“Free Trade Doesn´t Work: What Should Replace It and Why”

Sunday 31 October 2010

by: Thom Hartmann, t r u t h o u t | Book Review

book cover
“Free Trade Doesn´t Work: What Should Replace It and Why”
by Ian Fletcher

Some book reviews write themselves, because the book is so clear and articulate and easily read, and the information in it so straightforward that all the reviewer needs to do is lay it out.

Ian Fletcher writes: “Over the last 20 years, Americans have bought over $6 trillion more from the world than we have sold back to it. That's over $20,000 per American. Ironically, if the US were a developing country, our deficits would reach the 5% level that the international monetary fund takes as a benchmark of financial crisis.”

This is not the budget deficit that everybody is so hysterical about in the press, and which would go to zero over the next six years if the Obama administration simply let the Bush tax cuts expire in their entirety. Instead, Fletcher is talking about the trade deficit, the difference between what we buy from the world and what we sell to the world.

For most of the history of our country, we had trade surpluses. We made things here, and we sold them to people living in other countries. We even then used the surplus money from those transactions, accumulated in the currencies of those countries, to buy land from some of those countries.

As I laid out in detail in my new book “Rebooting The American Dream,” in 1791 Alexander Hamilton proposed an 11 step plan to turn America into a mighty manufacturing colossus. President George Washington took Treasury Secretary Hamilton´s advice, and by 1793 he and Congress had largely implemented the plan. That plan stood, steadily building America, until the first major cracks appeared during the Nixon administration, and an all-out war was waged against it starting with the Reagan administration. That war culminated in a Republican Congress and Democratic Pres. Bill Clinton passing and signing NAFTA and the GATT, which created the World Trade Organization.

Fletcher takes it from there and shows how the insanity of this so-called “free trade” system has, in a single generation, reversed two centuries spent building this nation.

“The US economy has ceased generating any net new jobs in internationally traded sectors in either manufacturing or services,” he notes. “The comforting myth persists that America is shifting from low-tech to high-tech employment, but we are not. We are losing jobs in both in shifting to non-tradable services—which are mostly low value–added, and thus ill–paid jobs. According to the Commerce Department, all our net new jobs are in categories such as security guards, waitresses, and the like. The vaunted ‘new economy’ has not contributed a single net new job to America in this century. Not one.“

Much like the little boy of folklore who famously said that the emperor wore no clothes, Fletcher points out that it´s a mathematical, political, and economic impossibility for “America [to] run a seemingly infinite overdraft against the rest of the world...”

He asks, rhetorically, “Where does the money come from, at the end of the day? Can we really get something for nothing forever? Is trade going to be the next shoe to drop?”

You don´t have to guess to know the answer.

Fletcher also points out that “free trade” isn´t, in most cases, making the rest of the world richer or better off.

“Working conditions,” he points out, “are the flip side of low pay in developing countries. Production methods long ago abandoned in the developed world — many of them dangerous and environmentally unsound — are still widely in use. In India, for example, foundry workers often don´t wear socks, shoes, protective headgear, earplugs, or even eye protection. Often wearing no more than boxer shorts, they squat on the floor next to the roaring furnaces. Charles Dickens has moved to Asia.”

So why are we so horrifically ignorant of this? As Fletcher documents:

“Japan clearly did not become the second richest nation in the world practicing free trade. China is conceded from one end of the political spectrum to the other to thumb its nose at free trade...”

“Even Europe seems to handle these matters better than we do: Germanic and Scandinavian Europe (Germany, Switzerland, Austria, Holland, Belgium, Luxembourg, Denmark, Sweden, Norway, and Finland) usually run healthy surpluses, and the euro zone as a whole has had its trade within pocket change of balance since the euro was created in 1999. Thirteen European countries now pay their factory workers better than we do, and Germany (not China!) Was the world's largest exporter as late as 2008. Do all these countries know something we don't?”

The answer is really quite simple. Transnational corporations and their shills —from think tanks to congressmen to presidents — have worked aggressively for two generations to get us into the situation we´re now in. In the process, they have made trillions of dollars, built personal and corporate empires, and through front groups like the US Chamber of Commerce now are even selecting our politicians for us by overwhelming the political process with money.

But there is a way out — several, in fact. They all, however, hinge on one of the two major political parties — presumably the Democrats — realizing that the vast majority of Americans have not been fooled by the bipartisan rhetoric in support of these massive corporate interests.

“Once protectionism is perceived as a legitimate choice,” Fletcher says, “it will become the actual choice of large numbers of people whose protectionist instincts have been held back by the belief that it is somehow an ignorant position to take. They will not need to master the details of why it is legitimate; they will only need to know that it is legitimate.”

“Once protectionism is conceded to be a valid political position, it will eventually win the public debate, if free trade's unpopularity continues to mount at the pace it has been mounting over the last 10 years.“

We are now near the tipping point, and the deep-seated and seemingly intractable unemployment crisis which is about to drop a 50-pound hammer on the heads of the Democrats in the next election is providing it. Senators like Sherrod Brown and Bernie Sanders have been ahead of this curve for years, which probably largely explains their popularity with their constituents.

If we are to end the so-called “free trade” insanity which is devastating our nation and ripping apart our middle-class, step one is to create a broad enough consensus that “free trade” becomes perceived as insanity. Sharing this book with everybody you know is step one.