The American Thinker, a conservative e-zin, has just published a new article whose author speaks out against suicidal “free trade” policies.
Predictably, a large number of pro-Fortune 100 shills flocked to the comments section and began peddling the Fortune 100’s corporate myths about why free trade, and in particular, trading with countries that cheat on the US, supposedly benefits America.
They falsely claim that:
a) trading with dishonest, cheating “trade partners” somehow benefits America and all parties involved;
b) jobs lost to these countries (shipped overseas by multinational corporations to countries where people work for slave wages and where labor, environmental, and construction regulations don’t exist) are somehow magically replaced with new, better-paying ones (the theory of “Creative Destruction”);
c) protectionism has failed, while “free trade” produces prosperity; and
d) protecting the US economy against unfair, dishonest foreign competition is a Big Government/socialist/crony capitalist policy and a violation of of the traditional conservative free market philosophy.
All of their claims are blatant lies. There isn’t a single shred of evidence supporting them.
Let’s start with myths a) and c).
It is “free trade” that has failed abysmally, while protectionism – protecting America’s industrial base – allowed the US to transform itself from a handful of states on the East Coast to the biggest industrial powerhouse in the world.
It is protectionism that allows countries to prosper and become economically powerful, while free trade is an economically suicidal policy. History provides irrefutable evidence of this.
EVERY country which ever became an economic power became one by protecting and actively supporting its industrial base: England under the Acts of Navigation and through the early 19th century, France under Colbert and Napoleon, Prussia under the Customs Union, unified Germany under Bismarck, the US from the 1860s to the 1960s, Japan since the 1850s, and China today.
Protectionism is the policy of ASCENDANT economic powers; free trade, the policy of descendant ones.
Trade surpluses add to GDP; trade deficits substract from it.
Just recently, France’s statistical office, INSEE, announced that the French economy grew by 0% in the 2nd quarter of 2014 – partly due to a large and persistent trade deficit, and partly due to low consumption and investment spending by consumers and entrepreneurs.
And the US, by trading with utterly dishonest, cheating partners, such as China, Japan, and Mexico, has amassed far, far greater trade deficits than France – deficits which helped cause the Great Recession and have prevented America’s recovery.
Trade surpluses add to GDP; trade deficits substract from it.
When a country exports goods or services (i.e. sells them abroad), it earns wealth at the expense of the importing country. Money is transferred out of the economy that imported the good or service in question, and to the economy that exported it. Thus, the exporting country’s economy grows.
More exports = more income.
But when a country imports goods or services (i.e. buys them from abroad), its wealth shrinks in order to pay the exporting country for the imported good or service. Money is again transferred out of the economy that imported the good or service in question, and to the economy that exported it. Thus, the exporting country’s economy grows – and that of the importing country shrinks.
There is no free lunch.
And trade with Third World countries that cheat on the US and suck American factories and jobs out of the US economy MOST CERTAINLY doesn’t benefit the US.
Since the passage of NAFTA in 1993, the US economy has lost 6 million well-paying manufacturing jobs and over 55,000 factories, not replaced by anything and never returning. Thousands and thousands of towns across America, such as Martinsville, VA, have literally been killed by free trade. Those 6 million Americans thrown out of work by companies outsourcing jobs are now permanently unemployed or forced to do poorly-paying jobs, either way ending up on the taxpayer’s dole, thus growing the federal, state, and city budget deficits.
Poor Americans and the middle class have not seen ANY real (after-inflation) wage increase, or increase in the median income, since the early 1970s.
Meanwhile, American shops, supermarkets, and department stores like Walmart have been flooded with cheap, dangerous crap from China and other Third World countries that breaks up the moment it is first used and contains poisonous elements such as lead.
Bikes that break up quickly, lead-painted toys, melamine-contaminated food – this is what the US consumer is now forced to buy, because the American makers of these goods are either undercut by the dumping practices of foreign consumers or have already been forced out of business.
The US, formerly the world’s largest industrial powerhouse, is now dependent on even the basic necessities of life.
No, free trade, especially with cheating countries like China, ABSOLUTELY DOES NOT benefits the US.
Nor does it benefit the workers in the Third World countries to which American factories have been moved. They work for slave wages in buildings that collapse on them and kill them and have to breathe poisonous, polluted air (vide China).
America’s trade with cheating trade partners only benefits those countries, such as China – which has used its massive trade surpluses to finance its military buildup – and the CEOs of the multinational corporations that have shipped jobs out of the US, cut their operating costs dramatically, and pocketed the difference.
As for crony capitalism accusations – it is FREE TRADE, not protectionism, that is a product of cronyism and lobbying.
The American people were vehemently opposed to NAFTA and all later “free trade agreements.” These were passed at the behest of the Fortune 100’s lobbyists on Capitol Hill and their financing of the election and reelection of obedient members of Congress. It is these crony capitalists whom you can thank for those “free trade agreements” – and all the disastrous consequences that followed.
Protectionism, OTOH, was the policy of the US federal government from the moment of its establishment in 1789. It was the official policy of the Washington and Jefferson Administrations and virtually all US governments until the Kennedy Administration.
Yes, protectionism was the policy of the Washington and Jefferson Administrations. And no one needed to bribe them, or any of the other protectionist administrations in US history, to adopt such policies.
Which brings us to the last claim of the free traders: that protectionism is a Big Government Policy and a violation of free market principles.
It is nothing of the sort. As even Adam Smith acknowledged, protecting a country against foreign predators is a perfectly legitimate government function. And trade cheaters ARE predators stealing American jobs, factories, and entire industries.
Protecting the US industrial base against foreign competition is a perfectly legitimate function of the federal government, written into the Constitution, Art. I, Sec. 8, giving Congress full and exclusive power “to regulate commerce … with foreign states.”
And this is the Constitutional power that virtually every administration from that of George Washington to that of Dwight Eisenhower used to protect America’s industrial base.
No, protectionism is not a Big Government policy.
In sum, all of the free traders’ claims are blatant lies. Free trade is a suicidal policy. It has brought about the decline of every country that ever indulged in it.