The Moral High Ground of Free Trade

I am quite the international trader, it turns out.

I put on my made-in-Argentina jacket and my new made-in-India shoes and got into my made-in-Japan truck. I stopped for gas at a British Petroleum station and chatted with its franchise owner, a guy from Mexico.

Earlier today I put on my made-in-Argentina jacket and my new made-in-India shoes and got into my made-in-Japan truck. I stopped for gas at a British Petroleum station and chatted with its franchise owner, a guy from Mexico. To help pay for it all, I taught my first class of the day — on a French philosopher, using a text translated into English by a Polish-American and printed in Canada — to a group of students, one-third of whom are from foreign countries.

Then it was mid-morning and I needed a coffee break. Italian roast with Arabica beans from Rwanda, thank you very much.

When economists talk of the benefits of trade they speak of division of labor and comparative advantage. Long ago Adam Smith used the example of a pin factory to show that dividing a complex task into parts is much more efficient than doing everything oneself. David Ricardo used the example of Portuguese wine and English cloth. Because of climate and differences in their workforces’ skills, both nations would be better off if Portugal specialized in making wine and England specialized in making cloth and they then traded wine for cloth.

Contrast this contemporary example — the guy who made a sandwich for himself from scratch — after spending $1,500 and six months’ effort. My sandwich at lunch will cost me $5 and a five-minute wait.

Trade enables us to be more efficient, and the more extensive our trading networks the more people’s talents we can each enjoy, and the more people we can reach with our own talents.

Those economic consequences of trade are important but only part of the overall value story, since built into trading with each other is a set of deeply moral value commitments.

People who trade with each other first have to be productive. That is, they have to create something valuable in order to bring something to the trade. Think of a standard business transaction: I raise chickens and bring eggs to market, and you grow wheat and bring flour. Each of us is committed to taking responsibility for our lives by making our own way in the world.

Next each party had to effect the trade by voluntary means. I choose to offer you some eggs for flour. You are free to accept — or to reject my offer and make a counter-offer. We then both assent to an agreement and make the exchange. Each of us is committed to dealing with the other peacefully.

We then reach a win-win, as both of us enjoy the fruits of the trade. I benefit from the flour you produced and you benefit from the eggs I produced. You worked to add value to my life, and my payment is earned by you. I worked to add value to your life, and I receive payment in return. Embedded in that is a kind of justice: people get what they deserve.

Those committed to the ethic of trade are committed to evaluating others in terms of their productive ability — not their skin color or political party. They are committed to respecting others as self-responsible agents — not to seeing them as the weaker sex or idolaters.

And finally we come to pride and respect. To be a trader is to be someone who works to add value to the world, who deals with others peacefully — and who knows that he or she deserves to enjoy the good stuff as a result, both the material wealth and the sense of accomplishment. That is pride. The trader also treats other traders as self-responsible individuals with something valuable to offer and who are free to go their own way. A win-win trade is a mutually-honoring interaction. That is respect.

Contrast the predator type in the business world — those who steal, defraud, or extort. Predators do not make value — rather they leave production to others and then take it. A predator does not earn his way, and he knows it. Pride is not possible to him. Nor does the predator respect his victims — he necessarily thinks of them as weak, as only their weaknesses make possible his exploitation of them. Predation is a mutually-dehumanizing mode of existence.

What holds for trade between any two individuals holds as we extend trade to all the way to international markets.

Think of all the things that set people at each other’s throats — religious and political zealotry, tribalism, sexism, ethnocentrism, and the pig-headedness that humans are capable of for any number of reasons.

Those committed to the ethic of trade are committed to evaluating others in terms of their productive ability — not their skin color or political party. They are committed to respecting others as self-responsible agents — not to seeing them as the weaker sex or idolaters. They are committed to offering their personal best to the world and seeking the best that others have to offer — not to stubbornly ignoring or downplaying the achievements of individuals from other cultures.

Trade is not a cure-all. But it does motivate civilized behavior, and it gives us all an incentive to overlook or unlearn any irrational prejudices we may have.

This was Voltaire’s point when he noted — with some astonishment — that at the London stock exchange people of many different religions traded peacefully and happily with each other. Outside of the exchange, Catholics might persecute Protestants, Protestants might persecute Catholics and other Protestants, and everybody might persecute the Jews — but inside the stock exchange Christians, Jews, and even some Moslems exchanged smiles, handshakes, and stock certificates to the mutual benefit of all.

It’s also why in those places most committed to the open trade of ideas and goods — the historic free ports of Pireaus and Amsterdam, the free trade zones of Hong Kong and Panama, the entrepreneurial hubs like Silicon Valley — that we find the highest rates of cross-political, ethnic, racial, and gender participation.

The point is that free trade is both economically good and embodies a set of principled moral commitments: productiveness and responsibility, voluntary and peaceful interaction, mutual benefit and justice, pride and respect.

In those places most committed to the open trade of ideas and goods — the historic free ports of Pireaus and Amsterdam, the free trade zones of Hong Kong and Panama, the entrepreneurial hubs like Silicon Valley — that we find the highest rates of cross-political, ethnic, racial, and gender participation.

And all of this has implications for many of our current debates over economic policy: Should we allow the free flow of ideas, goods, and people across borders — or should we erect barriers of censorship, tariffs, and immigration quotas?

If we make trade more difficult, we not only impose economic costs upon ourselves and others, we impose moral costs by erecting barriers that make it harder for us to evaluate others in terms of their creativity, productivity, and actual achievements. And if we lessen the number of win-win trading relationships across national borders, we will increase the ease with which people fall back upon primitive us-versus-them attitudes.

Here’s a good example of how free trade, in this case, the lifting of regulations on Uber, made me a new Cuban friend.

Recently, I met a young man in Miami. Instead of taking a taxi I decided to try Uber for the first time. Rafael (not his real name) showed up a few minutes later. Traffic was bad in rush-hour Miami, and along the way we started chatting.

Free trade, the lifting of regulations on Uber, made me a new Cuban friend. Rafael was a government employee and earned $20 per month as a young doctor.

He was a Cuban, I learned, and until recently he had been a medical doctor in Cuba. He loved the work — the challenges and benevolence of medicine — and said that he was not a politics guy. But Cuban politics had an interest in him.

Under Cuba’s communist system, Rafael was a government employee and earned $20 per month as a young doctor. I asked him to repeat that, certain that something had been lost in translation. But, no, his salary actually was about $240 per year.

So, I asked, was that why he came to the United States, looking for the higher earnings he could get here as a doctor? Not quite, he replied. The decisive thing was learning that the Cuban government planned to send him to Venezuela. In exchange for oil, Cuba ships about 10,000 healthcare experts to Venezuela, where they are monitored and forced to work in often terrible conditions.

Rafael disliked the low wages, but he disliked even more becoming a slave.

So he decided to escape. He and fifteen others got into a boat and spent a week traveling southwest from Cuba across the Caribbean Sea 700 miles to Honduras. Rafael’s medical skills were useful along the way, though toward the end of the trip they had to tie a few of the people down in the boat to prevent them from falling or throwing themselves into the sea in their delirium. The sixteen arrived thirsty and hungry — but all alive (unlike some unfortunate attempts). Everyone then dispersed, and Rafael made his way to Miami, working any jobs he could.

A few short years later, he could afford a car. He started driving for Uber earlier this year and said that on a good day he can earn up to $300. That supports him and his new wife and their infant son, as well as helping out those family members still in Cuba to whom he sends money each month.

I asked him about his medical career. Will he become a doctor here in the USA? Too complicated, he said, as well as too expensive and too much time. Instead he is going to night school and training to become a registered nurse, which he expects to be able to do within two years.

Another immigrant success story. Except that politics again has an interest in Rafael.

As in many cities, Uber is controversial in Miami and may be shut down by the politicians. Uber is under attack elsewhere in Florida, in Nevada, New York, California, Argentina, and France, where violent protests have erupted.

Huge amounts of money are at stake, as are fundamental political principles.

Currently, taxicabs are required by most local governments to have a license. Cities sell medallions to taxicab operators, which is a significant source of income for the cities. In return, the taxicabs are given various privileges such as protection from competition. In economics-speak, the taxi industry is a government-protected monopoly or cartel, depending on the city. In politics-speak, it is an example of public-private partnership, or “Third Way” politics, which tries to split the difference between free-market capitalism and socialism.

The money involved is astronomical, as the cost of medallions ranges from $270,000 in Chicago to about $400,000 in Miami to over $1,000,000 in New York City. There are over 13,600 taxis in NYC, as well as over 40,000 other licensed for-hire vehicles, so you can do the math.

Along come Uber and Lyft, which function as almost-pure free-market businesses. Private drivers are connected to private customers via the Uber or Lyft app on one’s phone. As a customer, one can get a cost estimate before ordering. Once the app makes the connection, a picture of the driver and car appear, along with a map that tracks how close the car is to the customer and its estimated time of arrival.

I’ve now had four Uber experiences. All four vehicles were cleaner than the typical taxi. All arrived quickly (two arrived within a minute), the drivers were all cordial-to-friendly, and the cost of each trip averaged 40 percent less than a taxi.

So the taxi cartels are threatened, and they in turn are pressuring the politicians who sold them the expensive medallions. We’re losing money on our investment, they point out, as many customers prefer Uber. We had a deal that you’d protect our monopoly.

Further: government protection always comes with strings attached, and taxicabs are subject to all sorts of rules and oversight. So it’s not fair, the taxi companies complain, pointing out that Uber’s drivers are not subject to nearly as many regulations.

Of course, that’s like getting into bed with the government — and then complaining that others’ sex lives aren’t as controlled.

Which brings us to political principle. The fact that anybody is complaining about Uber and Lyft should make us angry. Who is to tell Rafael, my young Cuban driver, that he can’t earn $20 driving me to the airport? Who is to tell me that I’m not allowed to use Uber’s app to find other people willing to transport me?

Suppose that Rafael were my neighbor or just a friendly guy who offered to take me to the airport for free. We should be perfectly free to do so. Now suppose that I agree to give him $20 for doing so. Nothing in principle has changed — we’re both free agents working out a mutually-beneficial deal.

Rafael is trying to make an honest living by providing a useful service. It’s his car, it’s my money, it’s my choice, and it’s his life. Why should any politico or taxi company have anything whatsoever to say in the matter? They shouldn’t.

Suppose that Rafael were my neighbor or just a friendly guy who offered to take me to the airport for free. We should be perfectly free to do so. Now suppose that I agree to give him $20 for doing so. Nothing in principle has changed — we’re both free agents working out a mutually-beneficial deal.

(I am a fan of Timothy Sandefur’s The Right to Make a Living, which argues this point in much fuller moral, political, and legal detail.)

My driver Rafael escaped from a Cuban government that stunts and destroys lives as a matter of political principle. And he made it to the United States of America, where he is working hard to make real the dream of a good life for himself and his family.

Uber’s opponents might want to limit Rafael’s options by making his livelihood illegal. But the rest of us can and should celebrate the innovative technologies that companies like Uber are creating — the convenience and cost-savings they are providing to customers — and the opportunities to make money they are providing to their many drivers.

And we can insist upon the moral principle: Free people can make their own decisions and their own deals. Turf-protecting politicians and crony businesses should back off.

Uber’s drivers are rated by the passengers that ride in their cars.

And my rating for Rafael? 5 (the highest rating).

This was first published in Every Joe as two separate essays, “Free Trade Makes You a Better Person,” and “Uber, Cuba, and Freedoms Small and Large”

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About the Author: Stephen Hicks

Stephen Hicks is Professor of Philosophy at Rockford University, Illinois, USA, where he also directs the Center for Ethics and Entrepreneurship. He is the author of two books in intellectual history: Explaining Postmodernism: Skepticism and Socialism from Rousseau to Foucault and Nietzsche and the Nazis. His other publications include essays and reviews on education, entrepreneurship, and ethics in publications such as Review of Metaphysics, Business Ethics Quarterly, and The Wall Street Journal. He blogs at StephenHicks.org.