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Trade Creates Wealth

September 27, 2011

Tags Free MarketsGlobal EconomyInterventionism

Last month, the St. Louis Post-Dispatch ran an article focusing on Missouri governor Jay Nixon's "Made in Missouri" jobs initiative. To promote this new initiative, Missouri's Department of Economic Development was planning to give away 6,000 key chains emblazoned with the insignia "jobs.mo.gov" at the Missouri State Fair in Sedalia.

The problem?  They were all made in China.

In response to this discovery, Missouri officials did what any responsible bureaucrat would do — they lied. Volunteers hunkered down in a conference room and peeled off all 6,000 "Made in China" stickers.

Now, in the governor's defense, Missouri state officials went through all the requisite channels to procure these promotional key chains from a Missouri-based business. Unfortunately, items like these are not manufactured in Missouri. According to Mark Morose, a partner with Regal Midwest, a St. Louis-based promotional product company,

Most items are made overseas now. Nobody is making [key chains]. There are a lot of American-made wearables like hats, t-shirts, and bags. But for the most part, trinkets such as flashlights, [key chains], and mugware are all made overseas.

Naturally, if "Made in Missouri" is so good for the state's economy, it raises the question, why not "Made in Western Missouri" or "Made in Kansas City"?  Perhaps, "Made in Sedalia"?  After all, tiny Sedalia, with an estimated population of 20,000, hosts the Missouri State Fair and could certainly use the job growth. By carrying this analogy to extremes, eventually society alienates the very principles of economics and returns to subsistence living — a far cry from utopia.

In a twist of irony, while promotional items are predominantly made overseas, Missouri officials recognize that warehousing, imprinting, and distribution provides employment for over 250,000 Americans domestically and pumps over $17 billion in to the US economy annually.

Behold, the Glory of Trade!

Every day, before waking, I use a number of items my hands could not create in a thousand lifetimes. My bed keeps me off the floor (where people slept like animals for centuries) and provides comfort while I sleep. My air conditioning places control of the atmosphere at my fingertips, keeping me comfortable through the night. My BlackBerry quietly prepares an update of the day's events and its alarm wakes me each morning. Without these items, my life would be infinitely more difficult.

Not one of these products is made in Missouri.

While I am confident Missouri's economy plays a key role in the production of many components responsible for the manufacture of these items (as anyone who has read Leonard Read's "I, Pencil" can attest), that is not the point. For the bureaucrats, authoritarians, and statists it is an all-or-nothing approach. Support local vendors or else!

Only Trade Creates Wealth

To paraphrase the Robinson Crusoe example, in a simple island economy, development is limited to manual labor. There would barely be enough food and water, let alone beds and BlackBerrys. However, through trade it is possible to escape this sorry state of affairs. As Murray Rothbard so eloquently states in "The Anatomy of the State,"

The only "natural" course for man to survive and to attain wealth, therefore, is by using his mind and energy to engage in the production-and-exchange process. He does this, first, by finding natural resources, and then by transforming them … to make them his individual property, and then by exchanging this property for the similarly obtained property of others.

Over time, the development of ideas and mutual exchange allows for growth through specialization, economies of scale, and comparative advantage. To counteract this process with "buy local" campaigns not only negates liberty but fractures the economy's very foundation, and the actions of Missouri's governor exemplify this regressive mentality.

Pushing Missouri-made products is no key to perpetual prosperity. History is scattered with the gravestones of sovereign states that closed their borders to trade.

Yet Another Threat to Liberty?

So far, these crusades have largely left the market alone. Sure, there are activist groups and public-service campaigns, but state intervention has been limited. Consumers are still generally free to buy and sell as they please, whether across the street, across the country, or across the globe.

However, the tide is changing. More and more state governments, like Missouri, are enacting tax incentives to foster local practices. Further, bureaucrats on both the left and the right continue to peddle local initiatives as the only way out of the country's economic malaise. Unfortunately, tax breaks and politicking are just the start, often leading to far more perverse intervention.

Remember, when the state enters the market as a participant, with briefcase in hand, be concerned. At best, the clearing process will be distorted. However, when the state enters the market as an enforcer, with billy club in tow — be afraid. Be very afraid.


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