By Benjamin Clement, www.economyincrisis.org
August 13th, 2015
US Economy As We Knew It Destroyed By Corporate, Rigged Trade
“Free trade” has essentially led to the most massive wealth transfer in the history of the world. The United States has not witnessed a trade surplus since 1975, and since then trillions of dollars have been lost through trade deficits caused by “free trade” on our end and protectionism on the other. The most significant flaw with all of our “free trade” agreements is that they are impossible to enforce, and because of this competition is impossible. “Free trade” depends on the premise that all countries will play by the same rules. However, in the real world, assuring that this occurs is incredibly expensive, time-consuming and inefficient to contest. We have simply been unable to create a universally free market. Like communism before it, true “free trade” works only in theory, on a large scale and when utilized by all.
The reality is, tariffs are not the only barrier to fair trade. Trade is impacted by much more intangible state-sponsored “trade weapons” such as currency manipulation, technology transfer requirements, joint-venture policies, selective customs policies, underhanded government subsidies and countless other tools. Under “free trade” agreements, the U.S. essentially relies on faith-based economic policy with other countries. We agree to play ball by the rules and, because of the nature of the game, are unable to ensure that others play fair.
Without the presence of tariffs, a “free trade” agreement places the country with lower overall wage rates in a superior position. When two countries with huge differences in labor costs engage in “free trade” eventually all the production that benefits the country with higher wage rates will be transferred to the country with lower wage rates. This is not theoretical—it has happened in China. The transfer was supposed to be offset with lower prices being enjoyed by our consumers, but in actuality it has led to the destruction of the manufacturing capabilities of the United States and a wider disparity in income among our citizens.
Why the lack of attention on this issue? There has actually been a great deal of attention paid to this issue despite persistent pro free-trade mantras. In the 1980s there was tremendous concern among Reagan administration officials that the U.S. was losing its competitive position in the world. Reagan enacted numerous protectionist policies in an effort to stem the hemorrhaging trade deficit. Media attention was centered on a doomsday scenario whereby Japanese and Arab interests would come to own and control everything in this country. Now, a frightening amount of formerly U.S.-owned companies are in the hands of foreign companies and interests. We failed to effectively combat the fundamental flaw with “free trade” and are now reaping the consequences.
The dangers and horrible consequences of “free trade” agreements have not gone unnoticed. A plethora of notable politicians, economists, journalists and industrialists have stepped up and spoken against this 30-year period of tail-spinning. Names such as Warren Buffet, George Soros, Pat Buchanan, Sen. Hollings, Sen. Lieberman, Ross Perot, Pat Choate, Eamonn Fingleton, Paul Craig Roberts, and Lou Dobbs have all voiced their concerns.
President Obama pledged during his campaign that, if elected, he would review the North American Free Trade Agreement (NAFTA) and discourage the signing of any new unilateral trade agreements. He has yet to review NAFTA and has, in fact, presided over the passing of three new trade pacts, including KORUS, a free trade agreement with South Korea on the scale of NAFTA.
George W. Bush even conceded for a time that U.S. steel tariffs were necessary to protect that critical industry (before eventually bowing to free-trade lobbyist pressure as well). Now we see that through a lack of innovation and adaptation, the U.S. steel industry is all but irrelevant in the global market.
Given all this insurmountable evidence to the contrary, why is it that free-traders continue to sell out the country at the expense of national security and our future generations? The answer is that every person, corporation, and politician tends to do what is in their own short-term best interest, be it pure profit or reelection. Those who support “free trade” but have no direct benefit typically do so on moral grounds and base their concerns on a fear of government intervention. In actuality, “free trade” does not sidestep government intervention: it simply relegates it to non-elected, international entities like the WTO, which is essentially in line with multinational corporate interests.
We can all agree that if anyone is going to manage America’s affairs it should at least be our own democratically elected officials. As things currently stand, that is not happening. America should be united against what has essentially been the foreign oppression of America’s industrial base. We are losing a war we fail to realize we’re fighting. We are oblivious and our competition has taken full advantage of that, exploiting our naivety. America, it’s time to wake up and take action.