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Two points. First of all, let's note that agreements like TPP and TTIP are not free trade agreements. Very little in them is about trade barriers; most of the countries involved already have agreements keeping tariffs low or absent. Much of what they cover is in fact protectionism: extensions of copyrights for Hollywood and publishers and drug companies, so smaller companies can't compete with them. The US has the most extreme copyright protections and is attempting to force that model on the other countries. Then there are the ISDS provisions in both agreements, that is, Investor State Dispute Settlement tribunals, in which three corporate lawyers act as the judges when corporations in one signatory country can sue governments in another if they pay any law that could affect their profits--raising the minimum wage, buy local deals, environmental or worker safety protections...they can make the proceedings secret, there are no conflict of interest provisions for these highly paid judges...only corporations have the right to sue, not unions or environmental groups or local governments. In other words, a kangaroo court and one hell of a sweet deal for CEOs. So--what Trump is (probably erroneously) given credit for shooting down is really not a free trade deal at all.Secondly, if we ARE talking about protectionism and relocalizing economies versus globalization, there are a couple of other HUGE factors Greer has surprisingly not mentioned, of which resilience readers should be well aware: the environment, especially in terms of climate, and resource depletion. Relocalized economies with minimized trade are likely all that will be possible before too many decades pass, and the sooner we move in this direction the less damage we will do.Why do people assume that protectionism leads to war? It seems to be implied that if country A won't sell product Z to country B at favorable prices, then of course Country B will declare war to seize the resource in question. Is that what we humans are about? I'd rather think not.
“Getting rid of free trade and returning to a normal state of affairs, in which nations provide most of their own needs from within their own borders and trade with other nations to exchange surpluses or get products that aren’t available at home readily, or at all, gets rid of one reliable cause of serious economic dysfunction. “
JMG just described, in a rather confusing way, that the history of our economy over the last two centuries is the exact opposite of what he describes above as the normal state of affairs. The economy described above would be a highly planned economy run for the benefit of workers with trade limited to a few luxury products and with the desires of international corporations and speculators completely cut out. It would be an economy closer to what I would like to see, but it’s laughable to think the Republicans in Congress are going to embrace that vision just because Trump (and I doubt he embraces it either) showed up. They still worship St. Ronnie and the Golden Rule of Deregulation of All Things--which amounts to leaving corporations and the rich individuals who own them to dominate society.
Great article by JMG. Post Trump US and post Brexit UK should provide evidence to test this thesis. In the UK referendum, free trade was not as high profile as in the US election. A related big issue in both votes was movement of people across borders. How about an article on the movement of people (as opposed to movement of capital or trade) between economies?
People moving from a lower productivity economy (LPE) to a higher productivity economy (HPE), provide more cheap labour in their new country. They increase their personal wages but depress wages generally in the new country. They also tend to send money home to relatives in the old country, resulting in a net flow of capital from the HPE to the LPE.
When resources are plentiful and ripe for exploitation and growth is in full swing, as in the case of early immigration to the US, everyone's a winner.
However when growth is low, this produces resentment in the working population of the HPE who see immigration as holding down wages and taking their jobs. A big factor in victory for both Brexit and Trump was the call to control borders. Generally mixed motives of racism (bad), patriotism (good?), localism (good?) and economic self interest (good/bad?) were at play here. I personally cast my vote for Brexit to restrict unsustainable population growth on a small island.
Another interesting piece on the same subject a little more in-depth .
“Tons of smart and less smart folks are breaking their heads over where Trump and Brexit and Le Pen and all these ‘new’ and scary things and people and parties originate, and they come up with little but shaky theories about how it’s all about older people, and poorer and racist and bigoted people, stupid people, people who never voted, you name it.
“But nobody seems to really know or understand. Which is odd, because it’s not that hard. That is, this all happens because growth is over. And if growth is over, so are expansion and centralization in all the myriad of shapes and forms they come in.” There ya have it , we have entered a new paradigm , the old political parties have no answer , the new are not yet in power ,Trump is the forerunner , if he can't make life better for those that voted for him ( and he / no one can ) more radical politics will ensue .
Perhaps, the Party is not over yet; are we are experiencing the beginning of the end of the Party?
Yep, the cult of exponential growthism is working tirelessly on another round of drinks. What will trigger the next step down?
Maybe the biggest 'Free Trade Fallacy' is that you can have 'Free Trade' without every adult having access to the land and tools they need to support themselves.
JMG has hit the nail on the head again in so many ways. The short version of this essay is that free trade is almost never fair trade. To achieve fair trade, which would in fact maximize mutual benefits for the traders, we must have global standards that guarantee slected rights for all, and this requires effective regulation. We have the WTO, IMF, etc, but these have been hijacked by the billionaire class, so that these institutions serve instead to exploit the weak in the "race to the bottom", as described by JMG.Unfortunately we have now also enough technology to automate a wide range of tasks that used to be paying jobs for people. This is a challenge independent of globalization and trade regulation, and it will hurt jobs in China as much if not more so than in North America and Europe.
So, we should insist that they pay for the robots' work, but the money goes to the workers the robot displaced. It would still save money for the capitalist class because robots work tirelessly and don't take time off. :-)
...the money goes to the workers the robot displaced.Even if it saved money for the 'capitalist class' as you suggest, it would be a more equitable use of that money than we currently practice. :-)
Trade also creates population bubbles. In 1849 when the corn laws were got rid of, it enabled Britain to import enough grain to feed its growing population which it wouldn't have been able to do otherwise. Britain has been in overshoot ever since.
Protectionism doesn't strike me as any better of a answer then globalism.
Didn't JMG suggest that only focusing on the opposite ends ignores the wide range of possible permutations that the middle ground makes available?
Oh, JMG has said a bunch of things over the years.
As have any of us who regularly post a bunch of things in response to someone else's thinking. That doesn't make us more or less correct, it just means we don't mind saying pretty much what we think, no matter how this may sound to others.
but the problem i see is that in such a case you need to have smaller countries to move to something apart from free trade. Larger countries can produce most of their goods within their own borders. But to govern a large country, you need to have a larger government. Which invariably means more complexity and with more complexity comes more corruption.This model works better with a bunch of smaller countries exporting surplus and importing what is not produced. But then you have very large countries(population wise) China India US. And larger countries always tend to dominate the smaller countries. So we will go back to empire building. And once empire building starts, we again go back to free trade.
Good point. I hope Greer addresses it. His argument for trade barriers seems sound in the economic sense. Can it be accomplished in the political sense when countries differ considerably? What may create a better equilibrium?
The equilibrium we have today is a race to the bottom , it's getting there , when a US worker has the same buying power as a " third world " worker then the wheels fall of the economy , that's what is happening , yes by comparison a US worker is rich but their costs are enormous , I remember under the Thatcher government the shipyards were crippled , the CEO stated a south Korean shipyard could run a electric welder for twelve hours at the same cost as his one hour , there is no way to compete with that . The other problem is taxes , low paid workers don't pay tax , neither do unemployed workers , hence the US government is borrowing 1 trillion a year .
If you want to raise tax revenue, Dave, probably the best place to look is in the tax havens, tax loopholes, etc. That's where the big money is.
Dave, great points, but just to clarify: you (and JMG too) are talking about the working class when you talk about "a US worker," right? There is still such a thing as a middle and upper middle class worker—very well-educated people with world-class technological and managerial skills. Skills that apparently insulate them from the vulnerability that is common to more routine workers.
I'm trying to figure out how John's explanation about free trade includes them. Maybe it doesn't.
Maybe history isn't moving only in the cycles John's always emphasizing. Maybe it's also following a broad trend to reduce the working class as a percentage of the population in rich nations. Sometimes by benign neglect; sometimes with much more calculation. But the upper classes seem to have already reckoned that by technology and offshoring, they can do without a domestic working class. The consumer needs of the overclasses don't need a mass market for satisfaction, so what is their incentive to support a fair deal for the classes below them? And how does a society resist that terrific pressure from above to eliminate a "liability"?
why is the cost of living enormous ? the major costs are
1) higher education2) healthcare3) real estate4) food
from various accounts I read, food is still cheap in US relatively. So will skip that.
but why are 1) 2) and 3) so expensive ? it has nothing much to do with free trade. US actually needs to import more qualified doctors from rest of the world to drive the healthcare costs down. I read somewhere that US doctor typically makes 2 to 3 times the salary in other developed countries. And US needs to crackdown on big pharma pushing up medicine prices and trying to stifle generic imports from rest of world which will push medicine costs down.
Since US is importing workers from outside ,why should real estate prices rise ? won't they have lesser buying power, shouldn't real estate price tend downwards ? as per the laws of supply and demand.
The problem is not free trade, the problem is size. US is way too big and complex. Federal govt has enormous power and they are far away from reality. Even if rich Chinese are buying up real estate, that could only be temporary, because Chinese are investing for returns not for charity, if there are no reasonable returns, they would sell their property too.
Doctors are a unionized closed shop they control how many enter medical college they control how many " foreign " doctors are allowed in to practice , unionized closed shop and they complain about the United auto workers . Drugs well , Medicare , it is illegal for Medicare to negotiate drug prices , so big pharma think of a number , double it and send the bill to the Fed's . Real estate depends where you live , how close you are to a city . College , again the Fed's they jacked up how much they will lend to students and the cost of education followed it up , and provide funds for ridiculous courses , take the Fed money away and costs would drop 75 % , TAMU employ 20 " support staff " for every lecturer they employ .
Most unionized shops pretty much functioned as closed shops where the number of new 'workers' entering that trade was limited, sometimes quite severely.
Why the focus only the doctors and not the plumbers, carpenters or electricians?
Simply because doctors CONTROL the numbers they CONTROL the licencing , they vet and licence immigrant doctors , not the Fed government not the states the doctors thru the AMA , plumbers have to be state licenced
Just because plumbers have to be state licensed does not mean that their unions did not exercise control of the numbers applying for those licenses.
Doctors have to be licensed by the state they will practice in...if you doubt that just Google 'Medical Doctor Licensing Requirements' and you will find that every state requires their own licenses and many if not most do not honor reciprocity. There is no one-size-fits-all AMA license that is valid anywhere.
I don't know what it's like where you live but here in TX the state license plumbers , electricians and others when they show they are competent,just like drivers , most learn in trade schools and even I knocking on seventy can go to school , there are no limits to the numbers , I know a EMT that teaches EMT that has been told to wait two years before his application to Medical college will be accepted , they have hit the limit for 2017 and 2018 , he is part way there and lectures emergency medicine , at his college they accept 20 students a year to be medical doctors , and qualify about ten ,his EMT course that is not regulated by the medical profession accepts 200 .and qualify about a hundred and sixty .
There is another factor that it is not included in this good analysis, which is the systemic tax-avoidance scam, the backbone of globalization
The globalization allows the coporations to use the infamous transfer mispricing and other fiscal tricks to have losses in the production of goods in the country of origin and also in the country where they sell the goods, even if the real profits are yuuuuuuges; and they can hold, all of them, in a beauty small caribbean island waitng to be repatriate in the next Dem-Rep fiscal amnesty
The tax havens are one of the main benefits of globalization for the extracting class
The offshored jobs will never return only because the cost of the manpower; even if the US workers have chinese wages also the tax system need to be "chinese", otherwise they will never return in an open-market-world
You can say the same related to all the regulations one government/country wants to have: if you want to regulate the worker's right, working places safety conditions, environmental protection, a fair tax systems, etc...you need tariffs for the coming products, otherwise you only have closed factories, unemployment and empty regulations & rights
Greer is not arguing against trade. He is arguing against unregulated free trade. However I do get your point, protectionism does lend itself to war. For example, if Russia decided to keep all her natural resources for herself, the US would probably go to war, without question.
Russia, being a one trick pony economy, is less able to survive keeping all the resources to themselves ( that they have no consumer market for ) than the US is to conserve and substitute on things they buy from Russia. Part and parcel of the resource curse.
Seems to me that is part of the compact between Russia and China...the flow of that one trick pony. From what I can tell there is much more to that whole deal than just oil and gas...for both parties. Of course we in America are really upset that those non-white people were smart enough to find a way around us, in spite of all our efforts at control.
You might be upset at what non-white people do, I can't say I care what anyone's skin color is myself.
I am not upset at what non-white people do. Quite the contrary, I am glad that people in other parts of the world who don't look like me or most of the people I know do find their own ways to live and interact with their neighbors, probably to the benefit of all parties in the long run. Seems to me that this kind of localized regional activity is what is needed to start the process of unwinding this 'global market' thinking that we in America have pushed on others (and ourselves) for way too long.I guess we'll see.