PCR, Cato’s Trade Report: Blinded by Ideology

Cato’s Trade Report: Blinded by Ideology (also at Counterpunch); the Cato Institute report

via LewRockwell.com blog

While PCR does not subscribe to that version of liberal capitalism that justifies outsourcing, he nonetheless, like PJB, does believe in the nation-state, and sees no problem in applying the principle of comparative advantage at that level:

Few economists have bothered to think about the issue of offshoring, preferring to dismiss concerns about it as manifestations of the old protectionist fallacy. They learned in graduate school that free trade is always mutually beneficial and ceased to think when they passed their exams. This is especially true of “free market economists” who believe that economic freedom, which they identify with the freedom of capital, is always good. Thus, most economists mistakenly believe that offshoring is protected under the authority of free trade doctrine.

However, free trade doctrine is based on the assumption that domestic capital seeks its comparative advantage in its home economy, specializing where its comparative advantage is best and, thereby, increasing the general welfare in the home economy. David Ricardo, who explicated the case for free trade, rules out an economy’s capital seeking absolute advantage abroad instead of comparative advantage at home.

While "protectionism" is better than allowing America to lose its manufacturing ability through outsourcing, it is not the ideal, as it still allows for the concentration of capital, the reduction of economic freedom, and exploitation. However, if the American people are too degraded to work embrace reform and the sacrifices that it involves, then nothing can be done; all there is left to do is to wait and watch things play themselves out, and I do not have reason to think that the ending will be a happy one.