Wednesday, February 06, 2008

What gives people the confidence to trade?

posted by Perry Eidelbus at 8:53 PM  

2 Comments:

Blogger jk said...

Your freind jk cribs his notes from Professor Deepak Lal, who points out that in the last 10,000 the great increases in global trade have come under two liberal international economic orders: pax britania and pax americana.

Friday, February 08, 2008 12:35:00 PM  
Blogger Perry Eidelbus said...

You're using the "appeal to authority" logical fallacy. Just because Lal says something does not make it right, nor should we think it's a greater probability it's correct just because Lal said it. Lal himself is using a logical fallacy, post hoc ergo propter hoc. Just because the increases in trade occurred during British and American military dominance does not mean the military dominance caused the increases in trade.

Like I said, technology should get the credit, rather than government-based force. It was the production advances of the Industrial Revolution that moved the world away from the constant destructive warfare that was so commonplace until the very early 1800s. Europe's constant warfare began declining in the 19th century as people traded more, negotiated more, and fought less. Not always, but it was a far cry from Napoleon's era, or situations like the Hundred Years War. The latter was literally a century of constant warfare where your little French village could be wiped out, even by your own army if it needed food.

Conquerors and criminals may not know it, but they also think logically in that they weigh costs and benefits. Arab traders had already shown for centuries that global trade was possible and not just beneficial, but the costs of transportation were still too high. The simple fact is that up to a certain time, it was more advantageous to enslave a people than to trade with them. It was cheaper to use the Spanish military to conquer indigenous peoples, then send galleons to bring back treasure, than to create things at home and deliver goods to trade.

However, once industrialization allowed people to create surpluses, and to traverse expansive lands and waters with greater ease, it became more apparent that trading excess goods was far better than constant warfare. In the end, this only proves what is attributed to Bastiat: "If goods don't cross borders, armies will." It didn't matter if people knew that it's better to trade than to fight, because they'd keep fighting until global trade became cheaper. Once that happened, they no longer needed to send armies.

You really worship government too much, at least for the benefit you think it gives people. Now, there was a decided benefit to the British military's dominance, but that wasn't to protect peaceful commerce so much as it was enforcing British monopolies on Far East tea, or forcing the Chinese to submit. If you want to talk about the Pax Americana opening up trade, well, our "free trade" began with the threat of force: we basically said we'd blow up Tokyo if the Japanese didn't start trading.

Friday, February 08, 2008 7:45:00 PM  

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