Saturday, November 12, 2005

Defenestrating free trade

It's being thrown right out the window.
Boy launches McDonald's boycott over US-Canada lumber rift

A 10-year-old Canadian boy has called for a boycott of US fast food chain McDonald's in hopes of hastening an end to the deep rift over lumber trade between Canada and the United States.

Taking the trade impasse into his own hands is Luke McAndless of Vancouver, who along with a 13-year old friend -- and apparently some adults in the background -- launched his proposed one-day boycott on an internet website,

His goal is to pressure the United States into repaying an estimated four billion dollars in duties the US collected on Canadian softwood imports since May 2002.

"We want our money back!," proclaims the website. "Yo yo yo, give us our dough," it says, asking readers to join the boycott starting December 3 and also to send a message to US President George W. Bush.

On October 5, a panel of the North American Free Trade Agreement ruled that the United States had unfairly levied duties on Canadian lumber and should repay the money.

But despite increasing Canadian government pressure to follow through on the ruling, Washington has balked, asking NAFTA for clarifications and for more time to consider its response.

Taking up the cause, McAndless has garnered support from the 340,000-member National Union of Public and General Employees, The National Post reported Friday.

McAndless told the newspaper that he chose McDonald's because it is a symbol of the United States, and also because the company is well-known among his fellow students.

A McDonald's spokesman regretted the boy's choice, emphasizing that Canada's McDonald's branches are mostly owned and managed by local people.
Conflicts are inevitable when we have merely liberalized trade, i.e. trade agreements like NAFTA and CAFTA, and not true free trade. That's not to say such Free Trade Agreements are bad, but why take only a half-step when you know which is the right direction?

On the other hand, truly free trade would preclude a participating country from crying to the governing organization every time it didn't get its way, when "its way" meant a slap to the face of free trade. Furthermore, how much money is being wasted paying bureaucrats' salaries so that they can interpret thousands of pages, with thousands more in appendices and supplements, of grossly overregulated trade? If you trust them with that, consider how Americans have enough trouble finding good judges to read -- not interpret -- a fairly short Constitution that was written in quite plain language.

Walter Williams put it best:
Imagine that you and I are in a rowboat. I commit the stupid act of shooting a hole in my end of the boat. Would it be intelligent for you to respond by shooting a hole in your end of the boat?
In this case, the Canadians involved don't understand McDonald's business model. I learned the difference between a chain (like Wal-Mart and Macy's) and a franchise (like McDonald's and Dunkin Donuts) some years ago. Over the course of several weeks, I talked to the owner of the local video store, who was shutting down his business. He was done once Blockbuster opened up across the street, and I made some comment about how it's too hard for "mom and pop" businesses like his to compete against the big chains. Yes, once upon a time, even I believed that chain stores were injurious to local economies, and that trade deficits were bad.

He corrected me: Blockbuster is a franchise. What I later realized that meant, however, which he didn't admit, was that he was competing against a single store, not some big chain. (Actually, it's irrelevant to consumers whether they buy from a small store or a large one, so long as they maximize their happiness for the least cost.) And if the small video store couldn't compete, then it's not a bad thing that it shut down. The owner would have to seek something in which he had a comparative advantage, and consumers overall would save more money at Blockbuster than they would have pumped into the small store.


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