Posted 3 years, 2 months ago around lunchtime by oso
Many people are surprised when I tell them I’m all for free trade. But only if it’s for real. None of this, I support free trade if my sock makers are protected nonsense. U.S. agricultural and steel subsidies are the biggest hypocrisies … I don’t know how they/we get away with it. I’m into free trade the way Thomas Friedman is (I can’t believe he didn’t write about CAFTA in today’s column), but even more so. If goods cross borders without restriction than workers should be able to as well. And those workers, no matter what their citizenship, should be completely allowed to organize, paid a minimum wage, and be given access to reasonable worker’s compensation and health care.
But don’t come whining to me about how your programming job just went to India or your manufacturing job is now in China ’cause I’ll either tell you to move to India or China or learn how to do something else. Which is exactly where the government can come in and do something good. The NY Times had a great editorial the other day saying some local government (I think it was in Virginia) was spending tons of money lobbying representatives to vote no on CAFTA as well as spending money on subsidizing the manufacturing and steel industries. But those are two areas where Virginia can no longer compete and that tax payer money, like the editorial said, should be used on training programs and adult ed classes to teach local citizens how to do something else which is in demand. Like porn. Ok, just joking.
But it really seems pretty incredible to me that well educated people still claim to be “against globalization.” Why not just claim to be against the earth’s rotation? Seriously, world getting smaller, get used to it. If you’ve got a product … let’s say a tennis ball … and someone starts making that tennis ball better and cheaper than you do, there is nothing noble or “liberal” about screaming, ‘no, not fair, I don’t want people to be allowed to buy their tennis balls.’ Now, if their tennis balls are so cheap because they pay their workers 10 cents an hour, then yeah, that’s bullshit and workers really need to start unionizing. And if governments try to impede those workers’ efforts to unionize, we need to speak out against it.
But the idea of isolated and protected economies is just plain silly and I don’t understand why so many liberals - with whom I agree on so many issues - are in favor of it.
Specifically, CAFTA is good news for Central America. [side note: I do feel a little weird writing things like this now that I'm covering Latin America for Global Voices because I feel like people are gonna think my own opinions influence what posts I choose to cover/translate over there ... couldn't be further from the truth though ... and besides, I always like to know where journalists stand on issues that they report so I'm not gonna keep my big mouth shut] A lot of people think about industries in Central America as small, family owned, and independent. This is often true in the “neighborhood business sector” (AKA auto-empleo) like corner shops and your local tortilleria, but when it comes to large sized companies (there aren’t medium sized companies) it’s pure monopoly and corruption. Unlike the U.S., in Central America you can find plenty of big business against free trade pacts (like Mexican gazillionaire Carlos Slim) because they will lose the protected privilege they’ve bought from federal and local politicians through campaign donations. So introducing competition - even from abroad - is a good thing. Cause really, why in the hell are Central Americans paying $1500 for a low end laptop when we can get it for less than half that?
Speaking of Slim, there’s a good example of bad Neoliberal policy. When Salinas privatized the former state telecommunications monopoly, TelMex, he sold the entire thing to one person - now the wealthiest private monopoly holder in all of Latin America. That was a big mistake - rather than encouraging competition and innovation, TelMex has become a notorious evil corporation which lobbies politicians to not allow competitors into the market. (word is, though I never experienced it, TelMex cut access to Skype which threatened its outrageous international call fees) It shoulda been auctioned off piece-meal to various regions of the country like AT&T was after the famous Bells split up.
Yesterday I wrote a post for Global Voices on TeleSur. Chickity check yourself before you wreck yourself. (amazing what 90’s rap lyrics were able to get away with). Much more impressive is what Neha and Nevin have been up to. It’s pretty exciting how fast the project is taking off.
Interesting. I will have to read this again when I’m not so hungover.
Oso,
I love you. You are wrong.
I don’t know if you know it but I’ve got a BA in economics which means I’ve got an extra piece of paper with which to wipe my ass.
Anyway, I agree that protectionism and subsidizing of some goods when trying to create free trade goes against how free trade SHOULD function, and how it would be great if people didn’t try to protect things like sugar, beets, steel, bras. However, economists tend to do a crappy job at looking at not just fiscial costs but social costs. To me this is where the real problem lies. What are the social costs of having McDonalds in Mexico? What are the social costs of having maquiladroas along the border? What are the social costs of moving away from agricultual based society?
I love it when you get all Republican like this!!! There is hope for you yet, my bleeding heart friend.
Elenamary,
However, economists tend to do a crappy job at looking at not just fiscial costs but social costs. To me this is where the real problem lies. What are the social costs of having McDonalds in Mexico? What are the social costs of having maquiladroas along the border? What are the social costs of moving away from agricultual based society?
Since you’re Irish, and because of the statements you made above, I thought this post written by Economist Don Boudreaux is worth posting. He responds to someone who made similar statements to yours above, only with regard to Ireland. A fellow named Mr. Ebnet wrote to the New York Times expressing his sadness over the fact that “Ireland is losing its “identity” as its people cooperate ever more closely with more and more peoples from around the world in a process that improves their standards of living”. He said the “sight of “foreign manufacturing plants” in Ireland burdens him with “oppressive melancholy.”
This is what Boudreaux wrote in response,
Bobbo,
I tried to call you. Your number changed.
EM,
I think keeping social costs in mind is important and a very good point. They need to be considered when writing free trade agreements. I’ll be talking more about social costs of capitalism and the alternatives when I write about Cuba.
HP,
I realize that the Democratic party has somehow become the protectionist party and the Republican party has become pro-free-trade. But - just like you don’t understand why more Latinos aren’t Republicans - I don’t understand it. To me, this shouldn’t be a partisan issue, it should be common sense. And, to make it clear, Republicans’ idea of free trade is just as far off from my own as Democrats’. Most American farmers and manufacturers are Republicans, but they’re the ones pushing for subsidies and protections.
If you read NY Times editorials - supposedly the US liberal oracles - they are consistently for free trade and against protectionism.
For those of you who espeaka espanish, Eduardo has an excellent update on the extent of TelMex’s telecommunications monopoly, which you can read more about (in English) here.
Oso,
Yeah, I agree. Actually, Democrats used to be for trade, as recently as the Clinton years. It’s pretty sad, IMHO, the direction they have taken over the years.
As far as the NY Times goes, well, it would look very bad on their part if they were not for free-trade. Within economics circles, as you already know, free-trade is not a partisan issue, both, liberals and conservatives, are supporters of free-trade (It is one of the few things you can get all economists to agree on). So if the NY Times was against free-trade, they would lose all credibility, since they would essentially be at odds with the whole economic community.
I am pretty sure I am going to regret doing this. As I most often just try to ignore ignorant wankers, however, as I am committed to learning and teaching about the impacts of econmic policy, I want to make it clear that asking “at what real cost?” does not mean a romantisation or holding back of a people.
And rather than use up Oso’s blog as my own platform go to my blog to understand why I disagree.
[...] El Oso wrote about how he is a supporter of free trade. [...]
I’m gonna copy part of a comment here that I just left on Elenamary’s blog:
This is what I left on Elenamary’s blog…
As I said before, it is only Democrats, and the Democratic Party, that still debates free trade. Within the economic community free trade has been a settled issue for conservative and liberal economists since the time of David Ricardo, for example liberal economists Paul Krugman, Brad Delong, Jagdish Bhagwati, and Alan Blinder are known free trade supporters. In addition, it has only been until somewhat recently that Democrats have not been in favor of free trade. Remember, it was Bill Clinton and the Democratic support in congress that helped pass NAFTA, a free trade agreement much more encompassing than the little CAFTA just passed by Republicans.
Why are economists so unanimous in their support for free trade? Precisely because it is a win-win situation for both countries involved. Because of what economists refer to as comparative advantage, free trade allows both countries to do what they do best, and in the process each countries standard of living rises. In fact, free trade has been so successful that it alone (well, with capitalism also) has reduced absolute poverty faster than anything else in history. We have witnessed it in East Asia, an area that had the fastest reduction of poverty in the history of the world. India and China, while there is more progress to be made, are other examples of the speed at which free trade works to lift a country out of absolute poverty. So when one attacks free trade, one is not just attacking ‘evil corporations’ and so forth, but the very source of poverty reduction around the world. Those who care the most about the poor, especially the truly poor, those in absolute poverty in underdeveloped countries, should be the strongest defenders of free trade.
So whether or not free trade is good economically is not in question here. Since economists are universally in favor of free trade, those who wish to argue intelligently against it must find some other non-economic reasons of doing so. I answered one of those reasons (the cultural change argument) in the comments section on Oso’s blog, now I will address this one.
While Elenamary’s talks about ‘hazardous waste’ and ‘exacerbated environmental problems’ sound alarming, however those of us familiar with the area see something very different. I don’t know if Elenamary is aware that I spent some time in the lower Texas area. In fact, I got my GED from South Edinburg High School, a city right next to Mc Allen, Texas. I also go back there often, and was just there as recently as a couple months ago, to visit my childhood friends that still live there. So based on my experience, I would describe the area very differently than Elenamary does above. While it may be hard to see all the way from Ohio, free trade has clearly been a boom to the region. In fact, the area is growing so fast that if you leave for a year or two and later return, you will find many places to be unrecognizable. Freeways, home development, businesses, and prosperity in general is rising fast in the region, particularly after NAFTA and the recent rise in free trade with Mexico. This is especially important when you consider the fact that the area was known to be among Texas poorest areas. It still has poverty, and there are still many parts that remain poor, but current poverty pales in comparison to the poverty prior to NAFTA’s passing and the recent rise in free trade.
As far as specific environmental problems go, I strongly believe those to be exaggerated as well. In fact, after reading Elenamary’s article, I phoned my friends in Edinburg and Mc Allen, and they had no idea what she was referring too. But since the environment and ‘workers rights’ seems to be a common objection amongst anti-free trade advocates, allow me address that by quoting from Don Boudreaux, Chairman of the Department of Economics at George Mason University.
He writes:
As far as egregious examples of health hazards and environmental pollution, we are in agreement there. Even the most extreme capitalists believe that the government has some role in protecting the environment. Clearly if a company has caused serious environmental harm to people, or the environment in general, we should all support severe punishments for that company. But it should be company specific, and not move us away from the overall plan, free trade and poverty reduction worldwide. You don’t remove the very tool underdeveloped countries are dependent on to reduce poverty because of some bad apples. The alternate would be much worse than the environmental problems free trade may cause. How many people died each year in underdeveloped countries before free trade was introduced? How many people did starvation and disease kill before free trade? What do you think India, China, Hong Kong, Taiwan and South Korea looked like fifty years ago? Free trade has the potential, and the record, of changing all of that.
When communism was shown to be the utter failure that it was, there were some liberals who couldn’t come to grips with this, there were some who just couldn’t accept that it is capitalism that reduces poverty and communism that leads to tyranny. They fought hard against all the evidence presented against communism. They just couldn’t understand how a system they put all of their hopes in could turn out to be such an abysmal failure. We are seeing the same resistance with free trade. While the economic community and the world in general have marched along with globalization, there are still some liberals who just don’t accept it. There are some liberals who cling to the outdated methods of the past and absolutely refuse to accept the overwhelming evidence presented against their views. As free trade continues, they are forced over and over again, to rephrase their arguments, yet free trade continues to show them just how absurd their beliefs are.
Call me a free trader, call me a capitalist, shoot, even call me a wanker, but don’t call me a protectionist, because that would imply that I am against the worlds greatest tool in fighting absolute poverty, in other words, a monster.
Good jebus. Glad to see you have so much free time now that finals are over.
I didn’t read all of that, so I’m not really sure what you said, but in case you didn’t mention it, 27 republican representatives voted against CAFTA.
Yep, and those Republicans are going to go to hell because of it. But atleast they will be accompanied by 187 Democrats. The roll call was,
Btw, let’s hang out, I got nothing but time now.
Has anyone ever heard of the Salton Sea situated between Mexicali and Coachella? That place is a great example of how pollution knows no borders. What this has to do with this post I have no idea.
Gustavito, it absolutly has to do with this post. A great example of how what we do in one place of the world effects other places around the globe.
Oso, Can I tell Gustavito that in response to his comment I wanted to say somthing about “having babies” or have I reached my monthly limit?