Economic Localism is No Better Than Economic Nationalism

But don’t fool yourself into thinking that you are somehow benefitting your local economy or doing something that’s morally superior. You’re just doing what globalized markets with a range of alternatives allow you to do: deciding what elements of your economic activity matter to you and choosing accordingly. Restricting those alternatives, whether through well-intentioned progressive “economic localism” or the darker, reactionary forces of “economic nationalism,” harms people, and often those who can ill-afford worsening poverty.

Americans clearly need a refresher course on economics and the principles of capitalism. I have been working on some longer essays in which I elaborate on some of the principles and the ways in which Trump’s campaign was based on arguments that sound good to some people in theory but which are deeply flawed in reality. Below is one article that outlines some of the arguments for free trade.  It is included in its entirety along with an image and a link to another short article supporting some of these themes.

Image result for free trade
Opposition to Free Trade is Demagoguery 

Economic Localism Is No Better than Economic Nationalism

 by Steven Horwitz**

 

Steven Horwitz
Steven Horwitz

As Black Friday has continued to expand in recent years, one response to its orgy of discounts and deals has been to promote the following day as “Small Business Saturday.” The idea is to encourage people to shop at their local stores rather than at national chains or big-box stores, or perhaps on the Internet. Doing so, argue its proponents, is both moral and good for the local economy, as it keeps jobs and money in “our communities” rather than, presumably, in the hands of faceless and distant corporate masters.

Let’s ignore the irony that the sponsor of this movement is the international corporation known as American Express. Is a moral or economic case for shopping local, whether on the Saturday after Thanksgiving or in general?

There is not. Many of the same arguments made by progressives in favor of shopping local are the same as those made by Trump and his supporters in favor of what they call “economic nationalism.” For the same reasons that shopping local isn’t morally or economically superior to buying from chains and big boxes, neither is buying “Made in the USA.” The most moral and economic choice is to buy from whomever you want based on your preferences about price, service, or any other number of factors.

Big Boxes Employ Locally

If we only shopped from locally-owned businesses, we would be paying higher prices and overall employment and incomes would be lower.The moral and economic cases against buying local are intertwined. Consider the argument that buying local is better because buying from Walmart or Target doesn’t keep money and jobs in the local community. This argument ignores that the average Walmart Supercenter employs around 400 people and the numbers are similar for Target. Those jobs continue to exist because people shop at those stores. The hundreds employed at any given big box store are just as much members of the local community as are the owners of the small business that compete with the big boxes.

To the extent that the prices at the big box stores are cheaper, they enable those who shop there to have income left over to spend on other goods and services, including things from locally-owned businesses, creating jobs that would not exist otherwise. If we only shopped from locally-owned businesses, we would be paying higher prices and overall employment and incomes would be lower. Plus, consumers would not have access to the variety of goods available at chain and big box stores, forcing them to not only spend more but get less value for it.

Buy National?

The same logic applies to international trade. Those imploring us to “buy local” are falling for the same sorts of fallacies that Trump, and many who voted for him, implicitly accept when they argue for raising barriers to international trade. “Economic localism” is nothing more than a smaller scale version of the “economic nationalism” of Steve Bannon and other Trump advisors.

US Job Growth, 1086-2016

Increasing duties on imports, thereby forcing more Americans to buy “local” in terms of the global economy, does nothing to create jobs or improve the economic standing of Americans. “Keeping the money in the USA,” like “keeping the money in the community,” harms those it is intended to help, and does so for the same reasons.

Labor time 1973-2009
Comparing Prices Relative to Wages 1973 and 2009

Forcing Americans to buy only, or predominantly, American-made products means we will spend more to get less, and the net effect on jobs will be zero at best. Globalized trade certainly shifts the mix of jobs in the US economy, as we have shifted in relative terms from manufacturing to hi-tech or services for example, but does not reduce the total number of jobs. One need only look at the data on overall job growth, and the increased variety of cheaper and better goods available to even the poorest Americans, over the last 30 years to see this.

The moral case for buying local is similarly weak. It’s best seen by making the moral case for buying globally.

The promoters of buying local often argue that buying from international corporations is problematic because so many of their products are bought from China or other parts of the world where wages are low and working conditions are bad. The belief is that by buying from those firms, consumers are supporting the exploitation of workers in those countries, making such purchases morally questionable.

Here is where the economics entangles with the morality: large firms are morally suspect because of the supposed negative economic effects they create. But are those negative economic effects real? Without an extended discussion of so-called “sweatshops” (but do see Ben Powell’s excellent book), two quick points are in order.

How Wages Rise

That Chinese workers have factory jobs that pay as well as they do, compared to the other options available to them, is a result of firms like Walmart buying the products those factories create. Wages depend on the productivity of workers (and the capital they use) along with the value of what they create. When the demand for those Chinese products goes up, thanks to us buying at Walmart, wages for the workers in those factories rise. And the evidence is clear that rising wages and the pressure of large Western firms are key drivers of improved working conditions.

Buying Chinese made products at Walmart not only doesn’t further exploit Chinese workers; it is of positive help to them.

Geography and Morality

The best path toward enriching everyone is allowing everyone to trade with everyone else.It is not clear why people more near to us geographically should have moral weight than those further away. Given the choice between helping a middle-class small businesswoman in our neighborhood or increasing the chances of better employment at a higher wage for much poorer men and women in China, why should we believe that the former is necessarily morally superior?

If human beings deserve our moral consideration by virtue of their humanity, and if those who are worse off economically are deserving of more such consideration, then it would seem that if there is a moral case for anything, it’s for buying in ways that help the least well-off, regardless of their nationality or ethnicity.

Certainly most of the progressive proponents of shopping local do not imagine themselves to be guilty of the same prejudices as Steve Bannon and other partisans of Trump’s economic nationalism, but the underlying logic is the same. The best path toward enriching everyone is allowing everyone to trade with everyone else.

Buy Wherever

To be clear, my argument is not that buying local is somehow wrong. It’s not. But it’s also not morally or economically superior to buying from Walmart or Target or even Amazon. Many local businesses offer better products or superior service, or perhaps fill a unique niche that large stores cannot. They also provide better opportunities to socialize with friends and neighbors. Those are all good reasons to buy from local businesses.

But don’t fool yourself into thinking that you are somehow benefitting your local economy or doing something that’s morally superior. You’re just doing what globalized markets with a range of alternatives allow you to do: deciding what elements of your economic activity matter to you and choosing accordingly. Restricting those alternatives, whether through well-intentioned progressive “economic localism” or the darker, reactionary forces of “economic nationalism,” harms people, and often those who can ill-afford worsening poverty.


**Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions. He is spending the 2016-17 academic year as a Visiting Scholar at the John H. Schnatter Institute for Entrepreneurship and Free Enterprise at Ball State University.

He is a member of the FEE Faculty Network.

This article was originally published on FEE.org. Read the original article.

 

Word of the Year: Post-Truth

“Feelings, not facts, are what matter in this sort of campaigning. Their opponents’ disbelief validates the us-versus-them mindset that outsider candidates thrive on.

post-truth-usage-2016The Oxford 2016 Word of the Year

A book, The Post-truth Era, by Ralph Keyes appeared in 2004, and in 2005 American comedian Stephen Colbert popularized an informal word relating to the same concept: truthiness, defined by Oxford Dictionaries as ‘the quality of seeming or being felt to be true, even if not necessarily true’. Post-truth extends that notion from an isolated quality of particular assertions to a general characteristic of our age.

Oxford’s Explanation for its 2016 Word of the Year

The Art of the Lie

Mr Trump is the leading exponent of “post-truth” politics—a reliance on assertions that “feel true” but have no basis in fact. His brazenness is not punished, but taken as evidence of his willingness to stand up to elite power.”

“But post-truth politics is more than just an invention of whingeing elites who have been outflanked. The term picks out the heart of what is new: that truth is not falsified, or contested, but of secondary importance. Once, the purpose of political lying was to create a false view of the world. The lies of men like Mr Trump do not work like that. They are not intended to convince the elites, whom their target voters neither trust nor like, but to reinforce prejudices.

“Feelings, not facts, are what matter in this sort of campaigning. Their opponents’ disbelief validates the us-versus-them mindset that outsider candidates thrive on. And if your opponents focus on trying to show your facts are wrong, they have to fight on the ground you have chosen.”

Whoever Wins the Presidential Election, There is No Going Back Now

“Why are you defending her, Erin?” Baldwin’s Donald asks the network interviewer in the sketch. “Are you a lez with her? Because I’ve heard from a lot of people that you’re lezzing her?” “That doesn’t even make sense.” “It doesn’t matter, Erin, because I said it. And now half the country believes it.”

Trump Lies about Obama’s Reaction at Rally

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“A few days ago, at Barack Obama rally for Hillary, the crowd turned on a Trump fan in their midst. Obama being Obama, he asked them to hush. “You’ve got an older gentleman who is supporting his candidate. He’s not doing nothing,” said the Prez, the only possible criticism of that being the use of a double negative. That apart, he was entirely positive about the man’s perfect right to support Trump. “We live in a country that respects free speech …  we got to respect our elders. Don’t boo. Vote. Don’t boo. Vote.””

All of this was filmed, of course. The truth of the incident was instantly available for anyone with internet access.

Later that  day, however, Trump wove his bespoke take on it into the rich tapestry that was his stump speech. ”You have to go… and see what happened,“ he told a rally in Pennsylvania. ”[Obama] spent so much time screaming at a protester, and frankly it was a disgrace.” If not the Baldwin version’s “half of America”, many millions of Americans will have actively decided to believe this idiotic invention. It fits perfectly, after all, into the insane, Obama the Tyrant narrative that is such a central building block of the Breitbart alternative reality.”

No one sharing the same postal code as their right mind could imagine Obama berating anyone in the way that Trump, that grandmaster of projection, has bullied protesters at his rallies. Yet although the lie was blatant and silly – and instantly exposable as such – there was no risk to him in telling it. Inhabitants of internet-created bubbles, where algorithms feed their prejudices and misconceptions with cosseting confirmations of whatever they have selected fit their bespoke truth, are axiomatically beyond the reach of fact.

The Post-Truth World

Mr. Trump appears not to care whether his words bear any relation to reality, so long as they fire up voters. PolitiFact, a fact-checking website, has rated more of his statements “pants-on-fire” lies than of any other candidate—for instance his assertion that “inner city crime is reaching record levels”, which plays on unfounded fears that crime rates are rising (see chart 1).

Even after controlling for party identification, religion and age, there was a marked correlation with support for Mr Trump (see chart 2): 55% of voters who scored positively on our conspiracism index favoured him, compared with 45% of their less superstitious peers. These measures were not statistically significant predictors of support for Mitt Romney, the far more conventional Republican presidential candidate in 2012.”

But though Facebook and other social media can filter news according to whether it conforms with users’ expectations, they are a poor filter of what is true.  Filippo Menczer and his team at Indiana University used data from Emergent, a now defunct website, to see whether there are differences in popularity between articles containing “misinformation” and those containing “reliable information”. They found that the distribution in which both types of articles were shared on Facebook are very similar (see chart 3). “In other words, there is no advantage in being correct,” says Mr Menczer.

Facebook and the Trouble with Being Everything to Everyone

One problem might be that people treat news found at Facebook with the authority of news gleaned from publications generally, even though news found at Facebook more often resembles the news gleaned from conversations with friends and family. People might practice a sort of mental discounting when encountering new information in different settings; I am less inclined to fully trust a factoid passed along by a stranger at a bar than I would be to trust something reported in a major newspaper. Facebook could throw this sort of discounting off, and lead users to too readily accept “news” (which after all is appearing on a major media platform) which is only a little more informative than what one receives in an email forward.”

Trump Supporters More Likely to Be Reading and Re-Posting Fake News

SOME OF FAKE STORIES POSTED AND SHARED ON FACEBOOK

$375,000 Deposited To The Khan Law Account From The Clinton Foundation

Mike Pence Says That Michelle Obama is the “Most Vulgar First Lady That We Have Ever Had”

Trump Won the Popular Vote

Hillary Clinton Wanted Donald Trump to Run for President

Hillary Clinton Sold Weapons to ISIS

Pope Francis Endorses Trump for President

2. Obama cut $2.6 billion from programs for veterans to support Syrian refugees in the US

Obama Uses Executive Order to Ban the Pledge of Allegiance

Fake News Stories that Went Viral During 2016 Election

Media Trying to Confront Fake News Stories

 Paul Horner, a writer who makes his living off writing fake news stories that go viral, told the Washington Post that he believes Donald Trump won the election because of him.

“I think Trump is in the White House because of me,” Horner said. “His followers don’t fact-check anything — they’ll post everything, believe anything.”

During the campaign, several of Horner’s intentionally false pieces were picked up and shared on Twitter by members of Team Trump. In March, Corey Lewandowski, Trump’s campaign manager at the time, posted Horner’s story about an anti-Trump protester supposedly being paid $3,500 to protest at one of his rallies.

“I’ve gone to Trump protests — trust me, no one needs to get paid to protest Trump,” Horner said. “I just wanted to make fun of that insane belief, but it took off. They actually believed it.”

Student Don’t Know When Fake News is Fake

Fake News is Both Cause and Effect of Distrust of Mainstream Media

Facebook Admits to Fake News Problem and Vows to Combat It

Useful List of Fake News Sources

Bit by Bit It Takes Shape: Media Evolution for the ‘Post-Truth’ Age

“But when significant political players are willing to say things that flat-out are not true — and when they’re not slowed down by demonstrations of their claims’ falseness — then reporters who stick to he-said, she-said become accessories to deception.”

Post-Truth and Other Trendy Words in 2016

2016-ing: verb. To feel intense stress and helplessness as you watch everything inexplicably go horribly, horribly wrong around you.

Alert: Hillary Clinton Is Stealing the Election in Ohio* — Foreign Policy

*Hacking voting machines isn’t necessarily what you should be worried about. It’s fake headlines like this one that could upend Election Day.

via Alert: Hillary Clinton Is Stealing the Election in Ohio* — Foreign Policy