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Tariffs Are Attacks on Property Rights and Freedom

Summary:
Rothbard wrote in the Libertarian Forum (v. 1, p. 184) that “… libertarians, if they have any personal philosophy beyond freedom from coercion, are supposed to be at the very least individualists.” Indeed, libertarianism holds high the rights and responsibilities of the sovereign individual: the right to self and to justly acquired property and thus ...

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Rothbard wrote in the Libertarian Forum (v. 1, p. 184) that “… libertarians, if they have any personal philosophy beyond freedom from coercion, are supposed to be at the very least individualists.” Indeed, libertarianism holds high the rights and responsibilities of the sovereign individual: the right to self and to justly acquired property and thus the right not to be coerced or arbitrarily restricted; the responsibility for one’s own actions and the moral duty to respect and honor other individuals’ rights.

Yet libertarianism, or at least a relatively large subset of proponents of libertarianism, has taken a strange collectivist turn in the recent years. This is evident in a number of issues, such as free trade, where libertarians used to be in agreement in principle, albeit not necessarily in all the details or the applications of those principles. In contrast, this new turn argues from a different starting point. Rather than the individual’s rights, the starting point for this group is instead a notion of the individual’s collective belonging and identity (such as one’s country or ethnicity).

There has of course never been a problem for libertarians to recognize individuals for who they are, or choose to be, and thus within their preferred social and cultural context. No man is an island, and as social beings we are embedded in a context of community, culture, and tradition. The distinction between individualist and collectivist is not either-or, but which is primary: for collectivists, the individual is subjected to the will of the collective (or, in reality, the will of its leadership); for individualists, the collective has no right of its own but is subject to the individual’s choice to associate. For obvious reasons, the analysis of any state of affairs from a collectivist point of view is different than that from an individualist point of view.

The issue of free trade illustrates this clearly. Libertarians used to be universally and uninhibitedly for free trade. Whether domestically or across borders, voluntary exchange serves individuals best—and any restriction thereof is a violation of their rights. Thus, any restrictions should always be abolished, and the sooner the better.

Granted, reality is somewhat more complex. As I discuss in The Seen, the Unseen, and the Unrealized: How Regulations Affect Our Everyday Lives, whenever the state regulates economic action, there are severe and oftentimes far-reaching distortions of both structure and outcome of market exchange. As libertarians have long recognized, regulations create winners and losers. Also, rolling back individual regulations, while it potentially causes a “freer” market, it will cause a different set of winners and losers. The only truly fair and just economy is one completely devoid of the state’s manipulations, whether those are actively pursued or passively effected.

These complex implications of trade policy were never seen as an argument against deregulation, however. Rather, it is an argument for letting people and businesses exchange without interventions. Less intervention means less distortion, and this is always preferable. This should be preferred even by interventionists, because, as Mises famously recognized in Bureaucracy,

Economic interventionism is a self-defeating policy. The individual measures that it applies do not achieve the results sought. They bring about a state of affairs, which—from the viewpoint of its advocates themselves—is much more undesirable than the previous state they intended to alter.

In other words, libertarians were free traders and favored any step in the direction of free trade. But this is no longer obvious. Trump’s trade war with China appears to have caused a rift within libertarianism, or at least among those libertarians who eagerly discuss policy online, alongside the individualist/collectivist fault line.

Libertarian-individualists are true to the "traditional" libertarian view that the state should get out of trade altogether and that Trump’s trade war is only harming consumers and the economy. The collectivists instead focus on international trade as a matter of collectivist justice, and, as a result, raise other issues. Among those are the recognition that China (the ‘other’ collective) is engaged in ‘unfair business practices’ by subsidizing and in other ways supporting Chinese (their ‘own’) business and, as part of this, neglecting to enforce international treaties. (A similar argument can, of course, also be made for the US and any other state.)

This is itself no news, as libertarians have always recognized the destructiveness of realpolitik, nation-statism, and the overall distortive nature of interventionism. But the solution from a libertarian-individualist perspective has always been to call for deregulation and free markets—even unilaterally—with the obvious goal to get the state out of trade. That China, for example, subsidizes production so that American and European consumers can buy goods and services at a very low, and possibly below-cost, price is not a problem for anyone but the Chinese. They are, after all, picking up the tab for the low prices we enjoy.

From the collectivist libertarian perspective, the suggested solution is very different—and may even be contrary to traditional libertarian views. In their take, Chinese domestic and international trade policy is not an issue primarily for the Chinese, but threatens ‘our’ businesses and therefore ‘our’ ability to produce goods and services, which can make "us" dependent on Chinese production.

The issue of trade is no longer a matter of the free exchange between private parties, whether individuals or businesses, but a matter of the collective to which these parties ‘belong’. International trade then becomes an issue of ‘national security’ and, the argument goes, it is therefore justified to call on the state to act on “our” behalf. Consequently, Trump’s trade war is seen by this group as a means for "us" to pressure the Chinese to adopt “fair” business practices so that "our" (American and perhaps Western) businesses can compete on the same terms as Chinese companies.

While there are certainly problems involved with an expansionary Chinese state, a Keynesian monster with grand international ambitions made clear in, among other things, the Belt and Road initiative, it should be fundamentally problematic for libertarians to identify with, and even support, one state against another. Even more so to support a state setting out to restrict and tax trade, whether or not it is intended as a means to pressure (or punish) "them."

The trade war issue appears to cause confusion among the new collectivist breed of libertarians regarding the non-aggression principle. This core principle is what underlies the free trade issue: it is fundamentally a question of voluntary market exchange. Trade is a matter of the parties involved in each exchange, not a conflict between the parties or their ‘teams’. In fact, the state is antithetical to this freedom, whether or not it is exercised alone or in voluntary association. Thus, a libertarian cannot see the state as a mechanism for good, or as a means to an end, no matter how legitimate the end.

Per Bylund
Contact Per BylundTwitter AwardsLawrence W. Fertig Prize in Austrian Economics Per L. Bylund, PhD, is Assistant Professor of Entrepreneurship and Records-Johnston Professor of Free Enterprise in the School of Entrepreneurship at Oklahoma State University. Visit his website at PerBylund.com.

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