MSI,an Xmas present with a bow on it:
"the best way to help the wretched of the world" has never had anything to do with globalization.
I can't think of a tactful way of saying you're wrong about about this. You're not making a small error, you're making a fundamental error. It was pointed out by A Smith 217 years ago and he's still right.
In honest terms, "globalization" is a euphemism for, if not free trade and investment, then free-er trade and investment.
In the early nineteenth century the US was quite poor compared to Great Britain. It had little capital whereas Britain by comparison had a great deal. The British invested gigantically in the US as it built its transportation infrastructure and coal and steel industries. And that is how the US juggernaut got underway.
Latterly, the world's richest country, now the US, invested in Japan and elsewhere in the far east, and great prosperity has resulted there and in the US. Just about the poorest person in the US can buy a TV, radio, or car and now the middle class in many very poor countries can afford these things fairly easily. (I am old enough to remember when the working class and even the middle class in N America and Europe had to budget very carefully to buy these things).
My own country became prosperous as a result of investment from Britain and the US.
Foreign investment is the almost sure path to prosperity.
[A digression]
I say almost sure, because a poor country which has practically no capital but a huge resource - such as oil - can have difficulty with its economic development because the resource income can make the domestic production of just about anything uneconomic (opium and coca can have the same effect). There is also a politically destabilizing efffect as people compete for control of the immense wealth.
So, as the man says, investment in resource poor countries has paid off very well in the 20th century but not so well in resource rich ones.
A smart government in a poor, resource rich country will make sure the oil winds up in private hands and and plow government royalty income into education and health care and stash the rest in New York or London and not touch it. Or, perhaps, do what the Alaskans did.
[End of digression]
Free trade is the lack of tariff and subsidy barriers to international trade. Much is said in this area about the bad effect free trade can have on, for example, US or European farmers. It's said they cannot compete with products from low wage countries unless they are subsidized. The accurate description is that they can not stay in business growing and selling the same product. They either must become more efficient or produce a different, or higher margin product. They have no incentive, and in fact, a disincentive, to do so with a subsidy in place and remain inefficient, one trick ponies and the long term effects are disastrous, particularly with respect to "smaller" farmers as marginal land is kept in production, as larger operators scoop the lion's share of subsidies and consolidation rushes through the mature industry, as margins, even with the subsidies, become smaller. Suddenly, it is announced that AGRICULTURE IS IN CRISIS!
Well, of course it is. It has to change suddenly and drastically rather than make the incremental changes that would have been done had the subsidies not been in place. Usually the CRISIS! appears at the bottom of an economic cycle when smaller farmers can't get their banks and suppliers to cooperate in taking very large risks....
My biggest beef with Dubya was the steel tariffs he laid on to protect an indusry which had been cosseted for years. Domestic producers of cars, planes, trains, machine tools, industrial machinery immediately began demanding, and getting, exemptions from steel tariffs for all kinds of specialty steels which are produced in Europe but not the US , and the US granted thousands of exemptions so its important industries could continue to operate. As a result of the protection the US steel producers had for decades, they never made the transition from low to high margin product with all the employment and spinoffs that would have entailed.
Further cost to the US economy lies in the higher prices US industries and consumers have to pay for the protected products and the resulting loss of spare funds to buy other things and invest in new industries. And of course, in the case of the subsidies, the higher taxes to pay for them. What you have is a "negative investment effect."
The effect tariffs and especially subsidies have on folk in poor countries is devastating. Most folk in these places are employed in agriculture. The N American and European subsidies keep the world price of commodities such as wheat low. A farmer in Nigeria still has to produce to meet the world price if he is to sell his harvest and, generally speaking, he can't, because the billions $ subsidies in the foreign countries has pushed the price in the city too low. Therefore the Nigerian farmer can't make any money, can't borrow, can't reinvest in improvements, has no margin for error, thus cannot innovate, and is generally kept at subsistence level.
Tariffs have a similar effect on the poor country, generally. For instance garment maker in a poor country has to buy machinery which, if it's to be any good needs be imported. If he can't export to a rich country, how can he get the foreign currency to buy the machinery?
We all have to export to get imports, you know. If the poor country can't export due to tariff barriers how much foreign and domestic investment will be placed in the country?
There is no point in urging this poor country to educate its children so it might raise itself to a higher level of economic development if it doesn't have the money to build schools and pay teachers. There also no point in urging it to protect its environment because it has it has no means to do so, and every body is trying to get fed and clothed and heated in the absolutely most inefficient way possible. Environmental care requires prosperity as a prerequisite.
A desperately poor country can't build itself a great value added industry such as automobiles or trucks, because it has no domestic market to support it because the citizens are uneducated and poor. They can only become less poor and more educated through foreign investment and trade - tariffs and subsidies prohibit such development.
Areas like the US, Canada, and Europe have no business being in the manufacture of clothing such as is sold in Walmart. They have no natural advantage here and can't create one. They should be in the business of producing beautiful, upmarket clothing, if they're going to be in the clothing amnufacturing business at all. Neither should they be in the business of producing things like commodity steel. They shoould be producing high quality, high margin, high priced steels to match their price and wage levels.
You claim US wages "are being dragged down." The US has never been richer. Every year US folk work less hours to buy just about everything that's manufactured, whether in the US or abroad, except for housing, and that has every thing to do with artificial constraints laid on the creation of both serviced land and greater densities. (This was done so the middle class could beggar its children and get real estate rich in the process, but that's another topic).
Your claim "America First" policy grew power house economies in Europe and Asia is false. In both cases the area was devastated by WW2 and was starting from zero with highly skilled, educated populations, with experience in manufaturing, underwritten by enormous foreign investment far exceeding the seed money from the Marshall Plan. Of course there was enormously quick growth at first, because they were starting from so far down and even then, their real growth didn't really happen until they started exporting. And the first exports from both areas was junk produced by low wage workers just as the first exports we get from very poor countries today is junk assembled from materials and components we export to them.
Ever since WW2 many in the US have been complaining about the "unfair competition" from low wage countries and every year the US has grown richer. Without the subsidies, tariffs and "Fair Trade" nonsense the US would have been even richer, with higher wages, with higher standards of living, and with less unemployment and dislocation.
Can you spell cognitive dissonance? Can you spell hypocrisy?
You wrote:
More of the sophistry of the simple false premise. Once that's gone, the rest of the arguments are reduced to pleasant background noises.
1) "the best way to help the wretched of the world" has never had anything to do with globalization. Neither the gov't nor private concerns have any interest in helping the "wretched" of the world. The motivating factor in writing and passing those thousands of pages of legislation is profits from labor arbitrage and reduced structural costs.
A worthy goal, in isolation. And understandably worth billions in promotional dollars to make it happen.
Of course globalization helps the developing world financialy - at the expense of the American workforce and foreign environmental damage. The so-called "liberal" opposition never argues that wages aren't increased abroad. Gillespie knows this, but it isn't convenient to acknowledge that, better to describe a strawman objection, and argue with himself. The US opposition objects to poor conditions compared to the US, primarily because the US wages are being dragged down, not because anyone wishes to deny others. The humanistic concern for environmental damage is a separate issue, and isn't the primary source of anger against the passage of these bills.
2) The second obvious lie is that an America First trade policy will somehow "condemn developing countries to poverty". Nothing prevents those countries from improving their lot, with the implementation of an America First trade policy.
It was America First trade that adopted the Marshall Plan, grew powerhouse economies in Europe and Asia. The rest of the world benefits from American success, as it was in the 1950s when wages grew at an historic pace, while simultaneously feeding the economies of other hungry, underdeveloped, underemployed countries.
I doubt he's winning over very many intelligentsia on either coast, and Middle Americans certainly don't believe a word of this.
Reminds me of the illegal immigration issue, special interests succeed in corrupting our political system to force passage of legislation allowing hundreds of billions in cheap labor, while 80% of Americans oppose it. |
