"America's growing trade deficit is selling the nation out from under us...our country's net worth is now being transferred abroad at an alarming rate. A perpetuation of this transfer will lead to major trouble."
Warren Buffett
Missing amongst discussions of trade policies today are any examinations of the corrupt origins of GATT/NAFTA and its on-going lack of democratic process. Clearly, however, no discussion of trade policy can be either relevant or honest without discussion of the capital-controlled, origins of GATT-NAFTA and its enclosure of the vast wage-earning majorities.
In effect, GATT/NAFTA is no less than a coup d'etat by capital, as chronicled in "The Selling Of Nafta" and revealed in polls in 1993 indicating that up to 87% of the people did not then agree with NAFTA. Missing during the entire election of 1993 was any discussion of trade policy by the candidates. Yet immediately after the election, what occurred (amidst a media blackout) was a midnight-style passage of this most important treaty only five days after the election.
In short, when you begin with a corrupt process you can only get a corrupt, undemocratic, unwanted, and now widely protested globalization Clearly, if we had a National Initiative, GATT-NAFTA would have been history within a year or two of its devious inception. Unfortunately, no capital-controlled society (like the USA) wishes to give you this basic freedom. In addition, capital's corporate media has created an information enclosure in which free trade is blameless, unchangeable, and impervious to any democratic processes. We, the people, are simply to await its rapture and banish those nasty protectionists.
As a result of this chicanery and economic fascism, what we have now is forced trade with the greater slave - i.e., one, set to benefit employers alone and hollow out the work and social progress of centuries. Now well down the road to abject dependency, we no longer have the freedom not to trade, nor to adjust horrendous trade imbalances with compensating-incentivizing tariffs. In short, we are forced to reward the greater slave and his worst-of-world conditions, and to compete on the downside rather than the upside.
As for hoary trade theory, a relatively free trade (without large imbalances or dislocations) is only possible amongst nations of similar social, wage, and regulation standards, and even then anti-dumping provisions are necessary. Otherwise, in any "race to the bottom" scheme amongst greatly disparate partners the partner with the least standards is rewarded for their lesser wages and standards. Thus, a corrupt and undemocratic Efficiency Uber Alles process prevails. As a result, Capital's amoral economists let no morality, human rights, or environmental ruin sully their religion of forced Free Trade.
Regardless, as things stand we reward the greater slave, pirate, polluter, and penalize the higher wage and standard country. This is no less than a recipe for the repeal of centuries of social progress and outsourcing demolition of the G7 middle classes. In plain fact, it is a recipe for the control of society by capital wherein there is no effective interference from the vast majority of wage-earning citizens. It is no less a recipe for fascism, for a secret, star chamber, WTO cabal without right of appeal - wherein judges remain both invisible, and unelected, by all those affected by their decisions.
Capital's "free trade" regime is both crude oligarchy and bad trade policy - particularly in a world of economies and societies in different stages of development. Today, as the inevitable backlash around the globe deepens, it is being revealed that undemocratic policy origins lead inevitably to corrupt and dismal ends, to currency decline, to immense social costs offsetting any gains, to the end of sovereignty, and finally to "terrorism" and revolution.
In any case, rational discussions of free trade theory and practice mean that a definition of terms is first necessary. As always, we should remember that it is those who define the terms (and own the media) who control the conception, perception, meaning, and implementation of policy. Thus, the great majority of wage-earning citizens are trumped by capital at the starting gate in our corporate- media-run "democracy."
Nevertheless, for balance and sanity in trade theory to emerge we must first admit that for trade to be truly free one must be able to trade or not to trade, and/or to have the freedom to adjust tariff policies as local conditions warrant, and a majority of citizens demand. Otherwise, so-called "free" trade is nothing but forced trade, without balancing levers and compensating adjustments to effect today's huge dose of "unintended consequences."
In the minds of capitol's well-paid lobbyist legions and those not likely to be outsourced, trade theory and practice is not currently constrained by any such rational definitions or democratic process. As such, it is no less than an outdated, centuries-old, religion and ruling-class fetish to be forced upon nations and wage-earning majorities regardless of their preference, or its self-defeating imbalances and costly effects. As defined by capital, it is simply British imperialism revisited.
In short, for so-called free traders, capital's ends justify capital's means, and the people's ends and means have no standing. Ignoring both a lack of democratic process and reality of ballooning trade deficits, currency decline, global oligopoly, and our dependency upon undemocratic nations, free traders await the glorious ends-justify-the-means results of their naive and pernicious trade theory. Today's true believers are conjoined with (not to mention employed by) our rapacious ruling elites - i.e., those whose corporate multinational and Trilateral social programs are based on "harmonizing" First World citizens into third-world status, and removing any form of effective democracy via the treaty powers of an imperial presidency and unelected trade representatives.
As for trade theory, in general we can say that amongst nations of relatively equal standards, "comparative advantage" amounts mostly to any geographic-climate-agricultural and natural resource differences. Today, however, amongst the very disparate and largely undemocratic nations of our world (now armed with First-World technology), "comparative advantage" for both manufacturing and service employment shifts to nations with the least democracy, wages, standards, and environmental protections" all amidst a complete lack of upward incentivizing influences and compensating tariff freedoms.
In practice, trade among the G7 countries is one thing but quite another matter between very disparate undemocratic and democratic nations. Amidst a lack of compensating-incentivizing tariffs from the First World, it is nothing less than an invitation to reward the greater slave and penalize the moral, democratic, and environmentally responsible. Thus, a misguided "engagement" - amidst a lack of compensating tariffs and incentivizing levers - is destined to collapse the superior civilization, and install a ruling-elite's hegemony, exactly that which is occurring. Within this sorry system even the CIA has warned that globalization - i.e., uncompensated and irrational free trade - is making it impossible to secure our own sources of military hardware and thus poses a threat to our freedom and security.
As a result of such lever-less "free" trade, First World countries lose their capacity to produce and so lose their historic freedom and become abjectly dependent. Dependent upon whom? To what End? With whose rules? Rewarding Chinese Generals with our industries and jobs is surely making all the dead and buried veterans who fought communism shout from their graves - they did not fight and die to establish a totalitarian capitalism via undemocratic trade policies! Where is democratic trade?
To give away market entry into democratic G7 countries without getting anything of real value in return illustrates the utter corruption and irresponsibility in our trade policy. As a result, it will generate a world in chaos, ruin, and rebellion. Karl Marx embraced capital's sorry free trade doctrine precisely because he knew it would, did, and will lead to a revolt of wage-laboring majorities.
Indeed, capital's coup will be met with revenge and revolution of one sort or another, until trade policy reflects not a top-down tyranny of a ruling elite but, instead, a from-the-ground-up will of wage-earning majorities. Any imposed monoculture is a disaster, both in nature and in human society.
To forestall reaction to top-down plutocratic policy, corporate media is full of shills saying "there is nothing you can do", its "inevitable" and "there's going to be some winners and losers" etc. Even worse, ruling classes are attempting to conflate growing resistance to globalization and dumb trade polices with "terrorism" - all so they can continue to arrest and wipe out dissenters and avoid discussion and amelioration of the underlying problems. You must be flattened.
Regardless, without compensating tariffs and levers for the G7, undemocratic countries like China will grow to control the world, just as they now control our monetary policy due to immense trade deficits and their currency peg. As a result of capital's GATT/NAFTA, corporate corruption, dependency upon the undemocratic, and a lack of effective democracy at home is now rife. In sum, we have simply given away our markets, freedom, rights, morality, and environmental safety only to suffer immense and costly trade imbalances, job losses, wage declines, and be forced to eat poisoned and polluted food from abroad.
The idiocy of today's uncompensated trade is aptly illustrated by the fact that, due to a lack of compensating and incentivizing tariffs, we are left to purposely devalue our currency "in order to compete." Yet this self-defeating strategy simply destroys everyone's savings, income, and erases all previous gains from any lower prices achieved! In fact, we have already lost trillions, made all our assets cheaper, and raised import prices. How dumb can we get?
Free is turning out to be so very expensive, and a dollar collapse - brought on by uncompensated trade policy - will complete the idiocy of "free" trade in a disparate and undemocratic world.
In addition to this idiocy, we also have no distance tariffs, so fossil fuel transport and pollution of "goods" is maximized due to the fact that products which travel only 100 miles to market compete, on a par, with products travelling 10,000 miles in fossil fuel ships and vehicles - yet more real-world costs not covered in "economic" theory.
As a result, we are forced to pay all the "exogenous" costs and attempt to effect our trade policy with monetary policy. This leads to competitive currency devaluation, a bludgeon approach as opposed to simple, rifle-shot, tariff adjustments needed to achieve trade balances in particular goods and attain a "Goldilocks" scenario. Surely, if we had tariff freedom, we could get them too high, or we could get them too low, or we could get them just right" precisely because we have the cultural and economic freedom to do so.
Today, we hear our representatives and Treasury Secretary telling us it is good to purposely destroy the value of our currency... all because we were not smart enough to employ compensating tariff systems fit for a still disparate and undemocratic world. In practice, these would work to maximize real trade and tariff freedom, retain local productive capacity where needed, prevent global oligopoly, cause business in less-developed countries to support domestic reforms to gain greater entry to G7 markets, and otherwise permit a smarter trade policy and more rational globalization-interdependency according to the wishes of wage-earning, majorities.
In sum, GATT/NAFTA must be jettisoned by the G7 countries and reconstructed to allow for compensating tariffs, all set by democratic trade processes and tariff boards made up of equal portions of labor and capital. Only in this "factor-balanced" fashion can we have truly free and democratic trade and avoid global dependency, oligopoly, and capital's fascism writ large. Utilizing such policies we have the freedom and ability to get trade just right, and just as right as wanted by the majority" in short, an ethical, rational, and willing interdependency.
Kent Welton,
TheCenterForBalance.org
