James Leroy Wilson's blog

Monday, May 23, 2016

Trade with foreigners at your own risk

Some countries are relatively free and some governments are relatively accountable to the people. But it's hard to draw the line between acceptable and unacceptable when exploitation is the game of The State.

That's what I was thinking while listening to the May 16 EconTalk podcast, Leif Wenar  argues that Congress should pass a law banning oil imports from oppressive countries. That's also the argument of his book Blood Oil. I haven't read it, and my reaction is to this podcast episode only.

Wenar argues that dictators of resource-rich countries keep the profits from the sale of resources to foreign nations, and give very little back to their people.  Because a country's resources rightly belong to the people, buying minerals from Congo, or oil from Equatorial Guinea, means buying stolen goods.

This is different in kind from the (relatively) free trade purchase of manufactured goods from developing countries. Even  if they're still undemocratic, they're at least developing and are demonstrably better off than they were in 1980. Wenar argues that the people in resource-rich dictatorships are no better off.

Wenar says that just as we no longer tolerate the criminal enterprise of the slave trade, so we shouldn't tolerate this criminal enterprise of buying stolen goods.  Like host Russ Roberts, I appreciate Wenar's point.

And also like Roberts, I remain skeptical. Roberts observes that some people will learn how to get around and profit from any kind of import ban, just as they do with other kinds of prohibition.

But where Wenar really missed the mark is assuming an import ban would save the federal government tens of billions in defense spending because it wouldn't have to protect trade with dictators.

I wanted to yell, "But it doesn't have to even now!"

The nation-state system that we live under assumes you're subject to the laws of the government of the place you are in at the present moment. If it's not your native country, or a country you're a legal citizen of, you're there pretty much at your own risk. Your "home" government can't do much for you, especially if you break their laws of the country you're in, or participate in its corruption. If you're an American CEO visiting a dictatorship and the people revolt and execute you, why should that be my problem? You're the one who went there and did business there.

If you leave the shores or borders of the United States, I don't see why your fellow American citizens should be compelled, with their tax dollars, to provide defense for your foreign ventures. Which means, if American oil companies deal with dictators, they would provide their own defense of their own ships as they see fit. No federal spending is needed.

That can provide its own incentive to deal with stable (meaning, relatively accountable and relatively free) countries with safe shipping lanes. And does not depend on "our government" deciding which other governments are morally acceptable and which are not.

Because they're all guilty of exploitation and theft, one way or another. To survive in this world means to make the best judgments based on the obstacles they unjustly throw your way. You may think one of these resource rich dictatorships isn't so bad. Somebody else may think it's worse than another.

If surviving meant dealing with criminals, you'd make do as your conscience will allow. And we all have to deal with governments. I may view some as worse than others. You might, too. But we might not agree on which are worse or why.

So I say let the goods flow into the country. We can't control how they came here.

Just don't protect the people who bring them in. Let them do it at their own risk, not taxpayer expense.

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