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Free Trade

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Essence

Free Trade - the perfect "Hegemony"

by SARTRE

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When Marxist Antonio Gramsci, coined the term "Hegemony", he proposed the notion of the predominance of one social class over others.

But when this term is used by Alan Greenspan in his congressional testimonies, he is describing US financial power. The indisputable benefit for Free Trade is accepted by the general public, as an article of faith. This canon of economic policy has become the ultimate political sacred cow. Those who challenge this basic maxim of the "World Community" are marginalized as kooks or extremists. If you want to understand how Ralph Nader and Pat Buchanan can agree, politically on the problem; namely the WTO, one needs to unmask the labyrinth of economic deception that surrounds the "Big Lie".

Dr. Ravi Batra has introduced terms like "jobless recovery," "contained depression" and ‘deflationary boom’ in his book The Great American Deception, but in his influential work - The Myth of Free Trade, he gets to the heart of the matter.

From a legal critic, one review states: "The Myth of Free Trade is an ambitious challenge to the proponents of liberal international trade…Yet, it is Batra’s willingness to defy the conventions of neoclassical economics that makes the Myth of Free Trade interesting, if not theoretically sound."

But what does this topic have to do with the conditions that affect the average America and their families? If you accept the mainstream mantra, you will chime in with the chant that we must support GATT, because the entire world is all a WTO! And to some degree that answer is true - all the globe has been turned into one interdependent "Hegemony", Greenspan style. But ask yourself, does that benefit you? Arguments about reasserting national sovereignty usually fall on deaf ears. Discussions that focus upon the shadow elites that set and fix international economic policy, goes unheard. So what will stir the minds of the public to take notice and express their discontent? Might the reality of their own economic plight and future be the common link, that will awaken the sleeping populace, from their deep sleep?

Consider THE EMPLOYMENT PICTURE OF THE UNITED STATES:

"Trade agreements (i.e., GATT, NAFTA) have been made in concert with the government's orthodox free trade policy . . . lower paying jobs, somewhat menial in nature in the service sector are being created, but quantity is no substitute for quality. With the average weekly earnings rate falling by 19% over the last twenty five years, trade deficits approaching $2 trillion dollars and domestic manufacturing employment dropping sharply"

The subject of jobs, wages and trade policy is discussed intelligently in this account.

For those who immediately think all the 'Greens' have lost their minds, consider their case in The WTO and "free" trade, without adopting their solutions.

"Clearly, the concept of "free" trade is misleading in that only economic and political elites make the rules (in secrecy), reap the bountiful rewards, and punish those who violate their rules."

But the best account comes from - Sobering Thoughts on Export Policy by Henry C.K. Liu

"In summary, the productivity boom in the US is as much a mirage as the money that drives the apparent success. There is not productivity boom. There is an import boom. The imports are not driven by the great growth of the American economy. They are driven by debt of the countries producing this wealth. The imports, in the view of the advocates of the New Rome theory, are a payment of tribute by vassals. The result of this distortion driven by the monetary system is a decline in real living standards in all of the indebted world, and in the United States. Indeed, reward has been divorced from effort. There have been enormous strides in productivity around the globe, few of them came in the United States. It has been the seigniorage of the dollar reserve system granted to the US without economic consideration, that allowed the import of productivity from abroad and the superficial appearance of health in the US economy." (emphasis added)

Now, after you have absorbed all this background, look at a real world example, from the Clinton administration, on how the doctrine of Free Trade really works:

Writing in the Wall Street Journal, Paul Gigot reports that the U.S.-China textile pact signed in February contained a unique provision that throws business worth several million dollars to American manufacturers of cotton towels. . . . A primary beneficiary of the provision is Springs Industries of Fort Mill, South Carolina, whose president and chief operating officer is Crandall Close Bowles, wife of the White House Chief of Staff.

"The Close family owns about 45 percent of the $2.2 billion textile maker, which appears to swing a big stick in Washington."

Americans need to examine their own circumstance. They have lacked the courage to face up to the facts. The succinct conclusion from Dr. Ravi Batra says it all:

"free trade has done to America what even the Great Depression could not do. Even during the economic cataclysm of the 1930's, earnings rose with productivity because the United States was still a closed economy with high tariffs. But since 1973, weekly earnings have declined, while productivity has continued to rise. Eventually, free trade could be more devastating than even the Great Depression."

The essential question you need to ask yourselves: How FREE are you because of the Free Trade creed? The current reality clearly is "Hegemony" rules - and you pay . . .

Complement

Five Myths About Free Trade
by George F. Smith

Experts hail it, the vast majority of people benefit from it, and yet it's nowhere to be found.  Free trade, which refers to the unrestricted flow of goods into a country, is not simply something that would be nice to have.  Without it we've suffered through wars, depressions, and permanent loss of liberty.  When we've come closest to having it, we've enjoyed relative peace and prosperity.

It's a cinch to get.  All government has to do is unilaterally repeal all import restrictions.  No more tariffs, quotas, or domestic-content requirements.  No more "voluntary" agreements in which foreign companies are intimidated into self-imposed quotas or prices for fear of government sanctions.  Let the goods flow.

Free trade is the enemy of special interests that run to the government for protection.  These groups throttle us with harmful legislation because of largely unchallenged propaganda.  Let's dissect some of their claims:

1.  Trade agreements such as NFTA and WTO promote free trade

Trade agreements as such are meaningless.  Only a country's unilateral commitment to free trade is meaningful.  The Bush administration pays lip service to WTO and free trade, then does what it wants.  So far this year they've threatened to slap steep fines on Canadian softwood lumber and some steel imports, and have declared that Vietnamese catfish aren't really catfish, since they take market share away from constituents in the Mississippi delta.  [1]  Disregarding the WTO, the European Union has threatened retaliatory tariffs targeted at some of Bush's politically-favored states.

In this regard, the spectacle of leftist protesters trying to hinder WTO negotiations is somewhat amusing, in that they believe they are fighting global laissez-faire.  The "WTO isn't mainly about trade," according to a writer for the Environmental Research Foundation (ERF).  "It is mainly about establishing the kind of economy, worldwide, in which the owning class gets to make all important decisions without interference from governments or from anyone else." [2]

Under laissez-faire, the "owning class" -- meaning the producers of goods and services -- are at the mercy of consumers, through their decisions to buy or not to buy.  The ERF promotes this state of affairs as the ultimate horror and believes, quite naively, that the WTO is working to bring it about.

2.  Free trade threatens domestic jobs

Creating jobs has never been a problem in any economy.  Creating productive jobs is the challenge.  Free trade encourages the creation of wealth, which means it will destroy some jobs and create new ones, as guided by consumers' choices.  Since tariffs insulate domestic firms from competition, the protection keeps some people stagnating in outmoded jobs, thereby discouraging them from seeking more favorable employment in competitive industries.

However, Paul Craig Roberts has identified a trade situation that is fast becoming a problem.  He notes that multinational corporations have established factories in underdeveloped countries like Mexico and China and use the low-cost labor of those nations to produce goods for sale in the U.S.  And not just unskilled labor, but engineers and researchers trained here but hired in those countries at one-third the salary.  "When these facts are mentioned," Roberts says, "free-traders have a knee-jerk reaction and rush to the defense of free trade." [3]  He's even asserted that the "end result of the job transfers will be a U.S. population too poor to purchase the products produced by cheap Chinese and Mexican labor." [4]

A policy of free trade with other nations will not guarantee a country's prosperity.  How government treats domestic commerce plays a major role in business decisions.  From the "law factory" in D.C. to the business-hating culture in Hollywood, America has subverted business with crippling regulation and unearned guilt.  Given that companies are always searching for more profitable ways of doing business, is it any wonder many of them are moving operations out of the country?

If we are to stop this "desertion," as Roberts calls it, we need to repeal laws that drive business away.  Unfortunately, if Congress ever addresses the problem, we can expect them to have a knee-jerk reaction and make matters worse.

3.  It is better to export than to import

When goods and services are exported, they leave the country.  Therefore, less is available for consumption at home.  When imports arrive, we have more choices, and because they compete with goods from other countries, including our own, we have better choices -- higher quality, lower prices.  As Milton and Rose Friedman explained, the "favorable balance of trade" that is so universally sought after really means "sending abroad goods of greater total value than the goods we get from abroad." [5]

Look at it this way: each person's own specialized labor is "exported" to get the imports (goods) he didnıt produce.  Most of us would prefer to get more for less rather than the other way around.  So it is with exports and imports between countries.

4.  "Fair Trade," not free trade, promotes world peace through justice

"Fair trade" means protectionism.  As Frederic Bastiat pointed out, protectionists want to do to their country during peacetime what they try to do to their enemies during war -- close its borders to imports.  Protectionism promotes conflict between nations.  When President Hoover went against the advice of over 1,000 economists and signed the Smoot-Hawley Act in 1930, boosting some tariffs to 100% levels, other countries retaliated in kind and brought world trade to its knees.  [6] The economy collapsed into a depression, which continued up to World War II.  Only free trade is fair.

5.  Free trade invites "dumping" of goods, which harms the domestic economy

Wouldn't you love General Motors to "dump" a new Corvette in your driveway for free?  In international trade, when goods are "dumped," it means theyıre sold here at prices below those in the country of origin.  Who benefits?  The American consumer, because he gets them at a lower price.  Any company that slashes its prices below that of its competitors could be accused of "dumping," but most people would benefit from it.

Anything other than free trade is an attack on property rights.  Without property rights, no rights are possible, and we end up at the mercy of the State.

References

1.  Bush plays free-trade game, USA Today

2.  Making Sense Out of the WTO, Environmental Research Foundation

3.  Smug in a no-think existence, Paul Craig Roberts

4.  Worsening Job Prospects for White Males, Paul Craig Roberts

5.  The Case for Free Trade, Milton Friedman and Rose Friedman, 1997

6.  Free Trade or Protectionism, Vincent H. Miller and James R. Elwood

 
The truth is always the strongest argument
Sophocles

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