The freedom of free markets

Most human settlements are not self-sufficient. They produce some of the products that they use and need, but other raw materials and finished items must be brought from other places. Archaeological research into the earliest civilizations in Iraq, Egypt, and India reveal that materials and items were exchanged among those cultures. Trade has been part of human history for thousands of years.

Trade gives governments opportunities to raise money. Governments tax products that move, charging tolls for using roads and bridges and ports. Governments tax products when they are bought and sold. Governments place special taxes, called tariffs, upon products that come from other places. Tariffs accomplish more than offering income to governments. Tariffs sometimes discourage consumers from buying foreign products, encouraging them to buy the same products from local providers. Tariffs discourage the purchase of foreign products, even when local providers have no local substitute for the products in demand. Tariffs—and the threat of tariffs—can be used in negotiations between governments, even when the substance of those negotiations goes beyond trade and other economic considerations.

In the twentieth and twenty-first century, the United States government has inserted itself into trade arrangements and economic factors in several ways. Tariffs have been established on foreign goods to try to protect American jobs. Bans on export of certain items and technologies have been enforced to keep our Cold War enemies from gaining products that might help them defeat our nation. Assets of some nations and their citizens have been frozen and tourism to some countries has been curtailed to limit their economic success in efforts to change their governments’ policies. At the same time, trade agreements have made it easier for American products to be sold in other countries while products from those countries also were made available to customers in the United States.

Free trade benefits consumers, giving them more choices in the marketplace. Free trade benefits workers, giving more consumers access to their products. In the same way, free trade benefits corporations and the many investors who hold stock in those corporations. Free trade reduces strife between governments—until 2008 (when Russia invaded Georgia), there had never been a war or military confrontation between two nations that both had McDonald’s restaurants. To preserve free trade with its economic benefits, governments often will go to great efforts to resolve differences through diplomacy rather than through violence or threats of violence.

Yet free trade can cause problems for some participants. Sale of crops from one country in other countries can lower prices paid to farmers in those other countries. Underpaid factory workers in one country can produce products that are sold in other countries, reducing purchase of similar products in those other countries and possibly driving workers into unemployment. Aware of these risks, governments frequently work to create trade agreements that will benefit their own farmers and factory workers and also benefit their own consumers, seeking a balance between the competing needs of two groups which often overlap—auto workers who assemble cars, but who also want to buy the best car at the best price, no matter where it was made.

The chief concern is competition. But other factors deserve consideration. Laws in the United States provide workers with safe working environments and adequate wages while also prohibiting pollution of the air, land, and water. Countries lacking all those laws (or more permissive in their laws) can compete with the United States, producing products at a lower cost. Not only does this put American workers at risk of losing their jobs, but it also harms workers and residents in these other countries.

One new tariff might help to maintain the balance of keeping American workers at their jobs, providing affordable products to American consumers, and also helping the rest of the world’s consumers, workers, and residents. This tariff would require products—both agricultural and industrial—to pass an inspection established by the United States Congress. That inspection would ensure that work environments are safe, that workers are receiving an adequate wage, and that companies are not polluting the environment. A logo would be placed on the packaging of items that pass inspection; a tariff would be assessed on items that are not inspected or did not pass inspection. A higher, punitive, tariff would be assessed on any producer that used the logo without having passed inspection. Some American consumers would buy only products that have the “safe workplace” logo. Others might still seek the better bargain, but the tariff would bring the imported item more in line with American-made items in the competitive marketplace.

Free trade contributes to other freedoms. Governments still bear some responsibility to regulate trade for the good of consumers and also for the good of workers. A balance is not easy to achieve, but such a balance is desirable, and most of the world’s governments share an interest in finding that balance. J.

Labor Day

The industrial revolution changed the world. One thousand years ago, Chinese technology created a new and better version of steel. Over the centuries that recipe spread, until it reached the British Isles, where iron and coal were abundant and were near each other, and where transportation by water made it easy to distribute what was manufactured. Labor-saving devices such as mechanical spinners and looms allowed increased production, and what happened in Britain began to happen in other European countries, in North America, and eventually throughout the world.

Capitalism had already begun to develop in medieval Europe. Workers formed guilds which controlled each craft, putting the power of production into the hands of workers. Along with the guilds came financial leagues which led to modern banking and a new financial system. With the industrial revolution came a new form of capitalism. Only those who had access to wealth could buy the new machines. Now workers came into the factories and worked for the investors instead of working at home and controlling their own careers. Following the precepts of capitalism, investors and factory owners paid as little as they could to workers and got as much work out of them as possible, thereby keeping prices low for their customers which allowed them to gain a profit.

Many people realized the problems implicit in the system of capitalism. Even Adam Smith, who wrote the book defining and defending capitalism, explained that workers needed to be treated well to produce a better product—and to be the customers that the factories required. Karl Marx was not the first thinker to attack capitalism, but he offered the most dramatic solution. He complained that the system was rigged to keep the many workers under the control of the few people who had wealth. Government and even religion, he said, always took the side of the wealthy few against the many workers. Marx predicted that the workers would rise in revolt. They would overthrow the wealthy few, along with government and religion, and create a new and fairer system. For a time, the government would own and control the factories and farms on behalf of the people (socialism). After a while the government would wither and die and the people would own the factories and the farms. They would distribute the wealth they produced according to the workers’ needs, and each worker would willingly labor according to his or her ability (communism).

Marx said that the revolution would begin in the countries where the industrial revolution began and would spread as industry had spread. When it had reached the entire world, then the conversion from socialism to communism could happen. Marx did not foresee any way the workers could achieve their goals of proper wages and decent working conditions without violent revolution. He did not foresee any way that capitalism could be preserved.

Marx was wrong. Workers in Europe and North America found ways to organize themselves into unions which could speak to the owners of factories on behalf of all the workers. Christian sensibilities took the side of the workers and implored factory owners to treat them better—fair wages, fewer hours of work, better and safer working conditions. Swayed by Christians and by the growing power of the labor unions, governments began making laws to require the workers in factories to be treated properly. Child labor was gradually abolished, work hours were regulated, and inspectors were sent into factories to guarantee the safety of the workers. Although there were exceptions, generally governments required factory owners to permit their workers to form unions that would negotiate with the owners for the good of the workers. Socialism and communism were not necessary. Capitalism, under limited government regulation, could be preserved, with investors and customers and workers all benefiting from the system.

In the United States we celebrate workers and their contribution to the nation and the world with a holiday called Labor Day. Unlike Memorial Day (which was originally May 30, until it was moved to the last Monday in May), Labor Day has always been celebrated on a Monday, the first Monday in September. Originally that Monday was meant to be a time when workers would parade through the streets of the city to be recognized by their fellow citizens. It was, naturally, an extra day without work for the laborers, a day when they could gather with their families and those of their coworkers in picnics and other festive occasions. Labor Day weekend has become the social end to summer, as Memorial Day weekend is the social beginning of summer.

Every Memorial Day a few people speak out about the importance of recalling the reason for the holiday. Memorial Day is not just about cook-outs and the beginning of summer. On Memorial Day we remember soldiers who lost their lives fighting for their country. I have written such reminders myself. Scolding Americans because we have forgotten the meaning of Labor Day happens far less often. Of course we should be grateful to those workers whose labor improves our lives. We might not go into factories and shake the hands of laborers there, but each of us can mark this Labor Day weekend in some appropriate way. Be kind to the restaurant workers and grocery store workers you encounter. Thank them for doing their jobs. Think of those other laborers who do not get time off for the holiday—police officers, fire fighters, hospital workers, pastors, and all those expected to continue working on a holiday weekend.

Labor Day recognizes workers. It also reminds us of a process—the way labor unions, governments, and Christians concerned about the lives of factory workers combined to assist those workers. Along the way, they rescued capitalism from the danger of revolt. We continue to debate how much regulation is necessary and which laws hinder capitalism excessively. We should debate these things. On Labor Day, though, we also rejoice and are glad for the good things we have because of the work of our neighbors. J.