Trade 
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Are Smugglers Heroes?
Walter Williams, economics professor and syndicated columnist, notes that "Government tyrants want to either prevent or interfere with peaceable voluntary exchange among individuals," and smugglers "reduce the impact of that interference." From molasses taxes in the early 1700s to cigarette taxes in today's economy, governments have enacted limits on peoples' freedoms. And smugglers are quick to swoop in and meet the demand. The downside is that smugglers bring along crime and erosion to a nation's rule of law. So while smugglers may appear to be heroes, it would be best to simply have the government and moral crusaders step out of the way.
For a Reason.tv interview with Walter Williams on his new book, Up From the Projects, see here.
Study: Imports and Trade Deficit not a Drag on Growth
In a new study, released by the Cato Institute’s Trade Policy Director Dan Griswold, the case is laid out why imports and a trade deficit are not negative factors of economic growth and why they are, in fact, a boost to the national economy. The study analyzes the past 30 years of U.S. trade policy and outcomes, finding that economic indicators such as "stock market appreciation, manufacturing output, and job growth were all significantly more robust during periods of expanding imports and trade deficits." This Trade Policy Analysis serves as an excellent empirical study applicable to academic topics ranging from economics to political science to foreign policy.
Cato Scholars Evaluate State of the Union Address
A group of Cato scholars -- ranging in discipline from education to foreign policy to economics to health care and more -- analyze President Obama's State of the Union speech. They evaluate the strength of his policy positions, including what he did well and what he could do to improve.
Ask the Expert: Can Businesses Transact with Gold on the Internet?
Jim Harper, Director of Information Policy Studies at the Cato Institute and government regulation guru, presents the case for transacting business on the Internet with precious metals as currency and the reasons why governments aren't likely to support it. Companies have offered platforms that facilitate alternative payment methods in the past. However, the U.S. government typically cracks down on these ventures citing that the anonymity and inherent lack of oversight that such a system offers draw attention from more criminal minds. There are additional reasons why governments may be interested in stomping out this concept of free-market business interaction, and Harper speculates on a few of them as well.
Are Imports a Boon or Bane to the Economy?
Cato trade scholar Dan Griswold addresses the common misconception that rising imports and a trade deficit are bad for economic growth. He demonstrates that imports actually benefit the economy, particularly as half of imported goods are used by producers to create more advanced products, which in turn add much more to economic growth. It's often forgotten, Griswold notes, that "the dollars we spend on imports quickly return to the United States" via purchase of American products or through investments. Those who decry the so-called trade deficit are stuck in misguided Keynesianism, neglecting that every time imports have fallen in the past 50 years the economy has receded.
The Great Prosperity Machine
Cato senior fellow Tom Palmer explains international trade in under three minutes. He explains that while many decry trade as unfair or harmful to a local economy, in fact, “Trade is like a machine that allows farmers to convert oranges into telephones, and allows factory workers to convert their products into oranges, clothes or whatever they want.” The benefits don’t stop there, as Palmer notes that “Peace is the natural effect of trade.”
Learn more about the French writer and economist, Frederic Bastiat, here.
Trade Deficit with China Not a Bad Thing
The Chinese currency – pegged artificially low against the U.S. dollar – has long been a topic of political debate, and with the current economic crisis some are claiming that the ensuing trade deficit hurts American jobs. Cato scholar Dan Ikenson dispels that myth by explaining how in the globalized economy the U.S. actually benefits from undervalued Chinese currency. He adds that “forcing China to appreciate its currency through sanctions will impose higher prices on American consumers, thereby reducing Americans' real incomes." The current situation allows Americans to benefit twice: once when purchasing inputs for production in the U.S., and again when purchasing final consumer goods from China. Our politicians should be aware that acting on impulse and not fact is setting us up for even harder economic times.
New Paper: Is the Trans-Pacific Partnership Worth the Fuss?
In a new trade study, Cato's Sallie James analyzes the Trans-Pacific Partnership, which will have its first session of negotiations this week. The group of Pacific, South American and Asian countries in the free trade agreement would expand U.S. trade possibilities, and has the potential to expand to even more member countries in the future. Despite the lauded benefits of the deal, however, James calls into question the agreement's benefits and the political motivations behind it. James, while acknowledging that any move towards freer trade is a good thing, finds that a lot of politics stand in the way of it being a truly beneficial deal, and even proposes that it may be used as a distraction to other more potent trade bills already on the table.
Good News in the Rising Trade Deficit
The 'trade deficit' (U.S. exports minus U.S. imports) is most often seen in news cycles as a bad thing. However, Cato scholar Dan Ikenson discusses why the trade deficit is a positive indicator of economic growth. Furthermore, in the globalized economy, it is increasingly difficult to parse between what is domestic and what is foreign, because "Imports are contained in domestic output, and a good chunk of domestic output is exported." Ikenson adds that public opinion seems to be shifting due to the recession; therefore, time will tell if Americans continue to "reconsider their antipathy toward trade."
Free Trade Is a Boon to the Environment
Cato scholar Sallie James responds to the growing divide between advancing environmental proposals and increasing protectionist policies. Many countries claim to be striving for stronger environmental agreements while enacting their own protectionist measures. James counters that, "Indeed, because trade leads to wealth, and wealth to an increased desire and ability to protect the environment, the two are complementary. Nonetheless, many G-20 leaders are doing their best to set them up as being inalterably opposed."
IWF Announces 2009-2010 College Essay Contest
The Independent Women's Forum is proud to announce its fifth annual college essay contest. College women enrolled in any four-year college or university during the 2009-2010 school year are invited to enter this competition. IWF will award more than $10,000 and grant national exposure to winners’ writings.
This year, students are asked to answer this question in 750 words or less: "Many campus coffee shops boast that they "proudly serve fair trade coffee," but does the fair trade movement actually make a difference in the lives of the poor and disadvantaged? Is free trade also fair trade?"
Cap-and-Trade is Dead, But Alive
Cato scholar Pat Michaels presents the idea that Obama and Congress Democrats can toss out the Waxman/Markey Cap-and-Trade bill and still get what they want. "Thanks to the Supreme Court's landmark decision in Massachusetts v. Environmental Protection Agency (2007), the EPA has authority to issue its own regulations on carbon dioxide," says Michaels, adding that "the president has really had the power to enact its core components on his own all along." Thinking strategically, by using Obama to enact (rather than pass) regulations, those officials seeking re-election can get the results they want while clinging to the anonymity that they need to keep their seats.
Cato Trade Policy Analyst Sallie James lays out the international and business implications of cap-and-trade policies in a podcast, posted here. James states that political figures have “not thought through the implications of what they’re proposing,” concluding that the trade provisions not only are ineffective, they are going to be harmful.
Google On Trial
Legal disputes have arisen concerning Google’s forthcoming ‘Book Search' utility. Adjunct Cato scholar Timothy Lee discusses this issue in light of a settlement that Google has reached with a group of authors and publishers. Lee claims that the problem is not with Google's stance on the copyright issues, but the expansive powers that the settlement grants. He furthermore cites Librarian of Congress Marybeth Peters, who wrote that "the settlement proposed by the parties would encroach on responsibility for copyright policy that traditionally has been the domain of Congress." Judicial approval of the settlement could alter copyright law, and potentially grant Google with certain unchecked power. Lee concludes that the issue at stake is not the Google case alone, but the establishment of a precedent, stating “Congress, not the judicial branch, is responsible for making broad changes to rules of copyright.”
*(Lee wrote a follow-up article based on a discussion with a Google policy analyst, featured here.)
Obama, burnin' rubber
After businesses closed on Friday, and average Americans were relaxing and kicking off the NFL premiere weekend, President Obama was in a room signing off on a 35% tariff on Chinese tires, under the guise of protecting "fairness" of trade. The tariff - snuck in amid healthcare debates, giant protests in Washington, and announcements of forthcoming financial regulations - has already raised objections and promised retaliations from China. Warren Meyer, from Coyote Blog, offers some good insights, along with links to other good articles, including one by Irwin Stelzer. Meyer says, "Suppose the Chinese government is massively subsidizing tire exports... What should our response be?" To that question, Meyer believes the correct response is, 'Thank you.'
What's at Stake When we Alter Trade Policy?
George Mason University professor Russ Roberts discusses the topic of trade on Capitol Hill. He addresses the historical basis for trade, surmising that the reason we no longer value trade so highly (and therefore impose trade restriction policies) is because we no longer rely on trade for our survival. He further provides an analysis of why trade policy is more volatile during a recession.
Cato Reading Lists, by Research Topic
The Cato Institute has just published a reading list of books and articles that form the basis for libertarian thought. The list has been expertly organized and is divided by research topic. If you have been looking for a stronger foundation of the principles of liberty, this is for you!
Is Your iPod Unpatriotic?
The guys at ReasonTV put together this article and visually appealing clip documenting 'Why America Shouldn't "Buy American."' They conclude with the analysis that "Even though plenty of foreigners have jobs thanks to it, so do 14,000 Americans whose duties include designing and marketing the little buggers. So the iPod is a product of America and the world, and these days that describes nearly all the items we buy."
Globalization = Good
Professor Donald J. Boudreaux discusses trade policy through the impirical demonstration of gains from globalization. "Those who doubt the strength of the theoretical case for free trade should also consider that the empirical evidence in its favour is overwhelming. There is simply no credible evidence to support the belief that restricting trade increases the prosperity of ordinary citizens. All of the evidence points towards the benefits of free trade."
February Op-Ed of the Month
Congratulations to Samuel Sharp for winning the February Cato on Campus Op-Ed of the Month! Arguing against protectionist policies, Samuel highlights the increased costs and economic harms that result when governments interfere in free trade.
Reason.TV Interviews Sallie James
"On December 19, Reason.tv's Nick Gillespie and Michael C. Moynihan sat down with Australian-born Cato Institute trade policy analyst Sallie James and memoirist and former Reason magazine staffer Sam MacDonald, whose new book is The Urban Hermit, a slacker update of sorts of Ben Franklin's Autobiography."