No More Free Lunch at Sea

In his 1993 book The Armchair Economist, Steven Landsburg attributes to David Friedman this picture of “The Iowa Car Crop”:

There are two technologies for producing automobiles in America. One is to manufacture them in Detroit, and the other is to grow them in Iowa. Everybody knows about the first technology; let me tell you about the second. First, you plant seeds, which are the raw material from which automobiles are constructed. You wait a few months until wheat appears. Then you harvest the wheat, load it onto ships, and sail the ships eastward into the Pacific Ocean. After a few months, the ships reappear with Toyotas on them.

Landsburg adds, “It would be unnecessarily expensive to manufacture all cars in Detroit, unnecessarily expensive to grow all cars in Iowa, and unnecessarily expensive to use the two production processes in anything other than the natural ratio that emerges as a result of competition.”

But what enables cars to be grown in Iowa is not natural: it is the safe westward passage for Iowa wheat and corn and eastward passage for Toyotas and Hyundais secured by the once unchallengeable might of the United States Navy. That might, in turn, was the product of American ships, American guns, American planes, and American torpedoes from an industrial plant and techniques that owe much to Detroit’s Henry Ford. 8,685 B-17 Liberators were manufactured at Ford’s Willow Run Plant outside Ypsilanti, and many hundreds of them played crucial roles in the bombing campaign against Japan. One can only be indifferent between Friedman’s two ways of making cars if one is also indifferent to the source of naval protection

Since John Lehman’s 600-ship navy of the final years of the Cold War, US naval power has been in continuous absolute and relative decline. Under Mr. Biden, the US lost its first war against the Houthi jihadi pirates of Yemen, being unable to secure the passage of US and allied-flagged ships through the Red Sea and the Suez Canal. Our principal rival of 2025, China, did more than watch and delight in this failure: China not only allied with and armed the Houthis but also secured passage for its ships. On Saturday, March 15, 2025, Mr. Trump commenced America’s Second Houthi War. Hopefully, it will go better for America than the first.

There will, however, need to be a great deal more onshoring of supply chains, manufacturing capacity, and shipbuilding if the US is to maintain “freedom of the seas” for itself and its allies on the world’s waters. All of that is, as the economists would say, “inefficient” compared to complete free trade, at least if you assume away any costs of maintaining the security at sea on which international trade depends.

Perhaps, only perhaps, the US can still choose between David Friedman’s two ways of manufacturing. Perhaps America can regain mastery of its own political and economic fate. The alternative is to accept that terms of international trade will be dictated by those who control the sea lanes, whether those are Shiite fanatics or Chinese Communist Party commissars, and accept America’s role as producer of those things China still wants from us — at the prices China chooses to pay — whether those things are Ivy League degrees, superhero movies, or Iowa pork bellies

Certainly, some advocate abandoning the dream of mastery, either due to ideological free trade convictions or because they are Atlantic Magazine contributors funded by Laurene Powell Jobs’s profits from unfree Chinese labor. And not least because mastery is costly.

The supposedly scientific economics that David Friedman and his father, Milton, preached was based on the notion that what mattered most was the level of goods and services available to the consumer. That is what free trade economics’ alleged founding father, Adam Smith, called “opulence.” Smith, for his part, asserted that “defense is of much more importance than opulence” and, on that basis, in his magisterial Wealth of Nations, justified Britain’s Navigation Acts that protected the British carrying trade from cheaper foreign competition and thus subsidized British paramountcy at sea.

The notion that wealth, and especially consumption, is all that matters is what thinkers from Plato and Aristotle down to Adam Smith called corruption. It is a notion of the human good that nobody really believes or accepts when they are thinking seriously about their own good or that of their families. The beginning of seriousness concerning our political-economic situation is to discard it.

That does not mean that every protectionist notion or industrial policy will work, and each of them requires justification in terms of its own costs and security benefits. But it means that only by some mixture of protectionism, industrial subsidy, and trade with allies (as well as carefully controlled trade with rivals and enemies) will the United States regain the mastery of its security conditions that enabled Steven Landsburg and David Friedman to dream their marvelous dream of free trade and a free lunch at sea.