Across Europe — and in the murkier corners of America, too — the forces of protectionism are mustering. Their target is the proposed free trade agreement between the European Union and the United States, known as the Transatlantic Trade and Investment Partnership. TTIP will, they say, be a denial of democracy, a ramp for big corporations, an assault on the little guy.
Some of this opposition comes from people who dislike markets on principle. They insist on seeing every exchange as a swindle, every contract as a form of exploitation, every legal system as an instrument of class oppression. Many opponents — especially in Spain and Greece — are also anti-American. Anti-Americanism has always struck me as odd: Pretty much the whole of humanity is represented in your country, so to dislike the United States is really a form of misanthropy. And, sure enough, anti-Americans are often also eco-loons who insist that there are too many people on the planet generating too much economic activity, and that we need an 80 percent cut in our numbers.
The anti-Americans are probably beyond persuasion, but they’re not especially numerous — other than, perhaps, in the European Parliament. Far more widespread are the soft concerns about free trade that go well beyond the fringe Left. I hear them in my constituency, not just from trade union activists, but from churchgoing Tory matrons who fret about food miles and support “fair trade.” How, they ask, can it make sense to fly produce halfway ’round the world instead of making it at home? Shouldn’t we diversify our economy rather than relying on a handful of sectors? Doesn’t it make sense to shield infant industries until they’re strong enough to withstand international competition? Isn’t globalization a racket that suits big multinationals? Doesn’t it make the rich richer and the poor poorer?
It’s important to understand why people worry about these things. The problem is that free trade is, literally, counterintuitive. Our minds evolved on the savannas of Pleistocene Africa, and are designed to take shortcuts, to make assumptions. Those assumptions were well-suited to the precarious life of a hunter-gatherer, but can these days lead us astray.
Take concerns over food security. It’s hard to stand them up rationally. Is your hometown self-sufficient in food? Does its dependency bother anyone? All right, your town isn’t an independent state, but plenty of city-states thrive by concentrating on what they do best and importing everything else.
There are no farms in Singapore, nor mines, nor reservoirs. Yet Singapore is among the wealthiest and most successful places on Earth. Compare it to, say, North Korea, which has made a fetish out of self-sufficiency, and where pretty much the entire adult population is drafted to help at harvest time. Where would you rather live?
We think we’re being guided by our reason, but in truth we’re being pulled by our intuition. A few hundred years of modern capitalism makes no dent in a genome shaped by millions of years of precarious foraging. The instinct to provide against famine, to hoard food, is embedded deep in our DNA. Importing what we eat from somewhere else just feels wrong.
The same is true of all the objections commonly raised against free trade. Protectionism may suit the sector being protected, but the damage done to the rest of the economy always — always — outweighs that benefit.
Free trade has not made the world’s poor poorer — quite the opposite. In 1990, the United Nations set itself the goal of halving extreme poverty by 2015. Extreme poverty was defined as living on a dollar a day at 1990 prices, and at that time affected 36 percent of the world’s population. By 2010, the proportion was down to 15 percent. Why? Because previously closed economies — above all in China and parts of Africa — had joined the global trading system.
Nor does free trade particularly suit large corporations, which instead thrive on barriers to entry and regulations that disadvantage their smaller rivals. While large companies may gain incidentally, by far the greatest benefit is to small and medium-size firms and, even more, to consumers.
Perhaps the most counterintuitive idea is that of comparative advantage: the notion that, even if Country A is more efficient in absolutely every respect than Country B, free trade will still benefit both parties. Two hundred years have passed since British political economist David Ricardo demonstrated by logic that this must always and everywhere be true, but many of us still balk at it. Indeed, it has been called the only idea in the whole of the social sciences that is both surprising and true. (To see why it works, watch this short video.)
Intelligent adults, presented with the evidence, can change their minds. It’s rather like an optical illusion (which is also the product of a Pleistocene mental shortcut). Once you’ve seen the truth, your eyes may still want to deceive you, but your reason can defy them. To win the case for free trade, we similarly need to present people calmly with the evidence.
Think about it. The only society which took self-sufficiency to its logical conclusion was that of the Stone Age. Cavemen ate seasonally and regionally, had no carbon footprint, reused and recycled and approximated the green ideal. They also had a life expectancy of about 30 years.
Every step away from self-sufficiency — toward specialization — has been a step toward longer, happier, healthier lives. We’re just getting started.
Dan Hannan is a British Conservative member of the European Parliament.
