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Friday, July 2, 2010

Listen, All Ye Peoples...Free Trade Doesn't Actually Exist

First, let's define the term "free trade" in a nutshell for those not familiar with it: it is the policy of maintaining low or non-existent tariffs on imported goods. It is a shibboleth of mammoth proportions among certain segments of the American body politic, including, aggravatingly, a number of libertarians running under the colors of conservatism. Part of the theory involves a hoped-for utopia wherein if we lower our trade barriers, other countries lower theirs, and everybody enjoys the results of goods being produced where and by whom they can be made best and cheapest.

It doesn't work. It has never worked. Other countries always find ways to protect their markets. Pat Buchanan's column today is a short education in that fact.
How has China vaulted to the forefront in manufacturing, trade and technology? Export-driven economic nationalism. Beijing cut the value of its currency in half in 1994, doubling the price of imports, slashing the price of exports and making Chinese labor the best bargain in Asia. Foreign firms were invited to relocate their plants in China and told this was the price of access to the Chinese market. Beijing began looting these firms of technology, as she sent her sons to study in America. Industrial espionage and intellectual property theft became Chinese specialties.

And how has America fared in the new century?

One in every three manufacturing jobs we had in 2000, nearly 6 million, vanished. Some 50,000 U.S. factories shut down. We have run trade deficits totaling $5 trillion since NAFTA passed. The real wages of working Americans have been stagnant for a decade.

While China has resumed her 12 percent growth rate, the United States, with 25 million unemployed or underemployed, appears headed for a double-dip recession.


For decades, America’s leaders have followed the Wall Street Journal ideology. We put a mythical world economy before our own economy. We put “global prosperity” before national interest. We forced our workers to compete, in their own country, against the products of foreign laborers earning a tenth of their pay. And we let in tens of millions of semi-skilled and unskilled immigrants, legal and illegal, to take the jobs of our countrymen.

And the Chinese? They put China first, second and third.

And who won the decade? And who is winning the future?

Inside the July 1 Washington Post is a small story about how the World Trade Organization finally ruled that European nations have been unfairly subsidizing Airbus — for 40 years.

While welcome, what good will it do now for scores of thousands of U.S. workers who built commercial jets for Lockheed and McDonnell Douglas, which Airbus took down, or Boeing, which was outsourcing jobs even before Airbus dethroned it as the world’s No. 1 aircraft manufacturer.
Read the whole thing. Really. You need to. I know you don't want to. Economics is booooooring, right?

But knowledge of such things is part of the price you pay to maintain your liberty and prosperity. You've avoided learning about it for decades, and look where the country is now...

Having trouble finding a job? This long-standing policy ought to be aggravating the livin' snot out of you.

"Real wages," by the way, means "adjusted for inflation." You keep hearing that aggravating line about the gap between the rich and the poor increasing? A big part of that has to do with stagnant real wages.

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