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GLOBALIZATION – WHAT GOES AROUND COMES AROUND – DEATH TO AMERICA (PART I)

October 30, 2013

GLOBALIZATION – WHAT GOES AROUND COMES AROUND – DEATH TO AMERICA? (PART I)

(The following was inspired by an article written by Jeff Madrick entitled “Toward Reglobalization” in the August edition of Harper’s Magazine.) This Part I is background.

My followers will recall that I have labeled myself a “protectionist” against the tide of those who write and lecture that protectionism is anachronistic and that “free trade” in the new world of global economics is the only way to go; that globalization demands as much. Mine was and still is a lonely view, but one borne of experience. I blogged repeatedly that Lincoln was a protectionist, that he thought that American labor and commerce needed protection against the ravages of unrestricted “free trade,” and that I agreed with him. The free traders pointed out that citing Lincoln was proof of the anachronism; that things had changed a great deal from the days of Yankee shipbuilding and cotton and tobacco in the South; that this was a new world with relentlessly new products and innovation to harness; that we could handle distortions in the global marketplace with international trade agreements and enforcement mechanisms; and that the dwindling few protectionists such as I were out of step with the new economic realities. We (selective) protectionists were old-fashioned.

Experience is a great teacher. With all our post-Bretton Woods “agreements” (WTO et al., including a new one in the works that includes the Orient but excludes China in an obvious political rather than trade play), it is increasingly clear that politics (always a factor but rarely so transparent) and not trade per se is the order of the day. It is plain that we are more interested in defusing China’s influence in its own back yard than we are about setting up an international trade scheme presumably for the benefit of all involved, though not coincidentally, we will find ourselves even cheaper labor in the process.

I certainly am no apologist for China’s miserable record in trade over the years, but I think politics should be carried out on another level, say, diplomacy, though at the same time I understand that all trade compacts contain robust political elements. Where the new trade agreement (the TPP) differs from others is this: China is not even to be involved at all. I think this is wrong and an invitation to further friction with the #2 (so far) economy on earth. As I have blogged before, I am opposed to the TPP, but again lonely. Both political parties (and more importantly these days, Wall Street) are for the implementation of the TPP. After a few years of living up to its exclusionary protocols and enforcement of rules by foreigners which trash sovereignty of the individual members in the TPP game, we will see what the grim measure of experience tells us. Not to boast, but I think I can write the script, and it is neither a good nor unfamiliar one. Look for the usual complaints of dumping, currency mismanagement and cries for exemption for certain products etc., all of which are hidden exemplars of protectionism but never called that four-letter word in free trade circles. It’s an obscenity, you know.

I have never favored protectionism as a forever thing. I have always thought of it as a flexible tool to be employed in certain sectors at certain times in order to meet our requirements for protection of our own labor and commerce. Both trade agreements and enforcement mechanisms we have agreed to in the last 25 years have removed such protections. The result has been disastrous to American labor and commerce though a bonanza for the virtually unrestricted movement of capital across international borders, all as advocated by a Wall Street now freed to roam the globe while American labor and commerce are frozen at home with declining median family wages and the deaths of commerce in bankruptcy courts.

By adding TPP to the existing (Death to America) agreements, it seems to me that we are extending our race to the bottom by bringing in new trade partners who have cheaper wage regimes than China (whose labor is unionizing, striking, and receiving substantial raises in wages). I suppose that after wages inevitably go up with our new and now impoverished trade partners under TPP that we will abandon their increased labor costs with a new set of “trade” agreements with Zimbabwe, Chad and others. Ultimately we are going to run out of new venues in our race to the bottom when there is no more bottom. Then what?

How smart is it for us as a country with our own economic problems to put our economic and political necks on the line for Wall Street financiers and traders so that they can cash in big time while we continue our self-inflicted descent into Third World status? I think that we gain less than nothing from such policies (as expressed in trade agreements) which reward a narrow financial sector but which results in our own impoverishment and inevitable downward glide into Third World economic oblivion.

I am therefore opposed to any such agreements or their undergirding “policies” which when implemented have all the earmarks of fostering a further decline of America in its current trek to Third World status. I think a selective protectionism practiced in certain sectors limited in time will help, but that even that short-term panacea is not the ultimate answer to our “trade problem.” I think that we have to have a whole new policy look at how we conduct all trade, from Chinese toys to intellectual property, an outlook built upon a view of what is good for all of America rather than what is profitable  for America’s financial (or any other) sector alone.

The tail is wagging the dog, and I for one want an end to this asymmetry in policymaking. America belongs to all of us, not just the financial sector, or any other sector, for that matter, and I think we can become greater than the sum of our parts if we recognize our potential for greatness by making and carrying out policies that look to prosperity for all of America and not just bloated Swiss bank accounts.

This has been an overview of what is to follow in this selective protectionism vs. free trade approach to the conduct of international trade. I will write on more specifics in Part II. Stay tuned.  GERALD  E

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