Free trade

Tariffs are making headlines, and free trade is a hot topic in global discussions. But when people refer to "free trade," do they mean a complete absence of government policies that restrict imports and exports? That’s the only definition of trade that is truly free of protectionism.

Government policies affecting trade include not only tariffs and taxes but also a range of other measures known as non-tariff barriers (NTBs). Examples include:

1. Quotas: Limits on the quantity or value of a specific good that can be imported.
2. Import Licensing: Requirements to obtain special permission or licenses before importing.
3. Technical Barriers: Standards or regulations (such as health and safety or environmental requirements) that can be difficult for foreign producers to meet.
4. Sanitary and Phytosanitary (SPS) Measures: Health and safety measures, especially concerning food and agricultural products.
5. Rules of Origin: Policies that determine where a product was made, which can affect its eligibility for certain trade agreements.
6. Customs Procedures: Complex or opaque customs clearance procedures, document requirements, or valuation practices that slow down or raise the cost of trade.

In many cases, NTBs are more burdensome than tariffs. So, two countries can have a reciprocal no-tariff policy and still have little trade in goods and services due to NTBs.

Tariffs and NTBs are always and everywhere supported by the producers that receive protection from competition. This was the topic of a satirical essay written by Frédéric Bastiat in 1845:

The Candlemakers' Petition

When supporting tariffs and NTBs to “level the playing field” or defend against “unfair competition,” keep in mind the absurdity of Bastiat’s petition.

If the goal is to attract businesses to establish operations in the United States, consider this approach: repeal the corporate income tax. This would trigger a surge of U.S. companies returning and a wave of foreign companies relocating here. Once that momentum slows, repealing the National Labor Relations Act, along with other federal labor laws and regulations, would spark a second wave of business investment and migration into the country. The United States would experience the “giant sucking sound” in reverse, as per Ross Perot.

Rescission

The Department of Government Efficiency (DOGE) has identified outrageous ways the federal government is wasting our tax dollars. Unbelievably Congress just re-authorized spending for these wasteful programs.

If you have been paying attention you just witnessed the Trump administration identify and cancel funding for these wasteful programs on one hand, then the Trump administration lobby Congress to pass a continuing resolution (CR) (spending bill) that funds those wasteful programs again.

 

Representative Thomas Massie and Senator Rand Paul vigorously opposed the CR. They pointed out the absurdity of defunding the wasteful programs under DOGE and then funding the same wasteful programs under the CR.

 

Defunding the wasteful programs can be done by a simple majority in Congress, but the President must initiate this process by submitting a rescission package to Congress. There is only a 45-day window under the Impoundment Control Act for these spending cuts to be made permanent by rescission, so time is of the essence.

 

What exactly is the process for consideration of rescissions?

 

Step 1: The President submits a special message formally asking for a rescission. The special message must specify:

 

• How much is proposed to be rescinded.
• The specific accounts where the rescinded budget authority (BA) comes from.
• Projects and functions affected.
• Why the BA should be rescinded.
• The estimated fiscal, economic, and budgetary impacts of a rescission, and the impact on the programs and functions of such a rescission.

The special message starts a 45-day clock. If Congress doesn’t act in 45 days, the President’s proposal expires, and the executive branch must spend the money as prescribed.

 

Step 2: Congress may draft a rescission bill in response to the President's special message, and that bill is referred to the appropriate committee.

 

Step 3: If that committee does not act on the bill after 25 days, a discharge petition for the bill is in order. The motion to discharge is privileged with a limitation on debate and is only subject to a majority vote.

 

Step 4: Once either chamber has a rescission bill (either via the committee process or discharge), they can act on it. In the House of Representatives, debate on the bill is limited to no more than two hours.

 

In the Senate, consideration of the bill is subject to a ten-hour clock for debate, which means it is not subject to the cloture requirement of 60 votes to stop debate (it is not at risk of a Filibuster). Amendments in the Senate must be germane, and no amendment may be debated for longer than two hours.

 

Step 5: If the bill or its conference report passes both chambers, the budget authority is rescinded. If the bill fails, or if the 45-day clock runs out, the President must spend the money and cannot propose its rescission again.

We are the future and you are the past

The European Union and Europe’s political elites are faced with many new political leaders that champion individual liberty and oppose socialism. Below you will meet 2 new European politicians that strongly oppose current European political policy.

Afroditi Latinopoulou, is a lawyer and former championship tennis player. In 2024 she established the Voice of Reason political party in Greece and was elected a member of the European Parliament. 

Afroditi Latinopoulou

Seriously ladies and gentleman, was it the right wing that destroyed industry? Was it the right wing that made an idol out of Greta Thunberg? Was it the right that imposed green energy at the expense of industry destroying the EU's competitiveness? Or was it the socialist governments that have been ruling the European Union for 50 years?

France, Italy, Germany, Spain, and my homeland Greece have been devastated by groundless socialist policies. And today you, the destroyers of Europe have the audacity to wag your finger at us claiming that we conservatives are a threat to Europe? I laugh, I truly laugh.

As Margaret Thatcher wisely said: "The problem with socialism is that you eventually run out of other people's money." So abandon these ghost stories about supposed far-right threats and implement liberal economic policies. Lower taxes, increase competitiveness bring back plastic straws leave lignite [coal] alone invest in the industry and above all face reality: YOU HAVE FAILED. Follow what we're telling you before it's too late for everyone. 

You have failed. We are the future and you are the past.

Kemi Badenoch just became the first black woman to lead the UK’s Conservative Party, the oldest in British politics, colloquially known as “the Tories.” 

Kemi Badenoch

The first step is to explain the value of liberty. Our opponents do not value liberty. They see it as the freedom to do bad things, whether they are offensive or exploitative; that is all they think about. But liberty is foundational for a flourishing society, not just a philosophical “nice to have.”

The second thing we have to do is to stop the expansion of the state.

The third thing we have to do is to stop being afraid to defend our beliefs.

People should always be treated as individuals (ideologies that suggest otherwise must be passionately opposed). Due process must always be ensured (there can be no room for mob justice of any kind). The rule of law must be protected, and the law must be applied neutrally (and there can be no special treatment depending on identity).

I will die to protect those things

And it isn’t so much about being on the left or being on the right, but about finding the common ground. So I am on the right. But I also recognize that just talking about things within your own bubble is not how to win other people over. I’m able to have conversations with people who have very different philosophies because there’s a way you can speak that shows the commonality and shows that we’re all trying to get to the same place. And that’s what I’m trying to do with my party now.

Tariffs “protect” us from lower prices

Here are 5 articles that might diminish your enthusiasm for tariffs:

Tariffs and Industrial Policy Fail

High tariffs distorted resource allocation, favoring inefficient industries over more competitive sectors. This misallocation led to higher consumer prices and suppressed overall economic welfare.

Their study highlights how tariffs weakened competition in manufacturing by protecting inefficient firms, which inevitably inhibited productivity.

His analysis reveals that trade liberalization—not protectionism—is consistently associated with higher economic growth. By reducing barriers to trade, economies can reallocate resources to more productive sectors, enhance competition, and promote innovation. The evidence strongly suggests that countries embracing open trade policies experience faster and more sustainable economic progress than those that rely on tariffs to shield domestic industries.

The failures of tariffs and industrial policies in the United States, Japan, and China underscore the broader limitations of anti-market economic strategies. These policies often stem from the belief that governments can outmaneuver markets in allocating resources and driving innovation. Yet, as history repeatedly demonstrates, markets are better suited to these tasks.

Our History of Protectionist Tariff Train Wrecks

Protectionist tariffs are associated with a long history of economic and social calamities in America.

The only real difference between a lobbyist for protectionist tariffs and an armed robber is that the robber is armed. 

Tariffs Are an Attack on Natural Rights

“Free Trade” means perfect freedom for every kind of industry; and it includes liberty to every man to employ his money or his labour in the way that he himself thinks most advantageous, and to buy and sell wherever he can do so with the greatest profit.

Bright asserted that the freedom to exchange the produce of one’s labor for that of his fellows anywhere in the world was the most fundamental of rights. Bright argued that there was no liberty without this liberty, which was simply the liberty to live. 

Tariffs Are Taxes on Americans

Protectionism remains popular. But, as Henry Hazlitt put it, voter support for raising tariffs is ”the result of looking only at the immediate effects of a single tariff rate on one group of producers, and forgetting the long-run effects both on consumers as a whole and on all other producers.” Those who are incapable or unwilling to examine policies beyond their most short-term effects are easy targets for protectionist rhetoric.

Tariffs have inspired a profusion of economic speculation and argument. The arguments for tariffs have one thing in common: they all attempt to prove that the consumers of the protected area are not exploited by the tariff. These attempts are all in vain.

The Immorality of Protectionism

Politicians who support these taxes and regulations like to frame it all like it’s some kind of public service to the community. These arguments generally employ some sort of feel-good language like “tariffs level the playing field for Americans workers.” 

In reality, of course, calls to raise or maintain tariffs are nothing more than a call to raise taxes on Americans. Describing these taxes as a burden only for foreign workers or foreign importers requires either dishonesty or impressive levels of ignorance about how trade barriers work. 

Protectionism  means Americans who are already taxed and regulated to the skies via income, sales, and property taxes must endure additional levels of taxation and regulation to get their hands on foreign goods. All these additional costs and taxes imposed at the import stage naturally filter down to the entrepreneurs, small business owners, and ordinary people  who benefit from access to less expensive foreign goods. 

There’s no moral high ground here for the protectionists, just unfounded self-righteousness. Of course, if protectionists don’t want foreign goods in their country, they are welcome to avoid purchasing such goods. Protectionists are also welcome to try to convince other people to not purchase those goods. One could also advocate against domestic regulations that drive up the cost of domestic production.

Investing for you

The opening paragraph of the news article below speaks volumes about the troubling state of today's society:

Maryland Gov. Wes Moore (D) on Tuesday announced a plan to raise income tax rates for the state’s wealthiest residents, money that would help close a looming $3 billion budget deficit and fund public taxpayer investment in private industries meant to strengthen the state’s economy.

Moore announces tax increases for the wealthy to close budget gap

The Governor proposes to steal money from individuals and then invest the spoils into private industries. For those of you who do not see a problem with this proposal, consider the definition of Fascism provided by the founder of that political philosophy:

Everything within the State, nothing outside the State, nothing against the State.  — Benito Mussolini, from a speech delivered to the Italian Chamber of Deputies on December 9, 1928

If this seems like an inappropriate comparison, how would you categorize the State taking money from private individuals and then investing it in private industry? Do you consider this free market activity? Do you consider this Capitalism?

Contrast Governor Wes Moore’s proposal with this advice:

A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. — Thomas Jefferson, First Inaugural Address, 1801

Happy New Year 2025

 

Make 2025 your most transformative year. The Essential Reading List is your key to gaining a clearer view of the world while building confidence and expanding your knowledge. It’s like putting on glasses for the first time. Visit www.TheRootOfLiberty.com today and start your journey to a brighter future!

One hundred thousand dollars per second

On November 21st 2024 the US federal debt crossed the 36 trillion dollar threshold.

US Treasury debt to the penny

The debt crossed 35 trillion dollars on July 26th, 2024.

7/26/2024 $35,001,278,179,208.67

11/21/2024 $36,034,994,586,981.97

In 118 days the Federal Government added $1,033,716,407,773.30 (over one trillion dollars) to the national debt. Over this time period the national debt increased at a rate of  $8,760,308,540.45 per day (almost $9 billion per day),  $365,012,855.85 per hour, $6,083,547.60 per minute, or  $101,392.46 per second.

You can watch the increase in debt occur in real time (fun for the whole family)  at:

US Debt Clock

As you are well aware the larger the outstanding balance the larger the interest payment. Interest on the national debt is now larger than defense spending:

The details of this happy story are available at this link:

Looming debt crisis

Another interesting publication is available from the US Treasury:

Financial Report of the USA

Look for these word of encouragement on Page 7 of the Executive Summary:

An Unsustainable Fiscal Path 

The current fiscal path is unsustainable. To determine if current fiscal policy is sustainable, the projections based on the assumptions discussed in the Financial Report assume current policy will continue indefinitely.1The projections are therefore neither forecasts nor predictions. Nevertheless, the projections demonstrate that policy changes need to be enacted for the actual financial outcomes to differ from those projected.

On page 9 of the Executive Summary you will find this:

Conclusion

Projections in the Financial Report indicate that the government’s debt-to-GDP ratio is projected to rise over the 75-year projection period and beyond if current policy is kept in place. The projections in this Financial Report show that current policy is not sustainable.

The USA is not the first empire to find itself in this situation:

Empire Killer

On January 20th, 2025 Donald Trump will earn his self chosen nickname:

The King of Debt

Three questions

In this post I will answer questions that refer to my previous post on extreme poverty.

The first question is: How do we know that the data is correct?

In the previous post I included these graphs:

Our World In Data - extreme poverty graphs

The graphs show a decline in extreme poverty from 38% in 1990 down to 8.6% in 2024. This might seem too good to be true. This decrease in extreme poverty refutes the narrative that "capitalism causes poverty". So it would be reasonable to assume that if the data showing a decline in extreme poverty was inaccurate it would most likely be from a "pro capitalism" or right wing source.  You can review the Our World In Data staff members at  this link:

Our World In Data - team

The staff does not appear to be right wing.

Information about the founder of Our World In Data is at this link:

Max Roser

Max does not appear to be a right wing conspirator. 

Next we can examine the sources that Our World In Data use for their data at this link:

Data

Their data sources are legitimate and from reputable organizations.

Other organizations have reported the same facts:

World Bank poverty

The chart presented by the World Bank shows extreme poverty declining from 44% of the world's population in 1981 down to 9% in 2022.

Here is a news story from a paper that is not considered right wing:

New York Times - Extreme Poverty

In the New York Times story we find these statistics: In 1990, about 36% of the global population lived in extreme poverty and that in 2015 the share of the world’s population living in extreme poverty fell to 12%.

A page from the United Nations website discusses the reduction in extreme poverty:

UN - Ending Poverty

You will find the following statistics in the above UN story: 

From 1990 to 2014, the world made remarkable progress in reducing extreme poverty, with over one billion people moving out of that condition. The global poverty rate decreased by an average of 1.1 percentage points each year, from 37.8 percent to 11.2 percent in 2014.

The share of the world’s workers living in extreme poverty fell by half over the last decade: from 14.3 per cent in 2010 to 7.1 per cent in 2019.

After reviewing the sources above it is safe to say that the data presented in the last blog post is accurate and extreme poverty has indeed declined from 38% of the world's population in 1990 down to 8.6% in 2024. With the additional data on this page we now know that extreme poverty has declined from 44% of the world's population in 1981 down to 8.6% in 2024.

Our second questions is: What caused this decline in extreme poverty?

The answer to this question is: The decline in extreme poverty is a result of  the advance of individual liberty. China and India deregulated their economies, while the Berlin wall fell and the Soviet Union collapsed.

China’s Economic Liberalization (1978–Present) began shifting from a Marxist centrally planned economy toward a partially capitalist free market with the following results:

Growth: Sustained GDP growth averaging over 9% annually for decades.

Poverty Reduction: Over 800 million people were lifted out of extreme poverty, making it the largest poverty reduction effort in history.

Global Trade : Integration into global markets boosted exports and foreign direct investment 

India’s Economic Liberalization (1991–Present):

The 1991 balance-of-payments crisis led to reforms under Prime Minister P.V. Narasimha Rao and Finance Minister Manmohan Singh.

Growth: India's GDP growth accelerated from 3.5% to 6-7% on average post-liberalization.

Economic Transformation: Shift from a closed, socialist, public sector-led economy to a partially capitalist free market with a strong private sector.

IT and Services Boom: Emergence as a global IT and outsourcing hub.

Over 330 million people were lifted out of extreme poverty.

Fall of the Berlin Wall (1989):

Reunification of Germany: Eastern Germany faced economic stagnation and high unemployment as it transitioned to a market economy. Massive fiscal transfers from the West funded rebuilding.

Eastern Europe: Countries like Poland, Hungary, and the Czech Republic liberalized their economies, leading to robust growth, EU integration, and modernization. Over 10 million people were lifted out of extreme poverty.

Breakup of the Soviet Union (1991):

Economic Collapse: GDP in post-Soviet states, particularly Russia, contracted sharply in the 1990s.

Hyperinflation: Rapid price liberalization led to severe inflation in newly independent states.

Privatization and Oligarchs: A flawed privatization process in Russia created oligarchic wealth while impoverishing many.

Recovery: Russia stabilized in the 2000s due to resource exports (especially oil and gas).

Soviet Satellite Republics: Baltic states successfully transitioned to EU-oriented market economies, while other states faced prolonged instability. 45–55 million people lifted out of extreme poverty

The common themes across China, India, Eastern Europe, and the former Soviet Republics is that economic liberalization: deregulation of economic activity plus respect for private property and contracts spurred GDP growth lifting hundreds of millions of people out of extreme poverty.

Our final question: Why is this tremendous accomplishment not widely publicized?

The dramatic decline in extreme poverty worldwide over the past few decades has not been widely reported or celebrated for several reasons:

1. Focus on Negative News

Media Incentives: News organizations often prioritize crises, conflicts, and disasters, as they tend to capture more attention than positive trends.

Perception Bias: People are more drawn to problems needing immediate solutions than to progress already achieved. This "negativity bias" leads to underreporting of positive long-term trends.

2. Complexity of the Story

Abstract Data: Declines in extreme poverty are often expressed in statistics and long-term trends, which can seem abstract and less relatable than personal or localized stories of hardship.

Slow Progress: Poverty reduction is a gradual process and lacks a single dramatic moment, making it less newsworthy.

Complex Causes: The reasons behind poverty reduction (e.g., globalization, technological advances, market liberalization) are complex and not easily summarized.

3. Misperceptions About Global Poverty

Outdated Beliefs: Many people assume global poverty is static or worsening due to exposure to stories of suffering in specific regions, ignoring overall trends.

Lack of Awareness: Public understanding of global development issues is often limited, with many unaware of how much progress has been made.

4. Criticisms of Progress Narratives

Focus on Inequality: Critics argue that while extreme poverty has declined, income inequality has risen in many countries, diverting attention from poverty reduction achievements.

Environmental Concerns: Positive news is overshadowed by emphasizing the environmental costs of economic growth, such as deforestation and carbon emissions, which contribute to poverty reduction.

5. Ideological Divides

Skepticism of Capitalism: Much of the poverty reduction has been driven by globalization, trade, and market liberalization, which are controversial topics in political and academic debates.

Distrust of Data: Some question the reliability of statistics from developing countries or view poverty definitions (e.g., $2.15/day) as too low to reflect real well-being.

6. Competing Global Issues

Focus on Crises: Attention has shifted to pressing global challenges such as climate change, pandemics, migration, and conflict, overshadowing positive developments in poverty reduction.

To thoroughly examine the reasons that this type of story is not widely publicized read the following essay by F. A. Hayek: 

The Intellectuals and Socialism

Consider this quote from a rising star in the economics profession, Per Bylund: "What causes poverty? Nothing. It’s the original state, the default and starting point. The real question is: What causes prosperity?"

Extreme Poverty

Are you aware that the number of people living in extreme poverty worldwide has declined from 38% in 1990 to 8.6% in 2024? (Extreme poverty is defined as living below the International Poverty Line of $2.15 per day. This data is adjusted for inflation and for differences in the cost of living between countries.)  Data supporting this fact is available at the following link:

Extreme Poverty

This is a dramatic and wonderful accomplishment.  The greatest reduction in extreme poverty in recorded history.

If you were not aware of these statistics you are not alone, most people think global poverty is rising when in fact the opposite is happening:

Wrong about world poverty

News media and schools are not sharing the facts about the decline in extreme poverty. This may be because the main driver behind the decline is that more people are gaining the freedom to make their own economic decisions. The shift from central planning to freer markets has unlocked human creativity and productivity.

This good news should be celebrated and shared by all who value human flourishing.

Pre-bunking

Your wise overlords are looking out for you.  There is a possibility that you could be exposed to harmful ideas, and they are going to vaccinate you against this possibility.  EU President Ursula von der Leyen will keep you safe.

The following article by John Leake provides all of the exciting details (be sure to watch the video):

Ursula von der Leyen Pre-bunking

Aristotle once said, "All men by nature desire to know," He argued that this innate quality distinguishes humans from all other species. This idea became a cornerstone of Western philosophy, shaping various schools of thought and guiding intellectual pursuits for generations.  Fortunately for us in today's modern society we have Ursula and her enlightened deputies to do the learning for us.  We no longer need to wade through information to decide what is useful or correct.  Ursula will provide us with the correct and useful information in advance!

John Leake refers to John Milton’s 1644 essay, Areopagitica, that was presented to the English Parliament in opposition to licensing for printers.  In this essay Milton  argues that censorship is a barrier to truth, intellectual growth, and individual liberty, asserting that individuals must have the freedom to engage with all ideas, even controversial ones, to reach true understanding.

If there is a sequel to George Orwell's 1984, Pre-bunking must be included.