Democrats & Liberals Archives

“Some just want everyone to believe that “Free Trade” is good regardless of how it is implemented and what the results of that implementation are in the real world.”

This is way too broad of a statement, and because pretty much your whole essay turns on it I have to contest it. It would be like saying ‘Some just want everyone to believe that government intervention is good regardless of how it is implemented and what the results of that implementation are in the real world.’ Maybe I could get away with the statement because of the leading ‘some’, but by stating the position that almost nobody has as if it were a normal policy position I would be dramatically skewing the debate.

I still can’t tell if you don’t like the ideals of free trade, or if you don’t like how they are implemented in practice. If you don’t like the practice, we can discuss how to make trade freer. If you don’t like the ideals, you really should have an alternate system available and then we can talk about its potential effectiveness when compared with the market. These are two very different discussions.

Test
henri

Sebastian,
My whole point is that “Free Trade” is so thoroughly overwhelmed by external factors that we cannot demonstrate from any test case that has been constructed if it would really work as true believers think it would or not. It really doesn’t matter if I “like” the idea because it does not exist and unless human nature changes it will not exist any more than an idealized Communist state can exist. Such ideas as Communism and “Free Trade” are particularly pernicious because they draw people’s attention away from what is happening in the real world and focus the debate on ideas that for the most part have little relevance to real events. My point in this piece is that it is the series of real agreements and events caused by them that we must examine, not how close we are to the abstraction of “Free Trade”.

By the way my whole essay turns on the proposition that the externalities are dominant in the world of trade not the central theory of “Free Trade”. I thought you might have missed that point somehow.
Henri

If free trade as your people picture it is beneficial, then the signs of it’s correctness should show up in everyday life across a broad category of people.

What’s shown up is, despite the fact that many products are cheaper now, we can’t buy what we used to because of low wages and high unemployment. The outsourcing of jobs from this country contributes to this pattern. In short, the short economic recovery of big business is coming at the expense of any substantial economic recovery for the American public at large. Because American laborers are not paying for as many of the cheap goods, the boon of oversea labor to business is undercutting itself.

The executives don’t realize the foolishness of this because they’ve insulated themselves from any corresponding loss by a combination of higher basic compensation, and their sale of the stock they got cheap on stock options.

This is what makes the expensing of stock options so important of an issue, and their widespread use so worrying. Upper Management and the Executives develop agendas over their own, counter to the interest of the company or those the company serves. Anything and everything that can be made to serve the stock prices is put to that task more than it the company’s raison d’etre. Product are made to break sooner. Warranties are made narrower and shorter. Unreasonable productivity demands are made of insufficient staff. Debt is hidden, lax accounting standards and “creative” number-crunching practices are used.

All of these things, while providing an illusory image of growth are part of what cut our economic good times short. They are also part of what has driven more people into debt in this country than have been in some time. It should not be overlooked that our recent gains in consumer spending were mostly debt-finance. Debt that’s coming due all over the place.

Of course, the supply-siders, the free-trade and free-market people are saying, these are just the costs of doing business, that if we want an economic recovery, our businesses successful, and our share big we have to look the other way.

But if you look at what happened to America’s corporations in the last decade, you’ll see the folly in that. You’ll see how a lack of accountability, single-minded focus on the aspects of a business that mainly benefit the upper income brackets, and just plain cheap-bastardry have combined to waste and poorly distribute the wealth of our country. You’ll see why I am in favor of regulation.

We can no longer afford to just sit back and let a few people distort our industries and workplaces to serve their ends alone. Businesses must earn their money, manage it, and pay it out honestly and fairly or our economy will hemorrhage, and the only those who bled it for their own ends will profit.

Stephen, I have interspersed my comments throughout your message using ( ) to set them off from your statements.
henri

Comments:

If free trade as your people picture it is beneficial, then the signs of it’s correctness should show up in everyday life across a broad category of people.

(It would possibly do that if free trade had been implemented with functional institutions dedicated to its establishment. Instead we have multinational corporations used as instruments of our own imperial power. This coupled with trade based on the WTO agreements which were written by the six richest nations in the world. Please note the possibly.)

What’s shown up is, despite the fact that many products are cheaper now, we can’t buy what we used to because of low wages and high unemployment. The outsourcing of jobs from this country contributes to this pattern. In short, the short economic recovery of big business is coming at the expense of any substantial economic recovery for the American public at large. Because American laborers are not paying for as many of the cheap goods, the boon of oversea labor to business is undercutting itself.

(I agree with you. I think that this problem is arising is in part due to exporting the means of production which is far outside of what was intended by Ricardo when he proposed the principle of “comparitive advantage”. This is the justification for “Free Trade” used by most of those working to justify the Globalization concepts embodied in the WTO.)

The executives don’t realize the foolishness of this because they’ve insulated themselves from any corresponding loss by a combination of higher basic compensation, and their sale of the stock they got cheap on stock options.

(True enough, but a small part of the picture related to the disconnect between upper management and workers today. The world of people who fly around in corporate jets and spend tens of thousands of dollars on shower curtains is so far removed from the average employee or the average investor that they need have no connection at all with the outcome for those people. This is a society where management is the new aristocracy and the workers and small investors are destroyed without any qualms on the part of the perpetrators of these crimes.)

This is what makes the expensing of stock options so important of an issue, and their widespread use so worrying. Upper Management and the Executives develop agendas over their own, counter to the interest of the company or those the company serves. Anything and everything that can be made to serve the stock prices is put to that task more than it the company’s raison d’etre. Product are made to break sooner. Warranties are made narrower and shorter. Unreasonable productivity demands are made of insufficient staff. Debt is hidden, lax accounting standards and “creative” number-crunching practices are used.

(This is all true but as symptoms of economic destruction they pale in comparison to the damage being done to the middle class. Perhaps it is imperial overreach, or perhaps it is simply the arrogance of our current pack of leaders but the midddle class is now shrinking at an alarming rate. It is the destruction of the middle class, if it is allowed to continue, that will finally write finis to the greatest experiment in self government in world history.)

All of these things, while providing an illusory image of growth are part of what cut our economic good times short. They are also part of what has driven more people into debt in this country than have been in some time. It should not be overlooked that our recent gains in consumer spending were mostly debt-finance. Debt that’s coming due all over the place.

(The diminishing equity value of middle class homes that is coming after this real estate bubble bursts is another stage in the destruction of the Middle Class. The destruction of the Middle Class might even be an unintended process at this point but it has advantages for those who want an empire in place of our Republic.)

Of course, the supply-siders, the free-trade and free-market people are saying, these are just the costs of doing business, that if we want an economic recovery, our businesses successful, and our share big we have to look the other way.

(Largely the debate going on in this nation about the economy is being treated as if it were between the people who want more government and those who trust “Free Enterprise”. This is totally false. It is between those who think the concentration of wealth at the top is bad for the nation and those who want it to continue and accelerate.)

But if you look at what happened to America’s corporations in the last decade, you’ll see the folly in that. You’ll see how a lack of accountability, single-minded focus on the aspects of a business that mainly benefit the upper income brackets, and just plain cheap-bastardry have combined to waste and poorly distribute the wealth of our country. You’ll see why I am in favor of regulation.

(Unfortunately regulation is useless when the International business community controls the regulatory apparatus as it does under the WTO. We need to restructure the rights of corporations entirely and limit their institutional powers before we can solve this problem. It is a deathless monstrosity like Enron that simply comes out of bankruptcy with a clean slate and is otherwise treated in our courts like it is a person that creates such problems. We need to limit their powers from the point of restricting their powers in their charters before we can keep them from running our nation and ruining our Republic.)

We can no longer afford to just sit back and let a few people distort our industries and workplaces to serve their ends alone. Businesses must earn their money, manage it, and pay it out honestly and fairly or our economy will hemorrhage, and the only those who bled it for their own ends will profit.

(I totally agree with you that we must act now! The attempts by individual states in the USA to take back the power given to the WTO are the beginning of a grass roots movement that can do just that. The issues of this election year have to be based in the economic downfall of our Republic, not the endless wars on terror and drugs that are being used to intimidate and distract our citizens.)

(Free markets and open trade cannot happen as long as we are bound up in the reactive state that we have been in since 9/11. Free markets are the enemies of huge corporations when the corporations are limited by charter. Especially when they cannot affect the body politic because they do not have the standing of a citizen in the courts. Free markets do not exist in the present system of oligopolys and (oligosonies)(Spelling?. We will have a prospect of changing that for the better when we human beings are back in control of our own government.)

(In large I agree with your reading of the symptoms but I think my treatment plan is more radical than yours.)
henri

I do not favor radical approaches to most problems under most circumstances. Consider your own response to Bush’s agenda, and the totality of it’s imposition on America- that would be many conservative’s and moderate’s reactions to your approach, if you get your way. I feel the best way to move about doing things is to win the right battles and pose the right questions, and to do so in a manner that doesn’t draw attention to itself. That’s how the Republicans did it- they just eased our party into more and deeper compromises on issues until the consensus of moderates was closer to theirs, and that worldview seemed a necessary approach to the political landscape.

To win, we will need to redefine things so that people internalize our assumptions instead of theirs. We can take big victories given the opportunity, but we need to win the small victories in convincing people that the assumptions of the GOP are erroneous, where they truly are.

And where they aren’t, we need to demonstrate bipartisan spirit in recognizing that. This will also serve to undermine some of the complaints that the ideologues send our way.

In the end, the aim is to put Republicans in a position that neutralizes their hold on the common assumptions of moderate Americans. And you can’t do that brute force. It has to be a subtle affair.

We have a history of radical thought leading to moderate change as in most of our historical movements. Anti-slavery was the only exception that led to civil war before the dispute was resolved. Populism always starts with a drive toward radical change and ends up with moderate change adding up to and reaching the agendas that radicals set years before. Women’s sufferage is a good example of that type of process. Of course you are right about moderate process working, but radical agendas are required and must be pursued by peaceful constitutional means if the march to Empire is to be stopped. Neither party has clean hands in regard to this process and both must be brought around before the real change will come.
Henri

My trouble is that this country has had its fill of radical ideas pushed on it, ideas that basically have said, do this and all will be well. And all hasn’t been.

The point is not necessarily in the radicality or non-radicality of whatever plan one is willing to put forward, but rather how observant people allow themselves to be about the results. We, as well as the Republican can err.

The problem I have with the current administration is the unwillingness to acknowledge mistakes, to give up dreams of how the world should be run, to actually run it correctly if one can manage it.

With the Republicans unwilling to admit any error, from their tax cuts, to their deregulation, to their war in Iraq, they are also unwilling to correct their mistakes. The Tax cuts were a mistake, and it’s a mistake that no one, unfortunately, is willing to call the Republicans on. Whether we get radical, or not, we cannot be so arrogant in our hold on power that we overlook the real world effects of what we do, in favor of the idealized consequences.

Free Trade? There is no such thing! Governments know very well that the employment of their citizens is critical, regardless if you’re talking Democratic blue-collar, Republican white-collar, or independent entrepreneurial positions.

Right now, there is a sea-change in the economy due to the cheapness of basic human labor. Manufacturing and agriculture are best accomplished by the lowest cost workforce, and the death of the American manufacturing sector and family farms is well under way. However, this trend also will displace many basic heart-felt American values, such as “Hard work always pays off” and “Anyone can get a job.” In the future, what will matter will be what you know, who you know, and what do you own. When all the agriculture goes to Brazil, and all the menial labor other than that found at Burger King goes to China, you will see the greatest social disruption in America since the Great Depression. The results will be ominous.

Health care will become the great scapegoat, and end up nationalized. Unemployment in all sectors will be rampant. Tariffs will be imposed to save whats left of strategically important industries while paying for the medical mega-bureaucracy. International trade will bog down, and prices for everything will skyrocket. Like the Great Depression, it will probably only end with a great war. The sad thing is that government will be largely powerless to stop it, since politicians in both parties refuse to see the big picture. Jobs at all levels are leaving this country, but as long as a politician gets paid (or bought), it won’t hurt them enough for them to act.

Russel, I think you are on the right track. I would posit though, that it is that politicians refuse to see the big picture. Part of the problem is that their expertise in areas of economics, history, philosophy etc. is limited, and another part of the problem is that their staff are selected in large part on the basis of the staff reflecting the politician’s limited views.

The Bush Adminstration for example has let a number of knowledgeable folks go because the reflected back to him, knowledge and understanding that did not foster his agenda. This is not unique to the Administration, staffers for Congresspersons, governors, etc. are subject to the same dynamic.

This is why an informed media and public is so bloody mandatory to lead the country. Our education system is designed to produce units of productivity for industry and idealogues more and more, and less and less are we seeing our nation produce generalists with broad sweeping knowledge of multiple disciplines with in depth expertise in two or three areas. And these latter are what politicians need for staffers and they need to learn from them. Regretfully, it seems to work quite the other way round.

I think the problem is that we confuse agreement with support, compromise with failure, and winning political battle with making things better. We have to be careful that our symbolic successes become real successes as well, or else all our efforts are in vain.

While jobs and the economy should be the huge issues of the election, it is not getting out there because the Democrats are asleep at the wheel.

There is practically no media coverage of this issue while it makes the front page of every paper that Bush wants a man on Mars!