Fair and Balanced Trade, Not Free Trade by Tadit Anderson
Fair and Balanced Trade, Not Free Trade by Tadit Anderson
“At an absolute minimum, ordinary citizens need to know enough about the economics that supposedly justifies free trade to hold their ground in confrontations with the experts and not get ruled out of public debate on the grounds of ignorance. America can't be a democracy if one side is intimidated into silence on a question this important. So ordinary citizens need to learn how to criticize the economics of free trade in language that economists (and those that look to them for policy advice) accept as legitimate – and will have to take seriously.”
The Fair trade agenda requires promoting a higher level of economic literacy to support a strategy of better informed advocacy. These issues can then be raised in public debate to promote the value of sovereign industrial policies. International trade and industrial policies are an important domain within macro-economics.
The need for sovereignty based trade and industrial policies is not the only item on the macro-economic reform agenda. It is one debate that has a strong potential for the recognition of its political importance by the people most directly harmed by Free Market trade and industrial policies. What matters above political affiliation is the awareness of actual results of the installed Free Market policies relative to sovereign economic interests. Blaming progressives or economic refugees is not going to fix the very basic disconnect between Free Market economics and our economic reality.
De-industrialization, environmental pollution, and the extraction of wealth from our communities have widely been accepted as collateral damage to the one size fits all weapon of mass economic destruction, Free Market economics. The outsourcing of jobs, the evasion of regulations, and more define only a part of the process. Without the means to pay for mortgages, higher education, health insurance, groceries, and utility bills, Free Market industrial policies have also served as a form of class warfare and a strategy to strip wealth from our communities by multiple types of political and economic extortion. The extortion has included tax abatements, tax depletion allowances, and various other incentives, including use of referendum to allow the establishment of casinos.
The mis-assumption is that these tactical “choices” will guarantee any enduring net economic benefit in the form of jobs or a sustainable economic future. Allowing foreign based corporations to contribute to political campaign funds based upon possible jobs in the US is a particularly treasonous way to protect the economic and political health of any nation.
Sovereign Industrial Policies
The public debate about sovereign industrial policy has been won largely because the debate has been one sided, no disbelievers are even invited. The indoctrination has featured courtier economists and politicians serving as false witnesses to assert the premise of economic grace to the true believers of the Free Market theology. They all then join together as the church choir with endorsements from both of the “business friendly” political parties and their common and generous corporate sponsors.
Economists seriously interested in trade and industrial policies and who have a historical and non-ideological perspective have generally been shunned as heretics. This sort of conformity has also been true in the marginalization of other economists lacking the blessings of blind faith. The public debate needs more than ever to include these voices of reason to inject some ideas actually based upon real life economics and not encumbered by the Free Market hymnal.
People with a serious interest in the economics of their communities need to reach beyond just repeating slogans such as “fair trade” and “shop local.” Being in favor of fair trade, of unions, of environmental standards, of sustainability, of localizing wealth, and of full employment are well and good, and are also not enough to carry the day by a large measure. If we are to become again a relatively sovereign nation, have a humane quality of life accessible to all, and have our expectations served by sovereign trade and industrial policies, we need to have both our public and our advocates better informed than what they are currently.
It is necessary to critique the reforms offered to modify Free Market industrial policies. There are approximately eight faults within the assumptions used to validate Free Market industrial policies. This begins with exposing the absence of reality in Ricardo's assertion of comparative advantage. Another major problem within the assumptions of neo-classical economics is that labor is regarded as only another commodity. The connection between labor as as consumers who support community and national economies, and labor as those who exchange their labor as productive capital for income is a bit of economic plumbing which has been left out of the Free Market design.
Occupational groups that are shielded from the real world effects of the Free Market theology tend to also ignore the brutality of economic free fall. This becomes more extreme when the demands for austerity include the elimination of social infrastructure . This is how private debt is socialized to enable an even deeper level of looting. Paying off the debt based deficits which resulted from subsidies, bail-outs, embezzlement, and no bid contracts of Free Market economics with higher taxes on working people and the privatization of public assets ends up being an admission of a faith based formula rather than a reality based analysis.
It can be argued that the US has possibly not had a realistic, industrial policy since shortly after the American Revolution, and that Alexander Hamilton was instrumental. Protectionist industrial policies including tariffs supported the growth of US industry. Relative to Hamilton's advocacy the wisdom of those industrial policies was valid, though it is also clear that those measures were not without substantial self interest.
Economic history is another domain which is largely ignored by conventional academic economics. In this context I recommend Charles Beard's book An Economic Interpretation of the United States Constitution, which gives an additional interpretation of the alignment of interests at that time. In the 19th century the southern US states were dominated by an agriculture based economy, which caused those states to favor no tariffs, also known as Free Trade. This became a major point of dispute toward the outbreak of the US Civil War. According to Michael Hudson industrial policies favoring economic sovereignty ended during the US Woodrow Wilson administration in 1914.
The U.S. continued to benefit from protective industrial policies up until just after World War II. Protectionist trade policies of a poorly conceived nature were offered by John Kenneth Galbraith in his book The Great Crash: 1929 as a reason for the “Great Depression.” Countries which had debt in US Dollars from WWI were unable to produce goods for trade into the US to retire their war related debt.
The US was able to provisionally recover from the Great Depression when it became the primary munitions and weapon supplier to the European countries during World War II. The entry of the US into WW II also caused the removal many people from the productive process through their enlistment in the military. The economic reforms of the US F.D.R. Administration were in many ways half measures that were easily dismantled when the lessons of the Great Depression were unlearned.
Mercantilism is a pattern of economic interests typical of the colonialism of an empire or of a relative regional dominance. It is a process of extracting and exporting raw materials to produce value added products which are then sent back into the raw material and labor intensive economies. This process then creates a relative trade imbalance and deficit. After World War II tariffs were often used as a part of the cold war strategy to serve the global political agenda of the nominal Free world led by the US. This agenda was largely framed as a contest between “democracy” and Free Market state capitalism versus the Evil Empire of state communism.
This political abuse of sovereign industrial interests rewarded new US allies who were former enemies to conduct a new form of mercantilism against the US which continue even today. It can be argued that the conflicts that created World War II merely paused and then returned as a continued economic contest. In the net analysis US sovereign interests and the interests of most developing nations became collateral damage to the agenda of global corporate power. The analysis of potentials for virtuous cycles and the efficient scale for establishing sustainable and sovereign industrial development becomes very important.
It is also important to debunk the mis-appropriation of sophisticated mathematical methods including modeling in the service of validating Free Market economics. This is not to deny the appropriate use of sociometrics or of appropriate mathematical modeling. The sciencism gambit was first made popular by the neo-classical economists of the 19th century, and it gained thereby an unearned aura of legitimacy. The emphasis upon historical behavior and outcomes actually provides a more solid basis for policy formulation, and validating better economic models. Having a workable set of priorities and policies and how the advocacy for a sustainable industrial policy might operate within congressional elections will be an important step toward shifting policies from Free Market theology toward sovereign stability and sustainability.
|Free Trade Doesn't Work trifold.odt||55.01 KB|
|Free Trade Doesn't Work trifold MS.doc||29 KB|