The blind men on the editorial board of The New York Times are at least consistent when it comes to pontificating about trade. This a.m., we’re treated to an editorial “A New Battle Over Free Trade,“(registration required) which gives us the view from the establishment press on the Central American Free Trade Agreement (CAFTA). Right from the get-go, you know where this is headed: all you backward people, get with it, you have to cast off your fear and wrap your lovin’ thighs around the economic love machine called free trade!!!
For the sake of you’all, I won’t dissect every sentence, but a few particularly moronic pearls jump out. To wit: “The
economic reality of our increasingly interconnected world is that
countries are best off if they lower trade barriers and try to
specialize in producing the goods in which they have a comparative
advantage.”
So, first thing: as I will repeat until I am dead, there is no such thing as “free trade.” It’s a myth. Actually, even long-time so-called “free trade” advocates like Paul Craig Roberts (a supply-side economist who served in the Reagan Administration’s Treasury Department) and Sen. Charles Schumer are now admitting that classical free trade theory (particularly, the buzz phrase of “comparative advantage”) cannot work in today’s world where communications systems move capital around the world in seconds. You can’t have an advantage over another country when capital won’t sit still or can’t be controlled.
I’ve long pointed out that these are not “free trade” agreements but very carefully-orchestrated agreements to protect investment and manage business relationships. You could write a classical free trade agreement on the back of a napkin (okay, maybe a few napkins)–the deal would simply say “eliminate all tariffs.” But, these deals are hundreds of pages long, with exceptions and protections for various industries.
The other fallacy the Times’ college-educated, upper-middle class editorial board keeps flogging is this: “America and Europe have the advantage in businesses that call for high-tech, high-skilled workers, good transportation and a sophisticated legal system.”
Could I suggest that they expand their reading lists beyond Thomas Friedman and Robert Reich? They might start with Oded Shenkar’s recent book, “The Chinese Century.” Shenkar is not left-winger. He simply points out an obvious fact: China will, quite shortly, be a dominant player in high-end, high-skilled work–and with vastly lower wage costs, will obliterate whatever advantage the U.S. and Europe have in the the fantasy jobs of the future.
Because in the end, the only thing driving the global economy is the search for the lowest wages. And so the real problem with those of us who are against so-called “free trade” agreements is that they don’t start from this first principle: how will trade benefit workers, not force a brutal search for the lowest wages on earth?
And don’t you love this sentence: “That classic free trade formula, for all the short-term pain it causes, provides for an overall gain in general economic prosperity.”Ever notice how all these people shilling for so-called “free trade” are so ready to live with the “short-term pain” but never had one of those jobs they are so eager to send away?
