An interesting article about free trade and its history ...

[Moiraine]

Here.

I am not going to quote the article, as it is quite long. [img]smile.gif[/img]

I found the historical part on how trade evolved in developed countries very very interesting. [img]smile.gif[/img]

Opinions please ? [img]smile.gif[/img]

[Timber Loftis]

Originally posted by Moiraine: Here. I am not going to quote the article, as it is quite long. [img]smile.gif[/img] I found the historical part on how trade evolved in developed countries very very interesting. [img]smile.gif[/img] Opinions please ? [img]smile.gif[/img]

The World Trade Organisation is run as an oligarchy of the developed countries, which do not even bother to pretend to be democratic. The excluded and abused underdeveloped countries could force a change, or even the end of the world's free trade order as we have come to know it. This would be a blessing to the world's poor, who have been further impoverished since the end of protected economies in the early 1980s.

I read past this introductory remark, EVEN THOUGH I KNEW IT WAS A WASTE OF MY TIME. I've ranted long and hard about the problems with free trade. It harms both the developING and developED countries.

On the one hand it "oppress" the indigenous peoples of islands near the EU preventing them from selling bananas at a profit (by knocking out EU protectionism against Nicaragua bananas through tarriffs on one type of banana but not the other). Of course, should these islanders loggerheadedly persist in growing bananas inefficiently or do what the market model says and GROW SOMETHING ELSE IF YOU CAN'T COMPETE?

On the other hand, lower tarriffs have lowered the walls that protected developing nations' internal controls of market externalities. Because labor is cheaper in China, Nike goes there. In fact, since free trade ramped up, the US textile industry has disappeared. While the seamster union assured good wages for workers here, no collective bargaining in the world mattered when the PLANTS PICKED UP AND MOVED. And what about less-restrictive banking/tax rules pulling business offshore. I am sure Tyco's one-story "Headquarters" in the Bahamas doesn't really do all that much for the company -- other than provide a loophole. Ford relocates to Mexico -- and it ain't for the weather.

As a result, we have a wider economic gap in the US. The only jobs left are $100K+ Exec positions managing companies (whose products are made by $7/month workers overseas) and McDonald's/Denny's/Taxis/Hotels and other service industry jobs which pay at or near the poverty level. The middle class, based on manufacturing jobs, has left the scene completely -- the middle class was built by unions, only to be destroyed by unions working with/against free trade.

So, I'll agree that free trade has its issues. I will not, however, whine and moan for developing countries when the pinch of free trade is being felt by all.

I will finally note that the good economist points out that these are the "growing pains" of a GoodThing(tm). Yes, it hurts the US to lose those jobs. However, as Ford makes more money (by using lower-wage workers), Ford's wealth and the wealth of its shareholders grow. This begets more investment and development and ultimately the creation of more jobs. Yes, it hurts that islanders have to abandon banana-growing, forcing them into severe economic hardship. However, they find something they can grow more efficiently and actually be competitive about (perhaps they open a Ford plant, or a bunch of eco-tourism hotels, or grow coffee or wine grapes), and in the end are better off and richer. Plus, the whole world's efficiency just got ratched up a notch -- for the betterment of all.

In theory, anyway.

[ 10-07-2003, 12:18 PM: Message edited by: Timber Loftis ]