Tapsearch Com EditorJoe says forget Free Trade. It's a no win situation for all in the world.
April 24th 2009 19:10
Bizarre Politics Reports:
Joe Lebon comes from the auto industry and sorts out in detail the problems behind our current global economic crisis.
The Truth of Free Trade - by Joe Lebon, Advocate with Protect American Workers
New good followup comments at related site [ see Say No to Free Trade at the Worlds News Net
An untold story behind the news in the global economic arena. Pass it on.
In light of our current economic downturn, it is appropriate to consider the role played by free trade as a contributing factor. The issue as to the economic consequences of large trade deficits is often diverted into one on whether or not trade in general is good. This false argument is a tactic often employed by free traders. The promise of free traders was a more prosperous America through low cost consumer goods and an explosion in export related jobs. As the evidence now indicates, the dream remains unfulfilled. Consider the fact that throughout the 1950 and 1960s, roughly 1/3 of Americans were working and they were paid about 45% of gross domestic product in wages.
Today, over 43% of Americans work, but are paid only 1/3 of GDP. Free traders must believe that more people working longer for less of what they produce is better. Still, fanaticism motivates them to continually put forth examples of the benefiting few while turning a blind eye to the plight of the many that have lost. If a coherent economic justification for persistent trade deficits exists, free traders have failed to produce it.
While ignoring the fact that the United States was a net exporter at the time, they level the many times discredited accusation that protectionism somehow caused or increased the severity of the Great Depression. They must feel that if they repeat this charge enough, it will somehow make it true. The fact is Great Britain, much like our country today, was a large net importer at the time of the depression. By implementing protectionist policies, they experienced a far less severe economic contraction than what occurred here.
Many of the so-called experts responsible for the current crisis in our financial markets are the same people long advocating for unregulated trade policies. This is understandable considering that they benefited from taking their cut of the financial transactions that result from trade. The academic arguments for free trade postulated that any jobs lost to imports would be more than compensated for by gains in export related industries. The existence of the trade gap invalidates any such conjecture. The gap, which is neither theory nor matter of opinion, is the empirical evidence for the reality that we are importing far more than what we export. Promoting the benefits of exports while ignoring the job loses resulting from imports is analogous to only counting deposits while ignoring withdrawals when balancing ones checkbook.
It is a simple matter of deduction to conclude that the economic benefits resulting from our exports are far exceeded by the damaging losses attributable to imports. The result has been the net loss of millions of manufacturing jobs. Further more, rather than export from home, many American corporations simply build new plants employing low wage workers at the site of their new foreign markets. This is necessary since Chinese and Mexican consumers can little afford American made products. While it is often argued that foreign companies have been building facilities here, they are often at the expense of existing American industries. Workers are essentially replaced by younger ones at lower wages and with fewer benefits. A prime example has occurred with the devastation of our domestic automotive industry.
Some consider job losses an acceptable consequence of trade policy. Their lack of concern is attributable to the isolation they feel while working in non-manufacturing sectors of the economy. But in time, the influence of these losses spreads to all sectors due to its domino effect. In the antithesis to a - trickle-down economics - the impact of plant closings spreads from the bottom-up throughout the economy. In the same way a new factory produces a multiplicative economic stimulus to a community, the closings produce multiplied economic losses. Unpaid taxes from displaced workers are lost to governments and educators. Lost insurance premiums undermine the financing for the worlds best health care system. Local communities are weakened by reduced spending and charitable giving. The impact extends to the local banker, school teacher, health care worker, and city employee.
As factories close, its victims extend beyond the unskilled laborers to supporting professions such as finance, management, and engineering. Related industries such as transportation and manufactures of machinery are impacted. The effects snowball into small businesses in surrounding communities. Canceled vacations spread the decline to travel destinations. Many of the displaced workers are forced to retrain and compete for jobs with existing workers in other industries. The result is downward pressure on all wages. Immeasurable are the social costs associated with broken lives and families.
Learning from politicians, internationalists have pitted middle class Americans against each other in order to propagate their vision. While union workers have always enjoyed wages above the national average, most Americans understood that they worked in industries in which they were best positioned to negotiate economic gains that would eventually be pulled-through to all working people. The demonizing of unions has progressed to the point to which the public will embrace new multi-million dollar contracts for professional athletes, but criticize workers attempts to secure health care benefits for their retirement.
Middle class Americans have been the big losers in the free trade experiment. What began with the signing of the NAFTA trade agreement, accelerated with WTO admittance for China. The negative impact of these deals was for the most part initially masked by two subsequent bubbles in our economy. The tech bubble resulted in a false sense of wealth as retirement accounts surged in value. As this balloon burst, the housing boom appeared. Cheap money coupled with loose lending practices produced inflated prices which bore no correlation with workers wages. Inexpensive home equity loans on exaggerated home values provided another short lived euphoria. As the chickens of our trade policy come home to roost, no new bubble exists to ease middle class anxiety.
Earning poverty scale wages, workers in countries such as China are not protected by OHSA or receive the benefits of workers compensation. The environment is left to its own devices. When coupled with government subsidies and currency manipulation, we must ask whether it reasonable to expect American workers to compete on this field. As contempt toward them reigns from many in the media and government, working Americans ask only that their voices are heard in the trade debate. The benefits of trade are considerable, but it must be exercised in a way to benefit all Americans. Requiring a virtually equal exchange of goods with our trade partners would be a reasonable first The Truth about Trade
Still, fanaticism motivates them to continually put forth examples of the benefiting few while turning a blind eye to the plight of the many that have lost. If a coherent economic justification for persistent trade deficits exists, free traders have failed to produce it. While ignoring the fact that the United States was a net exporter at the time, they level the many times discredited accusation that protectionism somehow caused or increased the severity of the Great Depression. They must feel that if they repeat this charge enough, it will somehow make it true. The fact is Great Britain, much like our country today, was a large net importer at the time of the depression. By implementing protectionist policies, they experienced a far less severe economic contraction than what occurred here.
The benefits of trade are considerable, but it must be exercised in a way to benefit all Americans. Requiring a virtually equal exchange of goods with our trade partners would be a reasonable first step. This would constitute true trade, not its current aberration. A gradual increase in tariffs should be imposed on imported goods. This could start at 1% and increase an additional 1% each month until our trade account is brought back into balance. This would allow the gradual return of millions of manufacturing jobs to within our borders with little disruption to markets. Unlike government spending, it would provide the economic stimulus of millions of high paying jobs without cost to future generations.
It is a simple fact that production is less expensive in low wage countries such as China. It will be no different for the new - green industry - products politicians have been touting. Left unabated, the closing of American factories will continue until the only goods manufactured in the US will be those with little labor input, requiring short delivery times, or with prohibitive transportation costs. There is no reason to believe that the one bright spot in our economy, export manufacturing, will not eventually be moved to low wage countries. Unfortunately, the only way to reverse this trend under our current trade arrangements is to lower the living standard of American workers to those of our third world competitors.
Undermining of the middle class is to the long term detriment of citizens, government, and corporations alike. Yet, the benefit of special interest groups drives government policy. Politicians attempt to pacify us by beating the tired drum of tax cuts, or new government programs. They dont seem to understand that tax cuts, while beneficial, dont help the unemployed or underemployed. Government spending diverts economic activity from the more efficient private sector.
The living standard of the American middle class was achieved at a great cost to our predecessors. It should not be surrendered so easily in the name of globalization. Participation in the global economy is a choice, and it is one in which we should participate only in a manner most beneficial to our citizens. Political candidates are often taken with asking us if we were better off four years ago. The time has come to ask whether we were better off before free trade.
Joe Lebon
New good followup comments at related site [ see Say No to Free Trade at the Worlds News Net
An untold story behind the news in the global economic arena. Pass it on.
In light of our current economic downturn, it is appropriate to consider the role played by free trade as a contributing factor. The issue as to the economic consequences of large trade deficits is often diverted into one on whether or not trade in general is good. This false argument is a tactic often employed by free traders. The promise of free traders was a more prosperous America through low cost consumer goods and an explosion in export related jobs. As the evidence now indicates, the dream remains unfulfilled. Consider the fact that throughout the 1950 and 1960s, roughly 1/3 of Americans were working and they were paid about 45% of gross domestic product in wages.
Today, over 43% of Americans work, but are paid only 1/3 of GDP. Free traders must believe that more people working longer for less of what they produce is better. Still, fanaticism motivates them to continually put forth examples of the benefiting few while turning a blind eye to the plight of the many that have lost. If a coherent economic justification for persistent trade deficits exists, free traders have failed to produce it.
While ignoring the fact that the United States was a net exporter at the time, they level the many times discredited accusation that protectionism somehow caused or increased the severity of the Great Depression. They must feel that if they repeat this charge enough, it will somehow make it true. The fact is Great Britain, much like our country today, was a large net importer at the time of the depression. By implementing protectionist policies, they experienced a far less severe economic contraction than what occurred here.
Many of the so-called experts responsible for the current crisis in our financial markets are the same people long advocating for unregulated trade policies. This is understandable considering that they benefited from taking their cut of the financial transactions that result from trade. The academic arguments for free trade postulated that any jobs lost to imports would be more than compensated for by gains in export related industries. The existence of the trade gap invalidates any such conjecture. The gap, which is neither theory nor matter of opinion, is the empirical evidence for the reality that we are importing far more than what we export. Promoting the benefits of exports while ignoring the job loses resulting from imports is analogous to only counting deposits while ignoring withdrawals when balancing ones checkbook.
It is a simple matter of deduction to conclude that the economic benefits resulting from our exports are far exceeded by the damaging losses attributable to imports. The result has been the net loss of millions of manufacturing jobs. Further more, rather than export from home, many American corporations simply build new plants employing low wage workers at the site of their new foreign markets. This is necessary since Chinese and Mexican consumers can little afford American made products. While it is often argued that foreign companies have been building facilities here, they are often at the expense of existing American industries. Workers are essentially replaced by younger ones at lower wages and with fewer benefits. A prime example has occurred with the devastation of our domestic automotive industry.
Some consider job losses an acceptable consequence of trade policy. Their lack of concern is attributable to the isolation they feel while working in non-manufacturing sectors of the economy. But in time, the influence of these losses spreads to all sectors due to its domino effect. In the antithesis to a - trickle-down economics - the impact of plant closings spreads from the bottom-up throughout the economy. In the same way a new factory produces a multiplicative economic stimulus to a community, the closings produce multiplied economic losses. Unpaid taxes from displaced workers are lost to governments and educators. Lost insurance premiums undermine the financing for the worlds best health care system. Local communities are weakened by reduced spending and charitable giving. The impact extends to the local banker, school teacher, health care worker, and city employee.
As factories close, its victims extend beyond the unskilled laborers to supporting professions such as finance, management, and engineering. Related industries such as transportation and manufactures of machinery are impacted. The effects snowball into small businesses in surrounding communities. Canceled vacations spread the decline to travel destinations. Many of the displaced workers are forced to retrain and compete for jobs with existing workers in other industries. The result is downward pressure on all wages. Immeasurable are the social costs associated with broken lives and families.
Learning from politicians, internationalists have pitted middle class Americans against each other in order to propagate their vision. While union workers have always enjoyed wages above the national average, most Americans understood that they worked in industries in which they were best positioned to negotiate economic gains that would eventually be pulled-through to all working people. The demonizing of unions has progressed to the point to which the public will embrace new multi-million dollar contracts for professional athletes, but criticize workers attempts to secure health care benefits for their retirement.
Middle class Americans have been the big losers in the free trade experiment. What began with the signing of the NAFTA trade agreement, accelerated with WTO admittance for China. The negative impact of these deals was for the most part initially masked by two subsequent bubbles in our economy. The tech bubble resulted in a false sense of wealth as retirement accounts surged in value. As this balloon burst, the housing boom appeared. Cheap money coupled with loose lending practices produced inflated prices which bore no correlation with workers wages. Inexpensive home equity loans on exaggerated home values provided another short lived euphoria. As the chickens of our trade policy come home to roost, no new bubble exists to ease middle class anxiety.
Earning poverty scale wages, workers in countries such as China are not protected by OHSA or receive the benefits of workers compensation. The environment is left to its own devices. When coupled with government subsidies and currency manipulation, we must ask whether it reasonable to expect American workers to compete on this field. As contempt toward them reigns from many in the media and government, working Americans ask only that their voices are heard in the trade debate. The benefits of trade are considerable, but it must be exercised in a way to benefit all Americans. Requiring a virtually equal exchange of goods with our trade partners would be a reasonable first The Truth about Trade
Still, fanaticism motivates them to continually put forth examples of the benefiting few while turning a blind eye to the plight of the many that have lost. If a coherent economic justification for persistent trade deficits exists, free traders have failed to produce it. While ignoring the fact that the United States was a net exporter at the time, they level the many times discredited accusation that protectionism somehow caused or increased the severity of the Great Depression. They must feel that if they repeat this charge enough, it will somehow make it true. The fact is Great Britain, much like our country today, was a large net importer at the time of the depression. By implementing protectionist policies, they experienced a far less severe economic contraction than what occurred here.
The benefits of trade are considerable, but it must be exercised in a way to benefit all Americans. Requiring a virtually equal exchange of goods with our trade partners would be a reasonable first step. This would constitute true trade, not its current aberration. A gradual increase in tariffs should be imposed on imported goods. This could start at 1% and increase an additional 1% each month until our trade account is brought back into balance. This would allow the gradual return of millions of manufacturing jobs to within our borders with little disruption to markets. Unlike government spending, it would provide the economic stimulus of millions of high paying jobs without cost to future generations.
It is a simple fact that production is less expensive in low wage countries such as China. It will be no different for the new - green industry - products politicians have been touting. Left unabated, the closing of American factories will continue until the only goods manufactured in the US will be those with little labor input, requiring short delivery times, or with prohibitive transportation costs. There is no reason to believe that the one bright spot in our economy, export manufacturing, will not eventually be moved to low wage countries. Unfortunately, the only way to reverse this trend under our current trade arrangements is to lower the living standard of American workers to those of our third world competitors.
Undermining of the middle class is to the long term detriment of citizens, government, and corporations alike. Yet, the benefit of special interest groups drives government policy. Politicians attempt to pacify us by beating the tired drum of tax cuts, or new government programs. They dont seem to understand that tax cuts, while beneficial, dont help the unemployed or underemployed. Government spending diverts economic activity from the more efficient private sector.
The living standard of the American middle class was achieved at a great cost to our predecessors. It should not be surrendered so easily in the name of globalization. Participation in the global economy is a choice, and it is one in which we should participate only in a manner most beneficial to our citizens. Political candidates are often taken with asking us if we were better off four years ago. The time has come to ask whether we were better off before free trade.
Joe Lebon
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Do you understand the theory of competitive advantage at all? Or do you think that's another free trade scam? Do you understand that America, while competitive in certain arenas, is uncompetitive in others? You mention the auto industry. The reason it is suffering is because other countries can do it cheaper, and Americans are choosing to buy cheaper cars. That's because other countries can produce cars more efficiently than America can.
Government protection can be a nasty thing, and taking it away is even nastier. I would love to see an American president try to deal with political fallout the way that Margaret Thatcher did: with iron resolve and balls of steel.
You say that workers in China are earning poverty level wages. I reply that the economic growth experienced by China and India (trade driven) over the last decade or two has lifted more people out of poverty than all the aid in the history of humankind. As it did in Singapore, and South Korea, and Hong Kong, and Taiwan, and Japan.... there are plenty of examples of countries that have embraced free trade and prospered.
I'm not saying government intervention is always bad... but think about this logically for a second dude. How can you argue that free trade will (eventually) lead to the most efficient allocation of resources. Take a long run view...
Just as an example, Singapore has proven that it is possible to prosper through free trade. The country is a perfect example of governments helping to make business efficient, not pandering to inefficient industries through protectionist policies. Even though it is one of the most expensive places in South East Asia to do business, they are not using protectionism to help themselves. They have adapted, just as America needs to adapt.
That's all I have time for. Interested to read your rebuttal.
Comment by Tapsearch Com Editor
Ethics Box
Stories behind News in Global Economic Arena
The Rationale Quest
The World's News
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I put up Joe Lebon's article after finding out his efforts in trying to get his work published in our local newspaper and finally got only a 200 word letter published. The news channels block out the real world when it comes to free trade and Globalization and have done it as long as I have been at it - since 1992.
I do not know where to begin with you since I do not consider so called Free Trade real trade as historically defined and practiced. I started my advocacy which I consider to be a "ministry" in searching out the common good in 1992. As a trouble shooter supplyer to top computer manufacturers, I found that the U.S. Federal Government sponsored the moving of factories outside the USA starting in 1956. It was a temporary program that never ended and evolved into so called free trade.
Free trade is all about moving production and factories from place to place for the sake of cheaper labor in an endless fashion because there will always be someone who will work for less in order to survive.
It is radical race to the bottom for all. It has caused the economic crisis because it deflated the value of labor and work with this value being about the only real tangible value we have left while acting as a money standard too.
Our economies based on making money on money instead of making things are burning out. The paper money products proved to be a ponzi scheme including the stock market. It was a funny money game that played out.
Still our political leaders led by President Obama now try to keep them afloat and have bailed out big money by putting a tariff on small money for many generations to come.
If you want to start reading my articles, note the following sites- which now represent a chronical of events behind the economic crisis forecasted years ago.
Mobile user friendly summary of articles from Tapart News/
Cluster of some of our sites under one adress
Select any article here at Bizarre Politics including a review of Alan Greenspan's The Age of Turbulence book .
A look at the global economic arena from a philosophical and religious perspective at The Rationale Quest
We are currently putting up our published letters from the 1990s that predicted the economic crisis at The Ethics Box.
I
Comment by Tapsearch Com Editor
Ethics Box
Stories behind News in Global Economic Arena
The Rationale Quest
The World's News
Tapsearch explores untold stories