Unfair
Trade
If we continue to let
our trade policy be dictated by special interests, then American workers will
continue to be undermined, and public support for robust trade will continue to
erode. That might make sense to the Washington lobbyists who run Senator
McCain’s campaign, but it won’t help our nation compete. Allowing subsidized
and unfairly traded products to flood our markets is not free trade.
By J.M. Hamilton (5-19-2015)
In
the mid-eighties, the introductory econ course I took presented free trade as a
panacea
for all the world’s problems. The macro concept was simple: Some
nations were better at producing goods and services than other nations, so free
trade allowed each nation to specialize and produce what it produced best.
This in turn led to lower costs for consumers, who were largely free trade’s
beneficiaries. It was also supposed to raise the living standards of
workers around the globe.
Some
thirty odd years - and many free trade agreements - later, the fruits, spoils,
and dangers of free trade surround us. For multinationals, private equity
and the global banking cartel, perhaps free trade ranks among the top reasons
for ever growing wage and wealth inequality, seen among Western democracies.
In brief, the
spoils of free trade have gone to the one percent, and the balance of the
population has paid dearly.
That would be the dangers of free trade: displaced workers; higher
government social spending to pay for services for those out of work; greater
resulting deficit spending; higher taxes for those who pay taxes (and cannot
dodge same); the ghettoization
of the rust belt and middle America; and a never ending excuse for the Federal
Reserve to continue to suppress interest rates and print money.
Quite
simply, free trade is just another example of top-down economic
policy dictated by the financial power elite, whereby the wealthy get
wealthier, at the expense of the middle class and the poor. Like the transfer
of wealth described in my last piece on the Federal Reserve’s policy of
interest rate suppression; here again, free trade transfers wealth from 99% to
the 1% (in short, globalization cuts wages and fattens profits margins).
And thanks to SCOTUS decisions, Citizens United and McCutcheon, almost all
career politicians cater to the one percent, with an occasional sop or nod
thrown by Dems to the remnants of the middle class (when their vote is needed).
In
short, free trade in its present incarnation is little more than wage, labor,
regulatory, environmental, and tax arbitrage; that is to say, multinationals
play nation states, and politicians, off one another in a race to the bottom,
and at the expense of everyone else. Again, top down
economic policy in action.
What
makes this topic so heated right now, is that President
Obama – alleged champion of the poor and the middle class – has done a complete
180 degree turn on free trade, and has reversed the rhetoric he’s
championed when he ran for the presidency in 2008. That the President has
joined with the aforementioned multinationals, banking cartel, private equity,
and the Republican Party, in eviscerating
the middle class once again, with yet another proposed free trade agreement
(TPP), is of singular importance (particularly when said President is less than
two years away from re-joining the private sector). Add in the
President's decision to allow Shell to drill in the Arctic, during a global
energy glut, and the optics look bad.
More
noteworthy still, the
Democratic Party has finally found its spine (her name is Senator Warren),
and told President Obama and the GOP to pound
sand last week, when fast track legislation green lighting the pending free
trade agreement (TPP) came up in the Senate and was voted down. Fast
track essentially, would give the President and multinationals TPP/free trade carte
blanche, plus another six years to do whatever the
plutocracy pleased, subject to simple Senate majority approval. Given the
reactionary nature of the U.S. Senate, and their eagerness to please any
multinational or plutocrat who contributes to their campaign, fast track
undoubtedly will be manipulated to a very bad end.
As
we can see free
trade is insidious enough, but what makes TPP, and fast track, particularly
galling are a number of added features:
·
First off, we don’t know what’s in the agreement because it’s classified.
When President Obama talks down to his free trade opponents (Dems, unions, and
liberals), he not only belittles democratically elected officials, but also
slams democracy, intelligence, and transparency. It also begs the
question, why the double standards in the President's free trade thinking?
·
Secondly, TPP assures corporate
autocracy over the power of democratically elected governments and
sovereign nations, by establishing extra-judicial panels, outside the rule of
law, that will decide matters for corporations, when sovereign nations put into
place laws, policies, reforms, regulations, or even minimum wages that threaten
a corporation’s profits. This provision basically puts into the trade
agreement, what Washington and SCOTUS have been advocating for some time, that
is to say, the
primacy of corporations over: democracy, the people, and global governments.
·
Thirdly, and perhaps Senator Elizabeth Warren’s biggest concern, fast
track would allow future administrations - for a period of up to six years - to
overthrow financial rules and regulations, via existing or future free
trade agreements, or amendments.
·
And finally, as a sweetener and payoff to Dems, the Administration threw in
welfare and government programs for workers, whose jobs will be shipped
overseas by TPP. The fact that the U.S., arguably, has gone bankrupt
supporting workers (and the resulting steady erosion of the tax base), whose
jobs have already been shipped overseas, courtesy of prior free trade
agreements, appears to be beside the point.
The
irony is President
Obama has often touted middle-class economics but then sides with the
plutocracy, and the GOP, in pushing for free trade legislation that is
antithetical to America’s poor, middle, and upper-middle classes’ economic
existence. Worse still, multinationals have shown again and again that
America and Americans are something to be exploited, and multinational
allegiance is solely to their own bottom line. And yet, day in and day
out, multinational
entities are who Washington serves.
So what might the
President do, or a future President do to reverse course?
Well
rather than adopt top down economic policy, a future President might try bottom
up economic policy, middle class economics, or policies that insure labor's
dignity. Such
a President might start by adopting policies establishing equilibrium in global
labor pay, regulation, and tax rates. For instance, future
administrations might work towards:
A)
Establishing a global minimum wage of $15.00 per hour;
B)
Establish a global forty hour work week, and eliminate all child labor;
C)
Mandate equal pay for women and men, world wide;
D)
Create minimal – universal - environmental standards (air, earth and water) for
all nations (utilizing California rules and regs, as the gold standard);
E)
Create a minimum corporate tax across all nations, as well as, a tax on wealth
(and eliminate all tax havens); and
F)
With a portion of these taxes set up a global economic and environmental
enforcement, and audit division at the U.N., to insure that these provisions
are enforced, taxes are collected, and regulations are met across the globe.
G)
And finally, medical care needs to be established as a basic human right, not a
benefit.
This
is what Democrats
should be fighting for in America, and in future international trade
agreements, a level playing field for all businesses and employees – regardless
of geography or nation state. Trade policy should not be dictated from
the top down, by the plutocracy and politicians owned by same; but rather, it
should be focused on those w/out a voice in Washington, the 99%, which in turn
supports higher aggregate demand.
One
can already hear the elite protest such policies, as “job killers.” But
as we all know by now, the true job killers are multinationals, the Wall Street
banks, private equity, and free trade agreements.
Free
trade agreements have enriched those, who are already wealthy beyond measure,
at the expense of crippling America, the American middle-class, and creating a
permanent underclass of citizens, and America’s ghettoization. President
Obama tells us that globalization and free trade cannot be reversed, many of us
beg to differ, and know better. President Obama has also been quoted as stating
that the “perfect is the enemy of the good,” but we are nowhere close to
perfect or good, when it comes to free trade agreements or the American
economy.
To
reverse current free trade dogma, all it takes is will, and leaders who are not
enthralled by the high priests of a failed free trade ideology, money, and
corporate power. Maybe the GOP and President Obama should take another
look at one of the greatest protectionist Presidents of the 20th Century, Ronald
Reagan and his economic success.
After
all, one cannot dine on inexpensive Chinese produced iPhones, particularly if
one is unemployed.
Copyright JM Hamilton Publishing
2015
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