Posted on 01/31/2004 2:47:00 PM PST by madeinchina
In his State of the Union message, President George W. Bush devoted only a single sentence to international trade: “My administration is promoting free and fair trade to open up new markets for America's entrepreneurs and manufacturers and farmers -- to create jobs for American workers.” With the country facing another record trade deficit around $500 billion, the dollar losing between 20 percent and 40 percent of its value against other major currencies in the past two years, and some 3 million jobs being lost in the manufacturing sector since 1997, the trade issue deserved much greater attention. Indeed, the Bush Administration had unveiled a new Manufacturing Strategy only days earlier. But failure to call for Congressional action to implement the new strategy enhanced perceptions that the White House was not really taking the issue seriously. Consider the use of the empty phrase “free and fair trade.” Not since the Portuguese inaugurated the modern global economy by shooting their way into the Indian Ocean to grab control of the Asian spice trade five centuries ago, has anyone been successful by an adherence to “free and fair trade.” Instead, they have played to win by using every advantage they could find or create. No one wants a “level playing field” if they can gain a “home field advantage” tilted in their favor. Indiana University professor William R. Thompson has spent his career analyzing international competition in all its forms. He has found that “waves of political leadership, order and large-sale violence [are] closely linked to processes of long-term economic growth.” Yet, he has observed that among too many analysts and policymakers “this set of activities remains underappreciated despite its close links to some of the most vicious wars of the past half-millennium and the political-economic restructuring that occurred in the midst and the aftermath of these contests.” This lack of interest is certainly evident among top U.S. decision makers. The idea that trade should be “free” of government involvement or simply made “fair” without concern for the outcome, implies that either trade is of too little consequence to require state supervision – a clearly disingenuous and thus untenable position, or that private “market” results will automatically provide the best outcome for society. It is this last notion about a benevolent “invisible hand” that has paralyzed U.S. policy. It is the wishful thinking of liberalism masquerading as theology. It has two basic tenets. First, the world is basically a harmonious place where conflict can be avoided by a mutually beneficial division of labor that integrates the world. Second, the division of labor can best be managed by private enterprise pursuing its own ends without being held accountable for any larger consequences. The noted realist thinker E. H. Carr demolished the harmony thesis by observing that the division of labor seldom creates a world of equals. Instead, there are “haves” and “have nots” or as foreign policy experts denote them, “satisfied” and “unsatisfied” powers, with the latter group bent on overturning the status quo in order to improve their place in the world. This unequal division is revealed in the classic example used by David Ricardo to teach the principle of comparative advantage: the cloth-wine trade between England and Portugal. In this example, the Portuguese should accept England’s lead in the industrial revolution, which in Ricardo’s day was best represented by the mass production of textile goods, and be content to export wine to pay for imported manufactured items. Portugal should not seek to industrialize itself to compete with England. This lesson quickly earned the title “free trade imperialism” as it would condemn Portugal, or any non-industrial society, to subservience. It should be recalled that one reason the American colonies revolted against England was that they did not like their assigned place in the imperial division of labor. The independent United States became an industrial competitor of the British Empire and eventually surpassed it. Reports from the recent World Economic Forum held in Davos, Switzerland indicate that a host of powers are working in the same way to undermine America’s economic leadership and overthrow its status as the only global superpower. Zhu Min, general manager and economic adviser at the Bank of China, predicted his country will become the main challenger to U.S. economic power, surpassing Japan to become the world’s second largest economy by 2020. Russian Finance Minister Alexei Kudrin said his country “has economic potential comparable with the United States.” Brazil is also making a bid. It led the block of developing nations in opposition to the U.S. agenda, bringing to an impasse the Doha Round World Trade Organization talks. Under left-wing president Luiz Inacio Lula da Silva, Brazil is forging closer ties with China. And India’s leaders are very sensitive to any implication that they are not keeping up with the ambitions of the other rising nation-states. Thompson’s research shows that “commercial challenges are aimed immediately at the leading commercial power.” In today’s case, that means the rich American market is the target, and domestic American firms are to be swept away in the struggle for economic dominance. Private firms are unable to meet this challenge on their own. Domestic American firms cannot stand against overseas rivals backed by their governments, who use all the tools and tactics learned from centuries of trade warfare. Many of the largest “American” firms in leading industries now see themselves as being “transnational” and owing no allegiance to the United States. This means they have been easy converts to the mercantile strategies of the rising states. Washington needs to take action to rein in these global mercenaries and channel their energies back to the advancement of American economic preeminence. In his study The Emergence of the Global Political Economy, Thompson warns of the cost of inaction: “If the declining leader’s deteriorating position accelerates due to its own choices, perceived vulnerability will increase and so, too, will the scope of the challenger’s attack.”
If you're going to engage in an intelligent discussion with me (at least on my end) I do expect you'll read and pay attention to the points I make. I am indeed a rabid free trader. I am not FOR levels of free trade. My point was simply (and how often we must make things 'simple' for those on your side) that impediments to free trade are not on/off or black/white. They are degrees of evil.
Well, of course, since you know everything about free trade, you also know that the WTO allows a country that imports an item which was subsidized in production by the home country to levy a tariff on the item equal to that of the subsidy in the home country--so, really what you are saying is not relevant to our discussion. The WTO allows a country to negate the subsidy.
Second, I understand that you are obviously a Statist. I think you have some fundamental misunderstandings about the workings of Capitalism; or, perhaps worse, you understand Capitalism well, but rather choose to ignore it in favor of an all-powerful State. I lean towards the former, given your ignorance of WTO trade rules.
I frankly don't understand what you think you accomplish by denouncing laissez-faire economics; it has a remarkable track record, despite the efforts of folks like you in trying to destroy it through things like minimum wage laws, anti-trust laws, etc. We will win. Free trade will win. By the time the elections roll around in Nov., we will have had 16 straight years of Presidents who have pushed a free trade agenda. It will not change.
All I'm in favor of is going back to those policies the US pursued back in the 80s and before. They worked to create the largest middle class in the world.
Trading with third world countries isn't working, we're losing our jobs to them thanks to the cheap labor. I prefer to trade with those more on economic par with us. American workers deserve a level playing field. I see few companies outsourcing to Europe or Japan or Canada, why is that? It's all to India at the moment.
I see you still can't read a graph. Real wages climbed from 1960-1975 and are now below the peak that they reached in that year.
In other words, you should have revised your #85 to read "real wages are lower for some." In other words, your #85 was not "truthful," under the commonly understood definition of the word.
If free trade is the goal then there would be no barriers whatsoever, right. So, then how can there be "degrees of evil"? Wouldn't they be "all evil, all the time" if I took your logic?
By the way, you haven't answered my question to cite anywhere that there is free trade. And since we both know that place doesn't exist, how can the global economy work? I know you think you came up with a pithy reply to answer that but, if trade restrictions that exist today are so bad, then, how is it that we have a working global economy?
As you very well know, the author was using 1960 as a base. Real wages are higher than they were in 1960 but lower than in 1975.
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