Posted on 07/30/2005 6:49:32 PM PDT by RWR8189
I am sorry you didn't answer the question pertinently.
"Any relevant USSC or other court citations?"
means has any court actually adopted your extreme view on these matters. Your blanket statements attached to Constitutional texts is merely scratching the surface. If "CAFTA DISPUTE PANELS CLAIM EXCLUSIVITY THEREBY SUPERIOR AND VIOLATIVE" is true, then it would have been litigated in some NAFTA disputes. The fact is that these panels are *not* superior if a Federal court says so. (Using, curiously, the kind of argument I cited in the Hamilton link.)
Yet I doubt a Federal court would back you up.
For example your claim of Congressional non-delegation is on its face absurd, as the FTC, FDA, EPA, and a gaggle of other regulatory bodies have had powers delegated to them under commerce clause. The limits of that delegation were address in Chandra v US (sp?) back in 1982 and in similar cases wrt legislative vetos etc.
So you need to back up your assertions with NAFTA related court decisions, or admit that this is just a wild claim that our current courts won't even touch.
(And I'd grant that Federal courts are far from originalist view of the Constitution, but you should still be able to get an originalist dissent on the matter.)
"Were they "socialists" as you deem anyone who opposes your tyrannical notions of trade?"
Strawman argument - the 'socialists' are the ones using socialist whining arguments to oppose free market economic principles that work. Some of that showed up on this thread with phony claims that this trade agreement would be 'neo-liberal' ... google that term and you'll find it in Mother Jones, Socialist Worker and other similar rags.
Dunno why that poster felt the need to use that term.
I've never confused protectionist paleo-cons with socialists.
"In fact they were all protectionists, promoting manufactures to foster national independence."
Not at all Some were (Hamilton, later Clay), some werent (Jefferson, etc.).
The key point is not what policy is best for 1790 but what is best for 2005. Adam Smith was still alive then, and his message, that mercantilism was a false and flawed economic view, had yet to be heard by all ... apparently, it *still* needs to be heard. Our prosperity is not to be judged by the amount of gold we can hoard or by our trade balance, which is secondary; the main measure of our prosperity is the amount of welath we can produce, ie our GDP.
By that measure America is doing well. By that measure, trade policies that open up foreign markets and reduce trade barriers both coming and going *work*.
For the last 60 years, America has led the world by promoting trade opening and lower trade barriers. That has fostered both economic advances and political stability (a very large point the economic isolationists seem to forget; sure you can put up barriers to central america, but when they start exporting revolution, illegal immigrants and anti-americanism, your policy of isolation will backfire big time).
Let's assume China, with GDP per capita currently about 110th in the world (ie mired in poverty), but with a large economy (about 15% the size of ours or $1.5 trillion) simply because they have so many people, is a mercantilist nation.
I'm not sure they are, but if they are, then that means they are following a path of economic foolishness:
http://www.futurecasts.com/Wolf,%20Why%20Globalization%20Works%20(I).htm
"Although it took two centuries and several bloody wars to get the message across, Adam Smith was precisely correct in his criticism of mercantilist practices. The prosperity of a nation depends on the combination of internal development and international exchange. The broader the market for trade, the better. Conflicts and wars are bad for trade."
"Mercantilism - the view that the aim of trade is the accumulation of treasure - was worse than bad economics. It was also lethal politics, because it led to conflict where conflict was unjustified. The rapid growth generated by industrialization should have helped instill Smith's lesson quickly. Unfortunately, it took two centuries."
http://www.econlib.org/library/Enc/Mercantilism.html
"Adam Smith refuted the idea that the wealth of a nation is measured by the size of the treasury in his famous treatise, The Wealth of Nations, a book rightly considered to be the foundation of modern economic theory. Smith made a number of important criticisms of mercantilist doctrine. First, he demonstrated that trade, when freely initiated, benefits both parties. In modern jargon it is a positive-sum game. Second, he argued that specialization in production allows for economies of scale, which improves efficiency and growth. Finally, Smith argued that the collusive relationship between government and industry was harmful to the general population. While the mercantilist policies were designed to benefit the government and the commercial class, the doctrines of laissez-faire, or free markets, which originated with Smith, interpreted economic welfare in a far wider sense of encompassing the entire population.
While The Wealth of Nations is generally considered to mark the end of the mercantilist era, the laissez-faire doctrines of free-market economics also reflect a general disenchantment with the imperialist policies of nation states. The Napoleonic Wars in Europe and the Revolutionary War in the United States heralded the end of the period of military confrontation in Europe and the mercantilist policies that supported it.
Despite these policies and the wars that they are associated with, the mercantilist period was one of generally rapid growth, particularly in England. This is partly because the governments were not very effective in enforcing the policies that they espoused. While the government could prohibit imports, for example, it lacked the resources to stop the smuggling that the prohibition would create. In addition, the variety of new products that were created during the industrial revolution made it difficult to enforce the industrial policies that were associated with mercantilist doctrine.
By 1860 England had removed the last vestiges of the mercantile era. Industrial regulations, monopolies, and tariffs were abolished, and emigration and machinery exports were freed. In large part because of her free trade policies, England became the dominant economic power in Europe. England's success as a manufacturing and financial power, coupled with the United States as an emerging agricultural powerhouse, led to the resumption of protectionist pressures in Europe and the arms race between Germany, France, and England, which ultimately resulted in World War I.
Protectionism remained important in the interwar period. World War I had destroyed the international monetary system based upon the gold standard. After the war manipulation of the exchange rate was added to the government's list of trade weapons. A country could simultaneously lower the international prices of its exports and increase the local currency price of its imports by devaluing its currency against the currencies of its trading partners. This "competitive devaluation" was practiced by many countries during the Great Depression of the thirties and led to a sharp reduction in world trade.
...
Modern mercantilist practices arise from the same source as the mercantilist policies in the sixteenth to the eighteenth century. Groups with political power use that power to secure government intervention to protect their interests, while claiming to seek benefits for the nation as a whole.
...The economic strength of the United States, however, provided the stability that permitted the world to emerge out of the postwar chaos into a new era of prosperity and growth. The Marshall Plan provided American resources that overcame the most acute dollar shortages. The Bretton Woods agreement established a new system of relatively stable exchange rates that encouraged the free flow of goods and capital. Finally, the signing of GATT (General Agreement on Tariffs and Trade) in 1947 marked the official recognition of the need to establish an international order of multilateral free trade.
The mercantilist era has passed. Modern economists accept Adam Smith's insight that free trade leads to international specialization of labor and, usually, to greater economic well-being for all nations. But some mercantilist policies continue to exist. Indeed, the surge of protectionist sentiment that began with the oil crisis in the midseventies and expanded with the global recession of the early eighties has led some economists to label the modern pro-export, anti-import attitude as "neomercantilism."
...
Of the false tenants of mercantilism that remain today, the most pernicious is the idea that imports reduce domestic employment. This argument is most often made by American automobile manufacturers in their claim for protection against Japanese imports. But the revenue that the exporter receives must be ultimately spent on American exports, either immediately or subsequently when American investments are liquidated. Another mercantilist view that persists today is that a current account deficit is bad. When a country runs a current account deficit, it is borrowing capital from the rest of the world in order to purchase more goods and services than it sells. But this policy promotes economic wealth if the return on the capital borrowed exceeds the cost of borrowing. Many developing countries with high internal returns on capital have run current account deficits for extremely long periods, while enjoying rapid growth and solvency."
I am sorry you didn't answer my answer to your question pertinently. Although it should not be a surprise by now.
You blew off not just the Constitution, which is inviable...(except I guess with you phoney free traders and the 5-6 liberals on the U.S. Supreme Court...gee what a coincidence). But case law as well.
The cavalier disregard for the People is common between you. The court decisions alluded to made it clear that the powers of the Congress...are not subject to excess delegation.
And as for your arguments about case law where there is none.... you should know that that proves nothing. A constitutional provision either is or isn't, and a court doesn't change it, however malleable the liberals try to make it with their activist construals. The nostrum is undenied: Absence of evidence, is not evidence of absence.
Anyways, there most definitely is evidence, you just choose to cover your ears and eyes and shout, "La, la, la, la, la!"
BTW: Your case allusion of Chandra v. U.S., from 1982 did not reverse or even modify the principles of the cases of Schechter or Panama...which are still good law. The failure of the court to revisit the issue, can be laid squarely at the feet of FDR and his court-packing scheme to intimidate the Court.
Oh, and getting down to the bottom of your assertions of history, which you are woefully errant in, Thomas Jefferson CHANGED HIS MIND. The War of 1812 was a salutory lesson for him. Every single person I adduced in that list either was or became a nationalist protectionist.
<Kicking Away the Ladder:
How the Economic and Intellectual Histories of Capitalism Have Been Re-Written to Justify Neo-Liberal Capitalism
Ha-Joon Chang (Cambridge University, UK)
There is currently great pressure on developing countries to adopt a set of “good policies” and “good institutions” – such as liberalisation of trade and investment and strong patent law – to foster their economic development. When some developing countries show reluctance in adopting them, the proponents of this recipe often find it difficult to understand these countries’ stupidity in not accepting such a tried and tested recipe for development. After all, they argue, these are the policies and the institutions that the developed countries had used in the past in order to become rich. Their belief in their own recommendation is so absolute that in their view it has to be imposed on the developing countries through strong bilateral and multilateral external pressures, even when these countries don’t want them.
Naturally, there have been heated debates on whether these recommended policies and institutions are appropriate for developing countries. However, curiously, even many of those who are sceptical of the applicability of these policies and institutions to the developing countries take it for granted that these were the policies and the institutions that were used by the developed countries when they themselves were developing countries.
Contrary to the conventional wisdom, the historical fact is that the rich countries did not develop on the basis of the policies and the institutions that they now recommend to, and often force upon, the developing countries. Unfortunately, this fact is little known these days because the “official historians” of capitalism have been very successful in re-writing its history.
Almost all of today’s rich countries used tariff protection and subsidies to develop their industries. Interestingly, Britain and the USA, the two countries that are supposed to have reached the summit of the world economy through their free-market, free-trade policy, are actually the ones that had most aggressively used protection and subsidies.
Contrary to the popular myth, Britain had been an aggressive user, and in certain areas a pioneer, of activist policies intended to promote its industries. Such policies, although limited in scope, date back from the 14th century (Edward III) and the 15th century (Henry VII) in relation to woollen manufacturing, the leading industry of the time. England then was an exporter of raw wool to the Low Countries, and Henry VII for example tried to change this by taxing raw wool exports and poaching skilled workers from the Low Countries.
Particularly between the trade policy reform of its first Prime Minister Robert Walpole in 1721 and its adoption of free trade around 1860, Britain used very dirigiste trade and industrial policies, involving measures very similar to what countries like Japan and Korea later used in order to develop their industries. During this period, it protected its industries a lot more heavily than did France, the supposed dirigiste counterpoint to its free-trade, free-market system. Given this history, argued Friedrich List, the leading German economist of the mid-19th century, Britain preaching free trade to less advanced countries like Germany and the USA was like someone trying to “kick away the ladder” with which he had climbed to the top.
List was not alone in seeing the matter in this light. Many American thinkers shared this view. Indeed, it was American thinkers like Alexander Hamilton, the first Treasury Secretary of the USA, and the (now-forgotten) economist Daniel Raymond, who first systematically developed the infant industry argument. Indeed, List, who is commonly known as the father of the infant industry argument, in fact started out as a free-trader (he was an ardent supporter of German customs union – Zollverein) and learnt about this argument during his exile in the USA during the 1820s
Little known today, the intellectual interaction between the USA and Germany during the 19th century did not end there. The German Historical School – represented by people like Wilhelm Roscher, Bruno Hildebrand, Karl Knies, Gustav Schmoller, and Werner Sombart – attracted a lot of American economists in the late 19th century. The patron saint of American Neoclassical economics, John Bates Clark, in whose name the most prestigious award for young (under 40) American economists is given today, went to Germany in 1873 and studied the German Historical School under Roscher and Knies, although he gradually drifted away from it. Richard Ely, one of the leading American economists of the time, also studied under Knies and influenced the American Institutionalist School through his disciple, John Commons. Ely was one of the founding fathers of the American Economic Association; to this day, the biggest public lecture at the Association’s annual meeting is given in Ely’s name, although few of the present AEA members would know who he was.
Between the Civil War and the Second World War, the USA was literally the most heavily protected economy in the world. In this context, it is important to note that the American Civil War was fought on the issue of tariff as much as, if not more, on the issue of slavery. Of the two major issues that divided the North and the South, the South had actually more to fear on the tariff front than on the slavery front. Abraham Lincoln was a well-known protectionist who cut his political teeth under the charismatic politician Henry Clay in the Whig Party, which advocated the “American System” based on infrastructural development and protectionism (thus named on recognition that free trade is for the British interest). One of Lincoln’s top economic advisors was the famous protectionist economist, Henry Carey, who once was described as “the only American economist of importance” by Marx and Engels in the early 1850s but has now been almost completely air-brushed out of the history of American economic thought. On the other hand, Lincoln thought that African Americans were racially inferior and that slave emancipation was an idealistic proposal with no prospect of immediate implementation – he is said to have emancipated the slaves in 1862 as a strategic move to win the War rather than out of some moral conviction.
In protecting their industries, the Americans were going against the advice of such prominent economists as Adam Smith and Jean Baptiste Say, who saw the country’s future in agriculture. However, the Americans knew exactly what the game was. They knew that Britain reached the top through protection and subsidies and therefore that they needed to do the same if they were going to get anywhere. Criticising the British preaching of free trade to his country, Ulysses Grant, the Civil War hero and the US President between 1868-1876, retorted that “within 200 years, when America has gotten out of protection all that it can offer, it too will adopt free trade”. When his country later reached the top after the Second World War, it too started “kicking away the ladder” by preaching and forcing free trade to the less developed countries.
The UK and the USA may be the more dramatic examples, but almost all the rest of the developed world today used tariffs, subsidies and other means to promote their industries in the earlier stages of their development. Cases like Germany, Japan, and Korea are well known in this respect. But even Sweden, which later came to represent the “small open economy” to many economists had also strategically used tariffs, subsidies, cartels, and state support for R&D to develop key industries, especially textile, steel, and engineering.
There were some exceptions like the Netherlands and Switzerland that have maintained free trade since the late 18th century. However, these were countries that were already on the frontier of technological development by the 18th centuries and therefore did not need much protection. Also, it should be noted that the Netherlands deployed an impressive range of interventionist measures up till the 17th century in order to build up its maritime and commercial supremacy. Moreover, Switzerland did not have a patent law until 1907, flying directly against the emphasis that today’s orthodoxy puts on the protection of intellectual property rights (see below). More interestingly, the Netherlands abolished its 1817 patent law in 1869 on the ground that patents are politically-created monopolies inconsistent with its free-market principles – a position that seems to elude most of today’s free-market economists – and did not introduce another patent law until 1912.
The story is similar in relation to institutional development. In the earlier stages of their development, today’s developed countries did not even have such “basic” institutions as professional civil service, central bank, and patent law. It was only after the Pendleton Act in 1883 that the US federal government started recruiting its employees through a competitive process. The central bank, an institution dear to the heart of today’s free-market economists, did not exist in most of today’s rich countries until the early 20th century – not least because the free-market economists of the day condemned it as a mechanism for unjustly bailing out imprudent borrowers. The US central bank (the Federal Reserve Board) was set up only in 1913 and the Italian central bank did not even have a note issue monopoly until 1926. Many countries allowed patenting of foreign invention until the late 19th century. As I mentioned above, Switzerland and the Netherlands refused to introduce a patent law despite international pressure until 1907 and 1912 respectively, thus freely “stole” technologies from abroad. The examples can go on.
One important conclusion that emerges from the history of institutional development is that it took the developed countries a long time to develop institutions in their earlier days of development. Institutions typically took decades, and sometimes generations, to develop. Just to give one example, the need for central banking was perceived at least in some circles from at least the 17th century, but the first “real” central bank, the Bank of England, was instituted only in 1844, some two centuries later.
Another important point emerges is that the levels of institutional development in today’s developed countries in the earlier period were much lower than those in today’s developing countries. For example, measured by the (admittedly highly imperfect) income level, in 1820, the UK was at a somewhat higher level of development than that of India today, but it did not even have many of the most “basic” institutions that India has today. It did not have universal suffrage (it did not even have universal male suffrage), a central bank, income tax, generalised limited liability, a generalised bankruptcy law, a professional bureaucracy, meaningful securities regulations, and even minimal labour regulations (except for a couple of minimal and hardly-enforced regulations on child labour).
If the policies and institutions that the rich countries are recommending to the poor countries are not the ones that they themselves used when they were developing, what is going on? We can only conclude that the rich countries are trying to kick away the ladder that allowed them to climb where they are. It is no coincidence that economic development has become more difficult during the last two decades when the developed countries started turning on the pressure on the developing countries to adopt the so-called “global standard” policies and institutions.
During this period, the average annual per capita income growth rate for the developing countries has been halved from 3% in the previous two decades (1960-80) to 1.5%. In particular, Latin America virtually stopped growing, while Sub-Saharan Africa and most ex-Communist countries have experienced a fall in absolute income. Economic instability has increased markedly, as manifested in the dozens of financial crises we have witnessed over the last decade alone. Income inequality has been growing in many developing countries and poverty has increased, rather than decreased, in a significant number of them.
What can be done to change this?
First, the historical facts about the historical experiences of the developed countries should be more widely publicised. This is not just a matter of “getting history right”, but also of allowing the developing countries to make more informed choices.
Second, the conditions attached to bilateral and multilateral financial assistance to developing countries should be radically changed. It should be accepted that the orthodox recipe is not working, and also that there can be no “best practice” policies that everyone should use.
Third, the WTO rules should be re-written so that the developing countries can more actively use tariffs and subsidies for industrial development. They should also be allowed to have less stringent patent laws and other intellectual property rights laws.
Fourth, improvements in institutions should be encouraged, but this should not be equated with imposing a fixed set of (in practice, today’s – not even yesterday’s – Anglo-American) institutions on all countries. Special care has to be taken in order not to demand excessively rapid upgrading of institutions by the developing countries, especially given that they already have quite developed institutions when compared to today’s developed countries at comparable stages of development, and given that establishing and running new institutions is costly.
By being allowed to adopt policies and institutions that are more suitable to their conditions, the developing countries will be able to develop faster. This will also benefit the developed countries in the long run, as it will increase their trade and investment opportunities. That the developed countries cannot see this is the tragedy of our time.
___________________
Ha-Joon Chang (hjc1001@econ.cam.ac.uk) teaches in the Faculty of Economics, University of Cambridge. This article is based on his new book, Kicking Away the Ladder – Development Strategy in Historical Perspective, which was published by Anthem Press, London, on 10 June 2002.
SUGGESTED CITATION:
Ha-Joon Chang, “Kicking Away the Ladder”, post-autistic economics review, issue no. 15, September 4, 2002, article 3. http://www.btinternet.com/~pae_news/review/issue15.htm
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