Mises Daily Articles
Boycott the French?
The conflict over Iraq has forced certain people to show their true colors, especially neocons parading around in libertarian drag. One case in particular is the Cato Institute's Stephen Moore, a contributing editor of National Review and head of a group cynically calling itself the Club for Growth. (Do you know many people who have publicly come out against growth?)
Moore appeared on last Friday's episode of Fox News' The O'Reilly Factor where he not only matched host Bill O'Reilly's fervor for war, but actually took a more extreme position on a proposed boycott of French products than O'Reilly (the architect of the boycott).
Early in the segment in which he appeared Moore said,
"Well I applaud you for what you're doing in leading this boycott, and count me as a supporter of it, Bill. You know we have bailed out France now three times in this [sic] century in World War I, and World War II, and then in the Cold War and so France really does owe us a debt of gratitude. They should be a strong ally of U.S. and European national security and yet what you have here is France undermining the national security of a country that's supposed to be a friend and an ally. What I support...is the idea that [sic] Americans voluntarily...taking little pieces of patriotism by boycotting French goods until France changes its opinion and its position on the war with Iraq and ousting Saddam Hussein and that means not buying French perfume, not buying French champagne, and products that will enrich the French people."
It would be amusing to hear Mr. Moore explicate Iraq's direct threat to the U.S. or its alleged role in the events of 9–11. It's probably a daunting task to someone who can't yet figure out if World Wars I, II, and the Cold War were fought in the Twentieth or Twenty-First Centuries.
To his credit, O'Reilly backed away from Moore's extreme position saying he didn't want to see Americans economically harmed by his proposed boycott, hence he thinks that French services (e.g., Sofitel hotels, Motel 6) should not be boycotted because they employ Americans but French goods should be boycotted because Americans allegedly won't be harmed when, for example, consumers purchase bottles of Poland Spring water instead of their regular Evian. O'Reilly is deluded by the hoary productive-unproductive fallacy tracing all the way back to at least Adam Smith.
Moore shared none of O'Reilly's concern about hurting Americans saying, "I would extend [the boycott] to any French product...If you choose an American hotel you're putting more Americans to work than if you choose a French one."
The latter point is of course practical nonsense at particular establishments in the U.S. Trade attorney John Magnus (providing a counterpoint to O'Reilly and Moore) said that the boycott was simplistic. Most French exports were not easily identifiable French goods such as perfume and alcohol but intermediate goods such as auto and aircraft parts and chemicals. O'Reilly then pointed out that France earns $9 billion in profits from its trade with the U.S. and that 25% of this trade is with aerospace firms such as Airbus. Why not boycott Airbus and fly only Boeing planes instead?
The problem is that Airbus is based in Toulouse, France but its four main design and production centers are based not only in "evil" France and Germany but also in "noble" Britain and Spain. Airbus also has smaller subsidiaries in North America and Japan as well as small centers in Miami, Florida and Ashburn, Virginia. Besides, how would U.S. airlines and passengers boycott Airbus? Airlines have leases on Airbus planes that would be costly to break and it would be impossible for Boeing to makeup the difference anytime soon.
Companies such as Walt Disney, Whirlpool, and Pitney Bowes lease planes and, combined, have lost hundreds of millions of dollars since 9–11 already. A boycott of Airbus would cause additional harm to American shareholders and employees of these companies. Some international passengers would have to go to considerable expense to avoid Airbus planes.
In supposed contrast, those living in the Southeastern U.S. can get around their region by flying the regional RJ-85 and CRJ jets of Northwest Airlines. The problem is that these planes were made by British Aerospace which has been an Airbus partner since 1979. (Speaking of the airline industry, it projects that the Iraq war will force it to lay off an additional 70,000 workers and sustain an additional $10.7 billion in losses. It would be amusing to hear Moore and his enlightened Club for Growth explain how all this is going to be just wonderful for the economy.)
O'Reilly's boycott segment ended with Magnus stating that the boycott would cause a lot of pain and do nothing to change France's Security Council vote on the Iraq war. O'Reilly agreed, stating that the boycott was motivated by not much more that malice. Magnus cautioned that such myopia could lead to serious long-term harm to both the U.S. and France down the road.
Moore then absurdly claimed that France was the nation "doing the damage" by failing to approve the Iraq war and thus potentially threatening U.S. national security. He then argued that he was a "free trader" because the boycott was voluntary. He also added that although French products are produced in many places, profits go mostly to French producers (ignoring Magnus' point about the bulk of trade in intermediate goods and intimating that profits were the only economically known benefits from exchange).
A more respectable challenge is found on O'Reilly's boycott page where nine French targets are listed: Chanel, Clarins, Dannon, Evian, L'Oreal, Louis Vuitton, Moet, Remy, Yves Saint Laurent. With regard to Dannon, O'Reilly seems to have this adolescent conception of yogurt arriving in America from France via ship. Stop the ships and only France gets hurt.
Ah, the simplicity of demagogic populism. He hasn't even bothered to notice on the Dannon Web page he's linked that Dannon produces products in three U.S. plants (in Ohio, Texas, and Utah) and distributes them from five U.S. facilities (in Texas, California, Ohio, Florida, and Pennsylvania). The plant in Ohio is the largest yogurt plant in the world producing an astounding 3 million cups per day. That's certainly a lot of Americans (and don't forget those all-important single moms) to be put out of work from a boycott.
Clarins has 19 subsidiaries operating in 150 countries (mostly U.S. allies) including the U.S. Groupe Clarins USA in Orangeburg, New York might not be a huge operation, but it definitely represents Americans who will be harmed by a boycott.
The rest of the O'Reilly list of French companies (champagne, cognac, perfume, clothing) would have done well to copy the Japanese auto companies and represent their impact on the U.S. economy in their corporate literature. Overall they've done a poor job in this area and will likely pay a significant price along with their U.S. wholesalers, distributors, advertising agencies and media, and small retailers who will all be harmed by declining sales and the costs of unsold inventory.
O'Reilly is a mass of contradictions, but can be reasonable and I believe he would reconsider some of his boycott if these points were brought to his attention. This is certainly more than can be said for Moore and his so-called Club for Growth which amounts to not much more than another Kemp-Bennett neocon front group (hence the oxymoronic pro-market warmongering). It's certainly a sad day for supply side economics when a confused journalist and trade attorney make far more economic sense than a prominent spokesperson.
What's so galling about this push for war is not so much the unprecedented level of terrorism it will bring, nor the $60-90 billion it will cost U.S. taxpayers and the $1 trillion it will cost the world, nor the taxes and inflation with which it will saddle future generations, nor the continual abridgement of civil liberties it will inspire. It is the fact that the Bush administration's own State Department recently rated Iraq's post-Saddam prospects for democracy as slim to nil. First, there's the huge problem of the Middle-Eastern ethos that heavily values conformity over individualism. Second, given the heavily anti-Western mass sentiment that will exist after the war, the electoral process (from those who participated) will yield more governments hostile to the West and Israel, which puts us right back at square one.
An extremely costly process to replace Saddam with someone just as bad or worse is not exactly a great victory for liberty or the free market. Most supply siders will surely figure that out some day.