William Greider: The End of Free-Trade Globalization

[marmar]

from The Nation:




The world economy is on the brink again, facing a crisis of epic dimensions for reasons largely obscured by the inflamed politics of 2010. Against their wishes, the United States and China have been drawn into an increasingly nasty and dangerous fight over currencies and trade. American politicians, especially desperate Democrats, have framed the conflict in familiar moral terms—a melodrama of America wronged—and demand retaliation. Other nations, sensing the risk of a larger breakdown, have begun to take protective measures. Every man for himself. The center is not holding.

The political fray obscures the fact that the basic economic problem is larger than any single nation and stalks the global trading system itself. There is a huge hole in the world—a massive loss of demand. Think of the trade wars as the largest producers fighting over an abrupt shortage of buyers. Financial collapse and recession, with falling income, defaulting debt and rising unemployment, made the hole. In other times, Washington would have stepped in to impose policy solutions and create market demand as the global system's buyer of last resort. This time, Goliath is gravely weakened, both in economic strength and political authority.

The political push-pull zeroes in on China. Beijing is accused of playing dirty, stealing jobs, production and wealth. Washington imposes a penalty tariff on Chinese tires and tubular steel. Beijing pushes back with a tariff on US poultry. President Obama once again urges China to stop manipulating its currency to underprice Chinese exports and stymie US goods going the other way. China once again blows off his request. United Steelworkers ups the ante by filing a 5,800-page complaint detailing how China is scheming to corner the global market in green technologies. Obama promptly orders an investigation. "What do the Americans want?" asks the vice chair of Beijing's National Development and Reform Commission. "Do they want fair trade? Or an earnest dialogue?... I don't think they want any of this. I think more likely, the Americans just want votes." He has a point. But so do American politicians, who think China's hardball industrial strategy has had something to do with America's anemic recovery. The House, divided on everything else, voted 348-79 in September to authorize tariffs on nearly all Chinese imports if Beijing does not relent in its currency game. ..........(more)

The complete piece is at: http://www.thenation.com/article/155848/end-free-trade-globalization

[GrpCaptMandrake]

1. The essential fallacy of global "free" trade . . .

lies in the fact that it remains tied to arbitrary and capricious valuations of wholly fiat currencies.

The only way to have truly "Free" global trade is to peg monetary values to labor values and, moreover, to a LIVING wage.

One wonders why the powers-that-be didn't recognize this. Me, I suspect willful blindness. The dead, stinking, rotten hand of Milton Friedman yet moves the pieces on a global chessboard where the pawns are still made of flesh, blood and bone, and Friedman cares no more for them now he's dead and (hopefully) burning in hell than he did when he was alive, perched in some bat-loft at the University of Chicago, contemplating ways to make working peoples' lives a little more miserable every day.

[arendt]

2. "The dead, stinking, rotten hand of Milton Friedman..."

This single sentence is almost poetic in its compact, yet multi-faceted denunciation of that ghoul. I am saving it.

Thank you.

[GrpCaptMandrake]

4. Thanks!

That ghoul (kudos to you) inspires urges in me that are best left to script-writers working on horror films.

[quaker bill]

3. This is the other shoe

and it is about to drop. The punchline is that all our lovely Bush tax cut dollars left in the hands of the wealthy created jobs and economic growth, unfortunately largely in India and China. This was in part due to currency manipulation and partly due to very low wage structures.

China resists raising the value of its currency because if they do, the real value of wages in China will rise, and likely rise to the point where factory workers are displaced by technology, because automation will then be cheaper than labor. Social stability requires them to provide employment to most of a billion people. Without massive demand for labor, China becomes an economic basket case. They will not go there.

However, here there is no solution, training, tax incentives, reduced wage structures, reduced benefits that will ever make the US worker competitive with dollar-a-day labor in China and elsewhere. It cannot happen. The simple stats are this, half of the US population has less than the median IQ. This is not subject to debate, it is a mathematical identity. No set of policies and education reforms will address this and turn this half into "knowledge workers". It is simply not possible and never was.

This is not to say that these folks are not decent people who deserve decent jobs with good work conditions and reasonable pay. In fact this is a social necessity and truly not optional. The problem is that no set of government policies will ever take us there, as long as globalized free trade exists.

The other half of the coin is equally ugly. The very best and brightest 10 percent of the people in China and India, outnumber the entire US population. Given time, they will be the "knowledge workers" of the future. There are just too many of them and they are prepared to work too cheaply for us to compete over the long haul.

Trade protectionism is the only solution and getting there will not be pretty.

[eppur_se_muova]

5. My brain keeps playing tricks on me ... I first saw the words "Free Fall Capitalism" ...

and had to reread it.

Perhaps "Free-Fall" is a pretty apt description, though.

[The2ndWheel]

6. Is it a global world, or a regional world?

We can't have both.

Should the federal government have more power, or should state governments have more power? We can't have both.

Should states have more say, or should cities?

Cities or neighborhoods?

Neighborhoods or streets?

Streets or households?

Families or individuals?

There is a scale. It goes to 100. You can divide that up any way you like. But you can't have the best of both worlds.

[quaker bill]

7. A globalized world is a borderless one

when jobs flow freely and workers can't an imbalance is always created.

[pampango]

8. Hence the EU solution allowing the free flow of goods and workers between countries and the US'

solution allowing the same between states. Not many want tariffs on trade between the states of the US (even if the constitution allowed it) nor on the movement of workers from one state to another. Nor do many in Europe (except for a few far-right parties) want tariffs and border controls between the countries of the EU.

The US and the EU have proven that open borders for trade and movement between states/countries on a continental scale works best.

[The2ndWheel]

9. Agreed

It's a global economy, with regional governments. Something has to give.

[quaker bill]

10. Regional governments are here to stay

for the foreseeable future. Thus the economy will necessarily become less globalized. The only question is the level of economic damage and social unrest it will take to undo this Reagan/Milton Friedman authored mess. Given the results of the election, I would conclude that the economic damage has not risen to sufficient levels yet. Keep your raincoat handy.