Power & Market

NAFTA 2.0: Free Trade or Central Planning?

10/09/2018Ron Paul


Last week the United States, Mexico, and Canada agreed to replace the North American Free Trade Agreement (NAFTA) with a new United States-Mexico-Canada Agreement (USMCA). Sadly, instead of replacing NAFTA’s managed trade with true free trade, the new USMCA expands government’s control over trade.

For example, under the USMCA’s “rules of origin,” at least 75 percent of a car’s parts must be from the US, Canada, or Mexico in order to avoid tariffs. This is protectionism designed to raise prices of cars using materials from outside North America.

The USMCA also requires that 40 to 45 percent of an automobile’s content be made by workers earning at least 16 dollars per hour. Like all government-set wages, this requirement will increase prices and decrease employment.

The USMCA also requires Mexico to pass legislation recognizing the “right of collective bargaining.” In other words, this so-called free trade agreement forces Mexico to import US-style compulsory unionism. If the Mexican legislature does not comply, the US and Canada will impose tariffs on Mexican goods.

The USMCA also requires the three countries to abide by the International Labour Organization (ILO) standards for worker rights. So, if, for example, the bureaucrats at the ILO declared that Right to Work laws violate “international labor standards”’ because they weaken collective bargaining and give Right to Work states an unfair advantage over compulsory unionism states and countries, the federal government may have to nullify all state Right to Work laws.

The USMCA also obligates the three countries to work together to improve air quality. This sounds harmless but could be used as a backdoor way to impose costly new regulations and taxes, such as a cap-and-trade scheme, on America.

This agreement also forbids the use of currency devaluation as a means of attempting to gain a competitive advantage in international trade. Enforcement of this provision will be difficult if not impossible, as no central bank will ever admit it is devaluing currency to obtain a competitive advantage in international trade. Of course, given that the very act of creating money lowers its value, the only way to stop central banks from devaluing currency is to put them out of business. Sadly, I don’t think the drafters of the USMCA seek to restore free-market money.

The currency provision will likely be used to justify coordination of monetary policy between the Federal Reserve and the Mexican and Canadian central banks. This will lead to region-wide inflation and a global currency war as the US pressures Mexico and Canada to help the Fed counter other countries’ alleged currency manipulation and challenges to the dollar’s reserve currency status.

A true free trade deal would simply reduce or eliminate tariffs and other trade barriers. It would not dictate wages and labor standards, or require inter-governmental cooperation on environmental standards and monetary policy. A true free trade deal also would not, as the USMCA does, list acceptable names for types of cheeses.

Those of us who support real free trade must not let supporters of the USMCA get away with claiming the USMCA has anything to do with free trade. We must also fight the forces of protectionism that are threatening to start a destructive trade war. Also, we must work to stop the government from trying to control our economic activities through regulations, taxes, and (most importantly) control of the currency through central banking and legal tender laws.

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No, a Ban on Dreadlocks is Not a Human Rights Violation

The “libertarian socialists” have struck again.

It began when a state Libertarian Party chapter posted a link to a court decision about an employer that did not allow its employees to have dreadlocks.

This was “discrimination,” the suit against it alleged.

Not so, said the court. The “race-neutral grooming policy,” it declared, was not discriminatory, since a hairstyle, unlike a racial identity, is not an “immutable physical characteristic.” Therefore, an employer is at liberty to enforce such a requirement.

Now that isn’t quite how a libertarian would argue the question, since the crux of the matter is that no contract should be entered into unless both sides agree to its terms, period. The employer may offer terms, and the employee may offer terms. If one side offers terms the other opposes, then they go their separate ways and find people willing to engage with them on terms they prefer.

This is also how we deal with the notorious “bake the cake” case. If the baker prefers not to bake the cake, that ends the discussion. Violently forcing him to bake the cake is out of the question. The Supreme Court may spend its time tying itself in knots analyzing whether cakes themselves are endorsements of relationships, or just the icing on them, or whether a cake is a form of expression, or whatever. We libertarians don’t need any of that nonsense.

All the same, the court reached the correct decision in the dreadlocks case from a libertarian point of view. Not a “right-wing libertarian” point of view, mind you, but a plain-vanilla libertarian one.

Now enter one of the two or three spokesmen for a group calling itself “libertarian socialists” that wants to get a foothold within the Libertarian Party.

He is not happy about this decision at all.

Let’s go one passage at a time.

“This is an affront to the principle of equal liberty. Using financial leverage to compel another human to change their [sic] hair is an initiation of coercive fraud, and the lie is that hair has anything to do with job performance whatsoever.”

Well, whatever “the principle of equal liberty” is, it sure ought to mean that every person is equally entitled to make offers to any other person. It surely cannot mean that any person must be compelled to accept another person’s offer, because that compulsion would violate the former’s “equal liberty.”

Next sentence: “Using financial leverage to compel another human to change their [sic] hair is an initiation of coercive fraud.” (As opposed to voluntary fraud?) By “financial leverage,” the libertarian socialist (we’ll call him LS) means that workers are helpless and without options, and employers wield a kind of coercion over them by threatening not to employ them. This is not really how libertarians view what happens on the market, though it is the way Marxists look at it.

Then LS insists that dreadlocks have no effect on job performance. Irrelevant, of course. People are free to make whatever offers they want, and other people are free to accept or reject those offers. That is the bottom line.

It is not reasonable to expect LS to be able to vet everybody’s job requirements to see if they win his approval. Some requirements have obvious connections to the work involved, and some have more obscure connections that may be more difficult to articulate. But even if the employer should demand that all employees wear a funny hat, that demand is perfectly compatible with libertarianism.

Then we read:

“Libertarians build our viewpoints around maximizing individual liberty, not who holds a magic piece of paper that purports to give them power over others in the name of state-sanctioned economic order. This is a gross violation of the individual and a racist one at that.”

Well, that’s nice: an employment contract is being sniffed at as a “magic piece of paper” that “purports to give [employers] power over others.” Oh, and by “a state-sanctioned economic order” (this is supposed to scare us because the word “state” appears) LS means the state’s occasional defense of private property. So private property and labor contracts are to be viewed as unnatural, and in upholding and defending them the state is violating the natural order (as opposed to doing what would occur anyway in the absence of the state, which is how libertarians look at it).

LS then says a condition for employment involving hair is “a gross violation of the individual.” Forcibly requiring the company to amend its employment requirements, however, would evidently not be a violation, since companies have no rights.

He concludes with this:

“I am sad and embarrassed, but not really surprised to see right-wing ‘libertarians’ celebrating white supremacy openly in the name of markets.”

(Man, what constitutes “white supremacy” sure has come down a few pegs, hasn’t it? It’s almost like hysterical people use the term to refer to just about anything.)

It isn’t “right-wing libertarians” who are “celebrating” this ruling. First, I think the ruling is too wimpy, so “celebrating” is too strong a word. More importantly, all libertarians believe in mutual consent, which means we are all free to offer whatever we like to anyone we’d like to offer it to, and that party is in turn at liberty to accept or reject our offer.

We do not favor threatening people with physical force just because we do not approve of the terms they are offering.

Unfortunately, this is the kind of confusion that so-called “libertarian socialists” are seeking to introduce into more or less everything.

And note well: the word property appears nowhere in the LS complaint. Probably not a coincidence.

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Neocons Demand "Crushing" Sanctions on Russia

08/06/2018Ron Paul

You can always count on the neocons in Congress to ignore reality, ignore evidence, and ignore common sense in their endless drive to get us involved in another war. Last week, for example, Senators John McCain (R-AZ), Lindsey Graham (R-NC), Bob Menendez (D-NJ), and others joined up to introduce what Senator Graham called “the sanctions bill from hell,” aimed at applying “crushing” sanctions on Russia.

Senator Graham bragged that the bill would include “everything but the kitchen sink” in its attempt to ratchet up tensions with Russia.

Sen Cory Gardner (R-CO) bragged that the new sanctions bill “includes my language requiring the State Department to determine whether Russia merits the designation of a State Sponsor of Terror.”

Does he even know what the word “terrorism” means?

Sen Ben Cardin (D-MD) warns that the bill must be passed to strengthen our resolve against “Vladimir Putin’s pattern of corroding democratic institutions and values around the world, a direct and growing threat to US national security.”

What has Russia done that warrants “kitchen sink” sanctions that will “crush” the country and possibly designate it as a sponsor of terrorism? Sen. Menendez tells us: “The Kremlin continues to attack our democracy, support a war criminal in Syria, and violate Ukraine’s sovereignty.”

There is a big problem with these accusations on Russia: they’re based on outright lies and unproven accusations that continue to get more bizarre with each re-telling. How strange that when US Senators like Menendez demand that we stand by our NATO allies even if it means war, they attack Russia for doing the same in Syria. Is the Syrian president a “war criminal,” as he claims? We do know that his army is finally, with Russian and Iranian help, about to defeat ISIS and al-Qaeda, which with US backing for seven years have turned Syria into a smoking ruin. Does Menendez and his allies prefer ISIS in charge of Syria?

And how hypocritical for Menendez to talk about Russia violating Ukraine’s sovereignty. The unrest in Ukraine was started by the 2014 US-backed coup against an elected leader. We have that all on tape!

How is Russia “attacking our democracy”? We’re still waiting for any real evidence that Russia was involved in our 2016 elections and intends to become involved in our 2018 elections. But that doesn’t stop the propagandists, who claim with no proof that Russia was behind the election of Donald Trump.

These Senators claim that sanctions will bring the Russians to heel, but they are wrong. Sanctions are good at two things only: destroying the lives of innocent civilians and leading to war.

As I mentioned in an episode of my Liberty Report last week, even our own history shows that sanctions do lead to war and should not be taken lightly. In the run-up to US involvement in the War of 1812, the US was doing business with both France and the UK, which were at war with each other. When the UK decided that the US was favoring France in its commerce, it imposed sanctions on the US. What did Washington do in response? Declared war. Hence the War of 1812, which most Americans remember as that time when the British burned down the White House.

Recent polls show that the majority of Americans approve of President Trump’s recent meeting with Russian President Vladimir Putin. Among Republicans, a vast majority support the meeting. Perhaps a good defeat in November will wake these neocon warmongers up. Let’s hope so!

Reprinted with permission.

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Napolitano: Kavanaugh "is at the heart and soul of the DC establishment."

07/10/2018Mises Institute

Not surprisingly, Judge Napolitano sees the Kavanaugh appointment for what it is — a nod to the DC establishment. On Fox and Friends this morning, Napolitano said:

“The Washington establishment, sometimes known as the swamp, wanted Judge Kavanaugh,” said Napolitano. “I am disappointed in the president because this is not the type of person he said he would pick. Justice [Neil] Gorsuch was. This person is at the heart and soul of the D.C. establishment against whom the president railed.”

See the video:

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Newman on the Tom Woods Show: The Progressive Era Was a Scam

04/24/2018Patrick Newman

Patrick Newman joined the Tom Woods Show yesterday to talk about the Murray Rothbard book he edited on the Progressive Era.

Check out the episode here. 

 

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NY Man Builds His Own Highway Off Ramp

04/10/2018Tho Bishop

One of the best stories I've seen recently comes from Irving, New York, where a man has decided to build his own highway off ramp for his tobacco store. This story has it all, tax evasion, Indian tribal sovereignty, and an answer to the question "who will build the road?" The video is worth watching.

As WRAL reports:

Eric White is a member of the Seneca Indian Tribe and owns the “Big Indian Smoke Shop” in Irving, New York.

He is reportedly building the ramp as part of a personal protest after losing a legal battle with the state over allegedly selling untaxed cigarettes.

Through his attorney, Mr. White is defending his move by evoking the sovereignty of tribal land, a point that the Federal Highway Administration doesn't know how to respond to. 

Just another reason why tribal sovereignty is so important

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New from Hunter Lewis: Economics in Three Lessons!

For years, people have demanded an update to Henry Hazlitt's 1946 best seller Economics in One Lesson. Now we have one.

In Economics in Three Lessons, Hunter Lewis brings Hazlitt's timeless wisdom to the 21st Century.

Even better, Lewis includes an additional work, One Hundred Economic Laws. Finally, an easy to reference collection of axioms to refute the economic fallacies from either the left or the right.

A complete course in economics, in just one short book.

Available now in the Mises Store for $8.95

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Neocons Are Back With a Big War Budget and Big War Plans

03/26/2018Ron Paul

On Friday, President Trump signed the omnibus spending bill for 2018. The $1.3 trillion bill was so monstrous that it would have made the biggest spender in the Obama Administration blush. The image of leading Congressional Democrats Pelosi and Schumer grinning and gloating over getting everything they wanted — and then some — will likely come back to haunt Republicans at the midterm elections. If so, they will deserve it.

Even President Trump admitted the bill was horrible. As he said in the signing ceremony, “there are a lot of things that we shouldn’t have had in this bill, but we were, in a sense, forced — if we want to build our military…”

This is why I often say: forget about needing a third political party — we need a second political party! Trump is admitting that to fuel the warfare state and enrich the military-industrial complex, it was necessary to dump endless tax dollars into the welfare state.

But no one “forced” President Trump to sign the bill. His party controls both houses of Congress. He knows that no one in Washington cares about deficits so he was more than willing to spread some Fed-created money at home to get his massive war spending boost.

And about the militarism funded by the bill? Defense Secretary James Mattis said at the same press conference that, “As the President noted, today we received the largest military budget in history, reversing many years of decline and unpredictable funding.”

He’s right and wrong at the same time. Yes it is another big increase in military spending. In fact the US continues to spend more than at least the next seven or so largest countries combined. But his statement is misleading. Where are these several years of decline? Did we somehow miss a massive reduction in military spending under President Obama? Did the last Administration close the thousands of military bases in more than 150 countries while we weren’t looking?

Of course not.

On militarism, the Obama Administration was just an extension of the Bush Administration, which was an extension of the militarism of the Clinton Administration. And so on. The military-industrial complex continues to generate record profits from fictitious enemies. The mainstream media continues to play the game, amplifying the war propaganda produced by the think tanks, which are funded by the big defense contractors.

This isn’t a conspiracy theory. This is conspiracy fact. Enemies must be created to keep Washington rich, even as the rest of the country suffers from the destruction of the dollar. That is why the neocons continue to do very well in this Administration.

While Trump and Mattis were celebrating big military spending increases, the president announced that John Bolton, one of the chief architects of the Iraq war debacle, would become his national security advisor. As former CIA analyst Paul Pillar has written, this is a man who, while at the State Department, demanded that intelligence analysts reach pre-determined conclusions about Iraq and WMDs. He cooked the books for war.

Bolton is on the record calling for war with Iran, North Korea, even Cuba! His return to a senior position in government is a return to the unconstitutional, immoral, and failed policies of pre-emptive war.

Make no mistake: the neocons are back and looking for another war. They’ve got the president’s ear. Iran? North Korea? Russia? China? Who’s next for the warmongers?

Reprinted with permission.

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New Course on Development Economics with GP Manish

01/24/2018Mises Institute

In 2017, the US spent more than $50 billion on foreign aid. Why then are so many of the countries receiving this aid still living in dire poverty with starvation as a constant threat? Why doesn't this aid foster economic growth and development in those regions? Because just throwing money at a problem, foreign aid in this case, simply doesn't work.

So then, what are the prerequisites for economic development? What will improve standards of living? These are some of the issues addressed in a new course, Development Economics: An Austrian Perspective. G.P. Manish will explain the roles time preference and capital accumulation play in economic development as well as the importance of a fully integrated structure of production. He wraps up the course with a case study of economic development — and economic disaster — in India since gaining its independence from Great Britain in 1947.

This course is for independent study, free, and available to be taken anytime. The Mises Institute appreciates your support for continuing the creation of more courses in the Mises Academy.

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New Audiobook!

12/20/2017Mises Institute

To understand the modern state, you must understand the Progressive Era. Thanks to the generosity of Mr. Tyler Folger, Murray Rothbard's definitive book on the Progressives is now available as a free audiobook.

The audio files are currently available on iTunes, Google PlaySoundcloud, and Mises.org.

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