Thursday, December 11, 2003

More on the Iraq Contracts: Radley is upset that the restrictions on who can bid for rebuilding contracts are, as he sees it, a strike against free trade:
The moratorium on bids from firms in those countries means that the American, Italian and Spanish firms get to compete in something that's less than a completely open market. That means that U.S. taxpayers will be footing arficially high tabs for construction projects, and it means that Iraqis will be getting something of less quality than what a truly open market would provide.
While it is true that the U.S. policy has restricted the pool of competition, this is not the same thing as violating free trade principles. Look at it this way: The U.S. is the buyer of goods and services. The companies that will bid are the sellers. When sellers and buyers come together -- under conditions negotiated solely by buyer and seller -- free trade has occurred. Recall that this is not a decision of U.S. trade policy; nor is it a decision that necessarily protects U.S. companies (since so many countries' companies can bid). Rather, this is a decision by the U.S. government as purchaser to spend its (our) money in a way that is most beneficial. This kind of "unfree" trade is practiced all the time, and most libertarians are in favor of it. As I said in my comments to Radley's post:
Think of the libertarian argument for freedom in hiring practices: it may plausibly be "unfair" for an employer to restrict hiring along, say, racial lines, and it certainly crimps the free market pool of labor. But most libertarians would defend a company's freedom -- as an entity contracting for services -- to put whatever restrictions it sees fit on its hiring practices.

This is basic economic liberty.

Unfree trade occurs when an outside entity (such as a government, the UN, the EU) restricts access to the free market -- that is, when it disallows a buyer and a seller from negotiating terms independently.

Radley goes on to say:
There's also something decidedly unseemly -- and at odds with free trade principles -- about holding private firms accountable for the foreign policy of their governments. Consider if France or Germany or Russia deicded to punish McDonalds or Microsoft or General Motors for the Bush administration's unilateralism.
I've considered that, and it doesn't pass the smell test. We're not talking about banning French companies from doing business here -- or in Iraq for that matter. We're exercising our freedom to spend our money as we see fit. Likewise, if the French government is piqued by American unilateralism, Chirac can decide not to have McDonalds cater the next National Assembly luncheon. It's their money to spend as they see fit.

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