Global Trade vs. Free Trade

Those who know the positions of distributists will understand that we are generally not in favor of modern "Free Trade" schemes. It seems, however, that some may misinterpret this and conclude that we are isolationists. After all, it is not unfair to say that we are not only in favor of localism, but that we put more emphasis on it than others who also favor that idea. This has led some to question what a distributist position on trade would be.

Distributism has a very strong emphasis on localism, understood to be that each community should have an economy that is as self-sufficient and self-supporting as possible. Not only should as many basic necessities as possible be produced locally, but people should generally work and shop where they live rather than commute for work or shopping. If your neighbors are your customers, and you are theirs, then the movement of that money is within the local economy and strengthens and stabilizes that economy. My personal belief is that a national economy cannot truly be strong or stable unless the local economies throughout the nation are generally strong and stable, and the best way to keep them strong and stable is if the people in each community consciously work to support its economy.

However, distributists are not unrealistic. There will be things that people want or need that simply aren't made locally. This is especially true for things that are currently best made in a larger scale operation, like a factory to produce cars. It is not really reasonable to expect every community to have its own car manufacturer, so trade - that is the importing and exporting of goods to and from your community - is something that will be necessary in a distributist society. We accept that there will not only be trade between different communities within a nation, but between nations. In other words, we are not strictly opposed to global trade.

Global, or international, trade simply means the trade that exists between different nations around the world. Global trade has been practiced for thousands of years. Coffee won't grow where I live, so I am fine with the idea of importing coffee from where it does grow. If a country doesn't have an automobile manufacturer, then distributists would not complain if it chose to import automobiles. This is the essential idea behind trade in general and global trade in particular. The ability for a nation to import things it wants, but doesn't produce, and to sell to other nations the things it produces. The only caution I would add from a distributist perspective is that no nation should allow itself to become dependent on trade. If loss of trade will devastate the national economy, then you have surrendered yourself to foreign powers. To the greatest extent possible, a nation should strive to provide for its own needs and wants. Trade should be the icing on the economic cake, not the entire dessert, and certainly not a critical ingredient of its economic diet.

Why then, do distributists have an issue with what is called Free Trade? The reason is that free trade is ultimately directed toward a globalist view of economic efficiency. If that goal is pursued, the result will ultimately be the extreme centralization of production and an economic dependence on trade.

To begin with, advocates of Free Trade view the entire globe as one economic market. You have probably heard economists talking about the "market price" for things. Distributists don't deny the existence of a market price, but we really need to understand what market we are talking about. For example, when distributists talk about a "just wage," we mean a wage that will provide for above subsistence living in that market. Capitalists, on the other hand, seem to go along the lines of the (lowest) negotiated wage for people living in that market. But what is "that market?"

For the distributist, the market in question is the local community. It is certainly within the same nation. However, for Free Trade capitalists, the market is the global market, and their Free Trade agreements are government instruments to force that to work the way they want. You see, if there is a factory in your town, where you have a decent wage, safe working conditions, and benefits typical of your national culture, the distributist considers that to be the market for that labor because any factory in that area would have to provide the same things for their employees. However, the Free Trade capitalist says that you have to compete with any workers in any conditions just about anywhere in the world as though they are part of the same market. Therefore, if they can get cheaper labor in another country, even a socialist country, you are now in competition with them. This leads to the "outsourcing" of your job to the other country because that other country now sets the "market price" for labor where you live.

"Learn to code."

Even if your job isn't outsourced, you may find yourself in competition with foreign factories where people have to work in conditions that simply wouldn't be accepted where you live. Adhering to safety regulations, overtime requirements, and providing benefits is a cost to production. If you have to compete with foreign labor, even socialist labor, as though you live in the same economic market, you will either have to start accepting lower pay and worse conditions or find another job. Some people will bring up the idea of "comparative advantage," but that is a false idea.

Comparative advantage is the idea that, in the realm of Free Trade, nations will focus on what they provide best. It doesn't matter if local manufacturing moves to another country, closing down factories and putting people in your town out of work. If another country can provide manufacturing for a lower cost, "that's just business."  Your country may have the best market price for things like programming and financial services. The upshot of this is that those who lose their manufacturing jobs, or whatever jobs, due to "comparative advantage" between nations simply need to retrain themselves for jobs in the favored market sector. This is extremely short-sighted.

To begin with, after all of your manufacturing moves to the other country, that country may decide to increase its own abilities in what you are currently focusing on. You see, comparative advantage will tend to move a large part of economic activity into just a few areas of expertise. If an adjustment ever needs to be made, it can have major economic impacts because it will be difficult to retrain such a large portion of the population, and that can't even start until your nation's new market niche in the comparative advantage arena is discovered. What happens in the mean time, or do Free Trade economists really believe that, once a country finds its comparative advantage niche, it will always stay exactly right there?

Another thing that seems to be forgotten, at least in the United States, is that our current economic prowess was not achieved in a Free Trade environment. Our giants of industry became giants under the protection of trade tariffs which allowed them to develop and flourish. Take an American icon like Harley Davidson motorcycles. They were getting crushed by Japanese imports because the Japanese were simply producing better motorcycles, so the government protected them with tariffs. This allowed the company time to improve its product and establish a stable market. Likewise, our steel, computer, and airline manufacturing grew in an economic environment protected by tariffs. Today, much of that manufacturing has been moved to other countries. This should be very worrying considering how much our economy depends on these things.

Distributism is fine with global trade as long as it doesn't become a dependency for any nation. However, within a nation - and even within regions of a nation, priority must be given to local markets. It is not right to regard a local market, based on a common culture and standard of living, as being in one competitive market with that of a completely different culture and standard of living. Those who advocate for Free Trade will tell you that it provides more people with less expensive goods. However, this is accomplished by treating local workers as though they are in the same economic market as people living in conditions we wouldn't tolerate, including under a socialist government. Distributism is against that idea.

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