Free Trade

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Martin Hash
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Joined: Wed Jan 20, 2010 2:02 pm

Free Trade

Post by Martin Hash » Sun Jan 30, 2011 12:26 pm

When I was young I was a Free Trader because it seemed like the sophisticated thing to be. Free Trade does offer an alternative to dealing with exploitive unions in the U.S., plus it prevents the Black Marketeering resulting from tariffs and import restrictions. But after considering the ramifications of Free Trade for the past two decades, I have changed my mind. The reason – market economies like ours seek out the lowest costs, and more and more often, the lowest costs are not in our country. As it turns out, America is having done to it what it did to Europe during the 19th and 20th centuries - back then our labor and productivity was cheaper than those people we were selling to. Now other countries do the same thing to us, and unfortunately, we have a huge portion of our population (25%?) whose capabilities are limited to the kind of jobs that go overseas, so we end up supporting them via the social safetynet. Free Trade is definitely not free.

Boiled down, every economy is cyclic – low manufacturing costs spark exports, which causes increased economic success, which causes increased expectations, which causes higher costs, which causes decreased exports, reversing the trend until there is a repeat. The length of the cycle is measured in generations, which means we have decades of economic stagnation ahead of us until our expectations lower or the rest of the world’s expectations rise to meet us.

Luckily, our vibrant capitalistic businesses have a good chance of extending the cycle through ever increasing productivity by rapid adoption of new scientific breakthroughs, and proactive thinking. But have no doubt, eventually we will become mired in the status quo, or stifle opportunity, or just get lazy, America will be no better off than any tin-pot socialist society in Europe. Some other country will rise to the occasion and Americans will watch from the sidelines.