A panel of guests recently appeared on Fox News’ Deep Dive to discuss the concept of “autarky”, which is largely defined as a self-sufficient economy that has comparatively few imports or exports. There were heated arguments at times and agreement at times, but much of the conversation seemed greatly focused on China and the influence of trade policy of the United States has with that country. Much of the talk centered on the benefits of influencing the way China governs and its harsh treatment of its own citizens, including in Hong Kong.
Firstly, using economies to influence foreign policy means that a government must have enormous sway over its economy in order to exert that influence. That’s not a good thing. When a government has enough control over an economy that it can use its own economy to influence other countries, that means that it has too much control. It means that particular government has meddled with its economy enough to pick winners and losers, enough to allow for businesses that are large enough to then also influence government, enough that rules and regulations are centered around who has the most money and influence rather than around fair competition.
To assume that economies can do better when isolating themselves from other nations is absurd. While the US might have the resources to ensure that the basic needs of its citizens are met, it does not mean that isolating its economy from the rest of the world would make the economy fare better. On the contrary, without the efficiencies of the market allowing for the selection of the most efficient means of innovation, pricing, supply, demand, and distribution, then the US would lose enormously and its citizens would suffer from it.
Open and free markets require the freedom to interact with whoever is the best trade partner, individually both as individual customers and individual businesses. If the entire world were a free trade zone, everyone would benefit. Concentrating all trade within the US to isolate itself from all other outside trade would allow the US government to control and influence more of the economy. It would allow the government to have even greater power to select the winners and losers. It would give politicians even more favors to sell.
The concept of autarky is foolishness. Isolationism is foolishness. The entire world benefits from free trade. If the US were to close off nearly all foreign trade, the citizens would suffer greatly as a result while paying higher prices, experiencing less innovation, and living under greater authoritarianism while the largest companies gain more unfair power over the smaller ones.
If you want to see more fairness in the economy, then allow for more free trade and eliminate any power government has over it. Want to see the US economy really take off? The eliminate the ability of the government to exercise trade policy at all. It may be an unpopular notion, but trade wars only hurt everyone. Nobody gains from them. We’d be better off if the US government was not allowed to charge tariffs at all. That would open trade tremendously. If another nation wants to charge tariffs on US imports, then they can punish their own citizens with higher-priced goods and services while the US enjoys freedom in its marketplace.
The answer to the US gaining a stronger economy in the world and the answer to dealing with influence in other nations is not to try to control things more. The answer is to try and control them less. Free markets tend to have positive effects against authoritarian regimes. When people who are less free interact with freer people, they tend to pressure their own governments, even overthrow bad ones. I’m less concerned with using trade policy to defeat China’s authoritarianism than I am with the negative effects of gifting the US government with enough control over the US economy to allow them the gift of doing so.
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