The Washington Outsider

NAFTA, Free Trade Tested by Trump, May Day Protesters

5/1/2017

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NAFTA sits in judgment under the Trump Administration, which scuttled the TPP agreement negotiated by the Obama Administration.  In advance of a May Day filled with protests pushing for stronger Labor Rights and Immigration Rights around the world, where free trade continues to spread with initiatives like TPP and CEPA, President Donald Trump signed an Executive Order that seeks to determine whether free trade agreements have benefited the US.  The simple answer will be “yes,” because the national, aggravate benefits of free trade policies are easier to calculate than the localized and long-term costs of failing to embrace alternative policies.
 
The more relevant question is, therefore, who has benefited from free trade agreements in what ways and who has been harmed.  In reshaping US trade policy, the next question is how can the benefits of free trade policies be achieved without the costs of tariff-free trade.  Although the Trump Administration faces steep opposition from immigration advocates due to his aggressive policies and rhetoric against immigrants, particularly illegal immigrants and migrants from Muslim countries, his anti-free trade views align with both the views of Labor Rights advocates and Immigration advocates who believe tariff-free trade disempowers the world’s population.  
Trade offers many benefit to wealthy and poor nations alike, but free trade policies, especially tariff-free trade agreements, can deleverage the Peoples and governments of the world.  NAFTA, for example, helped create the economic conditions that accelerated the need for illegal immigration from Mexico to the US while freeing US companies to exploit cheap labor in Mexico, thus undermining wages and business, opportunities in the US.  Tariff-free trade may offer some added benefits to consumers when compared to trade expanded via the removal of technical barriers, but the biggest beneficiaries are transinternational corporations and their investors, who are either affluent or part of the small Global Middle Class.
 
It is the fear of this writer that policymakers and economic researchers cannot foresee an economy capable of supporting a decent Middle Class lifestyle for the bulk of the human population.  In other words, they are settling for an economy that will enrich a handful of individuals in each country, thus engineering a sustainable economy for the few that will be composed of the superrich and a global Middle Class.  While there are those who have little interest in the needs of the masses, there are many affluent who want to create a broader economy, but they lack the insight to see a means to ensure economic prosperity beyond free trade-fueled growth.  
 
It is, therefore, pivotal for the middle and poor classes to take control of their economic destiny.  This starts with a clearer understanding of how the economy needs to work.  Tariff-free trade-accelerated globalization has undercut domestic production across the globe in favor of cheaper outsourcing.  National economies must be built on industries that serve the local needs of a people with locally plentiful resources that are as local as possible with excess production being used to participate in the global economy.  Globalization since the Clinton-era has, however, meant economies should be built to service global demand with each country offering a selection of specialized goods. 
 
Because this model creates a fragile global market built on global pricing of overly relied upon goods, it creates a lowest-bidder competition that artificially suppresses prices to unsustainable levels.  If a country has an established, efficient industry, which does not cater to vital national interests, that can deliver an equivalent and/or superior product and there is a weak or nonexistent domestic industry, tariff-free trade can be beneficial as it can be used to remove trade barriers to established industries in exchange for the same benefit.  Absent this scenario, tariff-free trade is an industry killer, because it disadvantages the already mature, often more expensive.
 
With that in mind, economies are the engines of communities and they run most efficiently when their numerous parts are free of destructive interference.  Only when the capitalist mechanisms of an economy are allowed to function properly and play their proper role can an economy provide for the various interests of the People it serves.  When consumers are able to buy products and services, businesses are able to stay open and pay their employees.  This is only possible, because wealth is able to circulate throughout the economy at a continuous and sufficient rate to maintain consumer spending.  
 
Economic growth is one means of ensuring wealth circulates throughout the economy, yet economic growth does not necessarily guarantee enough wealth will circulate to all corners of the economy.  Because the US economy is two-thirds consumer spending, payroll is the principle way in which wealth is distributed and circulated.  Consequently, widespread employment, high worker productivity, and healthy wages create a strong, healthy national economy.  As such, there is a need to empower workers and free the labor markets of destructive interference.  Unfortunately, proponents of “free market” policies often speak of free enterprise then use government to undermine the collective bargaining rights of workers.  
 
A lack of collective bargaining helps drive overall payroll costs down, which means lower pay, lower standards of living, smaller tax bases, and less consumer spending over time.  In turn, less wealth is circulated.  When employees can work together in some fashion to help ensure their interests as employees are met, they improve their outlook and the outlook of the economy.  For executives and other individuals with highly coveted backgrounds, this issue is of little concern as they have enough leverage to negotiate as individuals.  When it comes to those individuals with little leverage in their industry and workplace, collective bargaining puts them on a more equal footing with their employers, who can otherwise undermine worker demands by simply replacing them.     
 
For businesses, the major downside to the waning influence of unions is a lack of competitiveness between employers over the best employees, which can result in lower workplace productivity and increased employee discontent.  With or without unions, issues like this can only be addressed with better employer-employee relations.  Relationships between employers and unions have often been quite hostile due, in part, to the fact this free enterprise solution to unhealthy, abusive business practices was born in an era of violent corporate reprisals.  As such, the solution is not to undermine collective bargaining, but rather, to improve communication between managers and union workers for the betterment of business.
 
Unfortunately, today’s unions are businesses and their leaders are too often more concerned about their own paychecks and power than the interests of their members.  Unions have also become far too involved in politics, i.e. selecting political leaders instead of ensuring worker rights.  Unions have also failed to globalize alongside the globalizing economy.  As the economies of the world merge into one giant global economy, effective representation is needed around the world, yet the unions of developed countries have turned inward.  Too many have been willing to sacrifice the pay, benefits, and work conditions of nonunion members to further enrich their shrinking membership base, i.e. unions are helping to create the elitist Middle Class and deleverage nonunion workers inside and outside of their own nations. 
 
Increased trade can open new opportunities for business to sell their goods and services.  In turn, it can offers consumers greater access to those wares, including less expensive versions of domestically produced goods, which may or may not share the same quality and durability, i.e. the benefit of cheap is negated.   For investors, it provides cheaper access to global investment opportunities.  Above all, it provides businesses the opportunity to operate in whatever environment is most advantageous to their needs.  On the flip side, the benefits of free trade are derived from circumventing costs associated with taxes, regulation, and payroll. When these costs are suppressed too much, the economies of the world can no longer function. 
 
In other words, free trade helps neutralize the economic sovereignty (power) of nations and rewards economies offering the lowest cost environment instead of a sustainable, properly regulated business environment where the interests of workers/consumer are met.  Certainly, there will be those who argue businesses and countries have a greater choice under free trade, but the economy is ruled by market forces driven by costs.  Free trade spreads, because the immediate economic benefits are often more obvious than the broader, long-term costs.  In the long run, this means labor of richer countries is becoming too expensive to compete in the global economy and the labor of poorer countries must remain cheap to be competitive, thus free trade impoverishes and disempowers the Peoples of the world.
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      • Should Smoking Be Allowed in Public Places?
      • Is Teen Driving a Right or a Privilege?
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      • Is eighteen too young to vote?
      • First Amendment Rights: The Priviledge of The Press
      • Do Mandatory Seat Belt Laws Violate Individual Rights?
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      • Should police have to submit to routine drug and alcohol testing?
      • Public schools should not impose mandatory drug testing on students
      • Are High Taxes on Cigarettes Proper?
      • Should pharmacists be required to violate their religious beliefs and dispense the "Morning After Pill?"
      • Should school counselors uphold patient privacy or report students who become unstable?
  • For the record
    • Ongoing Issues >
      • Red Dawn in Ukraine: Understanding the Actions of Russia >
        • On Russia’s Coercion of Ukraine
        • The Russian Annexation of Crimea in the Eyes of the World
        • Putin Has Overplayed His Hand With Crimea
        • Ukraine in Terms of Resovereignization
        • Avoiding a Conflict Between America and Russia Over Ukraine
        • What Drives the World’s Interest in Russia’s Actions in Ukraine
      • China’s Aggressive Pursuit of Interests Demands a Global Response
      • Iran Makes a Deal: A Start to a Long-term Diplomatic Effort to Denuclearize Iran >
        • On the Future of a Nuclear Negotiations with Iran
      • America's Sphere of Influence: Retaking South-East Asia >
        • Power in Asia: Looking at the Power Shift in Japan
        • The China Paradox: Why America is Worried About China
      • Assessing US Support of Israel >
        • Tread Softly Israel for a Heavy Step May Be Your Undoing
      • Understanding the Dysfunctional Nature of the US-Pakistani Relationship
      • Recognizing the True Threat Behind the Current Unrest in the Middle East >
        • Reacting to the Escalating Crackdown in Syria
      • Assessing the Threat of North Korea >
        • Answering North Korea's Call for Food Aid: Breaking the Vicious Cycle Forced Upon Us by a Warring Nation
        • Dealing with the Restarting of the Korean War
        • North Korea Attacks South Korea
      • Dealing with the Ill-effects of Climate Change
      • Racial Inequality and Oppression Do Truly Exist in Today's Society
      • Should energy independence be a high priority in the US?
      • An overview of world wide Human Rights violations
      • Nuclear Threat from Pakistan
      • Return of The Cold War?
    • World >
      • Coverage of FIFA World Cup is a Chance to Focus on Poverty >
        • The FIFA World Cup Offers Benefits for More Than Brazilian Soccer Fans
        • FIFA Can Bring Brazilians Together as a Nation
      • Being Prepared for Any Potential Dangers at the FIFA World Cup Games
      • Treading Softly on the Politicizing of the 2014 Sochi Olympics Over Gay Rights
      • Why NATO Operations in Libya Lack a Well-defined Mission
      • China Hijacks the Web
      • Lessons from the Great Japanese Earthquake of 2011
      • A Modernizing Cuba Offers an Opportunity for Capitalists
      • The Seeds of Democracy Take Root in the Middle East
      • The Rebirth of Democracy in Tunisia
      • What May Come from the Hurt Revolution in Libya
      • Responding to the Violence of Qaddafi and Other Besieged Leaders
      • Embracing the Rise of a Democratic Egypt
      • Protests in Afghanistan Turn Deadly for Coalition Forces and UN Personnel
      • Haiti: Another Failing Humanitarian Investment
      • What Karzai Can Learn from Calderon
      • START II: A Necessary, Easy Success that Nearly Failed
      • Why Does the U.S. Government Support Independence for the Breakaway Serb Territory of Kosovo but Oppose Independence for the Breakaway Georgian Territories of Abkhazia and South Ossetia?
      • Iraq's Electric Issues: When Human Wants Trump Economic Sense
      • The International Community Reacts to Wikileaks: We May Be Moving Toward a Third World War in Cyberspace
      • On Climate Gate
      • Assessing Obama's Afghanistan War strategy
      • 2009 Iranian Presidential Election: The Fallout
      • Resolving Sri Lankan Conflict through Free Media
      • What are the Global Consequences of Russia's Invasion of Georgia
      • The War in Iraq: an assessment of President Bush's surge strategy
      • Drug War: Actions of Venezuela, Columbia, Ecuador in terms of Resovereignization
      • Is the Iraq Refugee Crisis America's Responsibility?
      • US support for a united Kosovo, Abkhazia, and South Ossetia: why?
      • Should the US withdraw from Iraq?
      • Setting a Timetable for Troop Withdrawal from Iraq is a Terrible Mistake
      • War on Terrorism is needed
    • Law and Order >
      • Rape in the US Military
      • Ethics of Force-feeding Guantanamo Bay Detainees
      • Reacting to the Aftermath of the Tucson Massacre
    • Economy >
      • Affordability Drives Fear of Obamacare and the Individual Mandate
      • Is the Economy Built for a Job's Recovery?
      • Gutting Healthcare Reform of the Individual Mandate
      • Arizona Budget Cuts Lead to Lethal Healthcare Rationing:
      • Shameful Collection Practices of American Banks
      • The Fed Reveals it Actually Undertook an International Bailout
      • Thoughts on French Budgetary Reforms
      • Seniors Start Businesses
      • The Case for Slimming Down the US Military to Make it Better
      • Looking at the Obama Administration's New Approach to Economic Policy
      • Should the Government Regulate the Credit Card Industry?
      • The Big Three's Big Chance
      • The Unhealthy Tone of the Healthcare Reform Debate
      • Should the federal government offer a bailout for home owners?
      • Environmentalists: Do They Do More Good Than More Harm?
      • Responding to Scott Walker's Contribution to the War on Unions
    • US Government >
      • America Needs to Focus on the Impending Fiscal Crisis
      • Reacting to the Bush Era-tax Cut Extension Deal
      • Quitting the Obama Revolution: The Fickle Nature of American Politics
      • John Boehner's Circus
      • Is the Fed Putting Itself in Jeopardy?
      • Wikileaks Goes After the US State Department
      • Discussing the Political Environment Surrounding the 2011 Budget Debate
      • What the Democrats Can Do to Ensure a GOP Year in 2012
      • What the 2010 Midterm Actually Said
      • Congresswoman Kathy Dahlkemper
      • Democrats Minus Nancy Pelosi Equals Opportunity
      • Terrorists Go Postal: The Terrorism Threat Reexamined
      • Victory in the 2008 Election: Reaction to Barack Obama'a Win >
        • Expectations for Barack Obama
      • President Obama's first one hundred days
      • John McCain's Negative Campaign
      • Reasons People did not Elect John Mccain
      • History judges the George W. Bush Administration
      • Should the next US President focus on domestic issues?
      • President Bush, should he resign or be impeached
      • Should the Ban on Government Sponsored Assassinations be Repealed
    • Off Topic >
      • A Face of America’s Greatest Generation
      • A Story About a Man Who Made the World a Better Place
      • Making the World a Better Place
      • The Bipolar Ethical Nature of Google
      • Learning Computer Plays Jeopardy
      • Verifying Medicine is the Real Thing
      • Taking a Practical Step Forward in Optical Computing Using Slow Light
      • Scientists Take a Closer Look at How Lithium Batteries Work
      • Remarking on the First Blizzard of the 2010-2011 Winter Season
      • Driving in the Snow: Acceleration is the Key
      • How People in Northwest PA Are Coping with the Increasing Cost of Oil
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