See Also: Insourcing, Outsourcing, Free Trade, Free Markets
Arguments For: Free Trade policies are necessary for America to remain competitive in the world market.
Arguments Against: So-called “free trade” may be good for someone, but it has NOT been good for Americans. Being “competitive” has cost Americans their jobs and their future. Civil unrest has begun to take hold.
Discussion Point: Suppose all foreign trades were subject to wage disparity adjustments.
Free Trade is not Fair Trade
The so-called “free trade” treaties that have been signed are not fair trade treaties. America always ends up on the loosing end of these types of bargains. For example the Japanese can build cars here but we can’t build ours in Japan. Why? Exactly how have Americans benefited from NAFTA?
Why are these “treaties” and not laws?
Treaties and “agreements” don’t require votes of the people. Why would the American people vote to have their employment taken away? Ask your local politician or multinational.
Look At All These Jobs!
The economy has exploded now that the market has healed and provided incentive for American entrepreneurs to flourish once more. And look – people have put away their pitchforks and gone back to work!
Proposal: Replace all “free trade” with “fair trade”. Price all foreign trade transactions to compensate for the disparity in wages between trading nations.
May the Cheapest Man Win
Suppose there is a global market for software tools. They are sold on the web. One tool is produced in the US and the other in Russia. Both are of equal quality and perform the same functions. The US tool sells for $1,000.00. The Russian tool is a bargain at $750.00. Or is it?
The Hidden Costs of Global Free Trade
The wages in Russia are half what they are in the USA. In the global free market model, the Russian tool would out-sell the US tool and ultimately put the US company out of business, eliminating the jobs for US programmers. The resulting lost wages would hurt not just those programmers, but also their families, the tax base and everywhere the programmer used to do business in the US. We see the multiplier effect acting in reverse. Now the programmer can no longer find work in the US, so he must be retrained to become a restaurant manager or perhaps a cook. His engineering degree has been wasted and he still owes student loans for which he can no longer pay, so he defaults on them and declares bankruptcy. His intellectual prowess is lost. His children see that earning a degree in engineering is a worthless waste of time and money, so they refuse to major in that subject, instead preferring to become rap stars. So while this transaction may have benefited a few consumers in the short run, it devastated the US economy in the long run.
Free Trade does NOT make America “Competitive”
Free traders often argue that America needs to be more “competitive” to compete in the New World Order – the global economy. As American citizens, we might ask, “Why?” Perhaps we might benefit as investors since global price wars are said to increase “shareholder value”. But we can’t invest if we don’t have any jobs to provide the means to invest. It should be pretty clear by now that free trade policies do NOT make America “competitive”. In fact, free trade policies do the exact opposite – they rob Americans the ability to compete!
Level The Playing Field
All countries have control over their portions of the Internet. It is trivial to track products sold from foreign nations. To level the playing field, the US government would impose a tariff on the Russian product in an amount equal to 50% of the wage differential ($350.00). Alternatively, the US could shut out all foreign products from the US market. Another approach would be to subsidize US companies paying them $350.00 per product sold so that they could afford to compete with the Russians.
Why this is a reasonable compromise: The goal of America is to look out for its own preservation and self-interest. This proposal is fair in that it insulates Americans from the disparity of wages in foreign countries. It still allows for healthy competition at American prices. It still allows for foreign competition, except it is done on America’s terms. It is not free trade. It is fair trade.