The Free-Trade Dilemma
Free trade may no longer be the winner of the past, but liberal prescriptions will only make the problem worse.
The March 28, 2007, edition of the Wall Street Journal carries a front-page, feature article titled Pain From Free Trade Spurs Second Thoughts.
The article opens with the following paragraphs:
For decades, Alan S. Blinder — Princeton University economist, former Federal Reserve Board vice chairman and perennial adviser to Democratic presidential candidates — argued, along with most economists, that free trade enriches the U.S. and its trading partners, despite the harm it does to some workers. “Like 99% of economists since the days of Adam Smith, I am a free trader down to my toes,” he wrote back in 2001.
Politicians heeded this advice and, with occasional dissents, steadily dismantled barriers to trade. Yet today Mr. Blinder has changed his message — helping lead a growing band of economists and policy makers who say the downsides of trade in today’s economy are deeper than they once realized.
Mr. Blinder, however, is definitely opposed to protectionism. Instead:
He wants government to do far more for displaced workers than the few months of retraining it offers today. He thinks the U.S. education system must be revamped so it prepares workers for jobs that can’t easily go overseas, and is contemplating changes to the tax code that would reward companies that produce jobs that stay in the U.S.
For more regarding Mr. Blinder’s emphasis upon education, see:
Our present liberal-Progressive-socialist dominated Congress eagerly grasps Mr. Blinder’s warning, but ignores his emphasis upon education, rather than protectionism.
Democrats get their largest funding from labor unions and the tort bar. The one hamstrings industry; the other, bankrupts it with class-action lawsuits.
Having been bought and paid for by the unions and the tort bar, the Democrats reflexively revert to the pro-labor and anti-business polices of Franklin Roosevelt that prolonged the Depression for eight years. If they link future outsourcing problems to education, it will be only to rationalize more members of the teachers’ unions to teach the anti-Americanism of multi-culturalism and PC indoctrination.
Following the labor unions’ imperative, the Democrats in Congress will indulge in their own brand of imperialism: they will try to force our trading partners to implement American unions’ stifling work rules in their countries. The idea is that, as American business is uncompetitive because of unionism, in good socialistic egalitarian fashion, let’s reduce all other nations to our level.
Just as industrial unions under Federal protection during the Depression got higher wages that forced disproportionate lay offs non-union labor, today’s labor unions will self-righteously foreclose improved living standards for workers in lesser developed countries.
Free-trade policies and laissez-faire economics first were applied in England after Adam Smith’s 1776 “Wealth of Nations” gradually converted Parliamentary opinion. Under that regimen, Great Britain in the 19th century became the world’s dominant economic and military power. The British navy kept the sea lanes open around the world for commerce with all nations.
During that period, the United States adopted protectionist tariffs for domestic industry. At the same time, we maintained close diplomatic ties with Great Britain, our biggest trading partner. Our 1823 Monroe Doctrine to keep European colonial powers out of Latin America would have been an empty gesture had it not been for the secret backing of the British Foreign Office and the British navy.
In the 1898 Spanish-American War, we began our experiment with imperialism, acquiring Puerto Rico, Guam, and the Philippine Islands at the end of the war.
Activist President Theodore Roosevelt got his political impetus from service with his Rough Riders in that war. Ascending to the presidency in 1901, after an anarcho-socialist assassinated President William McKinley, Teddy began building our navy (The Great White Fleet). He also began meddling in the internal affairs of Latin American countries, among other things, in connection with building the Panama Canal.
To counter the resulting ill will, President Calvin Coolidge (1923-1929) instituted the Good Neighbor policy toward Latin America. To rebuild diplomatic relations, the United States pledged not to interfere militarily in Latin countries’ affairs and to foster free trade among Western Hemisphere nations. President Franklin Roosevelt in the New Deal continued the policy.
Coming out of World War II, with Western Europe and Japan devastated, the United States, for both diplomatic and economic reasons, continued its free trade policies. Politicians in both parties supported free trade.
At the time, we had effectively the benefits of both free trade and protectionism, since there were no real challengers to our manufacturing industries until the 1960s.
In that unsustainable interlude, labor unions took advantage of businesses’ urgent rush to continue supplying the pent-up demand for consumer goods by a public unable to buy much of anything during the Depression and World War II. Unions, knowing that strikes would be very costly to manufacturers in lost sales, began extorting unrealistic wages, benefits, and restrictive work rules that promoted featherbedding (excessive numbers of workers).
When European and Japanese manufacturers began their assault in force upon the American market in the late 1960s, unions had made impossible nimble competitive reactions by American companies.
Liberal-Progressive-socialists are eager to bring back the glory days of the New Deal, when the world had not yet understood the devastation wrought by socialism in the USSR.
Three generations of students made ignorant of history by our corrosive educational system don’t understand any of this. Moreover, educated in John Dewey’s Darwinian belief that there is no such thing as morality, they frankly don’t care. They have been instructed that anything relating to the American past is evil.