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Health & Fitness

Critique of and Alternative to the "Free Trade" Disaster

If any political leaders of our country intend to revive American manufacturing, employment and prosperity, they will VIGOROUSLY OPPOSE the Trans-Pacific Partnership (TPP) with Asian countries and the Trans-Atlantic Trade and Investment Partnership with the European Union.  Instead, they must fight for a Balanced Trade Policy.

As their supposed constituents, we should demand our Senators and Representatives in Congress obtain and publish the drafts of these 2 so-called "free trade" deals.  It is completely unacceptable that hundreds of agents of multinational corporations, with zero loyalty to the USA, are writing these agreements while the American public cannot even read the drafts.

Anyone who wants to understand the role of trade in the decline of American prosperity should read the latest book by Paul Craig Roberts, called The Failure of Laissez Faire Capitalism and the Economic Dissolution of the West.  The next part of this article will quote extensively from that book.

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Dr. Roberts gets right to the point when he says "NAFTA and the so-called trade agreements are NOT trade agreements. They are enabling acts that empower globalized corporations to dump their American workers, avoid Social Security taxes, health care and pension costs, and move their factories offshore to locations where labor is cheap and environmental restrictions virtually nonexistent."  I add that these "free trade" agreements leave the US consumer market wide open to these now-foreign-made products.

Dr. Roberts cites a September 20, 2011, Manufacturing and Technology News report that "during the previous ten years, the US lost 54,621 factories, and manufacturing employment fell by 5 million employees."  That trend still continues.

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In the words of Dr. Roberts, "Jobs off-shoring has moved to China and India and other low wage countries not merely American jobs, but also the consumer income, tax base, GDP, supply chains, and life careers associated with the jobs….Half of US imports from China consist of the off-shored production of "US" corporations….the result is a US unemployment rate of between one-fifth and one-fourth of the work force, a high rate that is hidden by the deceptions used in the official statistics.  (See John Williams, shadowstats.com)"

Dr. Roberts shows that the "free trade" treaties have NOT created the jobs that were promised by the Democrats and Republicans who made these policies: "The US economy has only been able to create jobs in non-tradable domestic services such as waitresses and bartenders, ambulatory health care, and retail trade. Before the real estate bubble burst, house construction was a source of jobs.  Even that growth was due to asset bubbles and rising consumer debt, which for a short time masked to catastrophic dismantling of America's productive economy."

Dr. Roberts explains how these policies have produced a jobs deficit of over 17 million jobs: "According to experts, the US economy must create between 130,000 and 150,000 new jobs each month just to stay even with population growth. To reduce the high rate of unemployment requires higher job growth.  If we use the lower figure of 130,000, 1,560,000 new jobs are needed per year to keep unemployment from rising.  Over a ten year period 15,600,000 jobs would be required. The US economy has not come close to generating the number of jobs required by population growth.  The Bureau of Labor Statistics reports that over the ten-year period January 2001 to January 2011, the US economy lost 2,141,000 jobs. That leaves a deficit of 17,741,000 jobs."

Dr. Roberts explains how, under so-called "free trade" policies, "the US has been unable for years to produce any jobs in the tradable category, whether manufacturing or professional services…[In the 21st century,the U.S. economy has been able to create net new jobs only in non-tradable domestic services such as waitresses and bartenders, ambulatory health care, and retail trade."  No wonder he concludes that "the vast majority of jobs in the BLS ten-year jobs projections do not require a college education. The problem in 21st century America is not a lack of educated people, but a lack of jobs for educated people."

Yet the Obama administration is racing into 2 more "free trade" agreements, which will be the biggest yet and accelerate this destruction of American manufacturing and employment.  The TPP is intended to involve many Asian countries: Singapore, Chile, New Zealand, Brunei, Australia, Peru, Malaysia, Vietnam and Japan.  And much of it is about globalizing government by giving authority over U.S. food safety, financial industry regulation and other laws to unelected international tribunals who become more powerful than our Congress, legislatures and Supreme Court.  Similarly disastrous results are likely to come out of the US-EU "free trade" agreement also being negotiated.

Dr. Roberts is correct to say that "the loss of manufacturing means ultimately the loss of engineering and science.  The newest plants embody the latest technology.  If these plants are abroad, that is where the cutting edge resides.  When a country gives up producing tradable goods, it gives up the occupations associated with manufacturing.  Engineering and R& D depart with the manufacturing.  It is impossible to innovate independently of the manufacturing and R& D base. Innovation is based on state-of-the-art knowledge of what is being done, and if the doing is done elsewhere, the innovator will find himself at a disadvantage."

Our country desperately needs a Balanced Trade policy that is effective.  Our massive chronic trade deficits are the symptom of offshoring jobs and factories, dismantling America's industrial ecosystem.  This is no mere recession, it is a historic collapse of our ability to produce prosperity for our people.  There will be no spontaneous recovery.  It will get worse until real national leadership reverses our course in a fundamental way.

If we were to replace "free trade" policies with a BALANCED TRADE policy, we could take our $600 Billion annual trade deficits and, without any additional consumer or govt spending, turn it into a $600 Billion stimulus to American industries.  This would directly create well over 4 million jobs, and then create many more millions of multiplier-effect jobs.  It would directly add 4% to our GDP and even more % points of GDP through the multiplier effect.

It can be done.  Congress could revive the Balanced Trade Restoration Act of 2006.  That bill proposed balancing our trade through a system of Import Certificates issued in the same amount as our exports.  It would be perfectly legal under the terms of our membership in the WTO.  The Balanced Trade Restoration Act of 2006 states explicitly that "Article XII of the General Agreement on Tariff and Trade (GATT 1994), annexed to the Agreement Establishing the World Trade Organization entered into on April 15, 1994, permits any member country to restrict the quantity or value of imports in order to safeguard the external financial position and the balance of payments of the member country."

Once we are growing again, in terms of employment and GDP, we will then be able to afford to modernize our infrastructure, strengthen our scientific and technological capabilities, and fund other essential growth activities like education and training.  A growing economy would fix the fiscal crises of the states and municipalities, and put our people back to work.  But it has to start with a rebound of the private sector, with manufacturing at its heart.  And it could, with a BALANCED TRADE POLICY that really works.

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