04 Feb 2006
Free Markets

Perchance this should have been posted under 'Politics', but as the direct subject of the article I'm about to dissect is catfish farming in Vietnam, it's here in 'Agriculture' and here it shall remain...

There's been a most excellent blog on the roll for some time now, Dispatches from the Culture Wars, by Ed Brayton, who covers a variety of subjects from a mostly libertarian perspective. It was there that I discovered a link to Radley Balko's FoxNEWS essay entitled Catfish Wars: Why Is U.S. Blocking Capitalist Progress in Vietnam?. Ed characterizes it as "brilliant". I see it as a glaring example of the shortsightedness of libertarians these days, as determined as Pirates of the Caribbean to "Take what ya can, give nothin' back!".

In their zeal to dismantle trade barriers, they seem unconcerned about the reasons the barriers are in place and the effects their removal would have. They seem to see "low prices" as the final goal - but I (and, I believe, others of a paleolibertarian stripe) tend to view liberty as the ultimate political and economic destination.

I'm not going to quibble with Mr. Balko's economic analysis: he's right, you know. Government "protection" from competitors is as morally abhorrent as theft, because, well, it is theft. Nor will I argue from a nativist perspective, that jobs and enterprises should be saved simply because of their geographic location within a nation-state. That's called bigotry. However, I am going to quibble with his argument that all barriers to trade should be dropped. Nuance is a concept that most libertarian scholars (especially at the Cato Institute) seem to have lost.

So let's take a look at Mr. Balko's primary argument:

Today, however, when it comes to one market, it's the government of Vietnam that's fighting for the economic freedom of its people. And, sadly, it is the United States that's using the power of the state to deprive the Vietnamese of the right to earn a living. The market is catfish. And the behavior of American politicians in the so-called "catfish wars" has been consistently appalling.

As for the questions of which of our respective governments is fighting for a market economy today, he's dead on: it's the Vietnamese. He's also right about the appalling behavior of our politicians in the "catfish wars", but the behaviors he finds appalling are not the the root of the evil, just a symptom:

The politicians obliged. Mississippi Sen. Trent Lott was first up, introducing a measure in the U.S. Senate – through an obscure amendment attached to an unrelated appropriations bill, naturally – declaring that henceforth, only the U.S. strain of catfish could henceforth be called "catfish."

This is a labeling dispute, and while Mr. Balko claims that "the difference between the two varieties is almost nonexistent", that's not simply not true. I've eaten both varieties - and they are different. Look at the case of cheese: it's now completely legal to import MPC's (milk protein concentrates - a highly processed and condensed milk, mainly from bovines other than cattle) add some flavor and sell it as "cheese". Is this not fraud? Should people know what they're eating? To quote Malcolm X, "You can put a shoe in an oven but that doesn't make it a biscuit!". My brand of libertarianism condemns fraud. Mr. Balko's seems to accept it, at least in this case, as furthering a growing capitalist economy.

While on the subject of labels, let me note that manufactured goods entering the US must be labeled with their country of origin, but food is exempt. Hmmm...

The essay continues, noting that regulators in Alabama and Louisiana out-and-out banned Vietnamese catfish from those states:

Both states cited an antibiotic Vietnam allows its fishermen to use that hasn't been approved in the U.S., though as William Anderson of the Mises Institute notes, added protection from disease would seem to make the fish safer. Congressmen from those states then pushed the FDA for a nationwide ban on the imports. The FDA, thankfully, refused.

Let's leave aside the issue of antibiotics making fish safer for a moment (I think the reverse) and assume that it's true. This would then give Vietnamese catfish farmers a leg up on their American counterparts, due to a government regulation. What appalls Mr. Balko as a libertarian is that politicians acted to protect some of their citizens from foreign competition - what appalls me as a libertarian is that those same politicians are busily nailing the feet of the American catfish farmers to the floor with regulations. Mr. Balko apparently expects us to run a race with the Vietnamese in this condition, and than to stifle our complaints when we're throughly beaten, as we obviously weren't as "efficient".

Precisely. We're not as efficient because of the insane and idiotic amount of regulations our government imposes on us. Let me talk for a minute about something I know fairly well: poultry production.

Again, I'm going to ignore my particular situation as a free range, all natural producer and address something that affects the industry generally, from factory farm to backyard flock. I'm talking about USDA meat inspection.

In the state of Indiana, if I slaughter my own chickens, I'm forbidden by law from selling more than 1000 of them in any given year, or from selling any of them to restaurants, supermarkets or food processors. And I could not sell any of them outside the borders of the State of Indiana - apparently, driving a farm slaughtered chicken across the Wabash renders it poisonous. If I want to get into those markets, I have to have my birds killed and packaged under USDA inspection.

In my case, this adds nearly $2 to the cost of each bird. I'm sure that factory poultry farms have lower costs, but the point is that they have additional regulatory costs, too.

The USDA is currently considering allowing poultry imports from the People's Republic of China. If they do so (which is an incredibly stupid thing from a disease standpoint, but that's not the subject here), and they almost certainly will, and if I were a Chinese poultry producer, I could ship all the chickens I could pack to the US, selling them in any state to any customer, commercial or otherwise, with only Chinese government "inspection". Which, incidentially, is practically non-existent and priced accordingly - for all practical purposes it's free.

So soon, not only will I have to compete with the lower costs of labor, the subsidized energy and the tax incentives the Chinese government gives it poultry producers - I'll have to do so while paying through the nose for the privilege of having my government inspect each of my birds.

And starting real soon, I'll be forced to place an RFID tag on each bird, adding to my costs (the program is called NAIS). Foreign producers are exempt, of course.

The net effect of these one sided policies, free trade while maintaining excessive regulatory environments, is the the destruction of American industries. You could apply this same analysis to the auto, textile and other other industries that have been decimated by foreign competition. We're being asked to compete while our government blindfolds and handcuffs us - I have no fear of foreign competitors, as I know I can raise as quality a chicken as anyone anywhere. I do however, fear my own government making it impossible for me to sell that bird at a price my markets will bear while allowing underpriced foreign imports into the market with no regulatory penalty.

Libertarians today seem to want to implement totally free markets piecemeal - they have no problem with different rules for different players as long as the market (the consumer) "wins" with a lower price. There was a phrase for this in ancient times: it was called a "Pyrrhic victory". If this continues we will shortly find ourselves a socialist nation of unemployed masses - and does anyone recall where that leads to, politically?

Free trade is a good thing, but without the same set of legal rules and restrictions on all players there's nothing free about it. We should focus our efforts on getting government out of the business of regulating our very existence - we should work to prevent a communist state from emerging here, and not on helping former communist governments discover the miracles of the market.

If this is a focus on "America First" then I guess I am a nativist in a certain sense. But I don't want to be asked to compete as a slave with an army of free men - I know what the outcome of such a contest would be. So, barring the dropping of the onerous regulatory burden that prevents fair competition (a contest with equal rules applicable to all), I will continue to support such limited protectionist efforts as have been offered to save what's left of the American economy. The alternative is our economic suicide.

00:00 /Agriculture | 1 comment | permanent link