OT: Why free trade and CAFTA are good ideas
Wilhelm Kuhlmann
American Free Trade Agreement, commonly referred to as CAFTA. I predict
that most Democrats and liberals will oppose CAFTA, but they shouldn't.
In this case, Bush and the Republicans are right, and the Democrats and
liberals who oppose CAFTA are wrong. Free trade is always a good idea and
always benefits all countries involved. This hasn't been a matter of
argument in economics for 200 years. Every student of Economics 101 knows
this.
The United States has benefitted from every free trade agreement we have
entered into, and we will benefit from this one. All this nonsense about
jobs going to Mexico because of NAFTA? Pure bullshit. The statistics
clearly show that the economy gained more jobs from increased trade with
Mexico than were lost because of jobs going to Mexico.
Look, in a dynamic economy like ours, millions of jobs are created and
millions of jobs are lost every year. This is a necessary part of
reallocating labor resources to their most efficient use. It is ridiculous
to just focus on the jobs that are lost.
The problem isn't with free trade, the problem is with some fundamental
imbalances in the economy, which have been exacerbated by the wrong-headed
economic policies of the Bush Administration. Look, the economy has been
growing at an annual rate of over 3% for some time now. Corporate profits
have been increasing nicely. The problem is that the prosperity is not
being shared. Income inequality is increasing. The Ginni Coefficient,
which measures the degree of income inequality, has been increasing to the
point that the USA is now more like a third world country than a developed
country. Even though productivity has been increasing at a healthy rate,
real wages haven't even been keeping up with inflation. The rich are
getting richer and the poor are getting poorer, while the middle class is
taking it up the ass.
At the same time, we are running a huge trade deficit, which is causing
about $700 billion a year to leave the country. This money is being
recycled into financing Bush's huge budget deficit and into investments in
the stock market and real estate. If this trend continues, foreigners will
eventually own and control most of this country and we will be their tenants
and wage slaves, while the government will be so deeply in hock to them that
foreigners will be dictating American foreign and domestic policy.
I don't claim to have all the solutions to these problems, but it is clear
that everything Bush is doing is making things worse. His tax policy has
shifted the tax burden from the rich to the poor and middle class by
reducing the capital gains tax, the dividend tax, and the estate tax. Shift
the tax burden back to the rich where it belongs. This will help reduce
income inequality.
Raise taxes enough to run a budget surplus and pay off the national debt.
This will reduce the amount of money consumers have to spend, which will
help reduce the current account deficit. The major cause of the large trade
deficit is that the dollar is overvalued relative to other currencies. That
makes imported goods seem cheap, while our exported goods seem expensive.
The markets will eventually correct this, as they have been doing, by
steadily devaluing the dollar. This devaluation has been going on for some
time, yet our trade deficit still keeps expanding, because the dollar is
still overvalued. The root cause of the currency being overvalued is the
large budget deficit. I don't understand completely why this is, but I
think it has to do with the government spending money it doesn't have, which
increases the number of dollars in circulation, which makes each of those
dollars less valuable. Or maybe it is because consumers have more dollars
than they would have if the budget were balanced, so, once again, there
would be more dollars in circulation. Like I said, I am not sure why a
budget deficit causes a trade deficit, but I have read reputable economists
who have asserted this, without explaining why. If someone can offer a
precise explanation of this phenomenon, I would be grateful.
The fact that the GDP and productivity have been increasing nicely, while
real wages have been falling, is the result of labor not having any
bargaining power, so the large corporations can just pump up their income
statements and balance sheets, without sharing the wealth with their
employees. At their peak several decades ago, labor unions controlled about
36% of the private sector labor force. Now that percentage is down to 9%.
Unions are the only realistic way that workers can effectively bargain with
their employers to get their fair share of the wealth they are creating.
The government should pursue a variety of policies to strengthen labor
unions. Give unionized corporations tax breaks. Give government contracts
only to unionized corporations. Hell, I would even be in favor of passing a
law which made it illegal to employ anyone who is not represented by a
union.
Increasing the minimum wage is another way to decrease income inequality and
increase real wages. Whenever a minimum wage increase is voted on, as it
was recently in Nevada and Florida, the voters overwhelmingly approve. But
nothing happens. Why? Don't we live in a democracy? Why don't our elected
representatives in Washington do what the people clearly want them to do?
Because both the Republicans and the Democrats are controlled by greedy
corporations who don't want to give up anything. In all fairness, the
Democrats do want to increase the minimum wage, but many of them have proven
themselves to be corporate whores by supporting bankruptcy reform and making
it more difficult for consumers to sue corporations.
Like I said, I don't have all the answers, but my suggestions would clearly
improve the situation. Reform the tax code to shift the tax burden from the
poor to the rich. Increase taxes enough to run a budget surplus and pay off
the national debt. Take various measures to strengthen unions and increase
union membership. Increase the minimum wage.
But please, don't blame free trade for our problems. Don't complain about
outsourcing and the relocation of manufacturing jobs to other countries.
The reality is that any job that can be done at a desk with a telephone and
a computer can now be done more cheaply in India and China. Our free trade
with the rest of the world is enriching this country, and it will continue
to do so. The problem is that the policies that are now in place are
creating and maintaining a very small class of the rich and the super rich,
while consigning most of us to the fate of being wage slaves, peons, and
tenants of foreign landlords. All we have to do is figure out a set of
policies which will spread the wealth around so the middle class will
prosper and grow, while the poor are lifted out of poverty. The rich will
still have enough money left to buy their mansions and luxury cars.
Wilhelm Kuhlmann (ramashiva)
SweetBitches
> In this case, Bush and the Republicans are right, and the Democrats and
> liberals who oppose CAFTA are wrong.
They must be having a snowball fight in hell right now.
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Paul G.
news:GVZge.24
> Free trade is always a good idea and
> always benefits all countries involved. This hasn't been a matter of
> argument in economics for 200 years. Every student of Economics 101 knows
> this.
>
Of course, NAFTA was not about "free trade" at all. Actually, anyone who
has taken Common Sense 101 would know that it would only take one sheet of
paper to move forward with legitimate free trade. President here signs it,
and the president there signs it. But NAFTA was some 1100 pages long. 1100
pages of REGULATED trade.
So, once again, Paul G. easily and handily BITCH SLAPS Wilhelm Kuhlman, the
intellectual fraud.
WHACK!
Bill Bradley
> Free trade is always a good idea and
> always benefits all countries involved. This hasn't been a matter of
> argument in economics for 200 years. Every student of Economics 101 knows
> this.
Here's a pretty good overview of the topic if anyone's interested:
http://internationalecon.com/v1.0/ch120/120c010.html
Paul G.
news:mY3he.1335981$8l.119332@pd7tw1no...
This is NOT about free trade. It is about totally REGULATED trade. And the
biggest proponent of all of these pacts is David Rockefeller himself. Well,
I guess I should say Rockefeller, and Wilhelm Kuhlmann too.
gic...@yahoo.com
understand a specific job loss in this country and hard to understand
how this loss works its way eventually back to a plus for this country
and the vast majority of its citizens.. All they see is the person
initially out of work.
What blows my mind are three things about your other comments:
1. When Reagan cut taxes, it clearly did not work. It took years of
digging out, senior Bush's tax increase, and Clinton's tax increase to
balance the current budget. Yet no one blamed Reagan. A poll
conducted a year or two after the cuts blamed Congress for the deficit,
not Reagan.
2. When Clinton came in, he raised taxes slightly on the rich and
eventually balanced the budget, a historic achievement that had not
been done for over 100 years and set up the opportunity to finally
start paying off the national debt which Reagan had run up so much.
Instead of everyone embracing this, we had everyone talking about
spending the surplus apparently not even realizing that it applied only
to the current year and not the cumulative debt.
3. When Bush proposed a tax cut, I fully expected that sensible people
armed with simple graphs would show how Reagan's cut did not work and
how Bush's was the same thing. Yet, not one person or group made this
obvious comparison. Truely, we did not learn from history and are now
repeating it. This is so frustrating!!