With all the violent demonstrations against free trade, I wonder why so many governments seem so determined to enact it. I can see the benifit to large companies and small countries (along with totalitarian ones), but what’s the benifit to the rest of us? All I see so far is lost manufacturing jobs to china, and a lot of short life-spanned products that last for 1-2 years replacing the toaster that I have that’s been around since the 50’s. I have yet to hear any well formed arguements pro or con? I’d like to hear both sides of the question before I take a position. I haven’t found any threads on this board that addresses the question. This is my first thread, so I hope I’m in the right place. Thanks
Well, I wouldn’t characterise the demonstrations as being against “free trade”. Having said that, It’s also difficult to find a convenient phrase that does identify the essence of what is a hugely diverse and multi-faceted movement – in fact, there may be as many interpretations as there are views on what we have come to call ‘Globalisation’.
As an example, for me, a significant issue within the wider context of ‘Globalisation’ is the way international Corporations (grown enormously in size in recent years due to mergers and acquisitions) are able to influence the democratic processes of individual countries – it’s the absence of democratic accountability (in decision-making that affects both individuals and whole societies) that troubles me combined with the replacement of that accountability with an amoral profit motive.
This has happened increasingly as the power of being able to locate factories, research and development facilities, headquarters, registered offices, even the newly internationalised call centre’s (for example: UK callers are increasingly routed to call centre’s in India or East Africa where the staff have been specially trained)…every aspect of Corporate activity - almost anywhere you want - has increased the leverage Corporations have over political leaders.
In other words, decisions that affect the way we actually live, the quality of the life we lead and even the level of taxation available to influence the range and quality of aspects of our lives (health care, education, etc) are increasingly in the hands of people not elected by us and who have , at the centre of their decision-making, an agenda other than that which we vote for.
The protests at the various summits cover a lot of different issues. The biggest concern to me, and to most of the protesters is that the “free trade” movement allows companies to move facilities into countries where they the environmental and labor laws are weaker than in the United States. Personally, I wouldn’t have any problem with NAFTA as long as American companies that sold products in America were held to the same laws that actually apply inside this country. As long as the laws are weaker in Mexico, there’s no real reason for any corporation to keep its manufacturing plants here.
Other people are protesting on a wide range of issues. Some people want drug companies to provide cheaper versions of AIDS medications for the poor in Africa, others want the wealthier countries to place embargoes on certain countries with poor human rights records, etc…
It all makes sense now. Cheaper Aids drugs for Africa? Throw a fire extinguisher at the Police! Why didn’t I think of that? -smacks forehead-
Basically, global free trade in a nutshell can be compared with our interstate commerce. There are no tariffs within our state borders, that is, if I buy a car from Detroit, Michigan, Chicago doesn’t slap a prohibitive tax on the cars that enter Illinois borders for sale. The same would be true for say, Zenith Televisions, (If they were still made in Chicago, but you get the point)for sale in Michigan.
I have no beef against fair trade, but “free trade” in practice seems to mean that our corporations move out of the country down to mexico, and the workers move here.
Korea, Germany, and other countries dump steel at or below cost to undercut domestic producers, running them out of business. At the same time, we are prohibited from selling, say, RICE to the japanese, because they don’t want to buy it.
I know this is all supposed to work out for the benefit of everyone in the long run, but it’s still painful to watch.
The fire extinguisheer throwing is perhaps the only way protestors feel they can be noticed. Hardly something I condone, and I think its about as pointless as G-7/G-8 meetings, but it works.
Protesting generally works, although it doesn’t have much affect on profit margins. If people didn’t protest against companies like Shell, their execs would still be in the dark about public opinion on their policies. Same goes for the G-7, at least in theory.
Sorry about the thread-drift: we were talking about free trade…
Well, I was hoping to generate some interest in this subject, as it seems that it will affect most of us deeply-- or not. I found an interesting article in Business Week on line
http://www.businessweek.com/bwdaily/dnflash/may2001/nf2001052_941.htm
I’m trying to find a reason not to be concerned about the effects on my families quality of life. I don’t drive an SUV, but I can afford a car, and I’m young enough to have a serious downturn in median wages impact my life when I retire (assuming I don’t have to work till I’m 80 as per the ever changing Social Security situation). If there is no “up-side”, why do so many of my fellow americans seem disinterested to the point of silence? Help me out here. I hope it’s not because I mispelled benefit in my OP.
Free trade has many, many benefits. Aside from economic benefits (and they are large), it’s a powerful force for liberalization, because dictatorships can’t compete in a global economy and are therefore forced to change.
Like China.
This seems to be a disincentive, if it were actually to come to fruition:
- Scores of businesses pick up their widget manufacturing plants and move them to, say, Mexico.
- Tens of thousands of US labor jobs are lost, along with many more in support staff.
- Unemployment increases.
- Workers that were previously employed are now barely scraping by, and unable to afford the very widgets they used to manufacture.
- Sales of widgets plummit, and Widget Inc. goes out of business.
Please help me out here. Obviously, Widget Inc. is not owned by morons and are not expecting my step #1 to lead to my step #5. So what steps are they envisioning?
Except that years after NAFTA was passed, unemployment is lower than ever.
The same argument can be made about advances in technology. The blacksmith industry was decimated by the auto industry. We don’t have millions of unemployed blacksmiths today because they found other jobs.
So yes, jobs are lost in some industries. But they are lost because it is more efficient to do the work elsewhere, which means in the long run the country will have a stronger economy, leading to even more job creation.
In fact, you can think of free trade AS a technology. Japan imports grain from us and exports cars. So instead of thinking about it as a country, think about it as a technology - we have this amazing black box that we ship grain into, and cars come out the other end. If those cars cost less than what we could make them for here, the net result is the same as if we had automated our new plants, or designed an assembly line that eliminates a couple of stations for more efficiency, or whatever. And of course, when you eliminate a station on an assembly line, you eliminate the jobs required to man and maintain it. But the lower cost of cars causes other jobs to be created elsewhere. This is one of the keys to economic growth.
Not that I disagree with you, but you are neglecting the effects of trade imbalances on currency strength, and vice versa.
Get yourself a copy of “The Choice” by Russell D. Roberts.
http://www.amazon.com/exec/obidos/ASIN/0130870528/qid=997670882/sr=1-2/ref=sc_b_2/104-1494945-6639122
I also suggest reading PJ O’Rouke’s “Eat the Rich” in which he teaches himself economics with some humorous conclusions.
A recent issue of The Economist looked at the fallacy of protectionism, with reference to the satire of a 19th century French economist (name escapes me).
Protectionism is as old as humanity and has always failed. It is just a knee-jerk reaction but it has never succeeded in the long run. In general, the more protectionist a country, the less efficient the economy.
Also protesting against change is as old as humanity. The steam locomotive, the horseless carriage, industrial looms, agricultural machinery… they all drew protests of people who would be displaced by these machines. Not so long ago many people were terrified by computers fearing for their jobs. Yes, many people lost their jobs to computers but many more found jobs in the computer field and the economy as a whole became much more productive.
Globalization is a good thing and it will happen. Any country which tries to insulate itself will just be left by the wayside.
I always buy whatever is in my personal best interest. If it was made in Mexico or China I am glad as Mexicans and Chinese also have families to feed and a right to make a living. By buying their products we are helping them develop their economy and create better living conditions for them. They have as much right as anyone to make a living and I should have the right to buy their products freely.
Sailor: I like to think that the intelligent protesters aren’t really protesting about globilisation as sush - you’d have to be a complete idiot to think that process will be stopped. I think the issue here is more about what passes for acceptable corporate ethics. I don’t really care whether a company is Australian, manufactures in Australia, or is entirely overseas and imports absolutely everything into the country - I’m more worried about the way they treat their employees, what their work practices are like, whether they show any regard for any disruptive influence their business has on the environment/communities etc…
And I’ll be buggered if I know how to find that out without dedicating my life to it, and I’m not fanatical enough about the subject to be bothered doing that! (Which is probably why you don’t see me throwing fire extinguishers through Macca’s windows).
I attended my first protest march when I turned 17 and I’m turning 20 in two months. During that time, I have never, never, even one time, heard a single person on my side advocate strict protectionism as the alternative to globalization. (And no, just because Pat Buchanan shows up at Seattle doesn’t mean he’s on my side.) Those who think they are attacking the anti-neoliberal position by attacking the Italia farà da sè brand of protectionism are mistaken.
The question is not whether the world will have a global economy. The world has had a global economy since the sixteenth century. The question is, will the unconscious mechanisms of the market be consciously controlled to the common good by truly democratic institutions, or will we continue down the path of vox mercati, vox Dei - defining the market, no matter how romantic its whims, as what shall be good for humankind, whether or not it actually is?
The market is a tool to determine at what price goods and services shall be sold. It is not the philosopher’s stone and it is not the redemptor of humankind. It is a directionless force whose results are the average of millions of self-interested decisions, which means that it is unconscious. Permitting ourselves to be governed by the unconscious rather than the conscious involvement of citizens in the institutions of democracy is equal to the arbitrary denial of 2 500 years of the Western experience.
>> The market is a tool to determine at what price goods and services shall be sold. It is not the philosopher’s stone and it is not the redemptor of humankind. It is a directionless force whose results are the average of millions of self-interested decisions, which means that it is unconscious. Permitting ourselves to be governed by the unconscious rather than the conscious involvement of citizens in the institutions of democracy is equal to the arbitrary denial of 2 500 years of the Western experience
I don’t know where to begin with this nonsense. It is anything BUT “unconscious”. It is the result of millions of people who have spent millions of hours deciding what they want. No one in the entire universe is better qualified to decide what I want and what is best for me than myself. Sorry. I do not care if the entire antiglobal crowd thinks otherwise. I want my freedom to vote with my money for whatever product or service I find suits me best and I do not need no stinking bureaucrat to tell me what I need.
As for the protestors and their protests I only have to warn you that what goes around comes around. Here in DC the police chief is already fretting about the disruptions which we expect in the next demonstrations. The city will have to hire hundreds of cops from other towns and pay millions in overtime, lodging, etc. I find the disruption, the violence, the expense, all inexcusable. If anyone finds that is an acceptable way of expressing their opinions then they should be ready to accept the other side expressing themselves in a similar manner. I’ll tell you one thing, if they let loose on the demonstrators a few people of opposing views suitable equipped with clubs, the city would save a lot of money and the demonstrators would learn a fair lesson about acceptable forms of exchanging ideas. With the disruption they caused last time and what we are expecting this next time, don’t ask me to be sorry if a skull or two are accidentally busted open.
I think you’ve missed Matt’s point there, sailor. He isn’t arguing that any “stinking bureaucrat” (what, bureaucrats don’t have showers?) knows better than you do what you need. He’s talking about the same thing we always need to consider when we contemplate market fundamentalism: externalities.
The market is very efficient at pricing some things. On the other hand, it is very inefficient when it comes to others. This is because a decision in individual self-interest that makes sense because you can’t control the actions of others leads to overall aggregate harm. Pollution is a classic case of this - no one person or industry can affect overall pollution so in the absence of regulation, it makes sense for no individual or industry to let environmental effects affect their decision.
I don’t see why you appear to have a philosophical argument against deciding what kind of society we want and working towards that goal. There is nothing wrong with tweaking the market mechanism, for example, to try to reduce pollution. We may do this by regulation or we may do it by trying to build environmental cost into the production costs of an industry. In the same way, we as a human race may decide that certain working conditions are intolerable. The flexible market can then be adjusted to reflect our desire to institute this.
Matt saying that the market is not “the philosopher’s stone” was a very good way of putting it - there is nothing to indicate that our aggregate (or even individual) utility will be maximised by an unfettered market. Graphically, the best we can hope for is local maxima - this is not necessarily a pareto-optimal solution. The global maximum (even on a pareto ordering) may well be unobtainable without market regulation.
This is nothing to do with stinking bureaucrats and their ability to chose your car for you.
Well the protesters don’t want to let any stinking bureaucrats decide how they need to make their protest known…
pan
As an example let’s consider a tarriff on widgets to try an dkeep the domestic widget workers employed. This will of course have the effect of making widgets more expensive, so everytime I buy a widget, at an artificially inflated price I am subsidizing the workers, executives and stock holders of the American Widget industry. Plus, consider the people who don’t even buy widgets at the inflated price who would at the competitive price. That is also a loss.
Or consider the great automobile fields of Nebraske and Iowa. To the naked eye they may llok like wheat and corn fields. But amazingly, this corn is turned into automobiles when it is put on a ship going to Japan and on a ship coming back are cars.
I have one litmus test for politicians: Do they support free trade? Free trade is Liberating. Free trade is healthier. Free Trade is more productive. Free trade is the engine to world growth and prosperity. Sixty years ago we were fighting a war with Japan and Germany. Today we are allies and more importantly mutually benefitting economic partners.
Here’s a link to a previous (short) thread on this topic: Teach me about free trade. It’s a quality thread - it even features a good contribution from Ma Parrot - with a little feature from me on the theory that underpins the standard case for free trade, which I’d make again here if I wasn’t shagged out from a hard day oppressing the workers.
FWIW, I don’t have a problem with what matt_mcl said, and I suspect most in favour of free trade wouldn’t either. I’m pretty sure that trade barriers are bad news, but a “race to the bottom” in terms of accountablity, regulation, workers’s rights and environmental standards is a tendancy which must be resisted by democractic governments if most people are to gain from the gains from globalisation. That a small minority of protesters are intent upon destruction and the marginalisation of calls for such issues to be addressed ought only to result in contempt for and isolation of such fifth-columnists, not abandonment of the real concerns of the bulk of protesters (even if their concerns are not always well thought out or expressed).