Small Government & free trade..not compatible!

[Sir Terrence the Terrible]

I was listening to NPR yesterday on the way home from work, and I ended up sitting in my car for over an hour(with my dogs of course) listening to the subject matter. The discussion was on small government and free trade, and the information was very compelling. They talked about how free trade actually INCREASES the size of government in America because free trade lowers salaries, decreases jobs which drives up employment insurance, welfare, food stamp and various other social services. They made an interesting point that before free trade agreements were in place, the unemployment level was around 5-6 percent. Post recession we are sitting at 9.2%, and in Cali were I live, it is 12.9%.

Automobiles used to be made in Michigan, and exported all over the world. Lots of people had well paying jobs with great benefits. Local business thrived, which fed other local businesses. With free trade Michigan lost a ton of jobs, and manufacturers began to localize their production in countries they actually sell the cars. Local businesses closed as workers were laid off, and what is left is cities like Detroit. As a matter of fact, most of the Midwest went from a production hot house to what they call the rust belt.

They also made a direct correlation between the outsourcing of jobs to China, and falling of wages here in the US(illegal immigration didn't help either). They also made a direction correlation between free trade and falling wages(two big duh's). We in America were told that free trade would INCREASE jobs, raise wages, and actually benefit our country. We were hoodwinked, and actually sold ourselves out based on the propaganda we were fed.

The round table discussion was so interesting I just could not stop listening. I was glad for the information, but it quite frankly outraged me.

[bobsticks]

The endless list of "results" that we see bandied about in the media are but symptomatic of the fact that we've never really tried "free trade" or "free market capitalism". Let's dispell that myth right now. Our government has progressively allowed our position within the world market to grow by facilitating multinationals to view this country only from the demand-side.

We see this with the increasing debt, we see it with oil speculation, we certainly see it with agriculture...the entire concept of supply-and-demand has been abrogated in favor of oligarchy.

[atomicAdam]

I have to agree w/ Bob here - we've never had real free trade nor have we ever had real free markets in America.

The system is rigged. The transfer of money from the have nots to the haves is what it is really all about.

Hopefully folks in the Tea Party, the Lefty Enviros, and everyone else will see through this divide and conquer strategy by the wealthy that keeps them fighting over scraps, and re-balance the wealth like we saw in America post WWII.

[Feanor]

The textbook rationale for free trade is that trade is increased overall and that all countries benefit -- more or less. History has shown that this is generally true. However not all countries necessarily benefit equally, nor do all segments within a given country.

It's worth understanding that recent free trade agreements have been less about free trade in physical products, and a lot more about securing access to investor foreign markets and resources, preventing local governments from favoring domestic companies, and protecting foreign investors from local goverment regulations or confiscation. In other words it's largely about "making the world safe for capitalism".

Note that the US can no longer sustain a protectionist economy. If for no other reason, it's because the US is no longer even remotely self-sufficient in the resources it consumes; it must have access to foreign resources even more that it needs markets for its goods. The other side of the same coin is that US workers are no longer able to demand premium wages & salaries when other countries are increasingly able to supply not only resources but manpower at rates far below what the US can provide.

Capitalism is the great leveler of the global economy: investment flows where the greatest return can be had, and that is invariably where resources, including labor, are cheapest and least well regulated. What will make the US compeditive again? To a global corporation it's obviously to have US salaries & wages, working conditions, and health & safety laws fall to the lowest global common denominator.

If Americans don't want that, then they need to invest in education, infrastructure, and innovation in such areas as sustainable energy production. The global corporations aren't interested in providing the funding this if they can get what they want in, e.g. India and China. So tt's got to be done by -- or at least under the leadership of -- the US Fedral and state governments.

All we here today from right-wing US politicians is how free enterprise is good for what ails us, and that lower taxes and less government regulation are the answer to every problem. Saddy a lot of people, like Tea Partiers, suck this up like mother's milk because it's consistent with the American Myth. I call this the "Bribe the Rich" strategy; it's based on the notion that the rich will invest their profits and tax saving back into the local economy. But this isn't what's happening: instead the rich are either sitting on their cash, (or speculating with it), or else investing in foreign economies. Understand that this is how the rich will "reward" US citizens for their tax breaks until said citizens' wages & working conditions have fallen to the global common denominator.

[Feanor]

The endless list of "results" that we see bandied about in the media are but symptomatic of the fact that we've never really tried "free trade" or "free market capitalism". Let's dispell that myth right now. Our government has progressively allowed our position within the world market to grow by facilitating multinationals to view this country only from the demand-side.

We see this with the increasing debt, we see it with oil speculation, we certainly see it with agriculture...the entire concept of supply-and-demand has been abrogated in favor of oligarchy.
Allowing -- rather, encouraging -- consumer debt has the politicians and the Federal Reserve's method of sustaining the US economy under so much presure from global competion, automation, and, N.B., a strategy of concentrating wealth increasingly in the hands of the rich. The strategy presumes that the rich will repay us by investing in the domestic economy. This approach was/is variously know as "supply side" or "trickle down" economics.

The problem is that hasn't worked and won't worked because the rich haven't and won't invest in the domestic economic while there are so many more profitable options in the developing world -- the US is no longer preceived as compedative in the world economy.

[Sir Terrence the Terrible]

I agree with the stickster as well. They touch on what he states when they got to the bailouts of the financial industry. Two points on that. The mentioned that if we were really in a free market environment, there would be no subsidies at all, no bailouts, and no corporate welfare. All would have to sink or swim on their own.

The second point was that the bailout was all about rescuing the wealth engine for the rich and powerful. They didn't want to use their own money, so they took ours. They mentioned that if we got rid of the subsidies to oil companies, agri-businesses, and various other corporate welfare, and return back to the tax rate on the rich during the Clinton years, our debt would be a whole lot smaller than it is. They debunked the myth that tax cuts to corporation and the wealthy create jobs. They pointed to the fact that when the Bush tax cuts kicked in, there were FEWER jobs created, and an acceleration of outsourcing. The outsourcing has now made it much tougher to get out of this recession, because we don't make much of anything anymore. The tore a whole in Nixon for his privatization of health care, and killed Regan for his policies that accelerated the difference between the rich and the poor. The credit Regan with shifting wealth(or benefits) from the middle and lower classes, to the rich and corporations.

[Feanor]

The endless list of "results" that we see bandied about in the media are but symptomatic of the fact that we've never really tried "free trade" or "free market capitalism". Let's dispell that myth right now. Our government has progressively allowed our position within the world market to grow by facilitating multinationals to view this country only from the demand-side.

We see this with the increasing debt, we see it with oil speculation, we certainly see it with agriculture...the entire concept of supply-and-demand has been abrogated in favor of oligarchy.
Really the problem is the oppsiote, i.e. we have indeed experience a substantial measure of "free market ecomony", thanks to deregulation and lower taxes, and also international free trade. The problem is that under an unmitigated free market things don't always play out just as we would like them to.

The US no longer holds the cards in the world economy as it did when it had plenty of cheap domestic land and abundant resources in the 19th and early 20th century. Domestic investment no longer looks so good to the wealthy classes today as it did then. Provide tax breaks for the rich and they will invest the money off shore.

[bobsticks]

Really the problem is the oppsiote, i.e. we have indeed experience a substantial measure of "free market ecomony", thanks to deregulation and lower taxes, and also international free trade. The problem is that under an unmitigated free market things don't always play out just as we would like them to.

The US no longer holds the cards in the world economy as it did when it had plenty of cheap domestic land and abundant resources in the 19th and early 20th century. Domestic investment no longer looks so good to the wealthy classes today as it did then. Cut tax breaks for the rich and they will invest the money off shore.

...No.

[Feanor]

...No.
Says you! :skep:

[bobsticks]

japonica
The Chicken Tax
the repeal of the Chicken Tax
The Volker Plan
30% Chinese tariffs on motorcycles
Chinese tariffs on U.S. nylon products at 96.5%
the 2010 National Trade Estimate
Currency manipulation of the yuan and euro
Canadian subsidized lumber
Bill Clinton toothless international policy regarding intellectual property rights
(here's some irony for you: http://www.nytimes.com/2004/10/24/opinion/24sun2.html )
Presidents Ford and Carter, Zbigniew freakin' Brzezinski...

ad infinitum

When were we practicing free trade?

[kexodusc]

Gotta agree with sticks The champions for free market economies have the most regulatory obstacles to free markets. The champions for free trade are the most protectionist economies.

[thekid]

There will never be such a thing as Free Trade. For true free trade to exist the trading partners have to be on or nearly on the same economic level and in many ways the governments have to share the same goals and expectations for their people.
In more developed countries industry and government usually work together to form policies usually designed to favor the industry in some protectionist way. Governments often choose which industries they will protect and trade agreements are built on that basis.

Certain politicians use the term "Free Trade" to put forth policies that favor the industries they are trying to assist. It sounds better to say we are entering into a "Free Trade" agreement with a country rather than to say we are changing our trade and tax policies that will make it easier for that industry to outsource jobs and allow them to sell products outside of the US. This allows the company to be even more profitable and continue to donate heavily to the politicians re-election fund.

[Feanor]

japonica
The Chicken Tax
the repeal of the Chicken Tax
The Volker Plan
30% Chinese tariffs on motorcycles
Chinese tariffs on U.S. nylon products at 96.5%
the 2010 National Trade Estimate
Currency manipulation of the yuan and euro
Canadian subsidized lumber
Bill Clinton toothless international policy regarding intellectual property rights
(here's some irony for you: http://www.nytimes.com/2004/10/24/opinion/24sun2.html )
Presidents Ford and Carter, Zbigniew freakin' Brzezinski...

ad infinitum

When were we practicing free trade?
These are (mostly) abuses of concept of free trade. I won't justify them. But if you're going to criticize free trade you need to do it based on where free trade is working, not where it isn't.

Also maybe you ignoring my other points.

I don't entirely agree with free trade along the lines of the NAFTA agreement are intended to undermine the autonomy of goverments to control their own nation's resources, enterprises, and laws. For example, Canadian governments can't restrict export of Canadian oil or water, regulate the trade price of these commodities, favor Canadian oil exploration & extraction companies, etc. When tendering government contracts, Canadian governments are limited in their ability to favor Canadian companies. Etc. Basically NAFTA is less about free trade per se than it is about giving US companies easy access to Canadian & Mexican resources and markets, and protection from these nations' regulations

My other points went beyond free trade, viz.:

Raw capitalism, including NAFTA-style free trade, will accelerate the inevidable decline of the US (and Canada);
Low taxes for the rich will further facilitate this decline rather than resist it as the right-wing politicians insist.

[Feanor]

Gotta agree with sticks The champions for free market economies have the most regulatory obstacles to free markets. The champions for free trade are the most protectionist economies.
Indeed, noteably the US itself as you were doubtless implying. We in Canada certainly feel that US interests are constantly try to create exceptions to the spirit of NAFTA. 'Sticks mentions supposed Canadian lumber "subsidies"; there are more examples that work the other way.

But like I said, we certainly criticize "free trade" based on how it is working, not just where it is not -- see my issues with NAFTA, above and below.

[Feanor]

...
They also made a direct correlation between the outsourcing of jobs to China, and falling of wages here in the US(illegal immigration didn't help either). They also made a direction correlation between free trade and falling wages(two big duh's). We in America were told that free trade would INCREASE jobs, raise wages, and actually benefit our country. We were hoodwinked, and actually sold ourselves out based on the propaganda we were fed.
...
This I entirely agree with. Global "free trade, as it exists, does not favor US or Canadian workers. NA workers and hence the middle class cannot compete with workers in, e.g., China or India based on wages or working conditions. Also, as nations like these sponsor education and training for their workers, NA workers advantage in these areas will quickly diminish.

See my other posts about what free trade agreements, like NAFTA, actually do. Now let's talk about what they don't do:

Enforce equal worker health & safety standards
Enforce equal product quality & safety standards
Enforce equal environment & climate stantards.If free trade agreements did these things, as well as just protect the priviledges of global corporations, they would be a lot easier to justify.

[markw]

japonica
The Chicken Tax
the repeal of the Chicken Tax
The Volker Plan
30% Chinese tariffs on motorcycles
Chinese tariffs on U.S. nylon products at 96.5%
the 2010 National Trade Estimate
Currency manipulation of the yuan and euro
Canadian subsidized lumber
Bill Clinton toothless international policy regarding intellectual property rights
(here's some irony for you: http://www.nytimes.com/2004/10/24/opinion/24sun2.html )
Presidents Ford and Carter, Zbigniew freakin' Brzezinski...

ad infinitum

When were we practicing free trade?We were. They weren't.

Folks, this is NOT a level playing ground but the heads of the multi-national companies are doing just fine, thank you.

[bobsticks]

Yes...

[Feanor]

We were. They weren't.
...
No, if by "we" you mean the US playing fair. From a Canadian perspective, US interests are as relentlessly as any other country's in seeking ways to undermine the NAFTA free trade concept, (such as it is).

For a taste of NAFTA issues from a Canadian perspective, (if you give a damn: unlikely), check out the Council of Canadians website item ... here (http://www.canadians.org/trade/issues/NAFTA/). Canadians do share many of the same concerns as Americans.


...
Folks, this is NOT a level playing ground but the heads of the multi-national companies are doing just fine, thank you.
Yes, why yes, they are.

[bobsticks]

But like I said, we certainly criticize "free trade" based on how it is working, not just where it is not -- see my issues with NAFTA, above and below.

Bill, I think this is where you misunderstand my thrust. You have issues with NAFTA both for its lack of protection for workers and the advantageous position the U.S. has gained vis-a-vis economic posturing/maneuvering. You think that is "bad" and I think that yopu assume that I think that is "good".

My problem is not specific nor resuls oriented in this case. My issue is that "free-trade" has but one defining characteristic...that it's free; devoid of restriction, complication, intervention, whatever.I don't think that the U.S. has played "fair" and no one else has, I think the U.S. has played stupid and no one has played at all.

In context of the conversation I think the U.S. showed up to the fight on steroids in 1789, slipped on a wet spot in 1828, took a simultaneous illegal elbow and shot to the crotch in 1930, and suffered the KtFO punch on August 15, 1971. We lost, and we lost the instant that we implemented protectionist policy because this is economics and backroom politics and each and every slippery slope argument applies.

So, it's not that I didn't read your other posts or even that I don't agree with much of the analysis. You're a pretty well-read, curmudgeony character drawing from some solidly researched sources (John Stuart Mill, Hayek, Lenin, Freidman...even some Nock and, god forbid, Adam Smith), my point is that the discussion becomes moot when it becomes a "free market except for that deal with him or except for that deal with her.

I don't confuse the existing venal and sort of retarded mercantilism running amok with any reasonable experiment with a "free market". My guess is that most on this site that complain about the state of things are doing so from a parochial or at least micro-perspective largely influenced by their current disadvantaged position.

That said, I appreciate your perspective.

---sticks

[Feanor]

Bill, I think this is where you misunderstand my thrust. You have issues with NAFTA both for its lack of protection for workers and the advantageous position the U.S. has gained vis-a-vis economic posturing/maneuvering. You think that is "bad" and I think that yopu assume that I think that is "good".
...
Then we're not so far apart. Thanks for the clarifications.

For emphasis I'll repeat my point of view. Agreements like NAFTA are first + foremost for the benefit of global corporations. Workers, (and the middle class), are an afterthough at best. If workers were considered then there would be clauses to "level the playing field" for workers -- which would tend to be beneficial workers in both countries. Ditto for consumers; ditto for the environment. But the ordinary people & the environment are off the table in "free trade" discussions.

[bobsticks]

Yeah, I tend not to think of those things.

[Sir Terrence the Terrible]

Then we're not so far apart. Thanks for the clarifications.

For emphasis I'll repeat my point of view. Agreements like NAFTA are first + foremost for the benefit of global corporations. Workers, (and the middle class), are an afterthough at best. If workers were considered then there would be clauses to "level the playing field" for workers -- which would tend to be beneficial workers in both countries. Ditto for consumers; ditto for the environment. But the ordinary people & the environment are off the table in "free trade" discussions.

Your conclusions and the commentators agree, hence why he said that we sold ourselves out based on propaganda.

[Feanor]

Your conclusions and the commentators agree, hence why he said that we sold ourselves out based on propaganda.
That was never in question. :frown2:

[kexodusc]

Indeed, noteably the US itself as you were doubtless implying. We in Canada certainly feel that US interests are constantly try to create exceptions to the spirit of NAFTA. 'Sticks mentions supposed Canadian lumber "subsidies"; there are more examples that work the other way.

But like I said, we certainly criticize "free trade" based on how it is working, not just where it is not -- see my issues with NAFTA, above and below.
HI Feanor...

I really wasn't singling out the US. I've seen enough examples of Canadian protectionism to know it's systemic throughout both nations. Every country wants free-trade when they're exporting, and protectionism in election years and when they're importing. Sometimes Canada and the US team up vs other economies where there's mutual interest (automobiles) sometimes it's cross border dispute and the rhetoric on both sides of the border ramps up. I'm not convinced any one country is better or worse in this area...they all cheat for different reasons.

[markw]

No, if by "we" you mean the US playing fair. From a Canadian perspective, US interests are as relentlessly as any other country's in seeking ways to undermine the NAFTA free trade concept, (such as it is).

For a taste of NAFTA issues from a Canadian perspective, (if you give a damn: unlikely), check out the Council of Canadians website item ... here (http://www.canadians.org/trade/issues/NAFTA/). Canadians do share many of the same concerns as Americans.A quick scan of that blog shows me some internal problems that canada has to dal with and a bit of buyer's remorse.

Considring that canada has benefited from being out neighbor all these years, what with a lot of our auto manufacturing, copying most of our culture, and being the best friend of the biggest, baddest guy on the block, you should consider it a cheap price to pay.

[Feanor]

HI Feanor...

I really wasn't singling out the US. I've seen enough examples of Canadian protectionism to know it's systemic throughout both nations. Every country wants free-trade when they're exporting, and protectionism in election years and when they're importing. Sometimes Canada and the US team up vs other economies where there's mutual interest (automobiles) sometimes it's cross border dispute and the rhetoric on both sides of the border ramps up. I'm not convinced any one country is better or worse in this area...they all cheat for different reasons.
I agree. And I think it's fair and accurate to say the free trade agreements as long as they've been around, (which is at least a couple of centuries), have always been disputatious and tended to favour some to the disadvantage of others.

[badhabit67]

japonica
The Chicken Tax
the repeal of the Chicken Tax
The Volker Plan
30% Chinese tariffs on motorcycles
Chinese tariffs on U.S. nylon products at 96.5%
the 2010 National Trade Estimate
Currency manipulation of the yuan and euro
Canadian subsidized lumber
Bill Clinton toothless international policy regarding intellectual property rights
(here's some irony for you: http://www.nytimes.com/2004/10/24/opinion/24sun2.html )
Presidents Ford and Carter, Zbigniew freakin' Brzezinski...

ad infinitum

When were we practicing free trade?


Thanks bobsticks,that said it all !!

[Feanor]

japonica
The Chicken Tax
the repeal of the Chicken Tax
The Volker Plan
30% Chinese tariffs on motorcycles
Chinese tariffs on U.S. nylon products at 96.5%
the 2010 National Trade Estimate
Currency manipulation of the yuan and euro
Canadian subsidized lumber
Bill Clinton toothless international policy regarding intellectual property rights
(here's some irony for you: http://www.nytimes.com/2004/10/24/opinion/24sun2.html )
Presidents Ford and Carter, Zbigniew freakin' Brzezinski...

ad infinitum

When were we practicing free trade?
I had to check to see if 'The Volker Plan' (sic; s/b "Volcker Rule") was; turns out it was a proposal to restrict the activities of large banks to prevent them speculating, especially against their customers' interests.

'Sticks, I'm curious to be sure that you are angry that the plan/rule was thwarted versus that it was proposed in the first place.

Personally I don't think any person or concern ought to be able to hedge or short a security they don't actually own themselves. To do so is pure gambling. Before the 2008 crisis various parties bought "credit default swaps" on ("shorted") sub-prime mortgage-based bonds. These CDS would pay the purchaser the face value of the bond if it defaulted -- which plenty of them did as house prices fell and interest rates when up. Problem was that most of these 'short' parties didn't own any of these bonds.

It's been pointed out that such transactions create risk out of nothing. I.e. those on the "short" side had no risk respecting the bonds, but those "long" put themselves at risk for the full face value. Typically they sold CDS for between 0.5 -2.0% of the face value. The government bailed out these a$$holes???

IMHO, CDS, future, options and other such risk-creating derivatives ought to be available only to those with source security or commodity at risk. That is, only hog farmers should be able to sell porkbelly futures; only mortgage bondholders should be able to buy CDS for them. No life insurance company will sell you a life insuranc policy unless you have an "insurable risk" on the person; why should CDS be different?

[bobsticks]

'Sticks, I'm curious to be sure that you are angry that the plan/rule was thwarted versus that it was proposed in the first place.

I'm angry that it was proposed in the first place but probably not for the reasons that you think.

It's toothless. It places no restrictions on foreign banks which is where we're seeing the largest amounts of money flow in earmarked toward speculative markets and spread betting on U.S. crude prices. This is exacerbated by the low dollar, especially in Hong Kong and Argentina.

[Feanor]

I'm angry that it was proposed in the first place but probably not for the reasons that you think.

It's toothless. It places no restrictions on foreign banks which is where we're seeing the largest amounts of money flow in earmarked toward speculative markets and spread betting on U.S. crude prices. This is exacerbated by the low dollar, especially in Hong Kong and Argentina.
That's probably the principal argument of those opposed to the measure. But has the US already forfeited its leadership? Does it now lack the clout to get other countries to take similar, helpful measures? And how come "free trade" agreements facilitate corporations doing whatever they want, but nothing at all to constrain their distructive activities?

[Feanor]

I'm angry that it was proposed in the first place but probably not for the reasons that you think.

It's toothless. It places no restrictions on foreign banks which is where we're seeing the largest amounts of money flow in earmarked toward speculative markets and spread betting on U.S. crude prices. This is exacerbated by the low dollar, especially in Hong Kong and Argentina.
Big-banks arguement like ...

14 year-old: "Puleeze Mom, can I go downtown and turn tricks?"

Mother: "Yes of course Darling. We don't what the other sluts to get all the johns' money".

[bobsticks]

http://link.brightcove.com/services/player/bcpid823619053?bctid=913862823001

[Feanor]

http://link.brightcove.com/services/player/bcpid823619053?bctid=913862823001
Sounds vaguely promising but I really can't hear what they're saying. :frown5: