Tag: free trade

The truth about free trade

Free trade advocates are very often dishonest and attempt to claim that while they support the free movement of capital and goods, they do not support the free movement of people. But this is nonsense, because the free movement of people is intrinsically necessary for free trade in both labor and services. Furthermore, observe that the European Union’s “Four Freedoms” are explicit on this point:

One of the “Four Freedoms” of the Single Market is free movement of persons – along with free movement of capital, goods and services. Having a Single Market means having free movement of products (goods and services) and factors of production (capital and labour). Saying the UK wants to restrict free movement of persons but stay in the Single Market makes precisely as much/little sense (and for precisely the same reasons) as would saying “The UK wants to impose tariffs on imports from Germany and France but remain in the Single Market” or “The UK wants to impose capital controls on investment into Italy but remain in the Single Market”. Restricting free movement would, in substance, be withdrawing from the Single Market and hence in substance withdrawing from the EU. The substantive question is unambiguous. The only thing left to consider is the semantic question – whether withdrawing from free movement would be called “withdrawing from the EU” or not. Since the EU is the zone of EU citizenship and EU citizenship means free movement, the answer must be “Yes – the UK would not be in the EU”, though we might perhaps still be in some other form of “Europe”.

The second reason it is not mere word games is that many schemes for “withdrawing from the European Union” involve continuing to participate in some other form of “Europe” – e.g. the “Norway option” of continuing to be in the European Economic Area. “Out” hasn’t normally meant “no Europe”, merely “exiting the European Union”. But exiting the European Union is precisely what any form of restriction on the free movement of persons entails, by definition.

Past generations can be forgiven for not grasping that free trade meant the end of national sovereignty and the end of the very concept of “the nation”. They did not understand how inexpensive and easy travel would eventually become. But now we know better. And this is the real reason that “nationalism” has been attacked as  an intrinsic and dangerous evil; it is the strong point around which resistance to the universal pillaging of the global elite’s attempt to construct its vision of Eine Welt, Eine Art, Eine Ordnung.

Patient #2?

A possible case of Ebola in Washington DC:

A patient with Ebola-like symptoms is being treated at Howard University Hospital in Washington, D.C., a hospital spokesperson confirmed late Friday morning. The patient had traveled to Nigeria recently. That person has been admitted to the hospital in stable condition, and is being isolated. The medical team is working with the CDC and other authorities to monitor the patient’s condition.

Shut down air travel from Africa. Now. It’s a good thing this possible case is in DC, as perhaps the disease in the near vicinity will sufficiently alarm Congress to force ObolaObama to finally take action.

And if the CDC wants to avoid panicking the public, perhaps they should stop making statements that make them look like completely incompetent idiots.

Tom Frieden, director of the Centers for Disease Control and Prevention,
on Friday said restricting travel between the U.S. and West Africa
would likely “backfire” and put Americans more at risk of contracting
Ebola…. “Even if we tried to close the border, it wouldn’t work,” the top health official added. “People have a right to return. People transiting through could come in. And it would backfire, because by isolating these countries, it’ll make it harder to help them, it will spread more there and we’d be more likely to be exposed here.”

That’s complete horseshit. The moron may as well have painted a target in his back in the event Americans start dying from a disease that he could have, and should have, prevented from entering the country.

Competitive asset-stripping

Russia calls the globalist bluff:

Russian courts could get the
green light to seize foreign assets on Russian territory under a draft
law intended as a response to Western sanctions over the Ukraine crisis. The draft, which was submitted to parliament on Wednesday
by a pro-Kremlin deputy, would also allow state compensation for an
individual whose property is seized in foreign jurisdictions.
Italian authorities this week seized property worth about
30 million euros ($40 million) belonging to companies controlled by
Arkady Rotenberg, an ally of President Vladimir Putin targeted by the
U.S. and European Union sanctions.
The draft law, published on a parliamentary database,
would allow for compensation for Russian citizens who suffer because of
an “unlawful court act” in a foreign jurisdiction and clear the way to
foreign state assets in Russia being seized, even if they are subject to
international immunity.

Asset-stripping sanctions aren’t going to be very effective if the Russians simply compensate those whose assets are stripped by taking them from Western companies with Russian assets. This could have some interesting knock-on effects in the NBA.

And isn’t it remarkable how the sanctity of free trade is so readily disrupted when something is at stake besides the livelihoods and standards of living of the working and middle classes?

The end of comparative advantage

As I have repeatedly pointed out for several years, David Ricardo’s Law of Comparative Advantage has been shown to be based upon false assumptions. Now the mainstream economists are beginning to recognize this:

David Ricardo’s Theory of Comparative Advantage has broken down after 200 years, or so I learned at the Lindau forum of Nobel laureates in Bavaria.

The theory published in 1817 has been a guiding principle of free trade, taken as a given by every student of economics in the modern era. It has served us well, but just as Newton’s theories ran into limits and were overtaken by Einstein’s relativity, comparative advantage no longer explains the world.

Under Ricardo’s model, inequality was supposed to narrow within countries as globalisation accelerated exponentially in the Nineties. Instead it is getting wider….

Ricardo described a world where free trade in goods was opening up, but
labour markets remained largely closed. This is no longer the case.
Globalisation bids up the wages of high-skilled engineers or software
analysts towards international levels wherever they live.

The Nobel laureates at Lindau aren’t willing to give up on globalization yet (although they should), but the cracks in the economic wall are showing as they express their fears that it is “going horribly wrong”. But it’s not going wrong. It’s going the only way it could possibly have gone.

Free trade is incompatible with national sovereignty. International
labor mobility is incompatible with the very existence of nations. And the heterogeneous populations are economically detrimental and a material barrier to the growth of capital and national wealth. I shall repeat my core argument against free trade, which I first articulated in 2012 following a quasi-debate with Gary North:

1. Free trade, in its true, complete, and intellectually coherent
form, is not limited to the free movement of goods, but includes the
free movement of capital and labor as well. (The “invisible judicial line” doesn’t magically become visible when
because human bodies are involved.)

2. The difference between domestic economies and the global
international economy is not trivial, but is substantive, material, and
based on significant genetic, cultural, traditional, and legal
differences between various self-identified peoples.

3. Free trade is totally incompatible with national sovereignty,
democracy, and self-determination, as well as the existence of
independent nation-states with the right and ability to set their own
laws according to the preferences of their residents.

4. Therefore, free trade must be opposed by every sovereign,
democratic, or self-determined people, be they American, Chinese,
German, or Zambian, who wish to preserve themselves as a free and
distinct nation possessed of its own culture, traditions, and laws.

The H1B lie

It is readily apparent that there is no shortage of American tech workers when the Americans are being let go in order to hire the cheaper Indians, either via offshore outsourcing or immigration:

At A.B.’s company, about 220 IT jobs have been lost to offshore outsourcing over the last year. A.B. is telling the story because, initially, there was little knowledge among fellow employees about H-1B visa holders and how they are used. They didn’t know that offshore outsourcing firms are the largest users of H-1B visas, or exactly how this visa facilitates IT job losses in the U.S.

“I think once we learned about it, we became angrier toward the U.S. government than we were with the people that were over here from India,” A.B. said, “because the government is allowing this.”

The IT workers at this firm first learned of the offshore outsourcing threat through rumors. Later, the IT staff was called into an auditorium and heard directly from the CIO about the plan to replace them. It would take months for the transition to be completed, in part because of some new system installations.

Many younger IT workers found jobs and left. Mainframe workers were apparently in demand and also able to find new jobs. But older workers with skills in open systems, storage and SAN faced a harder time. About half the IT staffers, mostly the older ones, would stay to the end.

Training the replacement workers involved holding morning-long WebEx meetings several times a week with offshore outsourcing staff based in India. The sessions were recorded as details about the environment, including diagrams and scripts, were shared.

The entire foundation of free trade is a lie. There are multiple flaws in David Ricardo’s comparative advantage argument that I have previously pointed out – do a search or go through the Free Trade tag if you’re interested. So it should be totally unsurprising that the justifications for the H1B visas are lies as well.

Free Trade is global fascism

I worked that out on my own, but it turned out to be unnecessary. This document from the 1967 Congressional Record should suffice to demonstrate that conservatives who favor free trade are being played like Ronald Reagan signing the 1986 Immigration Amnesty under the belief that it would reduce future immigration from Mexico:

“For the widespread development of the multinational corporation is one of our major accomplishments in the years since the war, though its meaning and importance have not been generally understood. For the first time in history man has at his command an instrument that enables him to employ resource flexibility to meet the needs of peopels all over the world. Today a corporate management in Detroit or New York or London or Dusseldorf may decide that it can best serve the market of country Z by combining the resources of country X with labor and plan facilities in country Y – and it may alter that decision 6 months from now if changes occur in costs or price or transport. It is the ability to look out over the world and freely survey all possible sources of production… that is enabling man to employ the world’s finite stock of resources with a new degree of efficiency for the benefit of all mandkind.

But to fulfill its full potential the multinational corporation must be able to operate with little regard for national boundaries – or, in other words, for restrictions imposed by individual national governments.

To achieve such a free trading environment we must do far more than merely reduce or eliminate tariffs. We must move in the direction of common fiscal concepts, a common monetary policy, and common ideas of commercial responsibility. Already the economically advanced nations have made some progress in all of these areas through such agencies as the OECD and the committees it has sponsored, the Group of Ten, and the IMF, but we still have a long way to go. In my view, we could steer a faster and more direct course… by agreeing that what we seek at the end of the voyage is the full realization of the benefits of a world economy.

Implied in this, of course, is a considerable erosion of the rigid concepts of national sovereignty, but that erosion is taking place every day as national economies grow increasingly interdependent, and I think it desirable that this process be consciously continued. What I am recommending is nothing so unreal and idealistic as a world government, since I have spent too many years in the guerrilla warfare of practical diplomacy to be bemused by utopian visions. But it seems beyond question that modern business – sustained and reinforced by modern technology – has outgrown the constrictive limits of the antiquated political structures in which most of the world is organized, and that itself is a political fact which cannot be ignored. For the explosion of business beyond national borders will tend to create needs and pressures that can help alter political structures to fit the requirements of modern man far more adequately than the present crazy quilt of small national states. And meanwhile, commercial, monetary, and antitrust policies – and even the domiciliary supervision of earth-straddling corporations – will have to be increasingly entrusted to supranational institutions….

We will never be able to put the world’s resources to use with full efficiency so long as business decisions are frustrated by a multiplicity of different restrictions by relatively small nation states that are based on parochial considerations, reflect no common philosophy, and are keyed to no common goal.

Fascists are always all about “efficiency”. If the thought of global efficiency doesn’t put a shiver down the spine of a God-fearing free trader and cause him to rethink his position, well, there isn’t much hope for him. Note that “the idea behind getting rid of these barriers wasn’t about free trade, it was about reorganizing the world so that corporations could manage resources for “the benefit of mankind””

Corporate resource management in the name of freedom. That’s what “free trade” is.

Immigration: a temporal comparison

Steve Sailer draws attention to a failed social experiment in mass immigration.

Spain 2007: Imagine what would happen if a prosperous Western nation threw open its borders, allowing immigrants to flood in virtually unchecked. Soaring unemployment, overstretched social services, rising crime, even rioting in the streets? Not in Spain…. Over the past decade, the traditionally homogeneous country has become a sort of open-door laboratory on immigration. Spain has absorbed more than 3 million foreigners from places as diverse as Romania, Morocco, and South America. More than 11% of the country’s 44 million residents are now foreign-born, one of the highest proportions in Europe. With hundreds of thousands more arriving each year, Spain could soon reach the U.S. rate of 12.9%. And it doesn’t seem to have hurt much. Spain is Europe’s best-performing major economy, with growth averaging 3.1% over the past five years.
– Spain: Immigrants Welcome, May 20, 2007

Spain 2013: A strong tourist season helped the unemployment rate dip to 26.3
percent from 27.2 percent in the first quarter, the National Statistics
Institute said on Thursday. That left 5.98 million people out of work – a far greater proportion
of the population that every other euro zone country bar Greece.
–  Spain’s Unemployment Rate Falls, July 25, 2013

That should suffice to explode the myth that “Immigration is good for the economy”.  That is worse unemployment than Spain suffered during the Great Depression of the 1930s; for that matter, it is worse than the USA experienced during the Great Depression.

But there is more to it than just the problem of excess immigration. As I have pointed out, the free trade in labor has increasingly driven Spain’s native population out of the country.

“One interpretation of this finding is thus.  Given the quality of its institutions, Spain is due
for a lower wage structure, with lower quality jobs, as they might be
perceived by the workers themselves.  To some extent, Spain will achieve
this new equilibrium by population adjustment and exchange.  Spanish
engineers will move to southern Germany and Ecuadorans will move to
Spain.”

Free trade is incompatible with national sovereignty and national identity. It is, intrinsically and quite literally, anti-American, anti-semitic, and anti-everything except big corporations and even bigger governments.  Never forget that Karl Marx was a free trader for precisely that reason. You cannot claim to support either the U.S. Constitution or the American nation and also support free trade.

Free trade results in “equilibrium by population adjustment and exchange”.  In practical terms, that means 50 percent of your children will have to live in another country.

Bryan Caplan and the Open Borders movement

I find it remarkable that the image below is what the U.S. Chamber of Commerce thinks passes for a pro-immigration image.
In the meantime, the quasi-libertarian economist Bryan Caplan is demonstrating that he can’t follow the basic logic of domestic free trade or understand the consequences of the free movement of international labor as the Open Borders movement searches for a logo.  Steve Sailer has compiled a number of them that are nearly as bad as the Chamber of Commerce’s entry.

“The Open Borders movement seeks a symbol that embodies the spirit of
free migration. To achieve that goal, we are sponsoring a logo contest.
The winner of this contest will get $200 and their design will become
the official logo of the Open Borders web site.”

Lacking any graphic talent, I shall refrain from attempting to create one myself, although I would certainly encourage the Dread Ilk to do so if anyone is so inclined.  Instead, I would invite Mr. Caplan to attempt to rebut my argument that an Open Borders regime will force the international emigration of more than 40 percent of Americans before they turn 35.  I should also like to see him address the fact that this forced economic migration is desired by influential statists specifically in order to “undermine the “homogeneity of its member states”.

It is very important to understand that Open Borders movement seeks nothing less than the destruction of the nation-state in the name of the global economy.  This extreme Free Trade doctrine necessarily requires the end of the Jewish state of Israel, the end of the U.S. Constitution, and the demolition of the chief structural obstacle to global dictatorship. Open Borders and the Free Trade argument can be best understood as the European Common Market scheme writ large; it is the economic bait for global political integration.

The current immigration reform bill is the completion of the American national suicide that began with the Immigration and Nationality Act of 1965 and was proposed by the grandson of Jewish immigrants, sponsored by the grandson of Irish immigrants, and publicly championed by another grandson of Irish immigrants.  Thus demonstrating that even when they are superficially integrated, second- and third-generation immigrants tend to act against the interests of the nations their parents and grandparents invaded.

WND column

The utopian evil of free trade

In my previous column on the flaws of free trade theory, I concentrated
primarily on the theoretical aspects and the errors in the historical
arguments that have been made for it. In this column, I will focus on
the practical side and show how free trade, if implemented in a genuine
manner, will necessarily result in the complete destruction of the
United States of America as we know it.

Free trade and war

Yet another pillar in the free trade theory appears to be on the verge of falling:

China declares economic war on Japan

China is trying to hurt Japan economically, to gain leverage in its campaign to take control of the Senkaku/Diaoyu islands. In the 2010 confrontations, China took revenge on Japan by terminating shipments of rare earth minerals, needed for manufacturing of many of Japan’s electronic products. In the current confrontation, the Beijing government is encouraging the Chinese people to demonstrate and protest against Japanese businesses in China. The government urged protesters not to use violence, but that part of the message is clearly not getting through. Protesters torched a Panasonic factory and Toyota dealership, looted and ransacked Japanese department stores and supermarkets in several cities. China’s National Tourism Administration ordered travel companies last week to cancel tours to Japan over the weeklong National Day holiday in early October. AP and Bloomberg

Chinese Communist Party urges punitive sanctions against Japan

The Chinese Communist Party (CCP) is urging strong punitive sanctions against Japan, for its “well-orchestrated plan” to take control of the Senkaku/Diaoyu islands, according to the CCP’s official newspaper:

“The “nationalization” of the Diaoyu Islands by Japan after “purchasing” them from a “private owner” is ridiculous and cannot change the fact that they are Chinese territory. … China should take strong countermeasures, especially economic sanctions, to respond to Japan’s provocations. Military consideration, however, should be the last choice.

The United States has frequently used Article XXI Security Exceptions of the WTO (taken from the earlier General Agreement on Tariffs and Trade) to impose economic sanctions on other countries. The security exception clause says a country cannot be stopped from taking any action it considers necessary to protect its security interests. That means a country can impose sanctions on enterprises, financial institutions, organizations and even other countries’ central and local governments. Taking a cue from the US’ practice, China can use the security exception clause to reduce the export of some important materials to Japan.

China didn’t announce any sanctions against the Philippines in April, but it froze banana imports from that country in response to Manila’s aggressive attitude in the Huangyan Island dispute. Though the economic countermeasure forced the Philippines on the back foot, it also harmed the interests of some Chinese enterprises.

So it is important for China to devise a sanction plan against Japan that would cause minimum loss to Chinese enterprises.

The US’ capability to impose economic sanctions on other countries is based on its economic strength, huge share in global trade, financial institutions and global intelligence network. China, too, has the capability to impose sanctions on other countries now that it is the second largest economy, has the largest foreign reserves, and is the largest exporter and second largest importer.

An analysis of Sino-Japanese economic interdependence shows that Japan’s economy will suffer severely if China were to impose sanctions on it. China’s loss would be relatively less. … So it’s clear that China can deal a heavy blow to the Japanese economy without hurting itself too much by resorting to sanctions.

Apart from its reliance on China, Japan has been suffering from other economic ills. First, Japan’s massive government debt is increasing substantially. … Third, Japan’s fiscal deterioration is likely to continue. There are enough indications that Japan’s economic growth in 2013 will slow down or slip into another recession. The irreversible trend of long-term economic downturn, combined with Japan’s aging population, will eat into the country’s household savings, and the declining purchasing power of the Japanese will increase Japan’s fiscal debt. …

But instead of blindly boycotting Japanese goods, China should work out a comprehensive plan which should include imposition of sanctions and taking precautionary measures against any Japanese retaliation. China should also have several rounds of policies ready to undermine the Japanese economy at the least cost of Chinese enterprises.

Furthermore, in case Chinese enterprises suffer because of the sanctions, the Chinese government should be prepared to compensate them. And once China imposes sanctions on Japan, the government should ensure that all enterprises in the country, domestic and foreign, obey the rules.”

China and Japan have only been trading since diplomatic ties were normalized in 1972; China became Japan’s largest trading partner in 2004. A war between two of the world’s largest economies would permanently shatter the oft-heard argument that trade eliminates the possibility of war. It’s an argument that should always have been dubious, however, as England’s many wars against the various principalities in India and the USA’s Middle East wars have all followed the inception of large-scale trade with the region.

Once more, we see that free trade delivers precisely the opposite of what it promises. And, as Generational Dynamics adroitly points out, trade actually expands the range of warfare as well as providing an economic weapon that can be wielded against the trading partner. Even when trade is not a cause of the war, it provides a means of fighting it.

Lest anyone think I am setting up a strawman here, consider this article by a free trade advocate at the Mises Institute: “The Classical Liberals of the nineteenth century were certain that the end of the old Mercantilist system–with its government control of trade and commerce, its bounties (subsidies) and prohibitions on exports and imports–would open wide vistas for improving the material conditions of man through the internationalization of the system of division of labor. They also believed that the elimination of barriers to trade and the free intercourse among men would help to significantly reduce if not end the causes of war among nations.”