Rooted in Reason: Nurturing the Seeds of Liberty


Americans Sour on – OPEN – Trade by grassroothawaii
October 6, 2010, 10:16 am
Filed under: Uncategorized

By George Berish

In response to: http://online.wsj.com/article/SB10001424052748703466104575529753735783116.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

Possessing ignorance may bring bliss, but seeing ignorance of the difference between Open Trade and Free Trade in lawmakers and pundits brings terror.

Trade means economic exchange between Markets. Free countries, like America, India and Japan, create Free Markets. Countries oppressed by totalitarian rule, or equivalent government corruption, like China and Mexico, create Oppressed Markets. Free Trade requires two Free Markets, so trade between America and an Oppressed Market is Open Trade, not Free Trade.

Free Trade builds. Competition from Japan hurt till its bubble burst, but today no American company moves there for cheap labor, and each year fewer look to India.

Open Trade destroys. Tyrants get money to strengthen militaries and police to increase internal and external oppression, and to avoid the fate of Russia’s rulers. Tyranny can force people to produce, but it leaves them too poor to be a market for their production, so left isolated, misery builds to revolt. Open Trade money let’s tyrants provide just enough relief to keep subjects docile.

Open Trade was dishonestly sold as Free Trade. It gifted a few with Walton-sized fortunes (for inventing retail sales?). It cursed many with misery. The intelligent answer is to end Open, and keep Free, Trade. Not end both.

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1 Comment so far
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There exists in the minds of most people a gross misunderstanding about Free Trade.

The concept, as viewed by the large international mega-corporations, is the freedom to produce goods anywhere in the world (translated as wherever the labor costs are the lowest; environmental regulations are the least burdensome or nonexistent; and basic human rights are ignored) and sell them everywhere in the world without being subject to import duties.

This kind of Free Trade is only beneficial to the large international mega-corporations, which now, incidentally, are predominantly controlled by U.S.-based corporations. One might think that this is a good thing until one realizes that it benefits a relative few – the highly-paid executives of the large international mega-corporations who are not necessarily based in the United States.

The effect of following a Free Trade policy is to dismantle small and large manufacturing businesses in domestic markets in developed countries and all the jobs associated with them. It also makes it impossible for any developed nation to become self-reliant for their food, energy, defense or any other desirable product.

One of the first things that our founders did was to set up trade barriers to protect domestic businesses in the newly-formed united States of America from predatory British corporations. When developed countries are able to export lower-priced products into less-developed countries without balanced imports from that country, it undermines the ability of the less-developed country to develop its own domestic industries, forcing it to become dependent upon others for its most basic needs.

It was the trade barriers erected by the founding fathers that enabled domestic businesses within the fledgling united States of America to grow and flourish. Two hundred and thirty years later, U.S.-based corporations, representing the vast majority of the largest international mega-corporations, are the predatory corporations feasting upon the economies of the developing countries of the world under the mantle of Free Trade. The same thing has been occurring within the United States since the inception of Free Trade in 1992.

Ideally, trade between nations is desirable and promotes a higher standard of living for the people of both nations. This result is only attainable, however, when the trade policy is Balanced Trade. Whenever an imbalance exists between imports and exports (frequently expressed as a trade deficit or trade surplus), the nation running a trade deficit over time will eventually experience a loss of jobs as domestic manufacturers are driven out of business or move their production operations out of the country to lower cost environments.

In tandem with the loss of jobs is a loss of purchasing power in the domestic economy. It is said that the offsetting benefit of the loss of jobs is lower prices. This masks the steady deterioration of the economy as more people experience the benefit of lower prices than those who lose their jobs in the beginning. Eventually, over time. larger and larger trade deficits create more and more job losses until a significant number of the people realize that they have been hood-winked into believing that the persistent trade deficits generated by adherence to a Free Trade policy are beneficial to their well being. In reality, only the large international mega-corporations benefit through the production of higher profits.

The real question that needs to be answered is, “What is the real purpose of a trade policy.” If the real purpose is to enrich the large international mega-corporations, then Free Trade is the best policy. If, instead, the real purpose is to improve the standard of living of the people, the best policy is clearly Balanced Trade.

Comment by Mike Higgins




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