Post by RS Davis on Apr 30, 2004 12:23:09 GMT -5
[glow=red,2,300]Llewellyn H. Rockwell, Jr. Wrote:[/glow]
Free trade means the unencumbered exchange of goods and services, and nothing more or less. This means, for example, if wine from anywhere is knocking at our border's door, US consumers should be free to buy it. Free trade does not insist that the wine be produced and sold on a "level playing field" with everyone else. It does not demand that costs of production be the same in all countries. The right to buy and sell is not conditioned on the existence of a mythical, perfectly competitive environment.
What if Chile subsidizes its wine production? That's too bad for Chile's taxpayers, but great for the rest of the world, which enjoys lower wine prices due to expanded production (all else equal). California's wineries won't like it—no producer anywhere wants to be underpriced—but that's the way it is. The goal of production is consumption, and consumers are quite happy. It is their interest which is the closest proxy to the public interest.
What if the government refuses to let the wine in for whatever reason? Americans will pay higher prices than they would otherwise have to, which only increases the waste of resources. California wineries will be permitted to sell at a price higher than the free-trade price. This piles injury upon injury, and waste upon waste. California's wineries are the only parties benefiting from this, and only because they enjoy a subsidy.
Let's underscore the point for theoretical clarity. The subsidy Chile gives its wine is bad policy. It is not a violation of free-trade principles. On the other hand, protecting California's wineries from competition from abroad is a violation of free-trade principles. It means ripping off American consumers solely to benefit one sector.
Llewellyn H. Rockwell, Jr. is president of the Ludwig von Mises Institute in Auburn, Alabama, and editor of LewRockwell.com. He is the author of Speaking of Liberty.
Free trade means the unencumbered exchange of goods and services, and nothing more or less. This means, for example, if wine from anywhere is knocking at our border's door, US consumers should be free to buy it. Free trade does not insist that the wine be produced and sold on a "level playing field" with everyone else. It does not demand that costs of production be the same in all countries. The right to buy and sell is not conditioned on the existence of a mythical, perfectly competitive environment.
What if Chile subsidizes its wine production? That's too bad for Chile's taxpayers, but great for the rest of the world, which enjoys lower wine prices due to expanded production (all else equal). California's wineries won't like it—no producer anywhere wants to be underpriced—but that's the way it is. The goal of production is consumption, and consumers are quite happy. It is their interest which is the closest proxy to the public interest.
What if the government refuses to let the wine in for whatever reason? Americans will pay higher prices than they would otherwise have to, which only increases the waste of resources. California wineries will be permitted to sell at a price higher than the free-trade price. This piles injury upon injury, and waste upon waste. California's wineries are the only parties benefiting from this, and only because they enjoy a subsidy.
Let's underscore the point for theoretical clarity. The subsidy Chile gives its wine is bad policy. It is not a violation of free-trade principles. On the other hand, protecting California's wineries from competition from abroad is a violation of free-trade principles. It means ripping off American consumers solely to benefit one sector.
Llewellyn H. Rockwell, Jr. is president of the Ludwig von Mises Institute in Auburn, Alabama, and editor of LewRockwell.com. He is the author of Speaking of Liberty.
