The Free Trade Lie Is Exposed

The High Priests of Economics tell us that "globalization cannot be stopped," much like the wrath of the Inca's Volcano God. We've been told that there is no alternative to neoliberal globalization other than utter ruin.
Every time someone suggested renegotiating, or Gawd-forbid leaving NAFTA, then you better have a fainting couch nearby because you would think that someone just told the economists and politicians that Santa Claus died.
Don't anger the Great Volcano Gawd Of Free Trade!

This leaves one to assume that corporate executives would feel the same.
It turns out that CEO's don't.

In describing what life would be like without Nafta, some business groups have stopped just short of predicting a plague of locusts.
Listen to American CEOs, though, and the potential collapse of the continent’s trade framework doesn’t sound quite so scary.
As talks on reshaping the pact drag into a seventh month, executives are getting asked -- on earnings calls and at conferences -- how their businesses would fare in the event of a breakdown. Words like “well-positioned” and “manageable” keep cropping up in their answers.

Gosh, why would corporate executives not get excited over a FTA that we've been told for a generation is absolutely necessary? They don't even use it.

Still, some little-known data from the depths of the Nafta ledger helps explain why the CEOs sound sanguine. A growing number of exporters in Canada and Mexico don’t even bother to fill out the paperwork that would entitle them to use Nafta’s preferential tariffs.
Last year, only 43 percent of imports from Canada came into the U.S. under Nafta rules. The figure for Mexico was higher, at 58 percent, but still short of an overwhelming majority.

nafta.PNG
Canada's Prime Minister Justin Trudeau came out and said, “We will not be pushed into accepting any old deal, and no deal might very well be better for Canada than a bad deal.”
NAFTA isn't very popular south of the border either.

Lopez Obrador, 64, has been attacked by the business community and NAFTA supporters as a "threat to Mexico" because of his nationalist economic policies and his populist motto: "For the good of all, the poor come first."

The poor come first? Now there's a very un-American idea.
Both Mexico and Canada at least consider the welfare of their working class.

In the United States, the Democrats never even considered the idea of re-negotiating NAFTA for fear of offending their corporate donors. They ignored the threats and pleading of labor unions and the working class.
It required a meglomaniacal, anti-union Republican to renegotiate NAFTA.
How sad is that?

Corporate America doesn't care all that much about NAFTA anymore because it already got what it wanted most of all - the destruction of labor union in this country, and the submission of the working class.
The decline of the American middle class has finally reached the point that American workers can compete against Chinese peasants. Victory is in sight!

  How much have things changed since the start of this Depression? A lot.

 Whereas the gap in labor costs between the two countries was about $17 per hour in 2006, that could shrink to as little as $7 per hour by 2015,

 With any luck our corporate masters will soon be installing suicide nets outside their American factories too.

All one needs to do is look at economic history to see that the free trade mantra has no basis in fact.

Ulysses Grant, the Civil war hero and US president between 1868 and 1876, remarked that "within 200 years, when America has gotten out of protection all that it can offer, it too will adopt free trade". How prescient - except that his country did rather better than his prediction.
The fact is that rich countries did not develop on the basis of the policies and institutions they now recommend to developing countries. Virtually all of them used tariff protection and subsidies to develop their industries. In the earlier stages of their development, they did not even have basic institutions such as democracy, a central bank and a professional civil service.
Once they became rich, these countries started demanding that the poorer countries practise free trade and introduce "advanced" institutions - if necessary through colonialism and unequal treaties. Friedrich List, the leading German economist of the mid-19th century, argued that in this way the more developed countries wanted to "kick away the ladder" with which they climbed to the top and so deny poorer countries the chance to develop.

The American System: The blueprint for prosperity

Most Americans aren't aware that America once had a national economic plan, and it existed from the days of President Lincoln to President Nixon in one form or another. During that 112 year period America grew from an agrarian, frontier nation, to the most mighty economic power the world had ever seen.

The roots of the American School of Economics go back to Alexander Hamilton, Friedrich List, and Henry Clay of the Whig Party.
The American School of Economics was far different from the dominant economic thought of today.

The key components of the American School directly confront, deny and refute the economic imperialism that the so-called "Free Trade" school championed then by England and imposed by means mostly foul upon Europe over the years. It rejects free trade by imposing a system of duties, tariffs and other measures designed to defend the nation against economic threats by foreign predators. It uses government-directed spending projects meant to provide the infrastructure necessary for individuals to develop into the highly-educated and highly-trained people capable of being the ambitious and enterprising productive people we are famous for being. It chartered a national bank, owned wholly by the government, that administered the lines of credit necessary to get all of this done and otherwise oversaw the monetary policy of the state- and thus remained utterly accountable to the people by way of Congress and the Presidency.

The American School of Economics also involved government support for the development of science and a public school system. Through this economic philosophy America set the standard in manufacturing, higher education, scientific research and development, finance, and general standard of living.

What will the corporate Democrats do if NAFTA collapses and an economic catastrophe doesn't happen, like they've assured us would happen for decades?
Will they just ignore the fact that they've been lying to the working class for a generation? Will they pretend that no one remembers their lies?

"[They say] if you had not had the Protective Tariff things would be a little cheaper. Well, whether a thing is cheap or dear depends upon what we can earn by our daily labor. Free trade cheapens the product by cheapening the producer. Protection cheapens the product by elevating the producer. Under free trade the trader is the master and the producer the slave. Protection is but the law of nature, the law of self-preservation, of self-development, of securing the highest and best destiny of the race of man."
- President William McKinley

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The Aspie Corner's picture

As should the Repigs and Porky Dems. None of them give a fuck about us.

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Modern education is little more than toeing the line for the capitalist pigs.

Guerrilla Liberalism won't liberate the US or the world from the iron fist of capital.

JekyllnHyde's picture

@The Aspie Corner

Look at all the great things the Good Ole US of A produces!

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A riddle wrapped in a mystery inside an enigma

lotlizard's picture

@JekyllnHyde  
in Germany comes straight from the U.S. first-person shooter fantasy factories.

The cultural hegemony part still works fine here in the Western European colonies / satellites / vassal states / garrison states.

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CB's picture

@The Aspie Corner
shows just what America was based on - mercantilism. The East India Company had a private army (twice as large as England's) which exercised military power as it assumed administrative functions over the sub-continent of India.

The War of Independence was basically a trade war. The new American colony's wanted a bigger piece of the action. America has been mostly about making money since it's inception. Financial gain is what drew millions of immigrants to this new nation. It had little to do with true "democracy" and "freedom". It had every thing to do with freedom to make money.
[video:https://www.youtube.com/watch?v=JkhX5W7JoWI]

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Song of the lark's picture

When you consider that 500 years ago, the Venetians, the Chinese, the Portugese etc were sending wooden ships out to trade these Satus Quo economists know that trade will not be stopped. That was both a very expensive and a difficult undertaking. Trade is a natural out growth of even low level civilization. My anecdotal example is the shell bead I found as a young man high in the Sierra Nevada mountians. It no doubt came from the Chumash that lived for several thousand years near where I reside on the central coast. They made a small industry of making shell beads and trading them with Native Americans throughout California.
Globalism as it manifests now will break and fragment for various and sundry reasons, the price of oil, wars, thermodynamic collapse, nationalism, climate change, etc. so expect some chaos and breakdown. Our Chilean grapes , and specialty coffee may not arrive on time or at all. Global finance is just ramping up, and knitting the globe together. We may move to a global SDR (Special Drawing Rights) currency. And certainly cyber currencies are trying to circumvent currency controls. It's my thinking that we are at peak globalism and will likely stay here until some exogenous event, likely climate change in a few years breaks the squid like grip that free trade has on the global economy. Think of it a new route and new oil fields opening up in the Arctic. The globalist are!

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CB's picture

@Song of the lark
Three quarters of the world's population live in undeveloped or developing nations. The Chinese Belt and Road Initiative will bring these countries into the 21st century. What is phenomenal is the speed at which this is occurring. China has done in few decades what took a century to do in the United States. And it is speeding up.

China's New Silk Road | DW Documentary

[video:https://www.youtube.com/watch?v=u-ybBZgN154]

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Not Henry Kissinger's picture

@CB

A transportation corridor from Beijing to Lisbon would truly rank as a modern Wonder of the World. Like a massive twenty first century update on the Golden Spike across the breadth of Eurasia.

It's a human civilization milestone.

But instead of trying to figure out ways to make money from this mother of all economic linkages, the overriding policy of the US and its oceanic allies is (and has always been) to kill a lot of people and waste colossal amounts of public labor and treasure simply on trying to keep it from happening.

Fucking barbarians.

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The current working assumption appears to be that our Shroedinger's Cat system is still alive. But what if we all suspect it's not, and the real problem is we just can't bring ourselves to open the box?

CB's picture

@Not Henry Kissinger
Chinese workers.

Golden Spike - National Historic Site, Utah

A Legacy from the Far East

The Transcontinental Railroad was built by many thousands of workers from a variety of ethnic and cultural backgrounds, which truly created a unique blend of people that continues to define the nation to this day. One of the groups that literally took on the brunt of the work, were the Chinese laborers. Most of the Chinese workers, who numbered over 11,000 by the end of the project, were employed by the Central Pacific Railroad building out of Sacramento, California.

The use of Chinese labor started as an experiment. Fifty workers were initially hired, despite Nineteenth-Century stereotypes about their stamina, strength, and other traits that some thought would prevent them from completing the demanding 10-12 hour shifts of hard labor during a 6-day work week. The man responsible for the experiment was Charles Crocker, Chief Railroad contractor for the Central Pacific, who believed that the Chinese workers would be the answer to the labor problems the company faced. Many of the Central Pacific workers already employed by Crocker were leaving their jobs with the railroad to try their luck in the gold and silver rush. Labor unrest and strikes often arose in the workers' camps, which caused more headaches for the owners and construction bosses. Crocker's experiment proved successful in several ways.
...
The Chinese eventually proved so effective that their were organizations that actively recruited Chinese labor within the United States and in China for the railroads. Unfortunately the Chinese workers were treated unfairly and discriminated by other workers and superiors. The money that was offered by the companies was a large enough incentive that the Chinese immigrants continued to join the companies even though they were never treated as equals. Much of the work that these Chinese laborers completed through the rugged and wild landscape has stood the test of time, and continues to stand out in its quality and durability after almost 150 years.
...
It has been clear in the large amounts of documentation and research concerning the Transcontinental Railroad, that this amazing feat was moved forward at a much greater rate and was heavily impacted by the contribution of the many Chinese laborers which added a unique aspect of the story that makes up the completion of this 1860's engineering marvel.

Maybe China build new, modern rail system for America? Very inexpensive but of excellent quality. Maybe build new high speed rail-line for California? China workers ready to start tomorrow. Do good job like last time. But US no want deal with China. Too bad. So sad. American build themselves. Maybe finish in 10, 20, maybe 30 years - hopefully finish before first part fall down.

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jobu's picture

What will the corporate Democrats do if NAFTA collapses and an economic catastrophe doesn't happen, like they've assured us would happen for decades?
Will they just ignore the fact that they've been lying to the working class for a generation? Will they pretend that no one remembers their lies?

One word: Putin.

He is the proverbial duct tape of the Corporate Democratic Party Establishment.

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I think that automation is changing the dynamics of globalism. It may soon be more profitable to have all the automation/robotic production here, circumventing the costs of having products shipped in from overseas.
Especially when figuring in the reduced exposure to currency manipulation, the lowered trade deficits, not to mention the additional tax revenue from increased domestic production.
Will domestic automation finally outrun the multinational corporate 'savings' from cheap overseas labor? If it can it would definitely change the dynamics of globalization.

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Mike Taylor

Steven D's picture

is spot on. Multinationals received far larger benefits from that and our tax code) then they ever did from "free trade" agreements.

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"You can't just leave those who created the problem in charge of the solution."---Tyree Scott

Not Henry Kissinger's picture

Sorry, but when you're quoting William McKinley, I gotta take issue.

Worldwide economic integration is happening at literally a quantum rate. Severing economic ties between the US and the rest of the world now just keeps us on the outside looking in when (very soon) the grid is finally up and running.

Besides, why should I want Donald Trump to tell me how much I should pay for my coffee? Or anything else for that matter. A return to a tariff based economy simply locks us in a mercantile cage of our own making, with our benevolent corporate overlords holding the key.

And Henry Clay notwithstanding (Hamilton gets way too much credit), tariffs weren't exactly great for everybody back in the day. In fact, the Civil war nearly started thirty years earlier than it did over one called The Tariff of Abominations.

One of the many, many historical examples of a nasty trade war heralding a nasty shooting war. WWII is another. Oh, and the American Revolution for that matter.

(There seems to be a pattern here...)

We also need to stop playing this divisive game of our workers versus their workers and realize that workers worldwide are getting screwed by the neo feudalism that still defines most of the world economy.

That's the whole point of the Fair Trade movement which is trying to ensure that more of the benefits from this amazing global economic integration are passed to the people who actually make it happen.

Check it out.

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The current working assumption appears to be that our Shroedinger's Cat system is still alive. But what if we all suspect it's not, and the real problem is we just can't bring ourselves to open the box?

thanatokephaloides's picture

@Not Henry Kissinger

That's the whole point of the Fair Trade movement which is trying to ensure that more of the benefits from this amazing global economic integration are passed to the people who actually make it happen.

Check it out.

One aspect of any "Fair Trade" movement is the careful application of tariffs and protections. To wit: the worse off the workers that make a widget, the more that widget gets tariffed. Pay your workers enough to live decently, pay fewer or no tariffs.

The blunderbuss approach to tariffs is what started all those nasty wars you wrote about.....

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"US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar

"All power corrupts absolutely!" -- thanatokephaloides

@Not Henry Kissinger
You don't have to like him for him to be right.
You can always learn more from your enemies than your allies.
The only question is, can you honestly find fault with his logic.

A return to a tariff based economy simply locks us in a mercantile cage of our own making, with our benevolent corporate overlords holding the key.

In case you haven't noticed, our corporate overlords already hold the keys, and they accomplished this through free trade agreements, not tariffs.
That fact alone should give you pause.

tariffs weren't exactly great for everybody back in the day

You're right. The slaveowners hated it.
That should also give you pause.

One of the many, many historical examples of a nasty trade war heralding a nasty shooting war. WWII is another.

Uh, no. WWII started for a lot of reasons. Trade wasn't a major factor.

That's the whole point of the Fair Trade movement which is trying to ensure that more of the benefits from this amazing global economic integration are passed to the people who actually make it happen.

It's a great idea has that zero evidence of being able to work.
Every single international group in the world with any power is dominated by corporations. Period!
That's why it has to be done nation by nation.
you show me a worker-based international group with any real power and I'll change my opinion.
As for consumer groups, well, I don't want to offend.

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Not Henry Kissinger's picture

@gjohnsit You're right. The slaveowners hated it.
That should also give you pause.

Cheap shot. One has nothing to do with the other. All agricultural interests (as well as consumers) hated the tariffs that benefited manufacturing at their expense, not just those utilizing slave labor.

And the Nullification crisis also created the intellectual basis for secessionism, which should give you pause.

More nonsense:

Uh, no. WWII started for a lot of reasons. Trade wasn't a major factor.

Uh. Yes.

The U.S. embargoes gave Japan a sense of urgency. It would either have to agree to Washington's demands or use force to gain access to the resources it needed.

In their final proposal on November 20, Japan offered to withdraw its forces from southern Indochina and not to launch any attacks in southeast Asia provided the U.S., Britain, and the Netherlands ceased aiding China and lifted their sanctions against Japan.[10] The American counterproposal of November 26 (the Hull note) required Japan to evacuate all of China, without conditions, and to conclude non-aggression pacts with Pacific powers.

The US oil embargo led directly to the Japanese attacking not just Hawaii but especially invading the Dutch East Indies oil fields denied them by US sanctions.

Not to mention the countless doctoral theses that have been written on how restrictive trade policy contributed on the start of WWII - from contributing to a serious deepening of the worldwide Depression to being an explicit catalyst for Pearl Harbor. To say trade policy had nothing to do with starting WWII (or WWI for that matter) is just false on its face.

And lest we forget the entire Cold War was based first on constructing an economic cordon sanitaire around the Soviet Union, which was soon followed by a military one. Iraq is also another more recent example of restrictive trade policy leading to war.

Geez, you only have to look at our current and increasing sanctions against Russia to see how trade barriers and sanctions foment conflict.

And you seriously want more of this?

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The current working assumption appears to be that our Shroedinger's Cat system is still alive. But what if we all suspect it's not, and the real problem is we just can't bring ourselves to open the box?

@Not Henry Kissinger

All agricultural interests (as well as consumers) hated the tariffs that benefited manufacturing at their expense, not just those utilizing slave labor.

True, but I still don't believe I made a cheap shot.
If the situation was reversed I wouldn't hold it against you for pointing out this fact.
And speaking of farming, by the start of the 20th Century America was one of the biggest food exporters in the world. This happened despite those high tariffs.

As for Japan attacking us in response to our trade embargo, that is true. However:
1) it was an embargo, not just a tariff
2) it was in response to a military invasion of China
3) WWII was more than two years old at this point

Geez, you only have to look at our current and increasing sanctions against Russia to see how trade barriers and sanctions foment conflict.

Sanctions and embargoes are not tariffs.
That's like saying this is a debate between free trade vs. no trade.

You know, free trade is the exception historically.
Protective tariffs are the historical rule.
Under protective tariffs the U.S. went from a backwater frontier nation to the richest country in history.
Under free trade the middle class was gutted.
Those two things are facts.

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(Hamilton's baby) -- was it privately or Federally owned?
Wondering because of " It chartered a national bank, owned wholly by the government" whether that was the proposal or the practice. All the conservative talk I ever heard was the FNB was a stalking horse for the bank of England and/or private bankers exclusively. But if not true, I'd like to know.

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Orwell: Where's the omelette?

thanatokephaloides's picture

@jim p

The First National Bank

(Hamilton's baby) -- was it privately or Federally owned?

Private, as was the Second Bank. In both cases the US Government owned significant, but not controlling, stock.

Much like the Federal Reserve Banks today.....

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"US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar

"All power corrupts absolutely!" -- thanatokephaloides

The Chinese will put in protective tariffs to build up various industries. They put heavy tariffs on GM jeeps (or just high end cars), and the end result was GM moving manufacturing to gain market share as the tariffs made them noncompetitive.

Same with solar panels. China heavily subsidized the entire production chain and pretty much wiped out American based producers. When Trump put tariffs on them, the democrats became rabid free traders.

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CB's picture

@MrWebster
It's not as if we weren't forewarned. Back in 2006 very few believed that China would rise to become the manufacturing and technological powerhouse it is today. The following video won an award at the Sundance Film Festival. It was made to be raw and crude - just how Americans envisioned China at that time.

When I posted these on DKos, almost everyone said China could never come close to American ingenuity and manufacturing. The 21st century was to be THE American Century. It was the end of history. Didn't last long, did it? Most Americans are too busy gazing at their exceptional navels to understand what is happening in the world today.

User Reviews

Superb Short with Poignant Message
14 March 2006 | by Bob Nagle – See all my reviews

I was just floored by this little short. Excellent soundtrack, beat-timed sub-titles and a message that everyone (in the USA) needs to hear. Start passing this one out to your friends (the link on Sundance) and start learning Chinese. Unless more folks have the guts to create revealing content like this, we shall stay pitted against each other (being "played" by our leaders) while the world eats our lunch. Thank you Jon Daniel Ligon. Remember the "three stages of truth". First, it is ridiculed, second it is fought vociferously against, and third- it is made to seem as if had always been true. You my friend, speak the truth.

[video:https://www.youtube.com/watch?v=dmANxHJ6s9M]

[video:https://www.youtube.com/watch?v=FxJdEqaCcGc]

[video:https://www.youtube.com/watch?v=F7wsBNqM8AQ]

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@CB Interesting that the short was made in 2005. I remember an article trying to raise the alarm at the rate at which American manufacturing jobs were being eliminated under Bush. Some researcher later looked at companies and found that it was not a matter of these companies having to move production overseas just to survive. It was about greater profit margins. Which is what Apple blatantly did. They could have kept all of their facilities in the US and still made a profit, just not as much.

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CB's picture

@MrWebster
The current Chinese way is more akin to mid 20th century America. Building infrastructure - roads, sewers, airports, dams, things that once put dollars in American worker's pockets. They have scrutinized this and are duplicating it. (Can you remember how large the want-ad section in your local papers were in the 50's and 60's?)

The idea behind Chinese tariffs is to create jobs first and profits second. The idea behind American tariffs have been to maximize profits with jobs secondary. It is interesting that China will forgo profits for jobs while the US will readily jettison jobs for profits.

China's government is willing to subsidize it's industrial base with tax yuan to create jobs for many. America's government is willing to subsidize it's MIC and financial markets with tax dollars to create wealth for few.

China brings over 68 mln people out of poverty in past 5 years
BEIJING, Feb. 10 (Xinhua) -- China lifted 68.53 million people out of poverty over the past five years, as it made impressive progress in poverty reduction, according to the State Council Leading Group Office of Poverty Alleviation and Development.

It was equivalent to an annual reduction of at least 13 million. The country's poverty rate dropped from 10.2 percent in 2012 to 3.1 percent in 2017.

China aims to eliminate absolute poverty by 2020 as part of the creation of a moderately prosperous society.

The Chinese tend to be more co-operative while the American is more individualistic.

Some interesting photos here:

Coordination: China's new vision for development

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zed2's picture

(in economics)

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