Category: International Trade

2787733The second-hand clothing industry in parts of Africa is big business. In fact, many charities receive substantial revenue from the sale of these clothes. Why buy a t-shirt for 10 dollars when you can buy one for 32 cents? These trends should come as no surprise to Americans because consignment shops and thrift stores are plentiful. However, the difference is that in many parts of Africa second-hand clothing is the primary means of buying clothes and is, therefore, inadvertently stifling the growth of local African economies. Sadly, charities are playing a role in killing this growth.

For example, CNN just ran a story about how Americans sending over old clothes is killing Africa’s economy:
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Today at Ethika Politika, I critique David Bentley Hart’s recent (non-)response to the critics of his attack on natural law in public discourse last month, appearing in the most recent issue of First Things. My article, “Hart’s (Non-)Response to His Critics: Trying to Have It Both Ways?” is a response to Hart’s recent article, “Si Fueris Romae.”

While Hart’s most recent article may seem unrelated, it starts to sound remarkably similar to his article on natural law from last month about half way through. It is this convergence between the two that I examine and critique.

Ultimately, Hart seems to be trying to “have it both ways” when it comes to natural law. I find this to be particularly evident from his conclusion, in which he criticizes US policy toward China, writing,

Decade upon decade, we hear of the arrest, imprisonment, torture, and murder of China’s religious minorities (house-church Christians, Tibetan Buddhist monks, and so on), of the cruel measures taken to enforce the nation’s one-child policy, and of countless other chronic atrocities, but our response consists in little more than a sporadic susurrus of disapproval, just loud enough to flatter ourselves that we have principles but not so loud as to allow those principles to interfere with fiscal or trade policy. We try to shame the ruling party with pious panegyrics on “human rights,” as though the concept had any appreciable weight outside the cultural context that makes it intelligible, but we buy and borrow from the party, and profit from its policies, without hesitation or embarrassment. I think the government of the PRC might be pardoned for concluding that our actions, and not our words, indicate where our true values lie.

While at Ethika Politika I critique his reliance upon the concept of natural rights even while claiming that only our “cultural context … makes it intelligible,” there is another point to consider here. Putting aside the inconsistency of his principles, would his recommendation — more restricted “fiscal or trade policy” — really have the effect that he hopes? (more…)

Blog author: jballor
Friday, March 15, 2013
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Sam Gregg writes of Argentina, whence the new Pope Francis hails, “Over and over again, Argentina has been brought to its knees by the populist politics of Peronism, which dominates Argentina’s Right and Left. ‘Kirchnerism,’ as peddled by Argentina’s present and immediate past president, is simply the latest version of that.” For a bit of the current economic context in Argentina, here’s the latest on Kirchnerian political economy as related by John Teevan:

Cristinakirchnermensaje2010That’s the Argentine Way: In order to prevent the outflow of dollars from President Cristiana Kirchner’s silly-but-harmful economy, she created a new trade policy that permits only as much importing of foreign goods as can be paid for by equally matched by exports. So how is Newsan, an Argentine maker of Sanyo and JVC electronic equipment, going to create the exports necessary to buy the parts it needs to import? Easy, they added a seafood business that now exports shrimp and is paid in dollars. Similarly, Argentine BMW exports rice. Better to partner with Argentina’s wineries which produced $865m in wine exports. The words to describe this urgent economic inefficiency are not ‘free market’ nor even ‘social economic planning’ but ‘a Byzantine labyrinth.’ Why is it necessary? Because Ms. Kirchner also has currency rules or controls that ration how much foreign currency people can hold. Why? Because her policies have made the Argentine currency worth less threatening her dollar reserves. All this is to help ‘manage trade’ as she says so that Argentine jobs can be protected from ‘cheap imports’. President Cristiana is contorting herself to put many fingers in her leaky dike. She’s running out of fingers and looks ridiculous.

The above is from John’s monthly email, “Economic Prospect.” Send John a message if you’d like to be added to his list.

Trade and Mutual AidIn the forthcoming issue of Comment magazine, I examine how free trade orients us towards the good of others. In doing so, I argue against the value of pious banalities and cheap slogans. I include examples like, “Go in peace; keep warm and well fed,” or, “When goods do not cross borders, armies will.” The latter is often attributed to Bastiat, and while it captures the spirit, if not the letter of Bastiat’s views, the closest analogue is actually found in Otto Tod Mallery: “If soldiers are not to cross international boundaries on missions of war,” wrote Mallery in 1943, then “goods must cross them on missions of peace.”

I was struck by the disconnect between ideology and reality, or between idealism and realism, in an anecdote from a recent foreign policy speech from Sen. Rand Paul. As Paul notes,

In George Kennan’s biography, John Gaddis describes President Clinton asking Strobe Talbot “why don’t we have a concept as succinct as ‘containment.'” Talbot’s response [was] “that ‘containment’ had been a misleading oversimplification; strategy could not be made to fit a bumper sticker. The president laughed… “that’s why Kennan’s a great diplomat and scholar and not a politician.”

I guess that’s also the reason that I’ll never be a politician, either. As Lord Acton observed, “Every doctrine to become popular, must be made superficial, exaggerated, untrue. We must always distinguish the real essence from the conveyance, especially in political economy.” The key for responsible governance is not to lose sight of the complexity that lies behind popular exaggerations and conveyances.

As I argue in “Trade and Mutual Aid,” the temptation to rest easy with simple formulas to complex problems is common, but must be resisted: “Divorced
from a more comprehensive conception of the human person and social flourishing, an uncritical reliance on free trade to solve the world’s problems can well become destructive.” Even so, I conclude, “Free trade is a system that imperfectly, and yet with some measure of success—as Bono and countless others are beginning to recognize anew—orients us toward the good of others.” In the course of this piece, I draw on a variety of sources, including Frédéric Bastiat, Adam Smith, John Calvin, Johannes Althusius, Abraham Kuyper, Herman Bavinck, Pope Paul VI, and Friedrich Hayek.

To get your copy of the Comment issue on the topic of persuasion, including my piece on the fundamental persuasive nature of exchange, “Trade and Mutual Aid,” subscribe by March 1. You’ll also find content from new editor James K.A. Smith, Anne Snyder, Jim Belcher, Ashley Berner, Jonathan Chaplin, Marilyn McEntyre, Janet Epp Buckingham, D. Bruce Lockerbie, Calvin Seerveld, Natalie Race Whitaker, and Nicholas Wolterstorff.

This morning at Ethika Politika, I argue that “acting primarily for the sake of national interest in international affairs runs contrary to a nation’s highest ideals.” In particular, I draw on the thought of Vladimir Solovyov, who argued that, morally speaking, national interest alone cannot be the supreme standard of international action since the highest aspirations of each nation (e.g. “Life, Liberty and the pursuit of Happiness”) are claimed to be universal goods. I would here like to explore his critique with reference to the subject of international trade. (more…)

Blog author: jcarter
Thursday, August 9, 2012
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If you want to work in international development, says Charles Kenny, go work for a big, bad multinational company:

Kids today — they just want to save the world.

But there is more than one way to make the planet a better place. Here’s another option: Get an MBA and go work for a big, bad multinational company. Consider this: Over the past decade, foreign direct investment in Africa topped foreign aid — and in 2011 alone, by $7 billion. And unlike food handouts or free latrines, this kind of investment built factories, financed banks, and opened mines and oil fields, creating tens of thousands of jobs and transferring invaluable knowledge to the countries that need it most. That’s good news, because it is increasingly clear that new technologies are what’s driving improved quality of life in Africa, and new ways of doing business are vital to sustaining economic growth on the continent.

Yet there’s still a widespread feeling that multinationals are the rapacious, profit-obsessed spawn of globalization and free markets, running amok across the developing world. Some surely are. But think about how hard U.S. states compete to attract a Toyota factory. Or how happy Britain was when the Indian firm Tata bailed out its ailing steel industry. If multinationals can make that kind of difference in job creation and productivity in the rich world, consider the even greater role they play in poorer countries.

Read more . . .

When it comes to Swiss bank accounts, pop culture brings to mind wealthy people who hide assets from various groups, such as the IRS or their jilted family members. Our sympathies do not align with the type of people we imagine hold Swiss accounts. In fact, it is easy to get quite envious of the idea of holding a Swiss bank account, or possibly resentful that others can that are well off can avoid paying as much in taxes as possible.

Sadly, our perceptions lead us astray and throw up barriers to peaceful trade. Last year, a measure to go after tax avoiders who used Swiss (and other foreign) accounts was included in the jobs bill. Now, that law (known as FATCA) is harming Americans and Swiss workers alike. The New York Times has the story.

“Congress came in with a sledgehammer,” said H. David Rosenbloom, a lawyer at Caplin and Drysdale in Washington and a former international tax policy adviser for the Treasury Department. “The Fatca story is really kind of insane.”

Essentially, the law is so onerous to foreign banks that many say they do not want American business at all.  In fact, the law affects more than just Swiss banking. It actually imposes costs on virtually all foreign banking that deals with Americans. From the NYT:

“The Fatca legislation treats all Americans with overseas bank accounts as criminals, even though most of them are honest, hard-working individuals who happen to be living and working or retired abroad,” said Jacqueline Bugnion, a director of American Citizens Abroad.

This is incredibly inconvenient to Americans abroad, who may earn income in foreign denominations which would normally be easier to deposit in foreign banks. On the flip side, we have foreign based firms who operate in the United States. A Swiss firm is set to bring 150 jobs to Youngstown, Ohio in September. Do you think a Swiss firm might have Swiss bank accounts? Thankfully, the law does not seem to have scared off this investment, but it’s possible this was planned long before FATCA came to be.

We should be very wary of policy that is born of the rhetoric of envy. According to the NYT article, the treasury expects to take in about $8 billion from the new law, which may be much lower than the costs that foreign banking institutions face in complying with the new rules. As Jordan Ballor wrote last year, taxation should be primarily be about raising revenues. Can a law that causes more economic harm than it raises in revenue be a good law for revenue? The politics of envy and resentment seem to have clouded our judgement so badly that we are going to create a greater economic harm than the fiscal benefit to our country. Envy and resentment are natural, but we should recognize them for what they are: vices. It’s not surprising that vices lead to bad law.

H/T to Matt Welch

In this week’s Acton Commentary, “Contagious Community,” I look at the positive as well as the negative aspects of coordination and cooperation between human beings on a global scale. The film Contagion provided the occasion for these reflections, and I argue that

while the film is clear about the dangers of globalized human relationships, it also teaches a more subtle lesson. Even as disease represents a danger that can have worldwide impact, such dangers remain the exception rather than the rule. Indeed, the film portrays quite well how global networks of information and exchange are absolutely foundational for our contemporary world.

Abraham Kuyper on Common Grace in Science & ArtI was reminded of this uniquely human social characteristic again while reading through Abraham Kuyper’s Wisdom & Wonder: Common Grace in Science & Art this week. Kuyper makes the point that human pursuit of scientific knowledge is a communal endeavor. In fact, he writes,

Science is thus constructed not on the basis of what one person observes, discovers, imagines, and organizes into one system in his or her thinking. Rather, science arises from the fruit of the thinking, imagining, and reflecting of successive generations in the course of centuries, and by means of the cooperation of everyone.

What we have in the case of the development of human knowledge, then, is a communal endeavor defined not just in spatial terms (i.e. globally) but also temporally, including the successive ages of human beings from the past and their discoveries as they have been built upon and communicated to us today.

When discussing the idea of the invisible church, theologians include both the living and dead (who now enjoy the revelation of the blessed in the intermediate state) as making up “the communion of saints.” But similarly with respect to science as a common grace enterprise, we have a communion of common grace that likewise includes the living as well as the dead.

No single person can comprehend science in an “exalted sense,” which for Kuyper “originates only through the cooperation of many people,” the living as well as the dead. In the same way, no single person knows how to manufacture a pencil or build a chair, in part because none of us who are alive today got where we are on our own. We (and our civilization) are the products of those who have come before.

Recognition of this should instill in us a pretty healthy sense of humility and gratefulness for the graces of human community.

Is ‘fair trade’ more fair or more just than free trade? While free trade has been increasingly maligned, The Fair Trade movement has become increasingly popular over the last several years. Many see this movement as a way to help people in the developing world and as a more just alternative to free trade. On the other hand, others argue that fair trade creates an unfair advantage that tends to harm the poor.
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Blog author: jcarter
Friday, April 20, 2012
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“Charity rejoices in our neighbor’s good,” said Thomas Aquinas, “while envy grieves over it.” Unfortunately, grieving over our neighbor’s good has become a dominant part of recent economic discussions (“income inequality,” the “Buffett rule,” the “99%”).

Journalist Matt Lewis recently talked to talked to Dr. Victor V. Claar about the rise of envy in economics. You can listen to the audio below.
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