Ten problems with "free" trade

[eridani]

http://www.truthout.org/yes-virginia-there-a-legitimate-case-against-free-trade58859

Let's crack open that intimidating black box, shall we, and have a look at the machinery inside? Free trade has roughly ten very serious problems.

The first problem is the assumption that trade is sustainable. But a nation exporting non-renewable resources may discover that its best move (in the short run) is to export until it runs out. The flip side of this problem is overconsumption, in which a nation (like the present-day U.S., maybe?) borrows from abroad in order to finance a short-term binge of imports that lowers its long-term living standard due to the accumulation of foreign debt and the sale of assets to foreigners.

The second problem is that free trade increases inequality even if it makes the economy grow overall (which is itself questionable). Because free trade tends to raise returns to the abundant input to production (in America, capital) and lower returns to the scarce input (in America, labor), it tends to benefit capital at labor's expense. Economists call this the Stolper-Samuelson theorem.

The fourth problem is positive externalities, like the way some industries (mainly high technology) open up paths of growth for the entire economy. All industries are not alike, and the profits of an industry today do not necessarily predict the industry's long-term value for the economy. Free trade can allow these industries to be wiped out because it ignores this hidden value, harming the rest of the economy for decades to come.

[h9socialist]

1. The most important issue this raises is:

Problem #6 which discusses the mobility of productivity. Frankly, NAFTA, GATT-Uruguay Round and CAFTA would not have been possible if the US had had a sensible technology control policy. As it is, one should refer to Robert Reich's "The Work of Nations," where he describes how techno-trends made it possible to economically reproduce factories in poor nations. This is a textbook case of big capitalists using technology to play workers against workers to the detriment of workers in all countries. "Free Trade" would not have been profitable if these trends had been managed towards the benefit of workers, rather than a "race to the bottom." What I'm saying is that "free trade" was only a symptom of a deeper problem at the heart of capitalist production.

[upi402]

2. Common sense

Labor rates, like water will seek the lowest level. Free trade extended the area for US labor rates out to poor countries. A wider area with known lower topography. Our standard of living will continue to follow as no correction is in sight.

The old trickle-down lie, coupled with the phony assertion that wages and markets will increase in poor countries, destroyed American democracy. Let historians report the truth now.

Reich knew that when he touted NAFTA. I have yet to see him admit he was a Clinton-republican whore and a liar, and make amends.