SECTION 4: FREE TRADE & GLOBALIZATION 30. BASTIAT WAS RIGHT April 2001

Frédéric Bastiat was a French economist, a passionate and articulate believer in free enterprise, who lived from 1801 to 1850. But his writings speak to us today, and help explain why the recent conflict with China has ended through diplomacy and peace rather than belligerence and war.

The answer can be summed up in one word: commerce. Glorious, peaceful, prosperity-making, peace-preserving commerce. It was the overwhelming fact that the health of our economies are linked that made the Chinese and US governments realize that both sides have more to gain from good relations than hatred and war.

It was Bastiat who observed the trade-off between commerce and war. When goods don’t cross borders, armies will. Without trade, there is less to lose from the mass destruction that war implies. Countries that trade have a mutual stake in the preservation of open, friendly relations. This is one reason that free commercial activities promote peace, and why protectionism and trade sanctions generate war tensions.

History shows that war is good for government. In wartime, government gains massive power over society. It is granted a degree of latitude in its use of emergency powers that would not otherwise be permitted. War allows politicians and bureaucrats with a passion for power to use it to the hilt, through taxation, inflation, and regimentation. War destroys things and then permits governments to profit from rebuilding them. It drains the private sector of capital and entrepreneurial energy, and enriches the parasitical institutions of the state. No free society stays free after war begins.

The mystery isn’t why war exists but rather why, given the nature of government, it isn’t the norm. Bastiat explained that free trade helps quell government’s passion for war. It creates powerful lobbying groups on all sides that demand the preservation of peace and the triumph of diplomacy over hostility. International trade networks create intermediating structures of business relations that work as a barrier to bombs and belligerence.

This observation was further elaborated on by Ludwig von Mises, who responded to the Marxist-Leninist theory that capitalism leads to war. Lenin saw war as the internationalization of the intractable conflict between capital and labor. On the contrary, Mises said, the basis of capitalism is trade and mutual cooperation to the benefit of everyone. Capitalism creates networks of commerce—including capital markets and wide circles of labor and entrepreneurial specialization—that become dependent on each other.

The socialists of today understand this, which is why, since the end of the Cold War, so many of them have joined the war party. They too recognize that freedom, trade, and peace go together, so they’ve decided to oppose all three. Only last year, for example, the website of the World Socialists complained that

The pledge to restart the talks [with China] came after a barrage of lobbying pressure by US companies alarmed over the prospect of losing the billions of dollars in trade and investment opportunities.

Indeed, commercial ties are the very basis of international friendship, particularly that which thrives between the United States and China. Each year, China exports $200 billion in goods to the world, and imports $170 billion, for a total dollar value of commercial world traffic in and out of China of nearly half a trillion.

China’s top trade partner is Japan but next in line is the United States, which annually imports from China $81 billion in electrical machinery and equipment, apparel, shoes, toys, games, iron and steel, furniture, leather goods, and a million other things, while China imports $13 billion in machinery, fuel, medical equipment, paper product, aircraft, and a million other things.

Our lives—by which I mean the lives of regular people in the United States and in China—are made immeasurably better because of the freedom to trade. Our networks of exchange build private-sector prosperity in both countries. Was the “corporate lobby” influential in preventing the tensions over the US spy plane from degenerating into outright conflict? Very possibly, even likely—a fact that we should celebrate, not condemn.

So entrenched are US-China business ties that the warmongers among us have to think creatively to come up with excuses for protectionism and hostility. Lately they have been fulminating about human rights in trade, the supposed existence of forced and child-based labor, the claim that China is spying on the United States, and the trade deficit. They say that all these things raise good reasons to curb or cut off commercial relations.

The crucial question to ask about all these complaints is: will less trade make matters better or worse? The typical political dissident in China wants more contact with the outside world, more of the economic opportunity that trade brings. Commerce opens up societies and gives the powerless greater opportunities to have control over their destinies. Besides, if it were possible to use embargoes and sanctions to shape up foreign countries, Cuba and North Korea would have become paradises of human rights long ago.

Bastiat had a radical goal. In addition to the protection of private property, he wanted

the abolition of war, or rather (what amounts to the same thing), the fostering of the spirit of peace in public opinion, which decides the question of war or peace. War is always the greatest of the upheavals that a people can suffer in its industry, the conduct of its business, the investment of its capital, and even its tastes.

In the recent conflict with China, some Americans (even, I’m sorry to say, many American conservatives) tasted blood. But they didn’t get their way, Deo Gratias. With free trade between the United States and China, the opportunities for our governments to go to war are greatly reduced.

It is because peace and freedom go together, and mutually reinforce each other, that we need ever more trade and commercial relations with all countries everywhere, with no exceptions, ever. May private enterprise continue to save the world from destruction by governments.

31.
DOES WORLD TRADE NEED WORLD GOVERNMENT?
September 2003

This much we know: prosperous nations have the fewest barriers to trade, while poor nations have the most. That fact alone does not prove the case for free trade, but adding a bit of logic sews up the case.

The wider the pool from which a country can draw labor and capital, the more likely it is that resources will be used efficiently and to the betterment of all. By opening up an economy beyond the borders of the nation-state, the workers and capital resources of a country find the best possible employments toward the goal of serving society as a whole.

The case for free trade has been made for hundreds of years, and yet the fight for the right to buy and sell outside the borders is never ending. The situation is complicated by a major confusion that exists among free-trade advocates. Many believe that world trade, because it is a good thing, ought to be sanctioned, managed, and otherwise regulated by the government or a coalition of governments. This was the intellectual error behind the creation of the World Trade Organization, an international bureaucracy that was supposed to open up trade but has ended up politicizing it and creating international conflict where none need exist.

Consider the crazy, mixed-up politics at work at the trade talks in Cancun, Mexico. The rich nations (meaning, mainly, the United States) swaggered into Cancun with an aggressive, three-pronged agenda: to foist a stricter system of investment rules (including patent and copyright enforcement) on developing nations, to extend US-style environmental and labor regulations to cover poorer nations, and to reduce restrictions on exports to poor nations and foreign investment in them from the industrialized world. What was missing here was the good will to make a change in their own protectionist policies, much less to reduce the production supports for their own inefficient industries.

Trade was certainly on the agenda, but free trade as traditionally understood was nowhere in the mix. From the beginning, the WTO was based on the idea that industrialized nations need to find markets for their products among the sad-sack nations of the world—not that the poor nations might have something to sell that consumers in rich nations might want to buy. That’s why “intellectual property rights” (coercive monopolies for particular producers in rich countries) was high on the agenda but real-life free trade in agricultural goods was off the table completely.

Nor are the rich nations a monolith. Because the United States has long been the driving force behind global economic growth, US officials naturally assume that they have the right to exercise hegemonic control over the world economy, an assumption that makes EU finance ministers (embroiled in their own harmonization controversies) very wary indeed. This follows several years of unrelieved protectionist regulation by the US against anyone anywhere who would dare build a better mousetrap than is produced in the land of the free (which just so happens to be host to the largest, best-armed, most well-funded government in the history of the world).

Meanwhile, poor nations arrived in Cancun with a history of bad experiences at world trade conferences. The last time around, finance ministers from rich nations made some perfunctory promises to address the agricultural question, but moved on to preach to poor nations that they had better shape up and start regulating their economies more heavily. In particular, they were told that they need to crack down on alleged copyright and patent abuses in their countries, raise wages so that their workers can’t “unfairly” compete with those from industrialized nations, and start enforcing stricter environmental laws. This is a composite agenda cobbled together by the main labor, environmental, and business interests that are so influential in US politics.

Now, the problem here is obvious to anyone who knows basic economics. The comparative advantage that poor nations have in attracting investment and producing their own goods for export is precisely their unregulated labor and environmental regimes. Given that their object is to become more competitive, not less, it would make no sense to legislate higher wages that would only drive out capital and lead to more unemployment. If they stand a chance for development, tighter regulations on production are not the answer. What they need instead is an open marketplace in which to compete using their comparative advantage.

In the past, the anti-WTO protesters have claimed to be standing with the poor nations of the world against capitalist globalization, but the reality is much more complicated. By resisting the trend to “upwardly harmonize” regulations, poor nations of the world have stood firmly with the free-trade tradition. What they were arguing for, in reality, is not less globalization in general but less political globalization in order to make possible more economic globalization. The two forces are at odds with each other.

Having been burned too many times in the past, this time, poor nations arrived at the talks with a set of demands of their own. If the rich countries are going to preach about “free trade,” they’d best start living up to it themselves. That rich countries export highly subsidized farm products to the third world, to sell at prices cheaper than these countries can produce, is notable enough. But to then turn around and refuse to accept imports of low-priced goods on grounds that this constitutes “dumping,” is adding injury to insult.

At the talks, each side tried to change the subject as much as possible until it became obvious that there was little point in talking. The legal and regulatory reforms that the US demanded were never seriously considered. The idea of cuts in subsidies and tariffs was ruled out completely. Indeed, the Bush administration is moving in the opposite direction, toward the dangerous idea of national sufficiency, even though it is a sure prescription for economic depression. Of course the whole scene was punctuated by hysterical protests from the throngs of activists that the WTO attracts like flies to a picnic.

As for the leftists who railed against globalization, they are right to have an inchoate sense that the WTO is up to no good. Beyond that, there is no agreement. If they are in solidarity with the poor nations of the world, does that mean they favor cutting agricultural subsidies in industrialized nations? That would mean job losses of course, and further hardship for their beloved “family farms.” You can’t stand with both the poor and oppressed agricultural workers in the United States and the poor and oppressed agricultural workers in the third world; ultimately they are in competition with each other, and should be.

What’s more, the left can’t simultaneously endorse the full panoply of phony and expensive “rights” in the charter of the International Labor Organization and link arms with the workers of the third world. The bottom line is that if the US labor unions get their way, the workers and peasants in the third world would find themselves without jobs and even more destitute than they already are. The same goes for foreign investment, which, contrary to the left, is a boon for all poor nations.

As for the business lobby, it needs to worry less about forcing foreign governments to enforce their copyrights and think more about how to compete in an increasingly competitive world. It ought to spend at least as much time and energy reducing barriers to imports as it does pushing for the elimination of barriers to exports. In short, they need to stop acting so much like mercantilists and act more like entrepreneurs.

The irony is that the WTO bears much of the blame, though there is plenty to go around. Somehow world trade proceeded apace for the entire history of civilization without this outfit serving as a sounding board for fanatics, protectionists, and would-be global regulators. When so many free traders supported the WTO’s creation, were they being naïve or were they being paid off? Regardless, the WTO is no friend of free trade.

Everyone says that the collapse in Cancun could mean the end of multilateral trade negotiations for the duration. For the cause of free trade, there could be a downside to this, especially if it means that the US will treat the issue of world trade with as much political finesse as it managed the Iraq situation.

But the upside is even more obvious. It means a setback in the movement to upwardly harmonize regulations. It means a setback for global government generally. It is all to the good if it means that businesses around the world work on striking up their own deals instead of relying on governments, and the organizations that governments create, to do it for them.

As a side benefit, it is now exposed for all to see, and possibly for the first time in our generation, that industrialized nations represent a great threat to free trade. What is needed is not another round of negotiations. Let every nation, right now, do what is best for all citizens of the world: eliminate every form of intervention that would prevent or otherwise hobble mutually beneficial trade between any two parties anywhere in the world. No bureaucracy can help us toward that goal; it must come from a growing realization of the merit of freedom itself.

32.
BUY BETHLEHEM?
April 2005

Some of the most vociferous attacks on free trade in recent years have come from religious lobbies, and are led by people who believe that they have the best interests of the workers in mind. They call on us to buy products labeled fair trade, or to boycott growers who employ low-cost labor, or to refuse products made by international corporations operating in the third world, or to join protesters at any international conferences where it is believed that the conspirators inside are seeking to lower barriers to trade. They do all of these things under the conviction that to limit the right to buy and sell is part of the mission of spreading the social gospel.

Actually, what they are doing is raising the prices of consumer products, harming opportunity for workers to find good employment, hindering growth of economies in the developing world, and inadvertently serving as foot soldiers for the mercantile interest groups that seek to shield themselves from more efficient but foreign competitors. Their campaigns may be cast in a different light, but the substance of their program is no different from those who say that we should only buy American, which in turn makes no more sense than a campaign to buy only Michigan, or buy only Lansing, or, reductio ad absurdum, buy only from me.

The push to restrict people’s opportunities to buy and sell based on region is an attempt to bring about what economists call autarky, or economic self-sufficiency. It is the economic system that decries the expansion of the division of labor and urges all production to take place in the smallest possible geographical unit. In practice, the campaign for economic autarky takes place at the level of the nation-state and thereby works as a handmaiden of those who see nationalism and even war as a better program than peace and mutual betterment through trade.

I know of only one setting in which autarky is economically viable. It is the Garden of Eden. Here the ground did not need to be prepared for growing. It produced on its own. Animals did not need to be hunted, slaughtered, and cooked. Economic scarcity did not exist. There was no scarcity of resources, no scarcity of time, and no economic problem to overcome at all. Mortality was unknown. Man and woman lived in perfect contentment in the presence of God. Economic autarky was viable here.

But with sin came death and banishment from this garden. Man and woman would have to work to produce. Pain and suffering entered into the world. Time and resources were scarce. But God did not leave the human population with no means to overcome the new limits on what could be consumed. God made it possible for the human population to use intelligence to exchange. People would divide their labor based on their own unique talents and capacities. This division took place between peoples and regions. Trade became a means to achieve a kind of cooperative unity even though the Garden of Eden was nowhere to be found.

Thus was born the concept of free trade.

The Christian tradition teaches that the sin of the Garden was finally destroyed at the Incarnation, when God became Man and walked among us. The Gospel of Matthew records for us that the first gifts given to him came from the Magi, wise men who traveled from foreign lands. And what did they bring? Gold, frankincense, and myrrh—products from the East. Jesus was thus presented products acquired from international lands, imports to Bethlehem.

One can only imagine the scene had the social gospel autarkists been present. They would have demanded to know whether the workers who mined the gold, made the incense, or produced the myrrh were paid a fair wage. They might have demanded, lacking proof of such, that the Wise Men should have refrained from buying. Certainly Jesus should only be given gifts acquired through fair trade, they might say. They might have demanded that instead of traveling from afar that the Wise Men might have been socially conscious enough to Buy Bethlehem.

In his ministry Jesus recruited from among the merchant class, most famously from among fishermen, whose produced commodity knows no nation or state. There were tent makers who traveled to provide people goods and services that they needed where they needed them. There is not a word in the whole of the Gospels that speaks of some alleged need to keep production local or to establish some arbitrary geographic limits on buying and selling. Such an attitude is completely alien to Biblical times, where the need to overcome poverty through trade was everywhere understood.

Jesus’s parables are filled with references to commerce and its ethical obligations. In the story of the Laborers in the Vineyard, we find a vineyard owner who hires based on contract and adheres to that contract even when it means paying people who worked a full day the same as those who worked only a few hours. There was no talk of fair wages here. The lesson we are taught rests on the right of the owner to make contracts, the right of the laborer to accept or refuse work, and the failure of vision of those workers who complain about the terms after the fact.

Again, we can imagine what the social gospel autarkists would say about this situation. They would probably advocate nationalizing the vineyard and unionizing the workers, who would then promptly strike for shorter hours and higher wages and benefits all around.

Moving on to the parable of the talents from Saint Matthew, scripture notes that the master is preparing for another trip to a foreign land. We are told that he is the kind of person who reaps where he has not sown and gathers where he has not planted. In other words, he used the division of labor, the surest path to wealth. He was a trader and entrepreneur who saw his business as extended to all places, not just those of his residence. It is through foreign trade that the man most likely made his money, which was then given to the servants as a test of their prowess as investors. Some passed and others failed.

We as individuals and as a nation can choose to bury our talents or seek out the best and most profitable uses for them. That could mean that our capital should travel just as the master in the parable has traveled. To insist that we use our scarce resources wastefully means to behave as the man who was cast out of the kingdom on grounds that he hadn’t even deposited his money with the bankers to earn a market rate of return.

Today, we face relentless demands to establish a system of autarky, to buy local or national rather than divide up the labor, specialize, and trade to our mutual advantage. But this is not the path to prosperity. It is the path to conflict and war. Among the charges that the Declaration of Independence leveled against King George was that he was attempting to cut off colonial trade with all parts of the world but Britain. This the Founders saw as a violation of human rights and a policy of impoverishment.

As F.A. Hayek wrote in the neglected conclusion to his 1944 book The Road to Serfdom,

If international economic relations, instead of being between individuals, become relations between whole nations organized as trading bodies, they will inevitably become the source of friction and envy.

Ludwig von Mises concluded his 1944 book Omnipotent Government: The Rise of the Total State and Total War with a similar warning. “The establishment,” he said, “of an international body for foreign trade planning will end in hyperprotectionism.” These two great free marketeers understood how government uses the period immediately following a war as it does the war itself for state power and special-interest rewards.

When we think of the conflicts of our own time, we can see how they stem from a failure to engage in exchange. Ten years of sanctions against Iraq cut off that country’s trade with its most profitable markets. This act of protectionism was a prelude to a ghastly war. In contrast, our relations with China have been of growing amounts of trade, and a potential setting of conflict has turned to one of mutual benefit.

After the fall of Communism and the rise of economic liberalization around the world, it is no longer feasible to deny the reality of economic globalization. Rather than bemoan this, we need to see the benefits for all peoples. It means more goods and services and lower prices. It means more opportunities for improving the standard of living. It means better relationships between all cultures and peoples. In free trade, I believe, we see the hand of the Creator. We are given the means to cooperate to overcome banishment from the Garden. We will also contend with scarcity. But that should never stop us from living out the Gospel command to go forth into all the world.

It is the earth and the fullness thereof, not the nation-state, that is the Lord’s. Not just ministers but also merchants and consumers should be free to go forth into all the world.

33.
WHY THEY HATE US
June 2003

Journalists pride themselves on their power of observation. It is observation that is the first step toward putting a picture of the world into words and print, bringing to the rest of us an image they have seen but we have not. Journalists are often very good at seeing small pictures, but not big pictures. Actually, in their profession, it is bad form to even attempt to see the big picture until you have reached the highest level of professional achievement.

Thomas Friedman of the New York Times has achieved that level and thus acquired the right to pronounce. With three Pulitzer Prizes under his belt (1983, 1988, 2002) and a National Book Award for The Lexus and the Olive Tree (2000), his opinion on everything from economics to politics to war is highly regarded. Why? Presumably because he has seen so much, reported on so much, and been so long on his beat, he has mastered his craft. And it’s true that his commentary is usually worth reading. He can be unpredictable and even manage to dissent from established opinion, if only on the margin.

But even unimpeachable public intellectuals like Friedman tip their hand from time to time, and reveal that they have no better an understanding of the world than any man on the street who has never taken a class in economics or read deeply in political thought. His column titled “A Theory of Everything,” which ran June 1, 2003, is just such a case. For all his observations and reporting, he has missed the most elementary distinction and for that reason ends up falling back on a line of thought so conventional and confused that it could have been written by any college freshman on a term-paper deadline.

He begins with the question concerning the entire Muslim world after 9-11: why do they hate us? And after the most recent war, the question has broadened into: why does everybody else hate us? By now everyone knows these questions, but little thought is put into the phrasing of the question, namely, who exactly is “us.”

Am I supposed to believe that the average Muslim hates you and me as much as they hate Richard Cheney, George Bush, and Donald Rumsfeld? The fact is that Muslims don’t hate you or me. They don’t know you or me. But they do know the names of people at the top of the US government, and for good reason: these people have ordered the military occupation of Muslim countries. We did not order this; they did, and the citizens of these countries hate them for it. To conglomerate you and me with Dick, George, and Donald is to engage in a very slippery rhetorical tactic.

But let’s leave that profoundly important problem aside, and assume that by “us,” Friedman means America in general. There can be no question that world opinion on America has sunk. What is his answer to the question of why they hate America?

Friedman tells the story of the collapse of the Soviet Union and the amazing rise of American power in the 1990s, when the technology revolution led to the undisputable dominance of the United States as an economic and political power. As a “hyper-power,” we began to touch their lives in their countries more than their own governments. People around the world began to sense that America was shaping their lives in ways they could not control. The world economy is too intertwined for anyone to consider an official military response, Friedman goes on, so that left it to people who have no real stake in the system to try to beat back the hegemony. Thus terrorism—warfare by private groups as versus states—became the preferred means of fighting.

After the US military crushed the Taliban and then Iraq, more and more people have begun to fear the United States. People who once believed that the United States was a benign power began to believe that it was a dangerous one, especially given the Bush administration’s go-it-alone approach. Friedman says that the world’s real frustration is that people cannot vote over the uses of American power and thus have no choice over their fate, and this is fueling hatred. He concludes that we need to find “a stable way to manage this situation.”

What is Friedman’s error? In a phrase, he conflates “power and market” (to borrow a phrase from the title of Murray Rothbard’s great book). In missing this point, Friedman shows that he has done too much reporting and not enough thinking. He sees angry people all over the world, from Muslims in a rage over US troops and US movies, to the French bourgeoisie, attacking McDonald’s, and draws the most trivial conclusion possible: people always hate the dominant power. He makes no sharp distinction between econo-cultural influence and politico-military imperialism, whereas any serious understanding of the world must begin with this distinction.

What is the difference between econo-cultural influence and politico-military imperialism? It begins with the elementary divide between things that people choose to embrace and those that are foisted upon them. American commerce is not dominant around the world because people are buying products at the point of a gun. Consumers of the world have chosen, of their own free will, to purchase these goods offered by entrepreneurial companies.

It is an act of voluntary cooperation that has made American commerce dominant. Big Macs are not forced on the world; they are purchased by people who choose them over other options. If the French stopped buying Big Macs, the burger chain would pull out in a matter of months.

There is no reason to expect that market saturation would give rise to resentment. Let’s understand this by way of analogy. Let’s say that Persian rugs become hugely fashionable and inexpensive. They are on the floors of half of American homes. People don’t want rugs of other types or designs, just Persian. Now, if a person saw this fact and started to whip up a huge frenzy about the scary power of Iranian rug makers, everyone would think this person was a bit loopy. Far from being a threat, Iranian rug makers have merely made it possible for Americans to acquire the goods they want. If the American hegemony were limited to Starbucks, McDonalds, and Nike, who would care? None of these companies have any power to coerce anyone. There is no reason to resent them, anymore than we resent the Finns for cell phones, the Swiss for watches, or the Russians for vodka. We are free to buy or abstain from buying any of these goods at any time. It is our choices as consumers that give these products prominence in the global economy.

But don’t leftist protesters target US companies and even burn them down from time to time? Yes, they do, and I don’t doubt that anticapitalism has something to do with it. And yet these companies have come to serve as proxies for the aspect of the American hegemony that the world really hates: the military power, which is to say, the US state. But don’t Muslims despise the decadence of American movies and music? Certainly. But would their opposition turn to violence if the United States were not bombing and invading their countries? Highly doubtful.

There is a huge difference between setting up a company and inviting people to buy your product versus bombing people and bribing politicians to do your will. It is the difference between what Franz Oppenheimer called the social and political means. One way is peaceful, the other violent. One asks for people’s cooperation and the other demands it. One way is based on hope for voluntary choice and the other presumes that choice is a dangerous thing. Economic globalism and military globalism are not just distinct; they represent opposing forces in the world today.

The great tragedy of the American hegemony is that these two ways of doing things have been intertwined, such that people of the world are no longer able to distinguish between the voluntary choice to watch an American movie and the coercive mandate to turn in your gun. That Thomas Friedman does not draw attention to the difference makes him culpable for grave intellectual error but hardly unique: both the friends and opponents of American commercial globalism have presumed that it goes along with military domination.

Friedman himself has famously written that: “The hidden hand of the market will never work without a hidden fist.” For this he is called an apologist of corporate power. But here again, the phrase corporate power is highly misleading. In a market economy, no corporation has power, only profits and influence, which come to it by the voluntary choices of consumers. Only the military exercises power as such, and it does so without seeking the input of others.

Friedman hints at this with his comment that people of the world do not have a vote on the behavior of the American hegemony. But a political vote would be useless. Do we really want to subject the fate of world trade to the political votes of the world population? Who or what would they vote for? What if the vote ended up granting the United States the right to do whatever it wanted? Those who voted against this outcome would be no better off for having slogged to the polling stations.

Nonetheless, he is right that people want some say in world affairs. That requires, in the first instance, a rejection of war and military occupation. The appropriate means to grant people a say over the shape and direction of the world economy and culture is the market. The market is the stable way to manage the situation. But in order for the market to do its work, the military means must be rejected in favor of the peaceful means, which is all about commercial activity and cultural exchange.

As Mises writes:

The free traders want to make peace durable by the elimination of the root causes of conflict. If everybody is free to live and to work where he wants; if there are no barriers for the mobility of labor, capital, and commodities; and if the administration, the laws, and the courts do not discriminate between citizens and foreigners, the individual citizens are not interested in the question where the political frontiers are drawn and whether their own country is bigger or smaller. They cannot derive any profit from the conquest of a province. In such an ideal—Jeffersonian—world of democracy and free trade war does not pay.

However, so long as the United States has troops in 100 countries, overthrows regimes at will, slaughters people in its wars, decides which countries may defend themselves and how, and otherwise assumes the right to manage all world politics, the wonderful aspects of the American “hegemony”—namely the superiority of its economic and cultural exports, and their integration with countries and cultures around the world—will live in the shadow of the threat of coercion.

The American commercial sector has brought great blessings to the world. However, the great tragedy of a huge economy operating under a central state is precisely that it can be used to fund that state’s imperial impulses. When people of the world are looking for a way to curb the military power, they invariably turn their anger against the vulnerable symbols of capitalism (hence the Twin Towers calamity). It is up to the citizens of the hegemony to make their will known and restrain the state so that the blessings of commerce can thrive.

The journalist’s skill as an observer can only take him so far, if he is observing with the wrong theory in mind. As Friedman’s column shows, without the distinction between power and market—the very core of the libertarian idea—a theory of everything can easily turn into a theory of nothing.