An interesting article on free-trade and free market capitalism. I must say I had previously bought into the notion that free trade deals are win-win with no real evidence it just seems that smart people all seemed to agree. I am beginning to doubt this. Some snipets:
So there is no economic data to support the contention that free trade is benificial?
So R&D subsidies dont necessarily create the high tech jobs that are supposed to be the future and salaries for people with college degrees are decreasing.
The government more efficient than the free-market? Sacrilege.
So regulations to protect corporate interests are OK but the world will collapse if worker rights are protected?
Anyone out there have any actual data to show that the free trade deals are helping the US?
I have no data either but it doesnt take a rocket scientist to figure out that competing with the 3rd world labor market is going to put downward pressure on 1st world salaries. If we cant educate and innovate our way out of it then we lose. BTW is there any 3rd world country that we have a free-trade deal with where the US has a trade surplus? Why arent they buying all our high tech products with the $$s they are making selling us shoes and shirts?
Hayes then uncovers the faith-based nature of free market fundamentalism, and its inherent hypocrisy, recounting an exchange between University of Chicago Professor Allen Sanderson and students:
"Sanderson argues that liberalized trade creates more jobs than it destroys. 'Free trade creates winners and it also creates losers. It turns out that winners are quantitatively larger than the losers.' A student asks, flat out, 'Why are we to believe that?' Sanderson restates his point, but the student holds his ground, saying he's read that there simply doesn't exist an accurate measure to figure out how many jobs are being created and destroyed. Sanderson concedes that this is true, but insists it 'must' be a net positive...One student asks about attaching labor or environmental protections to trade deals. Sanderson replies that such stipulations (like requiring workers be paid $ 14 an hour) simply operate like tariffs, raising the price of goods and 'saving jobs in the U.S., union jobs that are relatively high paid, and taking people in developing countries who are not well off and making them poorer. I tend to be against laws that make poor people poorer.' 'OK,' responds the student, who with a beard and long hair looks a bit like the student radical who's been missing all quarter. 'Let's say the standards are not ridiculous. The workers have a right to organize, or we can't pollute the only source of the village's water supply.' 'How do we define what's ridiculous?,' Sanderson shoots back. 'Once you start, it's very difficult to draw the line...' 'We do draw the line every day," the student responds, not bothering to raise his hand this time. There are hands up all over and the class has now devolved into a free-for-all. 'We don't trade with Burma. We didn't trade with Iraq. We do trade with Saudi Arabia. It's not impossible to re-imagine how to draw the line.' Sanderson is not winning this argument. 'These are tough issues,' he says, and the class ends."
So, this esteemed professor has no proof that the free market fundamentalism he preaches actually creates the jobs he says it creates. Even worse, he pretends to actually support for a free market when in fact, he does not, and when in fact political and economic experts really know we actually don't live in a free market at all. As the student points out, "we draw the line all the time" in our economic policies. And that gets us to a key point that no one wants to openly admit: we don't live in a free market - we live in a highly-regulated totally unfree market.
So there is no economic data to support the contention that free trade is benificial?
The Great Education Myth
While free market fundamentalists rarely admit these hypocrisies or the faith-based nature of their religion, some have at least begun to acknowledge things aren't going as swimmingly as they predicted. What they propose to do about these shortfalls leads us to the next article - the cover story from the most recent edition of that not-exactly-liberal publication, Businessweek.
The article is brilliant, really. As Corporate America's bible, the magazine designed the piece specifically to make the incoming Democratic Congress believe that it cannot do anything to fix economic inequality. "Global forces have taken control of the economy," the magazine says breathlessly. "And government, regardless of party, will have less influence than ever" (this is a tried and true tactic of the free market fundamentalists: making us believe that all of the consequences of their religion - poverty, inequality, economic dislocation - are just forces of nature that no one can do anything about).
The only thing government can do, according to Businessweek, "is to boost government spending for R&D and education." The first part of this prescription - "boost government spending for R&D" - has long been a euphemism for corporate welfare, rather than government R&D. Hand over more tax breaks to the private pharmaceutical industry that's already swimming in cash, and miraculously we'll create more life saving drugs. And yeah, let's pay for that corporate welfare by cutting government agencies like the National Institutes of Health, despite the fact that, as Knight Ridder has reported, the government itself funds more than one third of all medical and health-related R&D, resulting in an uncountable number of innovations.
But it is the admissions that Businessweek makes that gives away the free market fundamentalists' weakness. Even if you believe that, yes, all we have to do is give away taxpayer money to companies for R&D and put more money into education - there is no evidence to suggest that will work. "The problem is that it's tough to make a direct connection between federal R&D spending and the creation of high-tech jobs," the magazine admits flippantly. "Despite the U.S. prominence in medical research, the pharmaceutical, biotech, and medical devices industries have added only 19,000 workers in the past five years."
Similarly, "real wages for young Americans with a bachelor's degree have declined by almost 8% over the past three years." Why? "Nobody knows the reason for sure, but some economists suspect that global competition has something to do with it." Uh-huh. A nebulous "some" merely "suspect" that forcing Americans to compete with slave labor in the Third World may have "something to do with" stagnating wages and with the fact that their education-alone-will-save-the-world myth is just that: a myth.
So R&D subsidies dont necessarily create the high tech jobs that are supposed to be the future and salaries for people with college degrees are decreasing.
Hayes points out that, in fact, there is ample evidence that the "non-free-market" (aka. the government) often does things far more efficiently than the free market. For instance, consider how much money we've wasted by stripping the military and government agencies of various responsibilities for Iraq security and reconstruction and handing those responsibilities over to private contractors. Consider also that, as discussed in Hostile Takeover, while Medicare spends about 4 cents of every dollar on administration, the private health care market spends about 18 cents.
The government more efficient than the free-market? Sacrilege.
Our trade policies, for instance, are chock full of protections for intellectual property, patents and copyrights, but free of similar protections for worker rights. When Sen. John Kerry (D-MA) tried to grant workers the same rights as corporations in the recent Central American Free Trade Agreement, he was voted down. Multinational companies have crafted laws allowing them to import cheap food from other countries that goes through almost no health inspection, while pharmaceutical companies have bought legislation to prohibit consumers from purchasing lower-priced FDA-approved medicines from Canada. Hell, when Bill O'Reilly or Sean Hannity scream from their television perches about how important the so-called free market is, they are using the highly-regulated cable and public airwaves to distribute their propaganda.
So regulations to protect corporate interests are OK but the world will collapse if worker rights are protected?
Anyone out there have any actual data to show that the free trade deals are helping the US?
I have no data either but it doesnt take a rocket scientist to figure out that competing with the 3rd world labor market is going to put downward pressure on 1st world salaries. If we cant educate and innovate our way out of it then we lose. BTW is there any 3rd world country that we have a free-trade deal with where the US has a trade surplus? Why arent they buying all our high tech products with the $$s they are making selling us shoes and shirts?