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3/4/02

STRAPPADO WRACK

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If an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. Most economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another. - Milton Friedman

Tariffs For Survival Or Profits For Multinationals

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The deadline approaches for President Bush to accept or reject the recommendations from the International Trade Commission on protective Tariffs for the U.S. steel industry.The dire condition of a crucial domestic industry is beyond dispute. The core question - "We need to go to the root cause of the problem," the official said, pointing to the need to get foreign governments out of the business.

The case from the viewpoint of the steel workers, industry and national interests is compelling.  The facts and statistics are clear, the implications of the destruction in an independent capacity to produce steel should be recognized as a national security issue. So why do the high priests of the 'Free Trade' movement continue to preach the line that the costs of proposed tariffs would cause the consumers billions, as the determing factor in the decision? 

For decades we have been forced to systematically dismantle significant domestic manufacturing industries under the suicidal policy of Free Trade. There is nothing free about the loss of living wage jobs and the demise of independent production capacities. The notion that America is best served when multinational 'stateless' corporations are allowed to leave our shores and dump their foreign built products back upon the society that developed, financed and provided a ready  market, is insane.

The madness of public support for purchasing foreign made goods based solely on  a subsidized price reduction is know to the consumer. But what effective choice do they have when domestic options are not available in a marketplace that is anything but reasonable. International trade must be beneficial for all interests for it to be successful. Commerce is the life blood of all economies. But under GATT, NAFTA and every other effort to open the U.S. economy, while transferring our industrial capacities outside our own borders; our country becomes dependent upon the whims, availability and political intents of foreign suppliers.

Tariffs have always been the traditional method to protect our sovereignty as an independent nation. Arguments that America benefits from Free Trade, when it is not Fair, are the siren's calls of the a deceptive vamp. Just look at the record that Free Trade has inflicted on our economy and security. Our Balance of Payments problem requires the financing of this deficit by foreign investment.

"The rise in the current account deficit was led by a surge in the merchandise (goods) trade deficit, which rose to a historic high of $347.1 billion in 1999 more than $100 billion higher than its previous record of $246.9 billion in 1998. Measured as percentages of gross domestic product, the current account deficit was 3.7% and the goods trade deficit was 3.8%, exceeding the previous peaks set in 1987 of 3.4% for both indicators."

The prospect for the future only gets worse. From The Interim Report: Notes on the U.S. Trade and Balance of Payments Deficits - Wynne Godley we get this projection: "After ten years the current account deficit is about 6 percent of GDP, nearly double its present level, while the NNAP (see Chart 6) continues to rise rapidly, reaching 50 to 60 percent of GDP in ten years' time."
 
Also from this same report: The Current Account and Primary Balances: Actual and Projected (Percentages of GDP)

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Compare this report to the most current Economic and Financial Data for the United States, latest update: March 3, 2002  So what does all this mean and why should we care about continued rising balance of payment deficits?
 
In simple terms, we all have to pay for the loss of American jobs. Don't be deceived that cheap foreign imports really benefit America. Temporary perceived price bargains just means that domestic produced alternatives will be forced out of business. Slogans that the world is now 'interdependent' is translated to read - your job has disappeared. When the last native manufacturing facility closes and only imports are available to purchase, do you really think that price competition will exist or that you will be able to afford the new cost structure?
 
Your so called Foreign allies reveal their attitude towards rational national trade policy with reports like this: "The United States has been accused of an unfriendly act by considering the imposition of tariffs against imports to protect its domestic steel industry." Preserving an indigenous steel industry is not an option, but is a necessity for the U.S. to survive economically. One need not be a fan of unions to see the wisdom of maintaining the ability to produce basic and necessary industrial capacity.
 
The political agenda for those who demand trade to be a one way street, flowing in the direction of imported foreign goods, should be totally clear. Destroy American industry and her people will be required to accept a bleak economic future. When government employment replaces skilled labor, your nation is doomed. Tariffs level the playing field and will stop the exodus of crucial elements of industrial autonomy. The choice is obvious. If America is the end user, we become the loser if we abandon homeland production. There is more at stake than just steel. The survival of a free people is the real issue.
 
SARTRE - March 4, 2002

Whoever could make two ears of corn or two blades of grass to grow upon a spot of ground where only one grew before would deserve better of mankind and do more essential service to his country than the whole race of politicians put together. - Jonathan Swift

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