The Follies of Free Trading
America is in open competition with the very countries from which we buy our goods and finance our government. These countries supply our consumption while simultaneously competing fiercely against our companies in international markets. India, Japan and China consistently rail against “protectionism” in the U.S., because they do not want their unfettered access to the U.S. market tampered with.
The U.S. is told that it must oblige to its commitment to free trade — not because it is in OUR best interest, but because it is in our foreign creditors’ best interest. Foreign exporters finance our government so the U.S. can continue functioning, and then they make all of their money back through the goods we buy from them. The U.S. government then pays back its finance charges, and over time foreign financiers virtually double their investments. The United States is told that it must keep up its end of the free trade bargain, while other nations seem to skirt the rules. They often use hostile practices to put American companies out of business and capture sectors of the market.
Other countries limit and restrict the amount of American-made goods flowing into their markets. The United States puts up no such regulations, and is thus flooded with foreign-made goods. The WTO, NAFTA, and other free trade agreements favor the major producers in this equation, and right now, the U.S. is not one of them. We are told by these international trade regimes that we cannot protect our own economy, because we must instead open our markets up to all foreign interests.
Our government has softened its own regulations regarding capital infusions, mergers and acquisitions, and foreign-takeovers. To make matters worse, many successful American companies are for sale on an open stock market. As a result, the U.S. has lost thousands of companies to foreign takeovers in the past 30 years, and stands to lose even more if the economic crisis deepens. The same cannot be said of other countries, where takeovers are closely regulated, and major industrial champions rarely get purchased by an overseas interest.
It is crucial that we start to follow the successful examples set by these other countries. The United States cannot continue allowing the rest of the world to walk all over our economy.
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Liberal/”progressives” are all a-tingle over the words,”free trade isn’t working.” Liberal/”progressives” have always despised “free trade,” not to mention the free market, commerce and manufacturing. Suddenly, however, they are bad-mouthing free trade in order to save manufacturing jobs — which they also despise. Go figure.
Of course, Americans are confused. Is free trade good, or is it bad?
Free trade is “bad” when it is one-sided. If you are engaged in what you think in open and honest free trade with a criminal enterprise, (Communist China) that is cheating at every turn, then the experience might be less than expected.
Is marriage good or bad? Ask someone whose spouse is constantly cheating? They might have a different outlook from the majority of married couples who live by the rules.
UPDATE:
I am reading “How The Economy Was Lost,” by Paul Craig Roberts, an EIC “Featured Contributor.”
According to Dr. Roberts, “The offshoring of American jobs is the antithesis of free trade.” p155
He further states that, what companies are doing is seeking “absolute advantage,” which represents “the betrayal of one’s own country,” according to “David Ricardo, the originator of the free trade theory.” p155
Hi, Bruce:
THat’s an interesting twist on “free trade”. When did
progressives despise U.S.manufacturing? I’m a long-time
progressive and I’ve always said a primary objective of
balanced trsde is to rebuild our ravaged domestic industry
while restoring lost jobs, regain control of our huge domestic market, and eliminate our trade deficits. Note
that rebuildong domestic industry is listed first. I should have added that’s also essential for national security reasons. We’ve lost much of our capability to make weapons
using only domestic manufacturing sources.
Best! Ken Davis
Hi Ken,
Sorry I missed your comment. I would have answered immediately. I checked my email from 11/17, and I didn’t receive the usual email from EIC advising me of a new comment.
I certainly do respect your wisdom and am always grateful for your insights, even when you are disagreeing with me.
First, let me say, I do not consider you a “progressive,” in the sense that I used the term above. All right-minded people are for progress, but a group of wrong-minded people have adopted the term because it sounds better than certain discredited terms like liberal, socialist, Marxist or communist.
The progressives I refer to are taking us down Hayek’s “Road to Serfdom.” They are working for rapid growth of government while downgrading our rights and our opportunities. Their plan is to reduce us to a quiet, peaceful herd of cattle, to be ruled over by themselves. We will do the grunt work and they will provide for our needs — as they see fit.
Some see this as a conflict of visions. “Progressives” believe that they can create a “perfect society,” while “conservatives” believe that flawed creatures like us must be allowed to develop a “spontaneous order.”
Personally, I don’t buy that the vision of a perfect society is driving the Left. I believe that it is ENVY, pure and simple. For decades, I worked in and around manufacturing, and I listened to Leftists — journalists, academics, politicians and economists — denigrate commerce in general, and manufacturing in particular. Somehow, they always managed to work it into the conversation just how much MONEY the folks who ran manufacturing operations were making, and how undeserving they were . . . why “some of them didn’t even go to college.”
So, when “progressives” claim to be for “equality,” what they mean is, they intend to be equal with anyone who has MORE. You know, “spread the wealth around,” and all that.
Bruce Bishop
Free Trade, in and of itself, is not wholly to blame. What America still fails to realize is that with every tariff reduced and every trade agreement signed, no attention is paid to how border adjustable taxes, which are NOT negotiated, or even really discussed, impact imports and exports.
Regardless of achieving a reduction of a tariff from 38% to 2%, more than likely the country importing American goods will apply a VAT, ranging anywhere from 10-22% in addition to all US imposed domestic taxes, including the world’s highest corporate tax rate. The US has no such reciprocal action.
America seems to be allergic to the thought of a VAT or a retail sales tax for this country, but clearly, free trade has benefited the 148+ nations who ascribe to some form of border adjustable taxation scheme. By reforming (reducing or eliminating altogether income tax) the US’s tax system to include some type of border adjustable tax, manufacturing, labor and investment will return to the US and the trade imbalance would lessen.
Ms. Deatherage,
Anyone who remembers Al Gore’s ridiculing Ross Perot on national TV back in 1993 will understand why no politician will risk taking a stand against NAFTA or WTO, or in favor of tariffs.
Our “progressive” government essentially drove manufacturing out of the country by, first, piling on taxes and regulations, and then, by opening the back door to China via WTO.
I have seen NO evidence that our government has any intention of “bringing back our jobs.” In would appear that the more people who become dependent on the government, the more votes that will accrue to the “progressives” in both parties.
Correction: Last paragraph, second sentence begins, “It would appear . . .” not “In would appear . . .” Sorry.
As an honorably discharged Cold War veteran, I remember how we used to protect American invention and innovation and leverage it to benefit our economy. Reverse that equation and that’s where we are today.
Of course, businesses are dumping our innovation on China and other countries to get them to manufacture their products and of course our universities are packed like sardines with student spies from other countries preparing to embed themselves in our government and buisnesses and all of this has been going on since the end of the Cold War; however, did you really read those two articles?
They stole everything they didn’t already have in the largest theft of intellectual property in the history of the world!
If you had to put a price on what they took from us, it could total sexillions and China will put it to good use as they seek to make their economy, military, and culture the foremost in the world supplanting the United States… and we will have been instrumental to them being able to accomplish that.
Meanwhile, our politicians slept oblivious to what just happened worrying about how to protect music and film interests for Hollywood companies in awful legislation (e.g. SOPA/PIPA).
The results are already observable, the Chinese are building stealth bomber prototypes and planning a space station and they were a backwards military force during the Cold War. That’s all a result of simply taking ALL of our technology (across the board) away from us that we didn’t give them.
And U.S. educational organs teach every student at every level, from K-12th to the post-graduate Ph.D. research level, that our current paradigm of free trade is desirable for our economy and our national security.
It’s a complete delusional travesty.
http://www.businessweek.com/news/2011-12-22/china-based-hacking-of-760-companies-shows-cyber-cold-war.html
http://www.independent.co.uk/news/chinese-stole-all-nuclear-secrets-1096016.html
Nice website, American Taxpayer
I think you may like this site, there are several debates referring to the cold war with many references.
http://www.scottmanning.com/content/communist-body-count/
Thank you Joe.
The thing is, it isn´t because China, Japan or Taïwan isn´t playing fair.
No, it is because the big US enterprises aren´t competitive anymore, and in the european union, things ranges from worst to only slightly better.
They relied too much on on the cronyist consensus, which cornestone is the federale reserve in the US and the “independent” (private hands, in the name of Democracy and Human Rights of course) central banks in europe, but have also many other “middle-hands”, vested interests as well.
A farmer sell a litre number X of milk for 1 euro, the same amount will be sold at 100 euros at the shop.
More so, the cronyist consensus makes sure enterprises that could become competitive does.
That is partially why there is such a pression on small enterprises and even on national governements(Hungary for example).
Of course, there is cronyism and corruption in south-east asia too but the difference is, neither enterprises or governements invest too much efforts in that.
Not at the price of shutting down such things as innovation, skills, competence and leadership.
In China, there is much better dissuation than 3 years in a luxury appartement “prison”.
Execution, followed by organe removale for a well-known official.
Execution by organ removale for less well-known official, ever played Quake 4?
There remaines a limit not to cross, business and bureaucrats can´t liberal their way out of it.
No “NGO”s like “Memorial” and “Open Society” to protect them from the consequences of their own stupidity, in the name of “strenghtening civil institutions” and “human rights”.
Failure meant punishement, not reward. Incompetence and stupidity are kinda like homosexuality and blasphemy during the Spanish inquisition, at one´s own risks, not promotion ticket.
If it wasn´t so and the Chinese governement followed the example set by the US instead, there would have been only a slow economic growth, then no economic growth, then decline of living standards, then unrest and finally, another revolution.
Others believe they can stifle such a future revolution with copyright legislations, hate crimes legislation, hate speech legislations, surveillance systems and patriot acts.
Then, moves toward rationning (carbon credits anit?), drones with missiles and now apparently, martial law. No “paranoïa” or “conspiracy theories”, all these problems today happened because the great majority was hypnotized by consumerism, too indolent, too apathetic, too trustworthy, too apolitical and naïve.
The liberals doesn´t believe all their fancie words about democracy, human rights and civil rights.
They only believe in their own integrist and dogmatic rule.
If they ever get a police state like the CCP have today, there would indeed be a rapid change in the economy, except that it would be downard and not upward.
While Xiaoping´s era left the era of the Chinese culture revolution, the subsequent rampage would make the Chinese cultural revolution look like an utopia to the average westerner.
They aren’t competitive anymore because they legally paid our politicians to implement free trade for them so they could abandon the country’s domestic labor market to accelerate share-holder wealth which exposed all of our invention/innovation to foreign competitors who gladly took it.
No more competitive advantage = Now we aren’t competitive anymore.
Anonist,
I highly recommend the book “Death by China,” by Peter Navarro and Greg Autry.
http://www.youtube.com/watch?v=IonQZj0RARo
The link will take you to a YouTube video of Greg Autry introducing the book and giving some of the highlights. The video is about five minutes long.
As to your comment: “The liberals doesn´t believe all their fancie words about democracy, human rights and civil rights.
They only believe in their own integrist and dogmatic rule.
If they ever get a police state like the CCP have today, there would indeed be a rapid change in the economy, except that it would be downard and not upward.”
You are totally right. As George Orwell said, “Liberals are power worshippers without power.” Once they get power, they become totalitarians.
Mark Levin’s new book, “Ameritopia,” explains clearly the differences in philosophies that drive the right toward freedom and the left toward tyranny.
For more than a year, hackers with ties to the Chinese military have been eavesdropping on U.S. Chamber of Commerce officials involved in Asia affairs, authorities say.
The hackers had access to everything in Chamber computers, including, potentially, the entire U.S. trade policy playbook.
Translation: The Chinese government just stole our entire U.S. trade policy playbook and now know the U.S.’s entire trade strategy down to the letter.
http://abcnews.go.com/International/chinese-hack-us-chamber-commerce-authorities/story?id=15207642
According to Peter Navarro and Greg Autry, authors of “Death by China,”
“… as each additional American job and each new American factory has been offshored to China, so-called “American” organizations like the Business Roundtable, National Association of Manufacturers and U.S. Chamber of Commerce have beeen transformed from staunch critics into meek apologists for a mercantilist and protectionist China having its way with the American economy and its workers.” p78.
According to Paul Craig Roberts, author of “How The Economy Was Lost,”
“The “free market” shills on the payroll of the U.S. Chamber, N.A.M., and in economics departments and think tanks that are recipients of grants from transnational corporations are whores aligned with the elites who are destroying the American work force.” p155.
Roberts also says: “The offshoring of American jobs is the antithesis of free trade.” p155.
We’ve been down this road before. Back in the 1980′s, the Japanese were eating our lunch, and the YEN/$ ratio was 220/1. We kept giving them dollars, and they kept giving us stuff. Today, the ratio is about 77/1. That means the dollars we gave them in 1980 are worth 1/3 of their 1980 nominal value. Take out inflation, and it is even less. That is a pretty smart investment by us, I think.
Today, we are doing the same thing with China. Don’t be surprised if 20 years from now the Yuan/$ ratio is 1/1 (currently about 6/1). If you want to make money, buy Yuan and hold it for several years, then exhange it back for dollars.
Am I worried? Yes, a little. China has four times the population of Japan, and can absorb dollars for a lot longer (because of their relative lower base to begin with). But as long as they take dollars, and we have a printing press…