I once was on a business trip to La Paz, Bolivia. This remarkable Andean country is maybe the most unique in the Americas. The city of La Paz was built upon a crevice in the Andes Mountains that climbs for 1000 feet to level out upon the Altiplano – an immense bowl nestled at 14,000 feet (the same altitude as Pike’s Peak) and surrounded by imposing mountains of 22,000 feet and higher. It is a stark plain, of muted browns and beiges – home to llamas and alpacas and the poverty of the Aymara and Quechua, descendants of the Incas. The valley extends from La Paz for a hundred kilometers north to the fabled Lake Titicaca: of ancient legend and mystery. That vast plain hosts the ruins of a 2000 year old civilization (called Tiwanaku), which rivaled the city of Rome. Gold, monumental architecture, music and tradition, stratified society and the most productive agricultural land in the history of the world. An epic civilization built upon trade – roads that channeled the flow of goods from the top of the continent, sweltering in tropical Caribbean sunlight, to the extensive bogs at the southernmost reaches of the Amazon forest.
While there, I had the occasion to talk to a taxi driver as I was headed to a certain place or someplace else. “How are things here?” I asked. “Oh, things are not going well,” he told me – as all cab drivers are wont to do. “The economy is bad. We are not self-sufficient, we import too much of what we need.” I expected him to start complaining about Chile – the feud between those two neighboring countries is legendary. “No, sir,” he said. “Those people down in Cochabamba are always taking advantage – we need to free ourselves from them.” Cochabamba is of course one of the lowland states of Bolivia.
I was taken aback; because this is not something I often consider. When I visit the supermarket, it doesn’t cause me angst that the roses I buy my wife on Valentine’s Day are grown in the vast fields outside of Phoenix. I do not fret that the cheese on my burrito is from Wisconsin. Nor do I lose sleep over the fact that the pineapples on my ice cream are grown on the gentle slopes of volcanoes in Hawaii.
Free trade between the states is accepted – normal – understood; and brings immense prosperity (unless you’re in the health care industry, in which case its unfree – the result being inflation. But I digress).
Which made me think, why then should it matter whether those same roses are from Phoenix, or from Mexico, or from Chile? Who cares whether the rice in my casserole is from Louisiana or from Vietnam? Does it matter whether the computer I am writing on is from Silicon Valley or from China?
Of course it doesn’t. At least not to me. Because the decisions of what I purchase are practical. I, as a consumer, am always making choices based upon what is in my interest. The nexus between price and quality. What do I need? How much can I afford? Those are the most important questions. Do I find satisfaction in a pair of underwear from Colombia, instead of one from Wilmington? And if it’s cheaper, isn’t that even better for me – because won’t I have more money to spend on something else? And won’t that competition force the Wilmington underwear makers to improve, to reduce price, or increase quality? Might that not lead to deflation (which is a good thing – don’t tell the FED)? And won’t that lead to more money flowing into other parts of the economy, stimulating business in sectors that the planners cannot foresee – or even, dare I say it, saved to buttress our banks? Put simply by a friend of mine whenever the Walmart activists take to the streets, “What do so many have against poor people keeping more of their money?”
Back in Bolivia, as I drove along through the ruins of a place that once had been epic, I wondered what had become of the greatest power in the west. What had happened, that had left a poor cab driver worrying about whether his beans had been grown in another state instead of by a neighbor? I wondered what too this means for us? And I worry, lest our politicians succeed – and we become consumed with the concern that a hot dog we are eating comes from New York, and we lose our civilization in the process.
“And if it’s cheaper, isn’t that even better for me – because won’t I have more money to spend on something else?”
Sure. Until the day when what YOU sell is being offered for sale for less by a foreigner. Then you won’t have any money to spend on anything at all. This is why the whole free trade thing is grinding to a halt – because it promises so much, but ends up offering less and less. Except for the lucky ones whose work can’t be copied for less elsewhere; with goods cheaper and cheaper, their income goes up, while everyone else’s goes down or disappears.
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We don’t have free trade. NAFTA is a 1700 page centrally planned document. The problem is with terminology – we are told things are something when in fact they are something else. All the great civilizations, Tiwanaki, Zanzibar, the Minoans, the Edomites – all of them built upon trade. And the freer – the more prosperous, thats just a fact (and history).
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Your writing reminds me of the kind of come-with-me-my-friend-while-I-share-some-stories feeling of Robert Pirsig (Zen and the Art of Motorcycle Maintenance). And yet it offers substance, stuff that’s good to know. Thanks for your work.
Thank you Lyle!
While I’m generally an advocate for free trade, it does have a cost attached to it. You produce more wealth (and economic freedom) at the cost of independence (which is not the same as freedom!). As an analogy, if I need a bowl of soup and a log for a fire every night, I could make one of each myself every night, or I could make 4 bowls of soup, and you could chop down 4 logs. Together we’re wealthier, but now we’ve become dependent on each other.
I would not mind larger tariffs on countries that do not share my values. Slave labor in China or the Middle East does not deserve to compete evenly with free people, nor do those who pollute and destroy the earth. I recognize that my economic freedom may shrink as a result, but I don’t want to benefit from exploiting others, and it’s so hard to avoid it nowadays. I’m largely free-trade with a dash of autarky.
That said, I imagine Bolivia and Chile are close culturally, and certainly the regions within Bolivia! Here in the US, I have no problem trading with South America. I feel comfortable leaning on them and them leaning on us. Just wanted to make a small point I’m sure you’ve heard before!
Thanks Sam. I do agree; with perhaps a caveat that what we call nowadays “slave labor” – perhaps – is the means to advance. For example, in industrialized countries in the past families put their children to work early. Like in the farms in the USA. While “illegal” in the USA it not only led to increased national productivity but also increased the wellbeing of those families. Which led to economic conditions where people could extend their free time, increase worker ages, etc (at the expense of their economic freedom as you suggest). Imagine if some foreign power had told England in 1850 that children could not work for their parents; or if farm kids can’t do chores for their families. Net decrease in wealth and worse condition for the children in the long run.