Chapter Two


Fair Play


Steven E. Landsburg

What Cayley Knows

Nearly every economist in America is appalled by Pat Buchanan's revival of protectionism. So is my daughter Cayley. The difference is that, unlike the economists, Cayley is appalled for the right reasons.

Economists know that trade is the engine of prosperity. From this they deduce -- correctly -- that a national refusal to trade is a national refusal to prosper. They cite studies showing -- again correctly -- that to save one American autoworker's $50,000 job through tariffs or import quotas, car buyers collectively pay an extra $150,000 a year through higher prices. They argue -- correctly once again -- that free trade, like technological progress, might displace some workers but must make Americans wealthier on average.

Those are the arguments I make in my college classroom. My favorite teaching tool is a fable based on a tale told by Professor James Ingram of North Carolina State University. It's the tale of a brilliant entrepreneur who invented a new technology for turning grain into cars. The entrepreneur built a factory by the sea, surrounded its inner workings with secrecy, and commenced production.

Consumers were thrilled to learn that the new cars were better and cheaper than anything Detroit had to offer. Midwestern farmers were thrilled when the factory ordered vast amounts of grain to feed into its mysterious machinery. There was indeed dismay among those autoworkers who had been trained in the old methods, but there was also a general recognition that technological progress, even when accompanied by growing pains, is on balance a very good thing.

One day an investigative reporter managed to locate a disgruntled employee who revealed the entrepreneur's great secret. The vast factory was hollow. The back wall opened out onto a shipping dock. Grain came in the front door and went out the back, where it was sent to foreign countries in exchange for cars.

The shock of these revelations transformed the entrepreneur from a public hero to a public villain. Riding a wave of popular outrage, Pat Buchanan was swept into the Oval Office.

The moral, of course, is that inexpensive cars are a good thing, and equally a good thing whether we acquire them with technology or by trade. Cutting off trade is exactly like closing the most efficient factories. To support a Buchanan, you must be blind to that fundamental equivalence. The willfully blind are unlikely to prosper.

That's what I tell my students. But it's not what I tell my daughter. Unlike my students, Cayley relies on me for moral guidance. Sure, I could explain to her how trade makes our family richer. But nine-year-olds are quite self-centered enough; it's their concern for others that needs gentle encouragement. So instead of telling Cayley how great it is for our family to save money at the car dealer's, I talk to her about the difference between right and wrong.

She knows a lot about right and wrong already. She is an active trader in the schoolyard markets for decals, trading cards, and milk bottle caps. Sometimes Cayley wants to trade with her classmate Melissa but Melissa prefers to deal with Jennifer, from the other fourth-grade classroom. Cayley knows how disappointing that can be, but she also knows she can't force Melissa to trade with her. More important, she knows it would be wrong to try.

Cayley is too morally advanced even to imagine asking her teacher to intervene and prohibit Melissa from trading with "foreigners." Only a very unpalatable child would attempt such a tactic.

Buchanan sees the U.S. Congress as the great national teacher, maintaining order on the schoolyard, making sure that all the children play the way the teachers' special pets -- or special industries -- want them to play. My daughter thinks that stinks. She's right.

Protectionism is wrong because it robs individuals of a basic human right: the freedom to choose one's trading partners. The freedom, for example, to buy any car, at any price, from any willing seller.

But protectionism is wrong also for another reason. It's a reason that my daughter understands and Pat Buchanan doesn't, and it sits at the core of what it means to be a decent human being. My daughter knows that all people are created equal, and that nobody's right to prosper should be altered by being born on the wrong side of an imaginary national boundary line. It would never occur to her to care more about an autoworker in Detroit than about an autoworker in Tokyo or Mexico City.

Forget all that stuff about how much it costs American consumers to save the job of an American worker. Suppose Buchanan were right; suppose he did have some miracle formula that could save American jobs at zero cost to consumers. His views would still be repugnant, because they start from the presumption that an American worker is more worthy of protection than a foreign worker. What moral foundation could support such an ugly division of humanity?

Buchanan has frequently been accused of racism, and I happen to think he's suffered a lot of bum raps on that score. But there is poetic justice in those bum raps, because his simplistic nationalism is every bit as ugly as racism, and in exactly the same way. Encouraging people to "buy American" is no different in principle from encouraging people to "buy white."

We need to care about others. We need to care about those who are close to us, and we need to care about strangers. But to care more about strangers who happen to be American than about strangers who happen to be Japanese or Mexican is an expression of the basest and most wrong-headed instincts that a person can have. Thank God my nine-year-old knows better.

It was long ago, early in the election year of 1992, when Cayley -- then almost five years old -- became politically aware. It was a year when every major candidate wanted to increase the size and scope of government. The incumbent George Bush had just presided over a four-year orgy of federal regulatory expansion; the Democratic front-runner Bill Clinton promised nationalized health care; Bush's primary challenger Pat Buchanan sought to close the borders; and Clinton's primary challenger Paul Tsongas (do you remember Paul Tsongas?) was running on an industrial policy platform that could have been crafted by Mussolini. I mean that seriously, by the way: Senator Tsongas's success in the early primaries was America's closest brush with something like full-fledged fascism since World War II -- until the emergence of Ross Perot later in that same dreadful year.

Cayley had a keen sense that her parents found the options less than adequate, and was eager to understand more. One night she sat me down and asked me to explain the issues. I summarized as best I could in language suitable for a five- year-old, while making an honest effort to preserve the spirit of what the candidates were saying. For example, I explained Buchanan's trade policy by telling Cayley that Buchanan does not think people should be allowed to decide for themselves what kind of car to buy.

She went off to think for a few minutes, and returned to announce that she had decided to endorse Buchanan. Her explanation was that "I don't care what kind of car we buy."

I could have taken the opportunity to explain the theory of comparative advantage, and in particular the fact that when we have fewer options, cars become more expensive -- leaving us less income for other material goods that might matter to a five-year-old. But in addition to being futile, that would have been shirking my parental responsibility for Cayley's moral development. Instead I pointed out that some people do care what kind of car they buy, and we should care about other people's liberty as well as our own.

I think that's the moment when my daughter became an expert in international trade. She got the point, and she developed a lasting and clear understanding of a fundamental moral issue that professors of economics frequently refuse to confront.

Those of us who teach for a living know that you never really understand a difficult idea until you've explained it to a student. Those of us who are also parents learn that you never really understand a simple idea until you've explained it to a child. There is a subject called "welfare economics," which provides mathematical tools for analyzing policy choices according to various ethical criteria. Those tools are, I believe, indispensable for anyone who wants to think seriously about genuinely subtle issues of economic justice. But those same tools can be used to create illusions of subtlety in cases where the underlying truth is really very straightforward. Such illusions ought to be shattered, and talking to a child is an excellent way to shatter them. You can't dazzle a preschooler with technical wizardry. You have to get down to basics. We should care about the rights of people who are different than we are. It really is that simple.

Cayley and I try not to shop at Wal-Mart. We don't always succeed; sometimes we're very eager to buy an item that's not easily available except at Wal-Mart. But when we can, we prefer to shop elsewhere.

That's a conscious echo of Wal-Mart's own well-advertised policies. Signs posted in every aisle boast of the store's efforts not to carry imported goods. Wal-Mart does not always succeed, admit the signs; sometimes they're very eager to carry an item that's not easily available except from abroad. But when Wal-Mart can, it prefers to "buy American - - so you can too."

By the time Cayley was old enough to read those signs, she was old enough to know that people who want you to care about the race or religion or sex or national origin of your trading partners are bad people. Even Wal-Mart managers are likely to have learned that truth in childhood. Adults who want to believe otherwise must resort to extremes of sophistry that are not accessible to elementary schoolers.

Such sophistry is readily available; if it weren't, Wal-Mart would be out of business. As would Senator Dianne Feinstein of California. Senator Feinstein opposes "cruel and inhumane" cuts in public health and education benefits for illegal immigrants, but supports stricter border controls to prevent illegals from entering the country in the first place. Only an extraordinary intellectual contortionist could justify such bald hypocrisy. Either Senator Feinstein cares about Mexicans or she doesn't. If she doesn't care about them, what's all this about inhumanity? If she does care, how can she justify confining those Mexicans to Mexico?

Like the management of Wal-Mart, the Senator appears to subscribe to some bizarre notion that we should care more about total strangers who happen to reside in the United States than about total strangers who happen to reside elsewhere, and that if we can force those strangers to stay on one side of an imaginary line then we need have no concern for their welfare. I cannot imagine any reasonable moral principle that would justify such anotion.

But of course Senator Feinstein is not motivated by any moral principle at all; her only goal is to advance the material interests of those Californians -- mostly Anglo -- who already have the extraordinary good fortune to be citizens of the United States of America. She believes those citizens will enjoy beneficial spillover effects from the health and education of their nearby Mexican neighbors, but can safely ignore the health, education, and welfare of Mexicans living a few hundred miles further south.

If Senator Feinstein were, say, a principled libertarian, then she'd favor allowing people to live where they choose. If she were a principled egalitarian, her concern for the relatively fortunate Mexicans who have made it across the border would be dwarfed by her concern for their impoverished former neighbors still stranded on the other side. Only by having no principles at all can she simultaneously demand that we offer more to the fortunate few and less to the unfortunate many.

Okay, so Senator Feinstein serves her constituents without regard to any sense of right and wrong. Perhaps that's all we can expect of a politician (and perhaps it's a good reason to limit the power of all politicians whenever and wherever we can). But her references to the"cruelty" and "inhumanity" of those who disagree with her suggest that she values having a moral smokescreen for her actions. And I'll bet she's got one. If the Senator were offered equal space on this page, she'd surely have no trouble concocting some superficially plausible way of reconciling her contradictory views. But I don't think my daughter would buy it.

Go ahead and try it with the child of your choice. Explain that there is a U.S. senator who believes that relatively rich foreigners who happen to live in America should receive additional benefits while relatively poor foreigners who happen to live in Mexico should be forgotten. In economics classrooms we are able to analyze such proposals with dead seriousness because we forget that they are ludicrous to the core. The advantage of explaining them to children is that, in order to be understood, you've got to strip away the surrounding verbiage and display the underlying assumptions with devastating clarity.

The textbook case for free immigration is very like the textbook case for free trade: We account for costs and benefits to all Americans and argue that the benefits must exceed the costs. In the case of immigration, the costs are borne by American workers (who are hurt by falling wages) and the benefits are reaped by American capitalists (who profit from those same falling wages). A competent economics student can represent both the costs and the benefits as areas on a graph, and can use some elementary geometry to conclude that the area representing benefits is the larger one.

The story underlying the geometry is this: When the worker earns a dollar less, the capitalist must earn a dollar more. So far, the benefits and costs exactly balance. But capitalists enjoy an additional benefit: A fall in wages allows them to profitably expand their operations. Thus capitalists' gains exceed workers' losses.

[Journalists seem to think that the costs of foreign competition can be measured by the number of Americans who leave their jobs as a result. That's pretty much the opposite of the truth. Those Americans who leave their jobs rather than take wage cuts to match the new competitors are presumably those Americans who cared the least about their jobs in the first place. The big losers are those Americans who value their jobs highly enough to keep them and absorb the full impact of the wage cut.]

If you accept cost-benefit analysis as a reasonable guide to policy (and if you believe the textbook analysis has captured all the relevant costs and benefits) then we have here an argument for free immigration. Most economists -- including me -- do believe that cost-benefit analyses are relevant to policy, and most economics textbooks contain some (qualified) defense of that relevance. Typically, the defense appeals partly to naked self-interest ("if U.S. policymakers are consistently guided by cost-benefit analysis, then in the long run most Americans -- probably including yourself --will win more than they lose") and partly to ethical principles ("cost-benefit analysis treats everybody equally; a cost is a cost, no matter who bears it").

The appeal to self-interest I can understand, but the appeal to ethical principles makes no sense. For in fact this particular cost-benefit analysis does not treat everybody equally; it treats all Americans equally -- while completely ignoring the interests of those who are not yet Americans but would like to be.

As it happens, admitting that foreigners are human would only strengthen the argument's conclusion, so in that sense no harm is done by pretending otherwise. The pretense may even serve some rhetorical value; we ostentatiously ignore the most obvious beneficiaries of open borders and can still conclude that open borders are a good thing! It's rather like winning a chess match after you've spotted your opponent a queen.

As it also happens, there might be an economic argument for assuming the gains to new immigrants are negligible anyway. The argument goes like this: If sufficiently many Mexicans enter the United States, they'll drive American wages and working conditions down to the Mexican level, in which case they themselves will have gained exactly nothing. So the gains we're "ignoring" never had a chance to materialize in the first place, and nothing is lost by omitting them from the analysis.

But this argument subtly assumes that all Mexicans are identical; otherwise some would have special skills or preferences that allow them to prosper specifically in the United States even when conditions are superficially the same in both countries. An analogous assumption about Americans -- that all American workers are identical -- would lead to thec onclusion that wages are already bid down to the level where employed and unemployed Americans are equally happy, and thus no American could be harmed by losing his job to foreign competition.

All of this is appropriate grist for the classroom, where I would welcome multiple rounds of point and counterpoint. All of it is important. And all of it is far beyond the grasp of any child (and of many adults). Silly folk songs notwithstanding, untutored youth is no great repository of wisdom.

That means that serious insights about issues like trade and immigration can come only from thoughtful adults. But sometimes an adult can be made more thoughtful through conversation with a child. The points and counterpoints all matter, but this matters too: There's no comfortable way to tell a ten-year-old that you'd prefer not to think about the problems of distant Mexicans.

Cayley, aged three, cuddled up with her dad to watch the animated Mousekewitz family of An American Tail as they fled from oppressive Old World cats to a promise of freedom across the sea. She gripped my hand in anticipation as the Statue of Liberty loomed in the distance. She sighed with relief as the Mouskewitzes disembarked. But then disaster struck. Feivel Mousekewitz was pressed into service in a sweatshop, chained to a sewing machine. First horrified, then indignant, Cayley placed her hands firmly on her hips and declared "This is not America!"

She was right, of course. It wasn't America, or at best it was only a small and unrepresentative piece of America. Cayley didn't know that Feivel's children would own their own tailor shops, and that his grandchildren would build great commercial empires, or cure diseases, or expand the limits of human knowledge. She didn't know that America would keep its promise to Feivel Mousekewitz and be repaid for it many times over. She knew only that she wanted Feivel to be happy. Not bad for a three-year-old.

The landmark that symbolized Feivel's freedom bears the words: "Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore; send these, the homeless, tempest-tossed, to me: I lift my lamp beside the golden door." I'm not sure how well Cayley understands those words, but I know she understands the sentiment behind them.