Ron Paul's Texas Straight Talk - A weekly Column

June 7, 1999

Free trade makes sense
Congress must resist raising taxes, limiting freedom

Once again the contentious debate over trade with China is before the Congress, but this time with the added twist of allegations of spying.
And, once again, those opposed to free trade will join forces with those favoring taxpayer subsidization of foreign countries to mangle the English language and thoroughly confuse the issue.
In the parlance of Washington bureaucrats and politicians, as well as most special interest groups, words used in debate take on a quality similar to Orwellian double-speak. As in his classic "1984," the "Ministry of Love" was actually the department of war, today’s debates use words and phrases in ways diametrically opposed to reality.
For instance, if someone says they are for "free trade," one must look carefully what they really mean, for the classic (and common sense) definition does not apply.
All to often in Washington, free trade is used when one really means "subsidized trade," or, tax dollars being funneled to foreign governments to buy American products. Similarly, the phrase can mean to use tax dollars to bail-out American firms for risky overseas ventures, or managed trade by the World Trade Organization to serve powerful special interests.
On the other hand, those of us who oppose using the taxes of American citizens to prop-up foreign governments or American corporations are derisively called "isolationists." There are indeed some people who are isolationists. They call themselves "fair traders," though. Exactly what this means is open to debate. All too often it involves letting the government determine what is and is not "fair" in the private trading between individuals who live in different countries.
Sadly, these definitions all hinge on the assumption that there are essentially only two options: tax dollars being used to subsidize corporations/foreign governments, or no trade whatsoever without the rubber stamp of government bureaucrats and special interest groups.
The bottom-line of both options, of course, is higher taxes for Americans. Higher taxes to finance the subsidies, or higher taxes on incoming products (and make no mistake, a tariff is a tax, paid by the American consumer).
There is another way. Free trade and free markets are, without a doubt, the best guarantor of peace. But this requires something all too few in Washington want: less government intervention.
It is indisputable that individuals know better how to provide for their families than government. It is also indisputable that a company is better equipped to know what its market will tolerate than a bureaucrat in Washington. In this way, a person is able to determine what goods best meet their individual needs, weighing numerous factors in their decision. But when government intervenes, it no longer becomes possible for an individual to provide for their family and business in the most expedient fashion. This is the antithesis of liberty.
Both the "fair traders" and the "subsidizers" now have a fantastic phantom upon which to justify their higher taxes and greater regulations: the Chinese spy scandal. This is a phantom for there is simply no connection between the spying and true free trade. In fact, it was the policy of subsidization and trade regulation, as well as generally lax security, which allowed the illegal transfers of technology. But to blame free trade, and then penalize average Americans, for the spying is the height of dishonesty.
If we are to end trade with all nations which spy on us, or upon whom we spy, then we will quickly find far fewer products available at the supermarket, and much higher prices on everything.
The correct solution to this seeming quagmire is one which few in (or for that matter, outside) Washington will promote. The US government should immediately end all taxpayer subsidization of China, including funds funneled through the Export-Import Bank and the World Bank. Congress should immediately require that when the government enters into contracts with companies to develop and manufacture goods critical to our national security, those companies agree to do no business with China.
Never, though, should Congress raise taxes or limit the ability of individual Americans to engage in honest trade with foreign manufacturers. While the market may demand - through boycotts and similar activities - that trade cease, that should be left entirely to the market, not bureaucrats in Washington.
Free trade, not isolationism or subsidization, is the most moral of instruments between men. Engagement, not irrational fear or political paybacks, is the best force for bringing change to China and our relations with its people.