The End of Free Trade: What Globalization Is Becoming

[00:00:00]The US president has increased tariffs  on China dramatically. In some cases,   the rate is as high as 100%, a truly unprecedented  intervention in the modern economy. Prices will   undoubtedly rise for American consumers in the  short term, though with the hope of boosting   American industry over the medium-term. This is  designed to increase American self-sufficiency   and reduce reliance on their biggest geopolitical  rivals. The year is 2024 and the president is... Joe Biden. Got you? Maybe. It does seem that even  before Trump 2.0, we were moving towards a new   paradigm for globalisation. "New paradigm for  globalisation" being the type of thing people   I hate say. I have become them. Excuse me, but proactive and paradigm. Aren't these just   buzzwords that dumb people use to sound important?  Not that I'm accusing you of anything like that.   I'm fired, aren't I? Oh, yes. Backlash against globalisation is hardly new. We saw numerous   protests across the world in the nineties and naughties,  taken up by lefties who saw globalisation as   dominated by corporations and the financial  sector. People in Poland protested their joining   of the EU; people in Seattle protested against the  IMF and World Bank; and people in Porto Allegre   in Brazil established the World Social Forum,  a counterpoint to the elite meetings in Davos.

[00:01:24]During the 2010s, we saw rising  anti-globalisation sentiment once more,   but this time from the right. The campaign  for the UK to leave the EU succeeded in 2016,   the same year Donald Trump 1.0 was elected on a  promise of putting America first. Since 2010,   Viktor Orbán has ruled in Hungary. In 2018, Jair  Bolsonaro, sometimes called the Tropical Trump,   was elected in Brazil. And we've had resurgent  nationalist movements even in stereotypically   progressive countries like Germany and Sweden.  There does seem to be a shift in how we manage   trade and especially in the ideas behind  it. Whereas countries sung the hymn song of   globalisation before, they are now open that  they want to be self-reliant. Indian Prime   Minister Narendra Modi has taken up the motto of  Atmanirbhar bharat or self-reliant India. China's Xi   Jinping also advocates zili gengsheng or self-reliance.  In response to Western sanctions from the invasion   of Ukraine, Vladimir Putin declared that "Russia  is a self-sufficient country in every sense of the   word." Donald Trump equally declared the 'economic  independence' of the United States and the EU is   making similar moves, though they'd never say  it out loud, at least not before 5 years of   preparing their statement. Despite all of this  talk, the reality has been that no country has   truly departed from free trade. In the UK, we left  the EU, but joined the Trans-Pacific Partnership,   and we are slowly reintegrating with the EU  anyway, albeit at a pace that people won't notice.   Nationalist movements have proven harder on  immigrants than on goods, which had already   been the case in the past. Even Trump 2.0 has  had trouble repainting the world in his image.   He has made a series of aggressive threats for  tariffs on not just China, but on the UK and EU,   who are supposed to be American allies, before  walking back on his policies repeatedly after   learning that it's just difficult to wind back  the clock on globalisation. In response to Trump,   Brazil and China have reaffirmed their  commitment to the idea of free trade,   as have other countries. New Zealand and India  revived their once-dead negotiations following   Trump's tariff mayhem. It seems that globalisation  will continue, though it may no longer be US-led.   What I want to do in this video is not so much  to review the ups and downs of contemporary trade   policies, which I'm sure will have changed since I  recorded this. Instead, I want to go into the idea   of free trade and how it has been challenged by  contemporary political developments. As we will   see, the rosy and apolitical notion of free  trade promoted by politicians, technocrats,   and economists has always been something of a lie.  As with seemingly every video essay of this type,   I'm going to start in the 19th Century. But  first, I'm going to ask you to consider joining   my Patreon. If you like my videos and want me  to keep making them, please sign up. [Music] Our ideas about free trade owe much to the  19th century economist David Ricardo. Ricardo   was a financier who made a lot of money trading  stocks. As trade had benefited him so handsomely,   he decided to formulate a theory of how  it could benefit everyone. To prove this,   he created a famous model to illustrate the point  with hard numbers. This was largely unprecedented   at the time, one of the precursors to the economic  models we know and love today. Before Ricardo,   economists had been quite worldly, reflecting  on the emerging capitalist system as part of   a broader set of reflections about morality  in society. The epitome of this was Ricardo's   predecessor, Adam Smith, who is often considered  the father of economics. His 900-page treatise,   the Walth of Nations, is full of arguments for  why trade is beneficial, but also confronts its   drawbacks and is filled with broader questions  about the human condition. His earlier theory of   moral sentiments has a self-explanatory title.  Some of Smith's best known reflections on the   economy are about the division of labor. Smith  thought that the productivity of a pin factory   could be massively improved by dividing up the  tasks. He claimed that one person working alone   could "scarce with his utmost industry make one  pin a day." Whereas in the factories of his time the   task was split into "18 distinct operations." This  would mean that "one man draws out the wire, another straightens it a third cuts it" and so on. Right, that's enough of that.  Yes. Smith was Scottish. This often gets lost.   Smith claimed that 10 men working in a factory  could make 48,000 pins or 4,800 pins each,   a number that dwarfs the single pin one man  could make in a day. According to Smith,   the efficiency gains from splitting up a task are  potentially enormous. Going from a small factory   to a large one may multiply the number of pins  produced by a factor of 100. That's a lot of pins.   Smith's argument for trading with other countries  was just an extension of this insight. If we could   split up tasks to maximise productivity within  a factory, why not do it globally? This means   greater specialisation and greater wealth. It is  the maxim of every prudent master of a family,   never to attempt to make at home what it will  cost him more to make than to buy. What is   prudence in the conduct of every private family  can scarce be folly in that of a great kingdom.   For whatever reason, we all have different skills  and interests, so we make different things. Why   bother making what you can't and don't want to  make when you can just do what you're good at   and trade with others? This is a pretty basic  argument in favor of universal free trade. That   is: trade at the level of the individual but  by the same argument, trade at the level of   international markets. The gains from the division  of labour are clear in each case and follow the   same logic. Furthermore, different countries have  different climates and cultures and histories. So,   it's been true throughout human- (There goes some  pins.) So, it's been true throughout human history   that others grow and make things that we just  can't. That's why Italians are always mad at food,   even though their food isn't- it's not that good.  I'm just saying, it's not that- it's not THAT good. Smith   had a number of caveats to his ideas, as he always  did. Above all, he was worried about a mass of   workers being reduced to something less than human  by the division of labor. Engaging in increasingly   minute tasks over and over would take its toll  on people and should be countered by government   education, which was a radical proposal when Smith  was writing in 1776. He was surprisingly modern   in his views. He seemed to think that free trade  was a powerful beast which, if harnessed correctly,   could benefit the majority of the population but  which needed government intervention to ensure the   gains were distributed fairly. This isn't far from  the views of most economists today. As expressed   in polls, the vast majority agree or strongly  agree with the statement, "Freer trade improves   productive efficiency and offers consumers better  choices. And in the long run, these gains are   much larger than any effects on employment." The  comments add nuance. Economists often understate   short-term employment costs, which are significant  and unequally distributed, but probably less than   benefits. Gains and losses are not spread evenly.  Retraining programs are an important part of trade   policy. Note that not everyone is better off.  Still, like modern economists, when pushed, Smith   tended to on the side of trade and commerce and  was against restricting them too much. By means of   glasses, hot beds, and hot walls. Very good grapes  can be raised in Scotland and very good wine too   can be made of them at about 30 times the expense  for which at least equally good can be brought   from foreign countries. Would it be a reasonable  law to prohibit the importation of all foreign   wines merely to encourage the making of Clarit  and Burgundy in Scotland? I'm not sure what's   more offensive, me trying to do a Scottish accent  or me pretending Adam Smith was English. Tell me   in the comments! David Ricardo came to similarly  positive conclusions about free trade, but had   a different approach which ended up burying the  caveats. Instead of engaging in observations about   the economic and moral world, Ricardo decided  to formulate precise theories of how the economy   works. He was one of the first to create a proof  of how free trade can benefit everyone. This was   known as comparative advantage. Ricardo's proof  of the concept was a simple 2x two matrix which   depicted trade between England and Portugal,  each of which produced both wine and cloth. Two   countries each producing two goods. Ricardo set  out to prove the counterintuitive result that even   if one country was better at producing everything  than the other, trade was still beneficial. In his   example, Portugal produces both wine and cloth  more cheaply than England does. The rows show   each country, while the columns show the hours of  labour required to produce each commodity. England   can make a box of cloth with 100 labour hours,  or alternatively make a barrel of wine with 120   hours. Portugal can make a box of cloth with 90  labour hours, or a barrel of wine with 80. Clearly,   Portugal is better at both. It takes fewer labour  hours to make the same amount of cloth and of   wine as England. As the converse of what Adam  Smith said about outsourcing things you're not   as good at, why go elsewhere if you're better at  everything? Common sense would guess that Portugal   should just produce wine and cloth and not trade  with England. Ricardo proved that common sense   is wrong. It's kind of easy to see that England  should go for cloth. This is the most productive   they can be, even if they're worse than Portugal.  So, I mean, what's the interesting part? The more   interesting insight is that Portugal is more  productive when it makes only wine because that   takes fewer labour hours. Portugal can produce one  box of cloth and one barrel of wine with 170 labour   hours, which is much better than England. It would  take 220 labour hours for my country to produce the   same. Ricardo's counterintuitive insight was that  if Portugal instead produces two barrels of wine   with only 80 workers each, it can trade one of its  barrels for a box of cloth. Now it will have one   barrel of wine and one box of cloth again, but it  will only have expended 160 labour hours. Compared   to producing one of each, it will have saved  10 hours of labour for other uses. This can be   hard to wrap your head around. In his best-selling  economics textbook, Greg Mankiw reframes this as an   individual issue. He asks if LeBron James should  mow his own lawn instead of playing basketball.   Presumably, LeBron's athleticism would imply he  is better at the task than many lawnmowers. Yet,   it's clear LeBron's time is best spent playing  basketball through which he can earn the money   to pay a lawnmower. Just like Portugal in our  example, even though he is universally better   at both tasks, specialising and trading is the  most efficient use of his time. The family name   is my legacy to you. I got it from my father and  he got it from his father and he traded a mule   for it and that mule went on to save spring break.  There were several advantages Ricardo's argument   for free trade had over Smith's. One, the use of  numbers lent an air of science to his work. This   rode the coattales of the increasingly successful  physical sciences which Ricardo wanted to emulate   and which made heavy use of mathematics. Two, the  theory was clear in its conclusion. Whereas Smith   seemed somewhat contradictory on the topic and  could be interpreted in multiple ways, the model's   message was one of unambiguous support for free  trade. Three, Ricardo's arguments were very much   in line with what the powers that be wanted to  hear. Whereas Smith had been somewhat critical of   the British Empire, Ricardo more or less ignored  it and arguably provided a smokescreen for   the British to pursue their own interests. More on  this later. The consequence is that it's difficult   to overstate quite how influential comparative  advantage has been. Mankiw, who was also an adviser   to George W. Bush wrote, "The central argument  for free trade has not changed much in the past   two centuries and is still largely based on the  principle of comparative advantage." In 1990,   Paul Krugman called comparative advantage  'Ricardo's difficult idea', stating that most   critics of free trade simply didn't understand it  and pleading with economists to do a better job   explaining it to the ignorant critics like they  were children. In an earlier article reflecting   on free trade, Paul Krugman had written, "If there  were an economist's creed, it would surely contain   the affirmations," I understand the principle  of comparative advantage and, "I advocate free   trade." As late as 2017, the economic historian  Deirdre McCloskey claimed, "The pattern of trade is   determined solely by comparative advantage."  There were critics from the days of Ricardo   to the present day, but they were all swept up by  the tide of triumphalism about the global economy   during the 1990s and 2000s when Ricardo's ideas  were being lifted up. The benefits of free trade.   Food is cheaper. Yes, food is cheaper. Clothes  are cheaper. Steel is cheaper. Cars are cheaper.   Phone service is cheaper. You feel me building  a rhythm here. That's cuz I'm a speech writer. I   know how to make a point. Toby. The lowest prices,  it raises income. You see what I did with lowers   and raises there? Yes. That's called the science  of listener attention. We did repetition. We did   floating opposites. And now you end with the  one that's not like the others. Ready? Free   trade stops wars. And that's it. Free trade stops  wars. Shows like the West Wing celebrated the age   of US-led globalisation, governed by technocratic  bodies committed to free trade. As Tobias reminded   us, free trade is often very good for consumers  and it can help relationships between countries,   too. His dismissiveness of the protesters is  a perfect representation of how economists saw   critics of free trade. But since that  era of nineties and noughties optimism,   a few facts have become undeniable and now seem  to have sparked big policy changes. It seems that   trade both reflects and reinforces the power of  different groups. Domestically, trade agreements   have favored the richest, with many communities in  rich and middle-income countries suffering while   those at the top prosper. Workers in traditional  manufacturing lose their jobs; corporations gain   the right to sue governments for regulating them.  On the international level, modern globalisation   has led to the rise of China as a geopolitical  entity, with its economic and military power   threatening the US-led global order. It is likely  that some of modern US policy is motivated by the   desire to hurt China, even if it costs the US,  too. This has highlighted that power and politics   are never far from a trade deal. Inequality,  politics, and power, all of which are notably   absent from Ricardo's 2x2 matrix. Let's go over  the evidence for them in more detail. [Music] You know what the trouble is, Brucey? We used  to make [ __ ] in this country. Build [ __ ] Now we just put our hand in the next guy's  pocket. There has been plenty of cultural   commentary about the decline of manufacturing  in the USA. The underrated Series 2 of The Wire,   set in 1990s Baltimore, depicts ports that are  starved of work with insufficient hours causing   individual workers to turn to petty crime.  while insufficient revenues cause unions and   bosses to turn to organized crime. Of course,  such casual observation was never good enough   for economists, who remained cheerleaders for free  trade throughout this period. This was despite the   fact that they had built on Ricardo's ideas and  most contemporary models of free trade did show   that it could hurt workers as certain industries  were out competed. Economist Dani Rodrik has long   been a careful critic of what he calls hyper-  globalisation, which he argues is damaging to   democracy. According to Rodrik, countries should  be allowed to pursue their own political goals.   And if this means spending, regulation, or even  some tariffs, there's no reason a commitment to   free trade should override democratic desire. In  addition, such desire may reflect genuine problems   caused by free trade that are missed by the model.  Rodrik summarised economist attitudes better than   anyone else. He asked what would happen if a  news reporter were to phone an economist and   ask whether free trade is a good idea. We can  be fairly certain about the kind of response he   will get. Oh yes, free trade is a great idea, the  economist will immediately say, possibly adding,   and those who are opposed to it either do  not understand the principle of comparative   advantage or they represent the selfish interest  of certain lobbies such as labour unions. Rodrik   then asked whether if reporters infiltrated a  graduate school seminar on trade and asked the   exact same question, they'd get a similar answer.  I doubt the question will be answered as quickly   and succinctly this time around. The professor  is in fact likely to be stymied and confused by   the question. What do you mean by good? She may  ask. Good for whom? If the reporter/student looks   puzzled, she will add, as we will see later in  this course, in most of our models, free trade   makes some groups better off and others worse off.  If this gets disappointed, look, she will then   expand. But under certain conditions, and assuming  we can tax the beneficiaries and compensate the   losers, freer trade has the potential to increase  everyone's well-being. Whether protesters,   journalists, or heradox economists, critics of  free trade were roundly dismissed. Soft cultural   commentary like The Wire would have been  deemed fun but inadmissible as evidence.   This is despite the fact that most economists knew  in their hearts that things were more complicated   than Ricardo and that other values may reign  over economic efficiency. As Rodrik has stated,   there is a difference between what economists  teach and what they preach. I'm telling you this   because it is necessary context for the study I'm  about to show you by David Autor and Co. The study   is a heavily quantitative look at the impact of  increased trade with China on workers in the USA.   They find that Chinese imports have a substantial  negative impact across a whole bunch of indicators,   mostly for low paid workers in manufacturing.  Without the affforementioned context, this can   seem like much to do about nothing. Why should  we go over a paper 'proving' that globalisation has   negatively impacted poorer workers, especially in  former manufacturing communities? That seems quite   obvious. People lost their jobs because their  jobs were outsourced, which led to unemployment,   poverty, and health issues. We might wonder why  economists like Paul Krugman didn't pay these   places a visit as opposed to just reaffirming  their understanding of comparative advantage.   Obviously, their perspective seems both blind  and arrogant from 2025. We can all agree that   economists should get their shoes dirty once in  a while. But to steelman, there are good reasons   for investigating these questions in depth.  Firstly, what seems obvious to our eyes may   simply be untrue. During the 2024 US election,  Democrats suffered because people overestimated   crime while underestimating the performance of the  economy. Complain all you like in the comments -   this was just true. Going back to globalisation,  the outsourcing of manufacturing may have happened   even without trade deals with China. This figure  shows the share of manufacturing in employment   in the USA from 1939 to 2014. There is an obvious  downward trend, but it's not immediately obvious   where the China shock is. Would manufacturing  just have declined anyway, either by moving to   other countries than China, else by factories  closing down if they couldn't relocate? Second,   these approaches allow us to be precise. What  exactly is affected by trade? Unemployment, wages,   health, suicides? Who is affected? Manufacturing  workers, related industries, low-income workers,   everyone? What are the magnitudes of these  effects? Third, sometimes being systematic   and using data reveals things we didn't know  were there, especially policy solutions. Homer,   that's your solution to everything, to move  under the sea. It's not going to happen.   One of the difficulties with research like this  is that so much is going on in the global economy   at once and it's all interlinked. As the authors - or  Autors - point out, trade deals like NAFTA, which   was with Mexico, were only agreed after a massive  increase in investment. Corporations lobbied for   the deal only after the investment took place. So,  it's hard to say the increase in trade was solely   due to the agreement. The agreement happened  because trade was growing. In the case of China,   things are a little different. China entered  the global market quite suddenly after decades   of isolation under Chairman Mao. As the study  documents, observers underestimated China with   economists and newspapers guessing that trade with  the country would only be small. In actuality,   China's entry into the global economy was massive.  Plus, it was concentrated in manufacturing,   which again helps with isolating the impact. China  was therefore a big, sharp, sudden, unexpected shock   to US manufacturing. This graph shows you the US  current account balance, exports minus imports,   and China's current account balance from 1985  to 2012. You can see that around the turn of the   millennium, the US starts importing much more  than it exports and that around the same time,   China starts exporting much more than it imports.  The current accounts mirror each other, which is   expected because we know this is when China  started exporting more to the USA. As China's   exports were the US's imports, and as this was a  substantial part of the trade for both countries,   this graph is intuitive, although it doesn't  prove anything, nor does it tell us anything   about the consequences. What they do in the  paper is to look at small regions in the US,   which are called commuting zones. (That's right,  even American datasets are somehow annoying.)   What this little map shows are the areas that  are the most exposed to trade, which are darker   brown. Naturally, manufacturing tends to be  more exposed to trade because it's 'stuff'. This   map actually shows which type of manufacturing  industries are more exposed to trade from China.   As the authors put it, Alabama has a lot of heavy  industry which isn't that vulnerable to foreign   trade, whereas neighboring Tennessee has a lot  of furniture manufacturing, which is exposed to   Chinese competition. By looking at which areas are  more exposed to trade, they can see the impact on   workers, industries, and communities. And it's  bad news. Autor et al find that a $1,000 increase   in imports from China in a given commuting  zone reduces employment in manufacturing by   0.6 percentage points. (Percentage points means  you can compare this easily to total population.   So if 20.6% of the population were employed in  manufacturing in Tennessee, $1,000 more in imports   from China would reduce that to 20%.) Increases  overall unemployment by 0.22 percentage points.   (For context, unemployment usually hovers around  5 to 10% in the USA.) Increases the number of   people out of the labor force by 0.55 percentage  points. (That means they've given up on finding   work altogether.) Reduces average annual wages by  $213 among the employed concentrated on the low   earning. Increases government transfers by $60 per  person. This last one relates to my third point   about quantitative research and policy. It allows  us to design government spending to ameliate the   specific negative effects of these trade deals.  They unpack this further in this figure by looking   at each item of government spending. As you  might expect, unemployment benefits and other   income assistance rise. So too do disability  and retirement benefits rise as people basically   give up the ghost and drop out of work entirely.  But the biggest impact is on medical benefits,   which is extremely important from a policy  perspective. All in all, trade with China   may have cost 2 million American jobs. And some of  these effects fall on things we might not expect,   not just employment and wages, but on health and  retirement. We can imagine a trade agreement which   boosted or adapted these government policies to  help those who lost out. That's why this research   is not entirely stating the obvious. Though I do  have to reiterate that watching dopick will tell   you basically the same thing and be much more  enjoyable than reading this paper. Yes, I am   doing a bit where I imply that watching TV series  will make you more right about the economy than   the average public-f facing economist was in the  '90s and naughties. Plus, you can't help laughing   at economists sometimes. The paper contains this  gem. Allowing for geographic labor immobility runs   counter to the belief that US regional labor  markets are integrated seamlessly. However,   there is mounting evidence that the movement of  labor across US cities and states in the aftermath   of changes in regional labor demand is slow and  incomplete. In English, they assumed for a long   time that displaced workers could move seamlessly  from manufacturing jobs in Alabama to tech jobs   in California. But as of 10 years ago, they're  realising that's not always possible. Thanks,   economists! Of course, it's not just America.  Autor et al note that similar analysis has shown   that British workers have struggled with lower  employment and earnings after being exposed to   competition from China as have those in Denmark.  These effects were concentrated on those with   lower incomes. Germany has done relatively well  owing to its globally competitive manufacturing   industry, but that too has been waning as  Germany falls behind in the electric vehicle   race. Contrary to popular narratives, it's not  just richer countries, either. Latin America has   struggled with the rise of China, with countries  like Brazil going from a promising manufacturing hub   to stagnant, highly unequal and corrupt. Brazil  hugely expanded its manufacturing sector from 1960   to 1980, over which time GDP per person increased  by 140%. Had this continued until 2000, Brazil   would be richer than most European nations today.  In reality, its GDP increased by only 20% as the   country's industry flatlined. Brazil was a leader  in both vehicles and electronics and although   these industries remain, they are nowhere near the  powerhouses they once promised to be. The country   has instead relied on booms in raw commodities  such as iron, meat, soy, and oil, some of which   directly fueled industrialisation in East Asia.  Many will be screaming that we shouldn't treat   China's growth solely in terms of its negative  consequences for other countries. That's true.   Its rise has been seismic and has lifted a billion  people out of poverty. China makes an outsized   contribution to most of the global poverty  reduction that has been celebrated over the   past few decades. At the same time, treating the  negative consequences as incidental or inevitable   dodges the crucial question we are raising in this  video: what if trade policies were designed to   harness the good while vanquishing the bad? Free  trade hurts workers. Hurts workers in Detroit.   It hurts them in Sao Paulo. It hurts them in  Copenhagen. It hurts them in rural France. You see   me building to a rhythm here? Free trade lowers  incomes and raises prices. We've done repetition,   w've done floating opposites, now, are you ready  for the one that's not like the others? [Music] If economists ruled the world, there would be  no need for a world trade organization. The   economist's case for free trade is essentially  a unilateral case. A country serves its own   interests by pursuing free trade regardless of  what other countries may do. Economists across   the aisle have been united on this view of trade  as a neutral, technocratic agreement that doesn't   require those pesky human institutions. Milton  Friedman thought that the average free trade   deal should be only one page long and basically  just say "we will trade freely." In Ricardo's dream,   Nat Dyer traces all of these arguments back to  David Ricardo and his barebones 2x2 matrix.   Comparative advantage appears as an ahistorical,  pseudomathematical proof of the benefits of trade.   And yet there's a bit more to the story.  Recall that the 2x two matrix contained   England and Portugal selling wine and cloth.  This wasn't accidental. As he looked back over   the previous century from the vantage point  of 1807, Ricardo picked an example that was   historically relevant. The Methuen Treaty had  been signed in 1703 and specified that tariffs   should be removed for English cloth in Portugal  and lowered on Portuguese wine in England.   In other words, the Methuen Treaty was the  basis of Ricardo's model. Krugman and Friedman   would have been very happy with the Methuen  Treaty. It was a free trade agreement that was   only a few pages long. Economist Tim Harford once  described it as "one of his favourite trade deals."   Pure economic efficiency. Right? One could  argue that there were a couple of things   missing from both the Treaty and Ricardo's  representation of it. As far as places go,   Brazil and West Africa were missing. And as far as  goods go - you may see where I'm going with this -  they were missing gold. And slaves. You see, trade  at the time was a complex network that involved   multiple trips across the Atlantic. British ships  would sail to Africa and buy or capture slaves.   These captives would be transported to Brazil,  where they would be forced to mine for gold,   usually until they died. That gold was transported  to Portugal where it was used to pay for the cloth   from England. The classic example is this England  and Portugal exchanging cloth and wine. And you   do the sums and it shows that both countries gain  and there's a gain in productivity overall. But as   you say, that excludes the entire real history  of England and Portugal and these treaties and   the fact that England was massively the more  dominant naval power and used its naval power   to essentially extract the terms that it wanted  from Portugal. So Portugal did start to export   more wine, eventually port to the UK and England  exported tons of cloth, but there was a massive,   you know, trade gap for decades and decades. And  Portugal made that up through Brazilian gold.   There was this huge gold rush. And the Brazilian  gold, this is the story I tell in the first third   of the book, was actually dug mainly by enslaved  Africans. And even some of the cloth that came   down to Portugal only kind of touched base in  Portugal before then going down to the West   African coast. So I came to see this England and  Portugal trade actually as a bit of an appendix   to the triangular trade to the Atlantic economy  rather than this sort of shining example of um   why trade is good for everyone. Once you know this  history, how significant does the cloth and wine   part seem? Like imagine if you had a 4x4 matrix  which included gold and slaves as commodities   and West Africa and Brazil as locations. Imagine  showing this to introductory economics students.   And if your response is that's too complicated  to show to first year students or to journalists,   then you're missing the point. Just have gold,  slaves, West Africa, and Brazil. That's a 2x2   matrix. Why is this less relevant than just cloth,  wine, England, and Portugal? The magnitude of the   things Ricardo left out is striking. In the year  the Methuen Treaty was signed, several tons of   gold, around 2.3 million pounds worth in today's  money, was transported from Brazil to Portugal   after being mined by slaves. And this continued to  grow every year. 5 million slaves were taken from   West Africa to Brazil, 10 times more than landed  in North America. Once in Brazil, the average   lifespan of a gold mining slave was 12 years at  most. 12 years! In Brazil, they still regularly   find human remains where slaves were buried on  mass, and a majority of the population can trace   their heritage back to slaves. The country was  the epicenter of the transatlantic slave trade,   more so than the USA at this stage - although the  USA would go on to have more home-born slaves over   the next few hundred years. As well as moral  significance, is how indispensable all of this   was to the trade between England and Portugal.  Portugal simply would not have been able to pay   for the cloth without the gold. It would not  have had the gold if not for the slaves. And   once Portugal bought English cloth, it re-exported  large quantities of it, up to 85% at its peak,   to pay for more slaves in West Africa. That just  sounds like slavery with extra steps. The parts   Ricardo left out were an integral part of the  trade system, and they raised questions that   he wanted to gloss over. My point isn't that all  trade is literally slavery, although watching the   West Wing may be. If you do want to learn about  Brazil's relationship with the global economy,   just watch the Invisible City instead. My point  is that from before the days of Ricardo, trade was   hopelessly intertwined with power and politics.  To his credit, Adam Smith spoke out against the   Methuen Treaty, which he considered unequal. He  claimed that it locked in a pattern of trade which   benefited a narrow set of producers but would  harm the general public. Smith also pleaded for   the European countries to free their colonies. He  despised colonial corporations like the East India   Company. Ricardo, for his part, tended to ignore  all of this and just cheerlead for free trade -  although he was against slavery. But the thing is: his view is untenable even if you restrict your   purview to Europe. As many historians have noted,  despite Portugal and Spain's brutal subjugation of   Latin America, they didn't really get rich from  colonialism. The gold and silver went straight   through their countries to Britain and France.  Although Portugal did not see its people enslaved   and its natural resources pilfered, it was also,  in many ways, a victim of English colonialism. The   amount of gold circulating in England tripled over  the 18th century. while Portuguese manufacturers   were decimated and the country's per capita income  stagnated. Why did they accept this? It turns   out that the seemingly concise Methuen Treaty  was signed at a time when Europe was constantly   a war. Specifically, the context of the Scond Hundred Years War between France and England meant   that Portugal needed protection. As political  economist Susan Strange documented, the freer   exchange of British wool and woolen goods for  Portuguese wine was acceptable to the Portuguese   government only because it perceived an urgent  need for the defensive protection of the Royal   Navy. The Portuguese must have guessed that the  result of the increased trade with England would   be the ruin of many honest, hardworking Portuguese  weavers. Yet, the price had to be paid because the   treaty promised greater security for the state. It  was not primarily a commercial agreement. In fact,   the Methuen Treaty was the last of three. The  first two were military agreements in which   Portugal pledged 28,000 troops for the war  on France, subsidised by England. The first   of these subsidies was paid only after the third  cloth and wine trade deal had been signed. So the   supposedly neat, few page long trade agreement  between England and Portugal in 1703 wasn't   really a few pages. There were two preceding  agreements and these were not for trade, but for   military alliance. What's more, Portugal signed it  knowing that their textiles industry would suffer   because they put politics before economics.  All of this was done under the protection of   Britain, which then controlled the seas. Hardly  sounds like free trade at this point, does it?

[00:38:00]I am one of the unfortunate souls who has  played Victoria 3. I do gaming streams on   my second channel every Friday and you should  come and watch. We can chat about economics.   Under capitalism, the produce belongs  to the capitalist and then they pay you,   right? Whereas under feudalism, it belongs to  you and then it's appropriated. Understandably,   many of my viewers like it when I play  economics-y games, so I've given Victoria   3 a go. You play as the disembodied spirit of a  country and manage it politically, economically,   and militarily. I have been toying with the  idea of invading Uruguay and maybe Paraguay.   There's a lot of thought and detail gone into it.  It has some realism. For instance, you can easily   have a supply chain crisis. All sounds like a good  fit for me- except that the game does my head in.   The endless notifications. The unnecessary  complexity and minutia. But we can import, right?

[00:39:02]Whoa. What's just happened to my budget? The one  more DLC, bro. I swear. Just one more expansion   and it will be playable. Anyway, one of the  options in Victoria 3 when you're engaging   in diplomacy is to damage relations with a  country. I like the way the Netherlands are   still really nice to us. Damage relations. Damage  relations. Belgium. Got to damage rel- You've got to   damage relations, haven't you? I always wondered  what this would look like in reality. I guess I   envisionaged a physical attack on a line drawn  between two countries, but that doesn't make   much sense now that I say it out loud. Like you  can't actually do that. So if you look at that...   Donald Trump has resolved my confusion by openly  damaging relations with a number of countries,   including his allies. His strategy seems to  be a combination of insulting countries and   enacting tariffs on them. You know - the stick and  the...stick. What Trump 2.0 has shown is that we   have exited the era of politically neutral trade.  Of course, you now know that trade has never been   politically neutral. Short technocratic commercial  trade agreements are merely the surface of a deep   sea of shifting political and military alliances.  What's clear is that Trump has seen the political   nature of trade and is treating it as such. That  doesn't mean what he's doing doesn't represent   a massive shift, let alone that it's good. But  it does mean that we have to reframe our ideas   about neutral technocratic trade because them  days is over. In Debt: the First 5,000 years,   anarchist David Graeber describes trade among the  Nambikwara of Brazil. They are a hunter-gatherer   society and are split into bands of up to 100  people. These different bands sometimes trade with   one another. Occasionally, if one band spots the  cooking fires of another in their vicinity, they   will send emissaries to negotiate a meeting for  purposes of trade. If the offer is accepted, they   will first hide their women and children in the  forest, then invite the men of the other band to   visit camp. Each band has a chief. Once everyone  has been assembled, each chief gives a formal   speech, praising the other party and belittling  his own. Everyone puts aside their weapons to   sing and dance together, though the dance is one  that mimics military confrontation. They then play   a game where they pretend that the axe someone  else wants is very dull. Oh god, this this axe   is old and worthless. Nobody could want this. They  then argue angrily with each other. It culminates   in them snatching the items from the others  hands. Naturally, there is ample opportunity   for misunderstanding if you snatch an axe too  soon. And it's not unheard of for the trades to   break out into fights. Plus, even once the actual  trades are concluded, the ceremony is not over.   The whole business concludes with a great feast at  which the women reappear. But this too can lead to   problems since amidst the music and good cheer  there is ample opportunity for seductions. This   sometimes leads to jealous quarrels. Occasionally  people would get killed. Today we trade all the   time without thinking about it. There is little  chance of you and your local shop owner getting   into a quarrel or fight nor of you concluding  your purchase of chewing gum with a great feast.   Digital transactions are even more impersonal and  contractual payments take place regularly without   us even noticing. The money comes out of your  account for 12 streaming services and you can't   even be bothered to take 2 minutes to cancel it  on the website, let alone go to war. Although,   after trying to cancel my Adobe Creative Cloud  subscription, that may change *grabs axe*. In any case, it's   trade deals between countries that have always  struck me as more similar to the Nambikwara.   Like the chiefs of the tribes, leaders meet in  grand settings and pose for all to see. They   praise each other's countries and assure them that  they are reliable and trustworthy allies. People   pore over the minutiae of the deals to make sure  everyone is getting what they want. After all,   getting what you want is the basis of trading, no?  It's also hard to see the current tariff war   with China as not hopelessly intertwined with the  possibility of real war. Or not to see Brazil and   China's commitment to free trade in 2024 as  a political statement about moving away from   a US-led world. As I write this, Trump has tried  to use tariffs to interfere in Brazil's domestic   affairs and get Bolsonaro out of jail. To which  Brazil responded by putting an ankle bracelet on   him so he couldn't leave the house. I [ __ ] love  Brazil. Bolsonaro will be there until he dies,   which from the looks of things will be quite  soon. As for the sex, you can't convince me   World Trade Organization meetings don't get  a bit randy. Come on, these guys [ __ ] Yet,   as Paul Krugman said, maybe there shouldn't be a  WTO. Maybe trade should just be brief technocratic   agreements - or no agreements whatsoever because  each country unilaterally abandons any tariffs   or trade management policies because total free  trade is in their individual interest? Maybe   all of this ceremony is just a relic of a bygone  era of human society where we didn't understand   comparative advantage? You might not be expecting  this, but I think he has a point. Modern trade   agreements are prohibitively long and filled with  impenetrable legalease. What's more, while they   often tend to hurt workers, hide power relations,  and leave economies unprepared for catastrophe,   these days they have a whole bunch of explicit  clauses favoring the rich. Western companies   have been pushing for stronger intellectual  property laws for a long time. In 1995, their   wish was granted with Trade Related Intellectual  Property rights or TRIPs. This pushed the length   of patents to 20 years where it had previously  been as low as 14. In many poorer countries,   the laws were not enforced, but the WTO agreement  changed that. This led to life-saving drugs being   denied to the poorest in the world because patent  laws kept prices high. Brazil, South Africa,   and Thailand allowed the import of low cost drugs  and were legally punished by the US and WTO. Score   one for free trade! Concessions were made after  public backlash, most notably about treatment for   AIDS. But the issue resurfaced with COVID when the  vaccine was pulled from poorer countries rather   than waiver the intellectual property rights.  There are still lingering health and financial   costs from these restrictions, a situation experts  have called vaccine apartheid. Another, even more   on the nose example of trade agreements favoring  the Illuminati is the investor state dispute   settlement mechanism which allows corporations  to sue governments for reducing their profits.   More than 650 cases were filed between 2000  and 2015, including the Keystone oil pipeline   cancellation in 2021 in the US. $7 million in  damages for Bilcon when the Canadian government   stopped them from blasting bassalt in an  area with an endangered species of whale.  $90.7 million awarded to American company Cargill  after the Mexican government taxed them to protect   Mexican industry and consumers. $1.3 billion  awarded to Churchill Mining Company in Australia   after the Indonesian government withdrew forged  mining licenses from them. Forged! Lowering of   environmental standards in Hamburg, Germany  so that Swedish company Vatenfall could build   a coal fired power plant. It's not that none  of the 650 cases are legitimate. Governments   can treat businesses unfairly, but overriding  environmental regulations to build a coal plant?   Fining poorer governments for enforcing anti-  fraud laws? Plus the whole thing uses a secret   process outside official legal systems known as  shadow courts. John the Duncan has a good video   going into more detail on this. If you think  this is some kind of leftist conspiracy, it   was acknowledged by the free trade loving Economist  magazine that the ISDM could convince the public   that international trade agreements are a way  to let multinational companies get rich at the   expense of ordinary people. Mainstream economist  Jagdish Bhagwati, a longtime cheerleader for free   trade, publicly criticised these deals on similar  grounds in 1998. He called the elites who designed   these deals the Wall Street Treasury Complex and  charged that they'd hijacked free trade. He said   that the WTO had been distorted and deformed into  a royalty collection agency and charged "the pretty   face presented to us is in fact a mask that hides  the warts and wrinkles underneath." Credit where   credit's due! While Bhagwati and to a lesser extent  Paul Krugman might have spied that the lengthy   trade deals struck in practice funneled money  to a wealthy elite, they would still like to see   shorter trade deals that live up to their ideal.  Like I said, I've got some sympathy for this,   but ultimately it's a fantasy. Just like the  Nambikwara, global trade is done by humans. And   as humans, we tend to be concerned about what the  impact of the trade will be on us, what it implies   about us, and whether or not we are being treated  fairly. Many economists believe that Ricardo's   ideas about comparative advantage represent a  decisive break with the old ideas. Mentioning   slavery, the classic economist's response would  be, "Oh, that was nothing to do with the free   trade era. That was the bad old mercantalist era  when people- when states were just motivated by   gold and everyone fought each other and everyone  was trying to grab each other's resources and   then Ricardo and Smith came along and then they  completely revolutionised policy. So then we had   this enlightened state of win-win trade where  you gained by exchanging rather than conquest."   Mercantalists believed that a country gained from  exporting because that brought in precious metals,   while imports were a loss as you had to pay using  gold and silver. So importing depleted precious   metals while exporting augmented them. For Ricardo  and for economists today, importing goods utilises   the resources of another country to free up your  own resources for more efficient use. Is this not   just true? Should we not just go for this? In 1703  when the Methuen treaty was signed, this was a   mercantile and slave-based system. Yet 100 years  later, when Ricardo was writing, Britain was once   again forcing a whole bunch of new arrangements  onto Portugal and Brazil to keep the slaves and   gold flowing. In a situation that very much echoed  the Methuen Treaty. The Portuguese royal family fled   Lisbon in 1807, guarded by the British Royal  Navy. Before leaving, the Royals had signed a   secret deal with the British. When the Portuguese  King arrived in South America, he made good on the   agreement by declaring the country's ports open  to the ships of any country. This ended Portugal's   monopoly of Brazilian trade. Two years later,  in 1810, the two countries signed a preferential   trade deal that reduced import duties on British  goods entering Brazil. The British would only pay   15% compared to 16% for the Portuguese and 24% for  everyone else. British goods excluded from Europe   due to Napoleon's blockade flooded into Brazil,  including, according to legend, ice skates,   shark fin corsets, and bedwarming pans. In  exchange, Brazil provided raw materials produced   with enslaved labor, much to the benefit of its  white agricultural elites. There's an argument   that we never truly left the bad old days.  Observers have long been aware that the pattern   of trade is not neutral. Those who create the  high-tech goods almost always have an advantage over   those exporting raw materials. Ditto for those who  control finance. Developing the cloth industry was   a goal of Britain's for centuries and it didn't  come easily. Once the industry was developed,   Britain was the 'workshop of the world' and everyone  relied on them for their cloth. Meanwhile,   India was de-industrialised and its once famous  cloth was no longer produced and sold. When   Ricardo was supporting apparently free trade, he  was actually promoting the economic interests of   the UK. And so I see much more continuation  between mercantalism and free trade. You can   even see it in the way that Ricardo personally was  supporting British manufacturers, exporting huge   amounts of cloth to India at a time when Britain  was the colonial power. Again, ignoring- ignoring   the power imbalances. As primary goods like  raw materials can usually be found elsewhere,   Something like cloth in the 18th Century fetches  better terms of trade than something like wine.   As one politician put it of Great Britain, "There  would always be a limit to our greatness while   we were growing our own supply of food, but  we should always be increasing in wealth and   power whilst we obtained part of it from foreign  countries and devoted our manufacturers to the   payment of it." A mercentalist charlatan? Hardly!  This quote was none other than David Ricardo.   Among the things Ricardo's 2x2 matrix does  not leave room for is the fact that a country   can become more capable of producing cloth - or any  good. The labor hours required for production are   static and fixed, with no development of industries  over time in his model. Nor is there any room for   quality. Apparently, Portugal's cloth at the time  sucked. Nor is there any room for terms of trade:   how countries reach some kind of agreement about  what exchanges for what. Ricardo just assumed   that. In other words, most of the interesting  questions about trade policy are absent. Tell   you what, Bart, I'll trade you the weight of a  bowling ball on the eighth moon of Jupiter from   my lunch for the weight of a feather on the  second moon of Neptune from your lunch. Well,   okay... There you go! In the 17th Century, Britain  used to complain that the Dutch were imposing free   trade on them. So they put up numerous tariffs  and barriers to nurture their own industry,   preventing them from being flooded by Dutch goods.  Then in the 19th century, the US complained about   Britain imposing free trade. And the Americans  put up numerous barriers to nurture their own   industries. Now, after decades of its own  protectionism, China is preaching the virtues   of free trade and criticising the USA for no  longer pursuing it. Now that it doesn't suit   the US, they're disobeying the same WTO rules that  they laid down! They can do this because they have   the economic and political power. (And to be fair,  they had actually disobeyed WTO rules long before   Trump.) Again, this applies equally to finance. The  reason Jagdish Bhagwati called the deals the Wall   Street Treasury Complex was that the Financial  Services Agreement in 1997 locked in American   and Western banks, who set up a unified lobby next  to the WTO headquarters in Geneva. The agreement   allowed them to do business unimpeded across  the world, including in developing countries   that were trying to nurture their own finance  and industry, but had to face corporations with   larger incomes than their countries. You notice  a pattern? Free trade generally suits countries   that have internationally competitive industries.  Like Portugal signing the Methuen Treaty in the   18th Century, less competitive nations may find  their industry overrun by these other countries   and be locked into stagnation, stuck exporting raw  materials to those who have high-tech industries.   They may understandably be a bit miffed about  this, which is why they typically only sign such   agreements when they're under pressure. It's hard  to say that even a short agreement is apolitical   and efficient when British gunships are stationed  outside the city where it's being signed. And it's   the third of a series of military and commercial  agreements. Plus, it doesn't include the slaves   and gold that are being taken from the rest  of the world by force to fuel all of this! You   can pretend there's no politics, but it defies  credul. And before too long, the politics will   come back and bite you, as it has. Often  it was seen also that thought that free trade   would lead to sort of greater global peace.  But as Ha-Joon Chang and others have argued that   ignores the fact that a lot of these free trade  deals with countries like China or elsewhere were   only signed at the end of a barrel of a gun, you  know, gunboat diplomacy. And then I look at how   America which had generally been hostile to free  trade right up until main you know the 1930s and   the 1940s when they became the dominant power in  the global system after - you know, 1945 - embraced a   freer type of trade. It's fitting that the age of  technocratic policy and free trade has taught us   unequivocally that trade is above all a political  beast. It should not be treated as separate from   the rest of society and governance. The timeline  throughout this video shows left-wing protesters   and intellectuals pointing out the limits of trade  in practice, then being dismissed and ignored by   centrist technocrats who proceeded with the free  trade model. Years or decades later, the far right   rose up with some similar criticisms and Autor et al eventually extended their analysis to show that   trade with China and with Mexico was a predictor  of Trump winning in 2016. With Trump 2.0,   economists like Justin Wolfers have taken to the  news to reiterate basic arguments for the benefits   of trade. Part of Trump's announced strategy,  it seems, is to balance out trade deficits with   countries, or at least one aspect of this, a def-  balance out deficits with countries where we have   one. But- but is there a legitimate economic  future to negotiating through tariffs here,   whether it's by the August deadline or or  if that one ends up moving too? Yeah, so   the underlying rationale for this is really quite  extraordinary. The- the large tariffs are going   on nations from whom the United States buys a lot  and they don't buy a lot of our stuff. In Trump's   mind, that's being ripped off. Um, but here's  the thing to understand. In my local economy,   I go to my local Trader Joe's all the time. I buy  a lot from them. And on the way out, I say, "Hey,   would you like to buy some economics lectures  from me?" Trader Joe's never says yes. So,   I buy a lot from them. They buy nothing from me.  I have a massive trade deficit with Trader Joe's.   But I guarantee you what won't help it is if  I impose an extra tax on myself every time I   go to Trader Joe's. And that's what a tariff is.  Colorado Governor Jared Polis similarly stated,   "Tariffs are bad outright because they lead to  higher prices and destroy American manufacturing.   Trade is inherently good because both parties  emerge better off from a consensual transaction."

[00:57:52]Branko Milanovic has an interesting post where  he chides his fellow economists for failing to make   sense of Trump's policies. Like Wolfers and Polis,  many have been reaffirming the basic Ecom 101   principle that tariffs will hurt consumers  and businesses. While partially true, this   may miss a crucial point: Trump is trying to hurt  China more than he is trying to benefit the USA.   He probably knows about the negative impacts on  the US, but most modeling finds that the tariffs   will hurt China more. They are still extremely  dependent on exports of consumer goods to America   and have been struggling to build up their own  domestic consumer economy for a good decade or   so. If Trump hurts China more than he hurts his  own country, he may impact the relative rankings   of their respective economies, which will give  him political power even if the economy declines.   This kind of consideration is just not a part  of mainstream economic thinking. And missing it   is missing yet another key feature of modern  globalisation. You can say again and again   that free trade is beneficial overall, but all  you're doing is asserting one value over others,   efficiency over security, justice, and freedom.  Plus, you're ignoring the countless economic   phenomena which are absent from theories like  comparative advantage. From the political context   to the rest of the trade system to the development  of capacity over time. Thanks economists. [Music] Is the point of this video that trade is bad?  Some people will interpret it that way because   some people are idiots. The point of this video  is that trade is political. Free trade is an   idea that simply doesn't make sense. In practice,  trade has always come with risks and limitations.   Negotiating trade deals means bringing these  issues to the fore in a manner similar to the   Nambikwara, who understood human nature better  than most technocrats. Seemingly simple free trade   agreements were only made possible by ignoring  the stark political realities underneath them.   If every country had an equal footing, we'd see  plenty of trade. But it would rarely come without   caveats and concessions based on democratic  demand. If we don't bring these processes out   into the open, then shadowy forces will rig trade  in their interests. If you ignore the needs of the   public when designing trade deals, you end up with  political backlash. Not because the public are   stupid and uninformed, as Tobias from the West  Wing or 1990s Paul Krugman would have thought,   but because cheerleaders for free trade have  missed key information about trade deals.   As Nat Dyer points out, some of the Seattle  protesters depicted in the West Wing actually   had pretty sophisticated critiques of trade  deals which are somehow never acknowledged. For   the organizers of the Seattle gathering, such as  American trade lawyer and campaigner Lori Wallach,   they were not protesting closer global ties  themselves, but the specific set of rules and   powers shaping that integration. Alternative paths  of globalisation were possible, they argued, and   the mandate for the WTO, despite its name, went  far beyond trade. Negotiators were considering how   national laws or rules about how products were  manufactured or sold might impede trade. These   non-tariff barriers might relate to domestic food  safety, to environment and product safety rules,   financial regulations, investment policy, patent  and copyright rules, and more. The new agreements   established by the WTO were, Wallach said, '800 plus  pages of one-size-fits-all rules.' These rules could   be used to challenge national laws as quote  illegal trade barriers at the closed door WTO   tribunal. They weren't anti-trade as such. They  were pro-democracy. That's why they literally   had signs showing democracy pointing one way and  the World Trade Organisation pointing another.   Naturally, this baffled observers such  as Paul Krugman, who believed that they   were driven by "leftist mythology" and that the  WTO was a "bizarre target." Perhaps he should   have spent more time reading the actual trade  agreements and less time explaining comparative   advantage. Krugman has apologized for some  of this, but as historian Adam Tooze has noted,   he was the policeman of orthodoxy in the 1990s. If  we are to move forward with a globalised economy -   which I will reiterate is both desirable and  unavoidable - we need to abandon the idea of free   trade and begin to understand commercial trade  as one part of a series of interlocking alliances   and agreements. Arguably, most politicians,  negotiators, and diplomats on the ground have   long understood this because they've been forced  to. But our commentary and analysis rarely has.   For too long, misleading fables like comparative  advantage have let people become cheerleaders for   free trade without truly understanding its  history or its present. These models can be   useful for narrow insights, but they are never  a good guide to policy in the real world and   should not be treated as such. The WTO's website  devotes plenty of space to explaining comparative   advantage rather than the actual details of trade  deals. Politics isn't just a negative thing,   either. This is why I've always been a supporter  of the EU despite its flaws. In a continent that   has historically been at war with itself, having  countries come together to negotiate politics,   economics, and foreign policy is incredible. The  trade within the EU includes harmonisation of   regulations and compensation for poorer areas that  are hurt by trade. These all help to manage trade   in the democratic interest. The EU has achieved  remarkable things from a political perspective.   After the UK left, our cost of living crisis was  worse because of Brexit. So don't underestimate   the benefit to the economy either. It does matter.  As the scholar Charmaine Chua observed, ports and   naval power were always a centerpiece of economic  history. In the days of the Methuen Treaty,   ports used to be in the center of London,  but today, like this one, they are outside   of cities and rendered less visible, and they  won't even let us in to film closer to them.   This doesn't change their significance. They  still carry 80% of global trade. But it's a   good metaphor for how our ideas about trade  have moved from it being an integral part of   politics and society to being deemed neutral and  disconnected from broader considerations. Thus,   it is the idea of free trade that is dead.  We should stop calling it free trade. I used   to call them trade deals, but I actually prefer  Nat Dyer's idea of treaties. Commerce is just one   aspect of international relations and the word  treaty communicates that succinctly. Of course,   such a minor pedantic change in language is  not enough. As far as specific policies go,   international institutions like the WTO should not  be dominated by Western countries, let alone by   multinational corporations within those countries.  They should be directly democratic and crucially,   all countries should have an equal seat at the  table. They may do so formally right now, but in   practice, money and power mean that the wealthy  interests have outsized influence. One desirable   consequence of changing this, which is also an end  in itself, would be to weaken or abolish some of   the agreements surrounding financial services,  intellectual property, and the investor state   dispute mechanism. Domestic policies that protect  workers one way or another are also indispensable.   On the other hand, if we stopped using the term  free trade, it might help more than you think.   You'd be surprised how deep the language we use  can go. After all, Portugal? Port? Im-port? Port?

[01:05:52]*glugs port* Makes you think!

[01:05:55]Hey everyone, hope you enjoyed the video! Haha, back to UE roots with a video about free trade and how bad Paul Krugman is.  Wonder how many of my other previous videos I can   basically just redo? Probably- probably just keep  doing it forever. That's the way this channel's   going now. There will be no effort anymore. I'm  like one of those companies that buys up all the   rights to content and then just farms it- farms it  out, you know, like Disney with Marvel and Star   Wars. Except it's my own content. Anyway, that's  what my next video is going to be about. So, love   you all. Thanks to Hobbie for helping me record,  including at the port. Sorry about the audio,   uh, and me looking at the autocue. There's a  whole bunch of complications with doing something   like that that I now know but didn't before. But,  you know, I think it's kind of cool. And thanks to   Ben as well for editing. Thank you to everybody  in my Patreon and Discord who helped with the   script. Thanks to Nat Dyer and his excellent book,  Ricardo's Dream. And thank you to my patrons.   um had a big boost in Patreon membership  recently because I put a call out and I'm   really grateful for that. So yeah, I will say  again if you're still listening and you really   like the video and you're not already a  Patreon, then just sign up. Just do it.