Why the Preaching Must Never Stop: Henry George’s and Paul Krugman’s Respective Contributions to the Free Trade Debate

Abstract

LAURENCE S. Moss (*) Introduction THE TINBERGEN ARCHIVES in Los Angeles, California are a monument comprised of books, lectures, and films--a monument that exists for sole purpose of honoring dead. Established to inform succeeding generations about this century's greatest crime, destruction of most of Europe's Jewish community, it preserv[es] history of Holocaust and blessed memory of Six Million who lost their lives so cruelly and unjustly. Mr. Cal Tinbergen, Director of Archives, has assembled media of all types to fortify the fight against bigotry and (1) In this never-ending battle Tinbergen and others are driven to spread ideas about tolerance and understanding over bigotry and hatred, so that peace and respect for human dignity someday might prevail in world. I admire clarity of Mr. Tinbergen's vision about who he is and what he does. I imagine he is a man who gets up each morning and sets out on a business routine calculated to fight bigotry and hatred and keep memory of victims of Nazi genocide alive. I, myself, get up each morning, but with less clear goals. My college hires me to teach students how economic theory helps to make world intelligible, especially for business decision makers. Along way, I must qualify extreme principles in various ways and then challenge my students with examinations and term paper reports about my lectures. Deep down, however, I want to preach tolerance as well, but economists are not supposed to preach at all (Stigler 1982). Indeed, there is a long tradition in economic theory that promotes tolerance--based not on religious and moral duty, but on value of capturing gains from open trade and exchange. (2) That tradition exalts middleman or entrepreneur, who discovers new and more valued combinations of resources and legal rights and sees nation-states as administrative regions that can provide frameworks for interregional trade, without themselves becoming salespeople for trading groups and firms in their regions. When I get this message across to my students, I do indeed teach my students something worthy of comparison with Mr. Tinbergen's crusade against bigotry and hatred. I teach gospel of free trade. As a member of a discipline that dates back more than 300 years, I manage to advance several steps beyond Mr. Tinbergen's call for mere tolerance of other peoples, races, and regional cultures. I use a variety of arguments to encourage government officials, politicians, business leaders, trade unionists, and even spiritual leaders to appreciate importance of commercial exchange and to stop punishing people for engaging in trade and exchange. The Nazi round-up of Jewish merchants and shop owners for supposedly profiting at expense of German people, slaughter of Armenian merchants during first World War for their middleman activities, which had long aroused suspicion among Turks, and current tensions in Indonesia directed against Chinese business community accused of causing Asian currency crisis--all are examples of merchant hatred. (3) As a student of market process, I have kind words for middleman trader who pioneers new trade routes and profits from integrating regions (Block 1976:186-191; Sowell 1998; Lerner 1961:41-48). As an economist, I take work of Tinbergen Institute one important step further: I address what happens to living standards in each respective region when trade and commerce are allowed to emerge and take shape in market settings. To an economist it is not enough that inhabitants of Region A stop slaughtering those of Region B. For people to live dignified lives, they must have comforts. They must have materials to fuel their creative labors so that new shapes can emerge, and they must connect with each other for mutual interest and gain. Because free trade and exchange are so obviously advantageous, officials should tolerate economic activity and not tax, prohibit, or crush improvements it makes possible. …