The poison pill smuggled in with the Indian FTA

Another Constitutional Trojan Horse: advancing change through political stealth

FOR ALL THE FOOLISH NONSENSE about "tsunamis" talked about the Indian-NZ Free Trade Deal, there is a genuine issue that Gary Judd KC has identified in reading through it, and it's not about free trade or butter chicken. It's about a poisonous clause inserted at the obvious behest of the NZ negotiators. 

"The striking feature of this Free-Trade Agreement," notes Judd, "is that it brings the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) into the text of a trade treaty. That is not a side issue. It is a political and constitutional declaration inserted into an agreement that is supposed to be about trade. ... New Zealand’s Free-Trade Agreements with the United Kingdom and the European Union refer to indigenous rights and Māori participation. But the India agreement goes further. It is the first to affirm UNDRIP expressly. That is a significant escalation."

Why the hell is it there?

Everything points to this UNDRIP wording having been included at New Zealand’s initiative, not India’s. India appears to have agreed only on condition that its longstanding reservation was recorded. There is no obvious reason why India would want UNDRIP written into a trade agreement with New Zealand. ...

If it truly changed nothing, it would not be there. The obvious reason for including it is not trade with India but politics within New Zealand. A trade agreement is being used to advance a domestic constitutional and political agenda. That is an abuse of the treaty-making process. A provision with no real trade function, but clear ideological value at home, has no legitimate place in a Free-Trade Agreement.

Once this affirmation is in a ratified treaty, it will inevitably be invoked inside New Zealand as proof that the country is committed to UNDRIP in a serious and operative way, not merely in some airy symbolic sense. Lawyers, activists and judges will be invited to treat it as yet another marker of state commitment. To dismiss that as mere technicality would be naive.

You'll remember that Helen Clark, as Prime Minister, was astute enough to have her UN representative vote against the Declaration -- one of only four nations to oppose.  (As Judd notes: "India voted in favour (see here) but immediately made it clear that it did so subject to an important reservation. That same reservation now reappears in the FTA.")

It was John Key who blithely acceded to signing up simply in order to bolster his parliamentary support from Pita Sharples's Maori Party. 

What Key casually signed away was not trivial, as we saw when Ardern's Labour Government began drawing up the He Puapua document under UNDRIP's impetus. "He Puapua is not a minor discussion paper," Judd reminds us. "It is a blueprint for major constitutional change, including forms of co-governance. One example is paragraph 15: 'If they choose, Maori must be able to participate in Crown governance."

Clark's objection to the Declaration was principled, and what Clark's UN representative  Rosemary Banks said about it then is as valid now: Four provisions in the Declaration in particular were [and still are] "fundamentally incompatible with New Zealand’s constitutional and legal arrangements, [with] the Treaty of Waitangi, and [with] the principle of governing for the good of all its citizens."

What were those four provisions?

• Article 26 stated that indigenous peoples had a right to own, use, develop or control lands and territories that they had traditionally owned, occupied or used. For New Zealand, the entire country was potentially caught within the scope of the article, which appeared to require recognition of rights to lands now lawfully owned by other citizens, both indigenous and non-indigenous, and did not take into account the customs, traditions and land tenure systems of the indigenous peoples concerned. The article, furthermore, implied that indigenous peoples had rights that others did not have.
• The entire country would also appear to fall within the scope of article 28 on redress and compensation. The text generally took no account of the fact that land might now be occupied or owned legitimately by others, or subject to numerous different or overlapping indigenous claims.
• Finally, the Declaration['s articles 19 and 32] implied that indigenous peoples had a right of veto over a democratic legislature and national resource management, she said. She strongly supported the full and active engagement of indigenous peoples in democratic decision-making processes. New Zealand also had some of the most extensive consultation mechanisms in the world. But the articles in the Declaration implied different classes of citizenship, where indigenous had a right to veto that other groups or individuals did not have.

In short, the Declaration set up two standards of citizenship based on race, and a legal veto over other's property based on ancestry. Clark understood that. Key was too dim.

And so too are Luxon and Todd McClay, who either called for this clause's insertion in the Indian FTA themselves, or were insufficiently astute to have seen it there and taken out.

The He Puapua programme itself was begun without explicit acknowledgement of its goals. Those goals, indeed its very existence, were only revealed when it began to seem that some underlying framework was at play in Willy Jackson's and Nanaia Mahuta's legislative agenda.  Turns out there was. Media organisations uncovered the document, who then obtained it under the Official Information Act, and it was finally released only in April 2021 after pressure from the Ombudsman. "That is not transparent government," points out Judd. "It is disclosure dragged out by resistance."

The irony is that the same thing is happening here. 

Neither Government appears ready to argue openly for setting up two standards of citizenship based on race and ancestry.

Instead, they have to do it by stealth.

Gary Judd explains the danger in detail here, including illustrations "why ratifying the FTA in its present form is not a harmless gesture." I recommend the read.

He concludes:

What is most objectionable in all this is the contempt it shows for ordinary New Zealanders. Constitutional change of this magnitude should be argued for openly, defended honestly and submitted to democratic judgment. Instead, it has been advanced by ministers, officials and sympathetic elites through opaque processes, delayed disclosure and legal increment. That is no way to alter the foundations of a country.

The obvious remedy is greater democratic control. If politicians, officials or judges wish to drive constitutional change, they should have to defend it before the public in clear terms and win consent for it, not smuggle it through advisory reports, bureaucratic process or the fine print of a trade treaty.

That is the real issue raised by this agreement: not trade, but whether constitutional change in New Zealand will occur by democratic choice or by political stealth.

"Ironically, New Zealand First did not place New Zealand first."

 

"We are discussing the soon-to-be ratified NZ-India free trade agreement and the opposition by Messrs Jones and Peters. It’s proving a popular strategy, but it has been my observation, perhaps unfairly, that New Zealand First can sometimes be a little, shall we say, imprecise when it comes to their interpretation of the facts. ...

"[T]he treaty allows for 1000 software engineers, 1000 civil and mechanical engineers, 700 construction managers, 500 teachers and 1200 nurses. That’s 5000 in total. This isn’t 5000 a year. It is 5000 at any one time. And then they have to go home. ...

"[W]hat [else] do we get in this agreement? ... We are talking hundreds of millions of dollars. Not billions. And without dairy this isn’t a game-changer as the Prime Minister describes it but it is, for those industries affected, transformational.

"The other nonsense being peddled by NZ First is the obligation to invest US$20b into India; this is not what the document says. The wording is clear; we shall promote foreign direct investment '…from investors of New Zealand into India with the aim to increase investment by US 20 billion dollars within 15 years…'

"This is an aspiration, not a commitment. I suspect that this was included to give New Delhi cover to justify the internal political cost of reducing tariffs. ...

"It is significant that the Labour Party stepped up to support a treaty that was in the nation’s interest. They [belatedly] placed country ahead of party and for this Labour deserves our appreciation. Ironically, New Zealand First did not place New Zealand first. ...

"Like the trade deal with China, the initial document isn’t the final one. It opens a bilateral economic engagement that will improve the quality of life for residents of both countries.

"Luxon and his trade minister deserve respect and credit for this achievement."

~ Damien Grant from his column 'Reading the NZ-India free trade agreement made my stress levels rise'

"Commerce first taught nations to see with goodwill the wealth and prosperity of one another."

"[C]ommerce first taught nations to see with goodwill the wealth and prosperity of one another. Before, the patriot, unless sufficiently advanced in culture to feel the world his country, wished all countries weak, poor, and ill-governed but his own: he now sees in their wealth and progress a direct source of wealth and progress to his own country. 

    "It is commerce which is rapidly rendering war obsolete, by strengthening and multiplying the personal interests which are in natural opposition to it. And it may be said without exaggeration that the great extent and rapid increase of international trade, in being the principal guarantee of the peace of the world, is the great permanent security for the uninterrupted progress of the ideas, the institutions, and the character of the human race"

~ John Stuart Mill from his 1848 book Principles of Political Economy, under the heading 'Indirect benefits of Commerce, Economical and Moral; still greater than the Direct'

"There is not a single example of a country opening its borders to trade and ending up poorer.”

“The message from history is so blatantly obvious, that free trade causes mutual prosperity while protectionism causes poverty, that it seems incredible that anybody ever thinks otherwise. There is not a single example of a country opening its borders to trade and ending up poorer.”

~ Matt Ridley from his book: The Rational Optimist: How Prosperity Evolves

Free trade is good. A reminder. [updated]

Getting a free-trade agreement with India over the line has been harder work than getting oil out of the Straits of Hormuz. But over the weekend it finally happened, and the agreement was signed.

It's true, as Murray Rothbard used to say, that genuine free trade doesn’t require a treaty or its deformed cousin, a “trade agreement” -- all it needs is repealing our numerous tariffs, import quotas, anti-'dumping' laws, and other restrictions on trade. Which, to be fair, is most of what this agreement seems to offer.

A relaxation of rules, not any new ones.

Over the centuries, getting it understood that trade is good -- a win-win -- has been even harder work. It's been 250 years since Scotsman Adam Smith wrote 700 pages to explain that very point. Yet as Daniel J. Smith, Gabriel F. Benzecry point out, "Returning to The Wealth of Nations, one is struck by how little progress has been made in educating the public about sound principles, a task that must be renewed with every generation."

The Enlightenment ideals of individual liberty and voluntary exchange that inspired America’s founders also laid the foundation of modern economics. Yet two and a half centuries later, persistent policy blunders — protectionist trade barriers, ballooning national debt, and stubborn inflation — reveal how far we have strayed from the Scotsman’s insights, endangering the principles upon which our republic was founded.

Protectionism is becoming so endemic once again, so normalised, that it requires a major effort to implement its opposite. It's big news when shackles come off. freedom free-trade 

The problem isn’t a lack of knowledge — it’s a failure to teach and apply enduring principles. ...

Yet even as those principles are applied we can see and applaud the results. Even as the world's population has increased rapidly, we see that the most important growth with more population is not more stomachs to feed, but more minds able to produce -- and (in Adam Smith's words) more people ready to truck, barter and trade. The very simple fact, as Marian Tupy reminds us, is that "for every 1 percent increase in global population, population-level resource abundance grew by about 6.3 percent."

For every 1% increase in global population, population-level resource abundance grew by about 6.3% — according to @HumanProgress's new Simon Abundance Index.

In other words, when people are left even moderately free to produce, resources grow at a faster pace than the population.

It was Malthus, writing after Adam Smith, who ignored so many of his lessons and saw only the stomachs to be fed. 

The Malthusian mind never [saw] the human capacity to cooperate, trade, discover, invent, and adapt.

The record is clear. Smith explained how it works 250 years ago. Let's applaud when more of it is allowed to happen.

UPDATE: Another reminder: 

It's not nations that trade. People trade.

And they will if you just get out of their way. 

"Globalisation encourages the capitalist engine of growth."

"Globalisation encourages the capitalist engine of growth. If people understood how generous that engine has been they would have less enthusiasm for protectionism or socialism or environmentalist or economic nationalism in any of their varied forms. Most educated people believe that the gains to income from capitalism’s triumph have been modest, that the poor have been left behind, that the Third World (should we start calling it the Second?) has been immiserised in aid of the First, that population growth must be controlled, that diminishing returns on the whole has been the main force in world economic history since 1800. All these notions are factually erroneous. But you’ll find all of them in the mind of the average professor of political philosophy."

~ Deirdre McCloskey from her review of Thomas Friedman’s The Lexus and the Olive Tree and John Gray’s False Dawn

It's Shitty Anniversary time

A year ago, Donald Trump stood in the Rose Garden, surrounded by charts nobody understood, and declared war on mathematics. One year later, not even the Rose Garden remains.

It's being called "The Greatest Economic Own Goal in Living Memory" -- and that was before the same goal-scorer launched a war without a strategy that's locked up twenty percent of the world's traded oil behind the mullahs' missiles. 

This, above, was one year ago today when Donald Trump stood in the White House's Rose Garden to shoot himself and world trade in the foot. 

Today, we 'celebrate' the anniversary of  one man's gut feelings over economic reality...

One Year On: The Greatest Economic Own Goal in Living Memory
by Gandalv 

One year ago, Donald Trump stood in the Rose Garden, surrounded by charts nobody understood, and declared war on mathematics. He called it Liberation Day. 

The Financial Times, along with every economist who has read more than a bus ticket, is marking the anniversary with a verdict that should be carved into marble: it failed. On every single front. Spectacularly. Completely. Embarrassingly. 

Let us be precise about this. 

Measured against Trump’s own three stated goals, making foreigners pay for doing business with America, narrowing the trade deficit, and punishing China, the tariffs have clearly failed. Not partially failed. Not failed with asterisks. Failed the way a man fails when he drives a Reliant Robin the wrong way onto a motorway and acts surprised when it rolls. 

And everyone said so. Economists said so. Trading partners said so. His own party said so. The entire field of international trade theory, developed over roughly two centuries by people who actually read things, screamed it from the rooftops. [Even this humble blog said so.] But Donald Trump, a man whose relationship with economics appears to consist entirely of gut feeling, cable television and 6 casino bankruptcies knew better. 

The average American household paid an extra $1,700 due to tariffs. Over 65 percent of Americans reported that everyday goods became significantly less affordable. This is what happens when you run the world’s largest economy on instinct and vibes. 

One year after the Rose Garden ceremony, factory jobs are down and inflation is up. The precise opposite of what was promised. And promised with extraordinary (and wholly unjustified) confidence. 

Then the lawyers arrived. 

The Supreme Court found that Trump had exceeded his authority, ruling that the declared emergency bore no rational connection to the trade measures imposed. In other words, the legal foundation was nonsense. The government had collected $166 billion in tariffs from over 330,000 businesses on grounds the Supreme Court found unconstitutional. The refund process is now underway.  One hundred and sixty-six billion dollars. Collected illegally. From American businesses. 

The financial markets, bless them, responded with the only appropriate tool available: mockery. The meme “Trump Always Chickens Out” refuses to go away, and the TACO index is now actively used by analysts to price in the president’s chronic habit of retreating. 

Every serious voice warned this disaster would happen. Trade economists. Former Treasury secretaries. The IMF. The WTO. The EU. Canada. Japan. Basically anyone who had spent more than forty minutes studying how global trade actually works. The man who ignored all of them had previously run a casino into bankruptcy and considered that a learning experience. He was not, it turns out, a fast learner. 

One year. 

Zero of three goals achieved. 

One Supreme Court ruling. 

One $170 billion refund. 

A world economy paying more for everything and making less of it. 

Liberation Day. What a name for it.

What if robots take all the jobs? Hint: They can't.

"People have it all wrong" about AI and robots, says philosopher Harry Binswanger. 

Robots are going to take your job? No doubt.

What if robots take all the jobs?  Hint: They can't.

You may not keep this job. But your next one will pay so much more.  How can we know that?  Because, he argues, "We’re all going to get richer. The more that AI and robots can do for us, the richer we will get."

How so? Because AI and robots makes everyone’s labour far more productive -- and the result will be more goods produced, and hence "more wealth in the whole economy."

More wealth means more savings. More savings means more investment. And "more investment means more goods produced, which means a drop in the cost of living, which means a rise in the standard of living."

But how can he be so sure that if your job is replaced you'll be able to find a new one and "take part in this bonanza?"

The temptation is to answer by finding things robots won’t ever be able to do. “Robots will never be great chefs.” “Robots will never be venture capitalists.” “Robots will never write a first-rate symphony.”

That’s irrelevant. The point is that even if AI and robots could do everything better than any human being, that would enhance, not undermine, the value of human labour.

Why? The explanation comes from applying here an important truth discovered two centuries ago. In 1817, the great English economist David Ricardo identified “The Law of Comparative Advantage.”

Ricardo's Law of Comparative Advantage explains that no matter how poor you country may be at producing stuff, if both you and others specialise in what they each do best then, at the end of the day, we are all better off. It's best, for example, if Scotland trades whisky with France for claret and burgundy, rather than the other way around. ("It is the maxim of every prudent master of a family,"explained Adam Smith, "never to attempt to make at home what it will cost him more to make than to buy.")

Equally, the best way for New Zealanders to get cars and electronics is not to try making cars and electronics ourselves, but to process grass into milk powder, meat and wool so that New Zealanders can trade for those fancy devices. And when we do, we're all better off. ( If you're struggling with the concept, because it is remarkably subtle, PJ O 'Rourke's short explanation is one of the funniest on record, and undoubtedly the only one using Courtney Love to help explain things.)

Recognising that self-same principle of Comparative Advantage applies between people as it does to countries, economist Ludwig Von Mises expanded Ricardo's Law to make it "one of the most beautiful laws of the universe." Calling it the Law of Association he showed that specialisation allows even the less productive to benefit from working with the more productive -- or what his student George Reisman characterises as 'what the productive cleaner gains from the genius inventor.'

Even if the inventor can clean faster than a given cleaner, it still pays him to hire that cleaner because off-loading the cleaning work saves him time. He can then use that saved time in the area of his comparative advantage: inventing and selling more stuff.

Likewise, even if there comes a time when the robots can do everything better and faster than human beings, [even] more wealth will be produced if robots and humans each specialise in what they do best. Super-robots would produce more for us if we save them from having to do things that are less productive [for them].

(Of course we won’t be trading with robots: robots own nothing. Robots are owned by people, and those people will be paid for selling robots or for renting them out, just as you can rent power tools from Home Depot today.)

The Law of Comparative Advantage means humans will never run out of productive work to do. There will always be tasks that you don’t want to waste your rented or owned robots’ time in doing.

If you’ve got a robot building you a swimming pool, you don’t want him to stop to cook you dinner.

A chainsaw is a lot more efficient than a knife at cutting. But you don’t use a chainsaw to slice a loaf of bread. Particularly not if that chainsaw is being used by a robot to clear a place for a tennis court in your backyard.

So, rather than panic over “the rise of the machines,” let’s bear in mind the Law of Comparative Advantage ....

And let's recognise that "even with science-fictional super-robots, there will still be money changing hands and a price-system, just as now. You will still be paid for working in the field of your own comparative advantage.

New kinds of jobs will appear, as they always have when technology advances. Ironically, most of the jobs people are afraid of losing -- such as programming jobs or truck-driving jobs -- were themselves created by technological advances. There used to be an American saying: “Adapt or die.” Having the same kind of job as your father and grandfather did is not the American dream.

What new types of job will be created? I can no more project that than a man in 1956 could have projected that today there would be jobs in something called “social media”; or that money can be made by driving for Uber and by renting out living space through AirBnB.

The robots will make work much easier, more interesting, and much better paid.

Prepare to be enriched.

Thank you Adam Smith

It's a busy week. This week also marks the 250th anniversary of Adam Smith's Wealth of Nations, the first in-depth exploration and explanation of (in PJ O'Rourke's words) why some nations are prosperous and wealthy and other places just suck.In honour of the anniversary, here are several of Adam Smith’s most insightful observations:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages. [The Wealth Of Nations, Book I, Chapter II]

It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. [The Wealth Of Nations, Book I, Chapter I]

Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things. [Lecture in 1755, quoted in Dugald Stewart, Account Of The Life And Writings Of Adam Smith LLD, Section IV, 25]

It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. [The Wealth Of Nations, Book IV Chapter I]

By means of glasses, hotbeds, and hotwalls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expense for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy in Scotland? [The Wealth Of Nations, Book IV, Chapter II]

Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. [The Wealth Of Nations, Book IV Chapter VIII]

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices…. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary. [The Wealth Of Nations, Book IV Chapter VIII]

To widen the market and to narrow the competition, is always the interest of the dealers…The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution... It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it. [The Wealth Of Nations, Book I, Chapter XI]

It is the highest impertinence and presumption… in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense... They are themselves always, and without any exception, the greatest spendthrifts in the society. [The Wealth Of Nations, Book II, Chapter III]

There is no art which one government sooner learns of another than that of draining money from the pockets of the people. [The Wealth Of Nations, Book V Chapter II Part II] 

Every individual... neither intends to promote the public interest, nor knows how much he is promoting it... he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
    Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. [The Wealth Of Nations, Book IV, Chapter II]

What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. [The Wealth Of Nations, Book I Chapter VIII]

Mercy to the guilty is cruelty to the innocent. [From his 1759 work, The Theory of Moral Sentiments]

The man of system…is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it… He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. [The Theory Of Moral Sentiments, Part VI, Section II, Chapter II]

It's Liberation Year [updated]

Remember so-called Liberation Day, when the Toddler in Chief announced to the world tariffs that split asunder world trade, and wrecked the very domestic economy he reckoned he was going to "save."

Well ...

... and ...

UPDATE:

"There is nothing like a Jobs Wednesday report to remind you that the Donald is utterly clueless when it comes to economic reality. He got a report card for January that shows during his first 12 months, the US economy did not generate a single new job in the goods producing sector!

"That’s right. The jobs figure (SA) for the combined manufacturing, construction, mining and energy sectors (blue line, below) for January 2026 was 21,501,000, which was actually 58,000 below where it stood in January 2025 (21,559,000). And in the case of manufacturing alone (dotted red line), the job count was down by 83,000 in January compared to a year ago.

"It is thus hard to see how those 'big beautiful tariffs' have generated the boom constantly ballyhooed by the White House. For crying out loud: The jobs count in the entire US industrial economy has been shrinking for the entire past year! 

"Not surprisingly, the dismal graph above didn’t dissuade the Donald one bit from crowing about 'GREAT JOBS NUMBERS,' even though the 130,000 monthly increase in January occurred in all the wrong places and then only by virtue of the BLS’ seasonal adjustment black magic.

"We treat with those factors at more length below, but here’s the spoiler alert: During the Donald’s first year the overall US economy purportedly generated 334,000 new jobs (according to the BLS), but fully 789,000 or 236% of those additional jobs were in the education, health care and social services sectors—the funding for which comes almost entirely from government budgets or tax exempt employer health care plans 

"The rest of the economy actually recorded a 455,000 job shrinkage!"

~ David Stockman, from his post 'Schooling The Donald On The BLS Jobs Scam'

"Other countries are not ripping off the US on trade"

"The Trump Administration and I are here to make a very clear point—globalisation has failed the West and the United States of America. It’s a failed policy… and it has left America behind.
    "America is done exporting jobs and offshoring its future. We will no longer give in to globalisation.”

~ Trump's Secretary of Commerce Howard Lutnick at the World Economic Forum

“'Globalisation has failed' claims Trump’s Secretary of Commerce at Davos.

    "Give me a break. Global free trade hasn’t failed. It helps America PROSPER."

~ John Stossell

"Everything Lutnick said in that statement is wrong, but the biggest flaw is that the US has somehow been 'left behind.' The US continues to enjoy one of the highest standards of living in the world, and it has been rising in the Age of Globalisation too (whenever you define it)."

~ Jeremy Horpedahl

"The US since 1990: 

• Real GDP per capita: +68% 
• Real median wages (PCE): +34% 
• Infant mortality: -42%  
• Life expectancy: +4 years 
• Nonfarm employment: +46% (50M jobs) 
• Median household wealth: +128% 
• Industrial capacity: +76%"

~ Scott Lincicome

The open society is the successful society

"The most secure and prosperous societies did not hide from the world. They were confident enough to remain open to trade and ideas, allowing the new to challenge the known. Progress emerges when people experiment, borrow, and combine ideas in ways no planner could ever foresee; decline happens when fear overcomes curiosity."

~ Johan Norberg from his article 'From Athens to the Abbasids to today’s Anglosphere, creativity and commerce drive greatness.' in which he explores the central lessons of history’s real golden ages in his new book, Peak Human: What We Can Learn from the Rise and Fall of Golden Ages.

Should we end capitalism? Or embrace it.

"Capitalism ... has been, blamed for various ills, from poverty and income inequality to pollution, inflation, child labour, and war. ... Capitalism is misunderstood because it is often confused with today’s mixed economy that combines varying degrees of economic freedom and statism. Statism gives the government unlimited power that it uses to tax, regulate, and subsidize individuals and businesses and to hand out favors (government contracts, lower tax rates, subsidies) to companies that make political contributions and do the government’s bidding.

"Because of this confusion, people blame capitalism for problems caused by the mixed economy and statism in particular.

"Consider poverty and income equality. Poverty is most persistent in countries where the government deters wealth creation through high levels of market controls, taxation, and corruption that constrain economic growth, entrepreneurship, job opportunities, and people’s ability to work themselves out of poverty and improve their incomes. The same can be said of child labour (a consequence of poverty), inflation (caused by government manipulation of the money supply, not by business seeking to maximise profits in a free market), and war (caused by government invasion of another country).

"Capitalism does not cause the problems it is blamed for but provides solutions by safeguarding freedom. ...

"In Ayn Rand’s definition, “capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.” In such a system, the government’s role is limited to protecting individual freedom ... by deterring and punishing the initiation of physical force against others ... Under capitalism, the only way to get others to collaborate is through persuasion and voluntary trade.

"Although pure laissez-faire capitalism has never fully existed ... some historical periods and countries have approximated capitalism ... [Northern] America during the 19th century (the longest uninterrupted period of peace); England, France, and other European countries during the Enlightenment (that brought about the Industrial Revolution); Hong Kong (before China’s takeover); and smaller countries like Estonia (that liberalised their economies after the collapse of the Soviet Union).

"Capitalism is good for people and their environment because it produces and protects freedom, the social condition that human flourishing requires. ... [C]apitalism did not create today’s problems but has helped solve or reduce them. ...

"If we want human flourishing to increase, we must not reject and banish capitalism but embrace and defend it ... "

~ Jaana Woiceshyn from her post 'Should we end capitalism?'

"Yet today protectionism is being used by some American politicians as a cheap form of nationalism..."

"Yet today protectionism is being used by some American politicians as a cheap form of nationalism, a fig leaf for those unwilling to maintain America's military strength and who lack the resolve to stand up to real enemies—countries that would use violence against us or our allies. Our peaceful trading partners are not our enemies. They are our allies.

"We should beware of the demagogues who are ready to declare a trade war against our friends, weakening our economy, our national security, and the entire free world, all while cynically waving the American flag." 

~ Ronald Reagan from his Radio Address on Canadian Elections and Free Trade, November 26, 1988

Helen Clark & John Key: Politically and historically tone-deaf [UPDATE]

It's hard to overstate how politically and historically tone-deaf Helen Clark & John Key are for showing up at a Chinese Communist Party "victory" party, complete with the world's biggest dictators, celebrating the end of the Second World War.

Politically tone-deaf for all the many reasons rolled out by mainstream commentators: being responsible for cementing New Zealand's free-trade deal with China (for which much credit to both) doesn't require attending the biggest Asian military parade since the Japanese army rolled into Manchuria.

Far from any credit going to Mao Zedong's Communist Party for resisting that invasion, it was instead the CCP's salvation. It gave them their best chance of survival, which they grabbed with both hands.

Far from fighting a patriotic war, Mao's rabble instead withdrew into Yenan, coming back from near-extinction far from the war zone while lighting joss sticks and praying to Marx for the destruction of Chiang Kai-Shek's Republican army at the hands of the Japanese.

So it wasn't "China" that fought off the Japanese. Because by and large the only "China" fighting there  was Chiang Kai-Shek's Republican army, forced to fight the Japanese invasion while Mao's forces largely sat on their hands hoping for the best—keeping their powder dry ready for the civil war they started after the Japanese surrender and the exhaustion of Chiang Kai-Shek's army. 

After resting up for several years while building its materiel and men, on the very day following Japanese surrender in China Mao's party headquarters issued orders to advance — taking over the country from north to south, finally seizing full control in 1949. (You can read all about the sorry tale in Anthony Kubek's brilliant How the Far East Was Lost.)

That neither Helen Clark nor John Key appeared to know anything about that history says very little for either, but their attendance at the revisionist parade would bring a quiet chuckle to Chinese organisers delivering the Big Lie to an international audience.

It would be even worse if Clark or Key did know the real history. That would be worse than a disgrace. It would be damning.

A brief history of Victory Day: 

• 1937-45: Kuomintang (KMT) exhausts itself fighting Imperial Japan. CCP "hides its strength bides its time." 
• 1945: Imperial Japan surrenders. 
• 1947: US cuts back on aid to KMT. 
• 1949: CCP, supported by Stalin, defeats an exhausted KMT. Captures China by Oct 1. KMT flees to Taiwan.

UPDATE: Historically tone-deaf to the CCP's stolen valour (the point of the cartoon above), and politically inept: just consider how the Financial Times, for example, summarises the event that Key and Clark endorsed. In short, it wasn't about free trade :

Chinese President Xi Jinping was selling his vision for a new world order this week. Hosting a regional security summit on Monday, Xi called on attendees including India’s Narendra Modi — Trump’s latest tariff target — and Russia’s Vladimir Putin to join China in leveraging their economic influence to challenge the west.

Bolstering that message was a massive military parade in Beijing yesterday ... to show off the latest weaponry in China’s arsenal. Xi was joined by fellow strongmen Putin and North Korean dictator Kim Jong Un — the first time all three leaders have been in one place.

We're reminded today of a man ranked by Hayek as one of the greatest classical liberals.  In this guest post by Jim Powell, we learn about William Ewart Gladstone, who so often started on the wrong side of an issue, and so frequently thought his way to the right side ...

William Ewart Gladstone’s Great Campaigns for Peace and Freedom

by Jim Powell

IN THE HEYDAY OF CLASSICAL LIBERALISM, British politics was dominated by one man: William Ewart Gladstone. He entered Parliament at age 23, first held a cabinet post at 34, and delivered his last speech as a Member when he was 84. He served as Prime Minister four times.

Nobel Laureate F.A. Hayek ranked Gladstone among the greatest classical liberals. Lord Acton believed Gladstone’s supremacy was undisputed. Paul Johnson declared there is no parallel to his record of achievement in English history. One might add there are few parallels anywhere.

As Chancellor of the Exchequer in four ministries, Gladstone fought the most powerful interest groups. He helped abolish more than 1,000—about 95 percent—of Britain’s tariffs. He cut and abolished other taxes year after year. Imagine, if you possibly can, our income tax with a single rate of 1.25 percent. That’s what was left of the British income tax when Gladstone got through hammering it down. He wasn’t satisfied, because he wanted to wipe it out.

Gladstone believed the cost of war should be a deterrent to militarism. He insisted on a policy of financing war exclusively by taxation. He opposed borrowing money for war, since this would make it easier, and future generations would be unfairly burdened.

Gladstone’s most glorious political campaigns came late in life: to stop British imperialism and to give the oppressed Irish self-government. Gladstone showed that even in such lost causes, friends of freedom had the strength and courage to put up a tremendous fight that would never be forgotten.

TO BE SURE, GLADSTONE WASN'T A perfect hero. Having matured in an era when his government had limited power and committed few horrors, Gladstone figured it could do some good. For instance, he approved taxes for government schools. But part of the problem was that government revenues soared as Gladstone cut tariffs and other taxes, and political pressure became overwhelming for government to spend some of the loot.

Despite his errors, Gladstone towered above his rivals. His most famous opponent was Benjamin Disraeli, the Tory who promoted higher taxes, more powerful government, and imperial conquest. Gladstone’s liberal rivals were mostly fans of Viscount Palmerston, best known for his bullying of weaker countries. During the late nineteenth century, Gladstone’s chief Liberal rival was Joseph Chamberlain, a socialist who became a vigorous imperialist. Without Gladstone’s influence, there probably would have been fewer gains for liberty, and the losses probably would have come faster.

Gladstone’s enduring contribution was to stress the moral imperative for liberty. Influential British philosophers Jeremy Bentham and John Stuart Mill had almost banished morality from political discussion, as they touted the greatest-good-for-the-greatest-number principle, but Gladstone brought out the moral dimension of taxes, trade, everything. Whatever he did, remarked historian A.J.P. Taylor, was a holy cause. 

Gladstone’s moral fervor was a key to his popular appeal. As historian J.L. Hammond observed: It is safe to say that for one portrait of anybody else in working-class houses, there were ten of Gladstone.

Gladstone vanquishes Disraeli

" The real delusion is the belief that advanced societies can live off spreadsheets while their physical base erodes."

"You see the retreat of industry in rich economies as a benign, inevitable drift toward services. On the ground it looks rather less idyllic. The real delusion is the belief that advanced societies can live off spreadsheets while their physical base erodes. Service innovation is welcome, but someone still has to pour the concrete and draw the wire. Better to recognise that reality now than relearn it in a hot war or a cold winter. ...

"De-industrial economies are not more efficient. They are merely importing other people's efficiency and exporting their own purchasing power.

"The lesson is not to seal borders behind tariff walls—Donald Trump's metals duties in 2018 proved how self-harming that can be—but to run an active, open industrial strategy. Permit planning that allows large plants to be built in years, not decades; use public co-investment where spill-overs are obvious ...; use trade among allies so that capacity is pooled rather than duplicated."

~ Wladimir Kraus from his letter to The Economist

"This is also the reason why the olive branch became a symbol for peace"

 

"Athena, goddess of wisdom and war, was the guardian of the city [of Athens], and she had offered it the gift of the olive tree. Since it takes many years for olive trees to bear plenty of fruit, the planting of so many olive trees in Athens indicates that people had hope for the future and they had found ways to feed themselves until then.
    "This is also the reason why the olive branch became a symbol for peace. If it takes two decades for your trees to bear a substantial harvest, you are extra vulnerable to warfare that might wipe out all your investments in one moment. Therefore olive growers usually insisted on negotiations and reconciliation when city-states were at each other's throats, and the olive came to symbolise both commerce and peace."

~ Johan Norberg on free trade as a powerful palliative for conflict and war. From his book Peak Human: What We Can Learn From the Rise dnd Fall of Golden Ages [hat tip Tony Morley]

"Over recent decades, the world trading system has drifted into a distorted, sub-optimal equilibrium"

"[O]ver recent decades, the world trading system has drifted into a distorted, sub-optimal equilibrium, shaped by regulatory and political asymmetry, integration clubs and rule-based inertia. ...

"So, while tariffs fell, supply chains over-concentrated. The post-1990s decline in tariffs between different economic structures enabled deep global supply chains. This increased efficiency — but also vulnerability, dependency, and strategic exposure.

"In turn, non-tariff barriers [in the form of excessive internal regulation] rose, especially in the European Union. It seemed like a good idea at the time – for some people – but the reduction in market access for outsiders and entrenching of the local status quo was less transparent. ... the expansion of the European Union from 9 members in the 1980s to today’s 27 ... has privileged trade for insiders, whilst diminishing the relative position of external players. ... amounting to a reversal of the principle of mutual recognition [and] the foundation of liberal trade ... [along with] a deeper recalibration of the global trade order towards more explicit trading blocs (which crucially will need to deregulate internally to grow) ...

"This will not be painless. The transition out of a long-standing but sub-optimal equilibrium rarely is."

~ from the uncredited post 'Europe is in trouble – and it’s not just trade'

A 90-day delay to fix what Donald Trump started

 

"MAGA—genuinely, explain the 'win' to me. The claim is this deal 'brought China to the negotiating table.' But… they were already there. We’re not further ahead than we were 90 days ago. No resolution. No structural wins. Just a 145% tariff that tanked the markets—now walked back to 30% so we can 'keep talking.' ...

    "I’m asking a specific question: what was actually accomplished here? We’re in the exact same place we were 90 days ago. No structural reforms. No resolution. Just tariffs that were hiked, tanked markets, and then were walked back during joint talks both sides agreed to in Geneva. ...

"Nobody wanted the tariffs. They hurt consumers and businesses. Reducing them helps—but that’s not a victory. That’s just undoing damage we caused ourselves. 

    "And wasn’t the whole point of this to force companies to stop buying from China and make everything in America? So how exactly is that going to happen now? Seriously—I’m asking. Help me understand what was accomplished.

"I understand this wasn’t a unilateral move. The U.S. and China both sent delegations to Geneva and mutually agreed to lower tariffs for 90 days to de-escalate the trade war. 

    "There’s no evidence China begged us for relief—this was a joint decision to pause and keep talking. To me, it just looks like a temper tantrum that backfired. No strategy. No plan. Just retreat, then spin it as a win.

"Dialogue and negotiation were already happening before Trump’s 145% tariff stunt wrecked the markets. There’s no 'position of strength' here, he lit the fire, panicked when it backfired, then called the act of putting it out a victory. He doesn’t have more strength now… 

"And no one’s demanding a full framework in 2 days, we are just calling out the fact that nothing was achieved except reversing his own mess. That’s not strategy. That’s spin. ...

"A 'Win'? China didn’t “drop” export controls—they paused them for 90 days as part of a mutual de-escalation agreement. That’s not a concession, it’s a temporary reset so both sides can keep negotiating. Nothing structural changed. 

    "A 'Win'? Our tariffs on China were 12% Trump jacked them up to 145%, tanked the markets, then walked them back to 30%. That’s not a win—it’s called cleaning up your own mess and calling it progress. 

    "A 'Win'? China’s tariffs dropped to 10%? Sure—after we started a trade war that forced them to hike them in the first place. Most of their original tariffs ranged from 5–15% and averaged 7.2% on key sectors. You’re bragging about partially undoing damage Trump caused. This wasn’t strategy. It was a tantrum, a retreat, and now you’re dressing it up like 3D chess, dipshit."

~ tweeter Agent Self FBI on the 90-day pause on self-inflicted harm