Obama's comments on free trade agreements show he doesn't know what free trade is

It is absolutely ridiculous for President Barack Obama to threaten sending Great Britain to the back of the trade line if they leave the EU. John had a very good summary of what the President said yesterday, including the fact Obama later claimed his comment wasn’t really a threat. But come on, what else could it be? Via The Telegraph:

However, he used his appearance at a press conference in the Foreign Office alongside David Cameron to dismiss the central claim made by Leave campaigners that Britain’s economy would not be harmed by a vote to leave.

Attacking Eurosceptic ministers for “ascribing to the United States certain actions we will take if the UK does leave the EU”, he said: “I figured you might want to hear from the president of the United States what I think the United States is going to do.

“And on that matter, for example, I think it’s fair to say that maybe some point down the line there might be a UK-US trade agreement, but it’s not going to happen any time soon because our focus is in negotiating with a big bloc, the European Union, to get a trade agreement done.

“The UK is going to be in the back of the queue.”

Yeah, that’s a threat. But the issue isn’t that he made it, but how politicians view free trade and free trade agreements. It’s typically thought free trade agreements come about through massive negotiations, like NATO or NAFTA or TPPA. In reality, free trade is companies going into another country and simply doing business with other businesses. Or, as Dr. Walter E. Williams wrote at Town Hall in 2010, individuals doing business with other individuals (emphasis mine):

Mercantilists have absolutely no argument when we recognize that trade is mostly between individuals. Mercantilists pretend that trade occurs between nations such as U.S. trading with England or Japan to appeal to our jingoism. First, does the U.S. trade with Japan and England? In other words, is it members of the U.S. Congress trading with their counterparts in the Japanese Diet or the English Parliament? That’s nonsense. Trade occurs between individuals in one country, through intermediaries, with individuals in another country.

That last sentence is the most important part of free trade people (and politicians) forget and it’s caused so many problems. Obama would not have made his threat to Great Britain if he actually believed in the real definition of free trade. The same goes for pundits and candidates who rail over how free trade hurts America. What they forget is how free trade can lift people out of poverty. When you have businesses selling products in other countries, they start hiring workers in that same country to explain their product to consumers. This means a British or French company could/would hire Americans to sell things to other Americans. This means the worker makes a wage, and can feed his family. It also means American companies can try to improve their products to bring more customers in, pay their workers, and line their own pockets with cash.

But it also means the government needs to get out of the business of making “free trade agreements.” They should allow companies do business in other countries (and with other companies) to bring everyone up. It also requires countries to lower tax rates (and reduce spending) to encourage businesses to move in. It’s a simple solution no one seems to understand which so frustrating. Obama’s comment about sending the UK to the back of the line is just stupid. If he actually understood how free trade works, he’d just let American and English businesses work together and reduce taxes to encourage this. Hopefully the next president (and the one after that) will realize this. So, no to massive trade agreements and no to individual agreements. Just let companies trade with each other and consumers. It’ll benefit everyone.