Free Trade Doesn’t WorkDonald Thoresen
Free Trade Doesn’t Work: What Should Replace It and Why
Washington, D.C.: U.S. Business and Industry Council, 2010
Among those who consider themselves part of the New Right, there has been an increasing level of awareness of the problems inherent in the theories and practices of neoliberal capitalism, in particular those of globalism and free trade. This is not a surprising development. The foundational principle of the New Right and all of its various factions is that there is a racial basis to culture. Once one develops the intellectual courage and capacity to start thinking practically about this fundamental truth, the contradictions between advocating for whites as a legitimate racial political collective and advocating for an internationalist economic system become jarringly obvious. The core problem is actually very simple: under free trade, the capitalist class is able to flee to other countries in order to avoid laws and regulations designed to increase the general health and happiness of national citizens, while continuing to extract wealth from those very people, and, crucially, without making good on the promise of increased wealth through “efficient” allocation of resources in a global market–often even decreasing their net worth. With this, of course, comes many other related problems, not least of which is radical demographic change.
Western governments have been moving in this direction for decades, as a result of political corruption, ideology, and bad economics. By colluding with internationalist free traders, these states have become exploiters rather than protectors. And instead of existing as the ultimate expressions of particular racial cultures, these states have become plastic shells of banalities and spectral remnants of their historical pasts. Citizens have been pauperized and replaced by cheap foreign labor (either through offshoring or immigration) and their once homogeneous and orderly communities have become increasingly multicultural and correspondingly unfamiliar, unpleasant, and unsafe.
For capitalist free traders (and, not entirely coincidentally, Marxists) the economy is the bedrock of all human activity. But for those who believe in race as the foundational element of culture, the economy must be, at its very roots, little more than a social construct that can either benefit or harm people depending on how it is organized and, most importantly, who organizes it. As such, New Rightists are forced to realize that certain presumed economic givens, which are tied intimately to our contemporary Judaized culture, must be evaluated first and foremost with one fundamental criterion: does a particular policy or theory aid the long term survival and prosperity of whites? If so, how? If not, why not?
In any discussion of economics, there will be many complex issues involved and various ways to approach them. It can often be confusing to try to make sense of any of them, especially as most arguments, from Left to Right, tap in easily to deeply embedded, but ambiguous and easily manipulable, cultural values such as “freedom” and “fairness.” There is, however, a particularly good book that can help anyone navigate the particulars of free trade arguments and understand why they are both fallacious and outright harmful: Ian Fletcher’s Free Trade Doesn’t Work: What Should Replace It and Why.
Mr. Fletcher is a San Francisco-based economist who studied at Columbia University and the University of Chicago. He was the senior economist for the Coalition For a Prosperous America from 2010-2012 and a research fellow at the U.S. Business and Industry Council, in addition to having been in private practice and having worked as a columnist for the Huffington Post. In this book, Mr. Fletcher refutes many of the basic assumptions held by free traders in very straight-forward language so that “ordinary citizens. . . [can] know enough about the economics that supposedly justifies free trade to hold their ground in confrontations with the experts and not get ruled out of public debate on grounds of ignorance” (p. 4). The book covers so much ground that it would be impossible to do justice to each of his various points, but this review will highlight some of the most important ones.
In the introduction, entitled “Why We Can’t Trust the Economists,” Mr. Fletcher makes clear his reservations about professional economists. He argues that those economists who support free trade generally do so for a few different reasons. First, that, despite knowing the problems of free trade, they simply believe that the alternative would be worse. He writes: “The great fear is that if protectionism is conceded any legitimacy, special interests will seize control and economic logic will fall by the wayside” (p. 6). But this, he argues, is based in a fear that is “not actually a part of economic science. . . It is just a somewhat cynical intuition about the American political system” (p. 6). Second, he argues that there is a significant amount of corruption within the field that contributes to the free trade mania. Economists, he writes, are sometimes “paid shills of special interests. . . . Economics consulting firms like Global Insight, MiCRA, and Strategic Policy Research basically retail the service of providing whatever conclusions are required, albeit with sufficient sophistication that nobody has to tell any literal lies” (p. 7). But another less explicit form of corruption results from the fact that in order to “win clients, economists in private practice. . . must cultivate a reputation for saying the kinds of things that clients want to hear” (p. 7). The effect of this corruption is that it “debases the quality of thinking over time, and a nation that insists on being told what it wants to hear will eventually lose the ability to figure out what the truth actually is” (p. 8).
Mr. Fletcher, aware of the propaganda against any kind of protectionism (it is socialist, it is fascist, it is xenophobic, et cetera), relates how his ideas square with the concept of nationalism. He states that both sides of the political spectrum tend to reject the primacy of the nation in economic relationships. But, he writes: “Globally, for good or ill, the nation-state is still where the buck of political legitimacy stops. (Higher or lower political entities, from Kansas to the United Nations, enjoy political legitimacy only because nation-states have given it to them)” (p. 14). He then goes on to say that a “blanket rejection of even the mildest economic nationalism . . . simply hands a blank check to multinational corporations, foreign powers, and distorted market forces to do as they please” (p. 14). He refuses to take a stand on nationalism per se, but the idea that economic questions can be answered without taking into account nation-states is, to him, misguided and naive. Since it is doubtful that Mr. Fletcher is aware of the ongoing demographic destruction of the white race and the role of Jews in this process, he tends to see “bad economics” where there is often malevolent calculation, but this does not affect the value of his arguments.
Mr. Fletcher begins the first part of his book, “The Problem,” by stating that the “fundamental message of this book is that nations, including the U.S., should seek strategic, not unconditional integration with the rest of the world economy. Economic openness, like most things in life, is valuable up to a point–but not beyond it” (pp. 20-21). He then proceeds to discuss various myths about free trade: its historical inevitability; the irrelevancy of the nation-state; the “cliché that we live in a borderless global economy” (p. 26); and the childish notion that free trade as foreign policy will lead to world peace. He also critiques those “empty, flashy arguments” of free traders that amount to little more than ad hominem attacks (p. 28). For example, responding to Barack Obama’s infamous remarks to an audience of campaign donors in San Francisco, in which he lambasted middle (read white) Americans for clinging to “guns and religion” and expressing anti-immigrant and anti-free trade sentiments, Mr. Fletcher writes: “God forbid the unemployed of an old-line industrial state should think trade has anything to do with their problems” (p. 29). Though the author himself misses the connection between trade and “guns-religion-immigration,” New Rightists’ ears should perk up when seeing trade included in this list of “things white people like.” Free trade is a major part of the larger process by which white influence in historically white nations has been, and continues to be, reduced. That the soon-to-be nominal “head free trader” made this connection explicit to a group of drooling Bay Area boot-lickers is telling, to say the least.
Mr. Fletcher then proceeds to discuss certain other basic assertions commonly made by free traders. One is that free trade creates billions of new consumers for American products, the most frequent example of which is the supposed economic opening of China. However, in addition to the fact that America runs a huge deficit with China, “China deliberately blocks imports, mainly with non-tariff barriers, in order to decrease consumption, increase savings, and boost investment. . . . As a result, even the limited purchasing power China’s mostly poor population does have rarely gets spent on American goods” and the “dream of selling to the Chinese functions primarily as bait to lure in American companies, which are then forced by the government to hand over their technological know-how as the price of entry. . . . They then build facilities which they discover they can only pay off by producing for export” (p. 31). This general formula applies to nations other than China, of course. It is one of the odd facts of modern geopolitical economy that white nations somehow believe in the efficacy of economic policies that are not practiced by those nations that pose the greatest economic threats.
Another common argument in defense of free trade is that cheap foreign labor will drive up wages overseas, rendering the threat to American labor impotent. Mr. Fletcher writes: “While this may be true in the long run, at currently observed rates of income growth, it will take decades at best. And it may not happen at all, as the past experience of nations like Japan, which rose from poverty to wages similar to the U.S., may not be replicated” (p. 32). He then points to United Nations figures from 2003 which state that “54 nations were poorer than they had been in 1990” (p. 32). The rise of Japan following its devastating defeat in World War II was certainly not merely a result of economic policy, nor is the decreasing prosperity of the other 54 nations. But, as usual, disciplinary compartmentalization leads to an incomplete picture. If economists in general, and Mr. Fletcher in particular, would weigh their observations against the observations of, say, geneticists and historians, some of these economic “miracles” and failures would be seen in a different light. For example, if American labor is expected by free traders to suffer in silence while waiting for wages to rise “naturally” in South Asia or Sub-Saharan Africa, American labor is destined to suffer for eternity, because nature has not rendered all races equal in the skills required for wealth-creation in the modern world.
Free traders also frequently claim that cheaper imports from foreign countries somehow off-set the consumer’s lost wages. As Mr. Fletcher points out, “there is no data that actually proves this, particularly since the crucial data concerns the long term, which we have not yet had the opportunity to observe. And there is no principle of economics that guarantees that this will be true, even in theory” (p. 33). An oft-linked assertion is that low-paying jobs might be lost but high-paying jobs are created. This is false. The author notes that the statistics do not show this to be the case. He writes that “the hard data actually show America losing both kinds of jobs. For example, according to the Bureau of Labor Statistics, the U.S. lost over 54,000 engineer and architect jobs between 2000 and 2008″ (p. 33). These various myths about free trade have been so effectively inserted into the collective American political consciousness that extricating them is, and will continue to be, a serious challenge. But, like other issues that concern the New Right, the coming reality, barring a radical shift in politics and governance, will eventually rear its ugly head and change American minds in perhaps very unpleasant ways.
All of this leads the author to believe that free trade threatens to turn America into Brazil. He writes: “Free trade squeezes the wages of ordinary Americans largely because it expands the world’s supply of labor, which can move from rice paddy to factory overnight, faster than its supply of capital, which takes decades to accumulate at prevailing savings rates” (p. 34). This, obviously, privileges capital over labor. He explains that this is not some “cranky Marxist canard” but rather a commonly understood economic phenomenon called the Stolper-Samuelson theorem, which states that “freer trade raises returns to the abundant input to production (in America, capital) and lowers returns to the scarce one (in America, labor). Because America has more capital per person, and fewer workers per dollar of capital, than the rest of the world, free trade tends to hurt American workers” (p. 34). Simply put, the “occupations that suffer the most are those whose products are easily traded and can be produced by cheap labor abroad. This is why unskilled manufacturing jobs were the first to get hurt in the US: there is a huge pool of labor abroad capable of doing this work, and manufactures goods can be packed up and shipped around the globe” (p. 35). Those Americans with lower incomes were the first to feel the effects of free trade but, increasingly, the virus is spreading upwards. Even if our economy expands under free trade, as the free traders claim it will and Mr. Fletcher claims it will not, poverty could still increase because the benefits of the expansion would not likely be felt by a large percentage of the population, just as is the case in Latin America. A future in which “an advanced First World economy exists side-by-side with Third World squalor, the rich live behind barbed wire, and shopkeepers hire off-duty policemen to kill street children” (p. 35) is not exceedingly far off. And the reader must remember that Mr. Fletcher is only dealing with purely economic issues. That is to say, he is doing little other than number-crunching. When one factors in different racial propensities for crime, alien social mores, the capabilities of low-IQ immigrant populations and so on, this prediction become even more terrifying.
According to Mr. Fletcher, the trade deficit is the most important indicator of the problems of free trade. He writes: “Americans are poorer simply because we own less and owe more. Our net worth is lower” (p. 38). Some of his figures are shocking. For instance, he writes: “Net foreign ownership of American assets (what they own here minus what we own there) is now $3.4 trillion–over a quarter of U.S. GDP” (p. 40). He also writes that “every billion dollars of trade deficit costs America about 9,000 jobs, So it has been estimated that our deficit costs is approximately one-fifth of all manufacturing jobs that would otherwise exist” (p. 41). The economist William Bahr has “estimated that American’s trade deficits since 1991 alone–they stretch back to 1976–have caused our economy to be 13 percent smaller than it otherwise would be. That’s an economic hole larger than the entire Canadian economy” (p. 41).
Another major problem with this scenario is that much of this debt is financed by the selling of assets. As the author points out, Americans only hear of such things when they involve landmarks of some sort. He uses the example of the 1989 purchase of Rockefeller Center by the Japanese as an example, but such purchases happen frequently under the noses of the public, by both private foreign investors and foreign governments (p. 42). For Mr. Fletcher, this is a serious national security issue in addition to being an economic problem. The institutions in place to guard Americans from these problems are ineffective and rely on outdated models of national security. The Committee on Foreign Investment in the United States (CFIUS), for example, “deliberately limit themselves to conventional national security concerns and ignore economic security. CFIUS rarely blocks transactions. Of the 404 foreign investments evaluated in the most recent reporting period (2006-2008), not one was actually blocked, although a number were withdrawn in response to security” (p. 43). The economic security of Americans is simply no longer a concern of the state.
At the end of the first part of the book, Mr. Fletcher addresses any free market libertarians who might still be reading. Such people would doubtless assume that there are free-market solutions to the numerous problems the author has addressed up to this point (only a few of which have been mentioned here). It is worth quoting the author at length here, because he very effectively describes a fundamental truth about free trade arguments:
The root problem is simple: when free-market economics says free trade is best for the economy, it takes no position on whether this is best in the long or the short term. In fact, free-market economics takes no position on whether any policy it recommends is best in the long or the short term. It treats short- vs. long-term well-being as an arbitrary consumer-driven preference. . . The technical way of saying all this is that free-market economics “treats the time discount on consumption as an exogenous preference”. . .Time horizons are the idea that outcomes matter up to some point in the future (the “horizon”) and then don’t matter after that. Instead, economics deals in time discount, which is the idea that the further into the future an economic event is, the less it means today. . . . So “treating the time discount on consumption as exogenous” means that while economics can give us lots of advice about the most efficient way to produce whatever it is we want, it cannot tell us what we ought to want (or when we ought to want it!) in the first place (pp. 45-46).
Free-market economists believe that efficiency and utility-maximization occur whenever two nations get exactly what it is they want or need at any given moment. But instant gratification always comes with costs at some point. If a nation ends up poorer in the future after “maximizing its utility” in the present, what has it achieved?
Different economic behavioral patterns between nations, even if small in scale, have major ramifications. Mathematical modeling demonstrates that “under free trade between nations with merely different time discounts on consumption, the nation with the higher discount (more impatient) will tend to maximize present consumption by having past generations (who produced the assets that can be sold off) or future generations (who will service the debt) pay for present consumption” (p. 47). This idea is so important that it is again worth quoting the author at length:
If the “decadents” in a society can borrow from the “diligents” in the same society, then every borrower creates a lender in the same society, keeping society as a whole in balance. So no amount of decadence (whatever other problems it may cause) can reduce that society’s total net worth or future consumption possibilities. But if members of a society can borrow from outside that society, then it can. Worse, things can spiral out of control, given the self-reinforcing way in which social and cultural validation of behavior creates more behavior, then more validation, and so on. So it matters whether people engage in economic relations with compatriots, with whom they share a social and cultural system, or with foreigners, with whom they share only arms-length economic relations (pp. 47-48).
This basic principle is universally applicable, but it is obvious that there is much to be said about how it pertains to America and other historically white nations, which are not only being flooded with “decadents” at a rapidly accelerating pace, but whose major culture-producing institutions and governments have been co-opted by a powerful internationalist merchant and financier class with deep-seated antipathy towards their various host nations. These people facilitate indulgence on the part of the “decadents” at the expense of the “diligents” because they stand to profit, both economically and culturally.
In part two of the book, entitled “Ye Olde Theory of Comparative Advantage,” the author denounces as false the famous “192 year old” theory of Jewish economist David Ricardo, which serves as the conceptual basis for free trade arguments (p. 95). He begins by discussing the concept of absolute advantage, an idea that is easily grasped by non-specialists. Indeed, it is the seemingly commonsensical nature of this concept that makes free trade arguments so appealing to the public. In Mr. Fletcher’s words, the “concept of absolute advantage simply says that if some foreign nation is a more efficient producer of some product than we are, then free trade will cause us to import that product from them, and that this is good for both nations” (p. 96). The simple reason behind this is that it “is good for us because we get the product for less money than it would have cost us to make it ourselves. It is good for the foreign nation because it gets a market for its goods. And it is good for the economy as a whole because it causes production to come from the most efficient producer, maximizing world output” (p. 96).
It seems to be a perfectly sound concept. But it is incorrect. He explains this by saying that under free trade “America observably imports products of which we are the most efficient producer–which makes no sense by the standard of absolute advantage” (p. 96). This theory “not only predicts that less efficient producers will sometimes win (observably true) but argues that this is good for us” (p. 97). As Pat Buchanan once wrote, “Are Chinese factories more efficient than U.S. factories? Of course not” (p. 96). From the simple starting point of absolute advantage, Mr. Fletcher expounds on the theory of comparative advantage.
This theory “says that it is advantageous to America to import some goods simply in order to free up our workforce to produce more-valuable goods instead” (p. 97). In the free trade model of global economy, nations will automatically devote their economies to those industries that are the most valuable to them–that is, to the industries with the lowest opportunity costs. He uses China as an example once again:
[I]f America devoted millions of workers to making cheap plastic toys (we don’t; China does) then these workers could not produce anything else. In America, we (hopefully) have more-productive jobs for them to do, even if American industry could hypothetically grind out more plastic toys per man-hour of labor and ton of plastic than the Chinese. So we’re better off leaving this work to China and having our own workers do more-productive work instead (p. 99).
By this logic, Mr. Fletcher argues, nothing but free trade can prevent economies from wasting time and money on inefficient industries. And by this logic, “when imports drive a nation out of an industry, this must actually be good for that nation, as it means the nation must be allocating its factors of production to producing something more valuable instead” (p. 99). It all seems so simple. The theory of comparative advantage relies, however, on “seven dubious assumptions” (p. 104):
- The first assumption is that trade is sustainable. But nations do not have an unlimited supply of “accumulated inheritance” and may run out of things to export (pp. 104-05).
- The second assumption is that there are no externalities. Mr. Fletcher writes: “The classic negative externality is environmental damage, which reduces the economic value of natural resources without raising the price of the product that harmed them. The classic positive externality is technological spillover, where one company’s inventing a product enables others to copy or build upon it, generating wealth that the original company doesn’t capture” (p. 105). Free traders simply suggest that these problems are insignificant.
- The third assumption is that “factors of production move easily between industries” (p. 106). Free traders assume that a nation that has been pushed out of one industry will be able to simply move into another. If this cannot be done, imports “will just kill off [the nation’s] existing industries and leave nothing in their place” (p. 106).
- The fourth assumption is that trade does not raise income inequality. It is possible, as discussed above, that even if an economy grows, the benefits will not reach the masses. As an example, the author compares clothing production to airplane production. If a nation switches from clothing to airplanes, an industry which requires more white collar workers than blue collar workers, the demand for white collar workers will increase and so will their salaries. But since most workers are blue collar workers, the majority of the population would be hurt by this transition (pp. 108-09).
- The fifth assumption is that capital is not internationally mobile. Just as factories can move to different regions within a country in order to maximize profit, under free trade companies can relocate to other parts of the globe. This in no way guarantees the “win-win” promised by the theory of comparative advantage. To illustrate the effects of this, the author writes: “In 1950, Michigan had absolute advantage in automobiles and Alabama in cotton. But by 2000, automobile plants were closing in Michigan and opening in Alabama. This benefitted Alabamans but did not necessarily benefit Michigan. (It only would have if Michigan had been transferring to a higher-value industry than automobiles. Helicopters?) The same scenario is possible for entire nations if capital is internationally mobile” (p. 110). Even David Ricardo himself understood that his theory relied upon the immobility of capital and explained away these objections by suggesting that capitalists would be connected to their native lands by patriotism and fear of unknown foreign cultural climates. Such an idea certainly seems ridiculous now but, as the author points out, was already demonstrably false when it was proposed (p. 111).
- The sixth assumption is that short-term efficiency causes long-term growth. Mr. Fletcher writes that “even if the theory of comparative advantage tells us our best move today, given our productivities and opportunity costs in various industries, it doesn’t tell us the best way to raise those productivities tomorrow” (p. 112). As an example to illustrate this concept he uses a secretary and a banker. It is in both their interests today to be the best they can be at their particular jobs but, for the secretary, “the path to personal success doesn’t consist in being the best possible secretary forever; it consists in upgrading one’s skills to better occupations, like banker. And there is very little about being the best possible secretary that tells one how to do this” (p. 113).
- The seventh assumption is that trade does not induce adverse productivity growth abroad. If free trade works as promised and raises productivity in foreign nations, any benefits we may have received from their cheap products might disappear. If a foreign nation achieves economic parity with us through the various benefits free trade might have had for them, it might hurt us in the long run. In one example, the author compares Canada to the United States: “If Canada’s wheat vs. corn trade-off is two units per acre vs. three and ours is four vs. six, all bets are off. Because both nations now face the same tradeoff ratio between producing one grain and the other, all possible trades will cost Canada exactly as much as they benefit the US–leaving no profit, no motivation to trade, and no gain from doing so. And if free trade helped raise Canada’s productivity to this point, then free trade deprived us of benefits we used to get” (p. 115). As the author notes, this invisible shift in productivity ratios goes unnoticed because it carries with it no drama or easily discernible victims. And, as with the problem of capital mobility, David Ricardo was aware of this as well.
Upon reading Mr. Fletcher’s critiques, one cannot help but wonder whether the business community is aware of these problems and, if so, how they get away with pushing free trade on the public. According to the author, they are indeed aware of all of the above. But, he writes, “the business community and its lobbyists in Washington use comparative advantage all the time in politics to lobby for more free trade. So to a huge extent, the American business community has been using, broadcasting to the public through the media, economic ideas in which it does not itself believe and refuses to live by” (p. 121). So much for David Ricardo’s assertion that capitalist free traders will ultimately remain loyal to their own nations.
Later in the second part of the book, the author discusses the history of free trade. He points to the fact that “no major developed nation got that way by practicing free trade. . . . Every single one did it by way of protectionism and industrial policy” (p. 122). He spends a fair amount of time on the economic history of Great Britain, which according to “the creation myth of free trade, [was] the original motherland of free markets, home of Adam Smith and David Ricardo both, the first nation to break free of the misguided gold-hoarding mercantilism that came before and consequently the industrial superpower of the 19th century, erector of a global empire upon free-trade principles” (p. 123). Mr. Fletcher demonstrates very effectively that this is, to a large extent, a deception.
A short history of American economic policy comes next, in which he argues that industrial policy was one of the causes of the American Revolution, that slavery and free trade were intimately connected, and in which he provides an excellent overview of the tariff debates that have been a regular feature of American politics since its founding. He also discusses the effect of Cold War rhetoric on American economic policy, the “disappearance of middle income nations” (p. 156), and analyzes the North American Free Trade Agreement (NAFTA), which, unsurprisingly, he argues was a complete failure.
His discussion of free trade diplomacy is particularly valuable. Though trade treaties often “contain free trade agreements, and their sponsors would certainly like the public to debate them as if they were nothing else, 90 percent of their legal substance concerns other things” (p. 165). Various legal protections for foreign investors is generally the major concern. Though Mr. Fletcher believes that protecting foreign investors from corrupt thieving politicians might be a reasonable thing within certain limits, these agreements “embrace the dangerously elastic principle that any action which reduces the future profitability of foreign investments constitutes expropriation” (p. 165). In effect, this makes the “profitability of investments . . . the supreme priority of state policy–overriding health, safety, human rights, labor law, fiscal policy, macroeconomic stability, industrial policy, national security, cultural autonomy, the environment, and everything else” (p. 166). In the name of free trade, numerous sensible and democratically-decided laws have been struck down over the years, many of which were environmental protections and food safety regulations designed to increase the quality of life of various national citizens.
Needless to say, these trade negotiations are at least partially secret. Mr. Fletcher writes: “American trade negotiators have even been known to withhold details of these treaties from other U.S. government departments whose laws they would overturn” (p.168). The two houses of Congress have also aided the anti-democratic moves on the part of trade negotiators by forfeiting various procedural rights, such as the right to debate the details of these treaties and the ability amend them (p. 168). And, of course, the administration of these agreements is handled by international bodies with no obligations to any particular nation or its citizens. This is a dangerously radical shift in the nature of the state and to whom it owes its legitimacy. When citizens do take action, as in the case of the 1999 Battle of Seattle, the World Trade Organization (WTO) reacted not by addressing the various concerns of the protesters but by increasing its secrecy: the next WTO meeting was held in Doha, the capital of Qatar (p. 174).
So what is to be done? Mr. Fletcher offers his solutions in the appropriately titled third part of the book, “The Solution.” After discussing further problems with free-market economics, Ricardian thinking, and the “trade secret” that economists really do not completely understand how economic growth occurs, he argues that certain varieties of protectionism and industrial policy will be required to remedy the damage done by free trade. One of the first steps towards this should be educating the public about the real nature of American free-market “success” stories. Silicon Valley, for example, is touted as the quintessential example of the value of free-market economics. Yet the internet developed from military technology and even Google, “the ultimate better-mousetrap free-market success story, was based on research done by founders Larry Page and Sergey Brin at Stanford while supported by National Science Foundation grant IRA-9411306-4 to research digital libraries” (p. 203). There are numerous other and better examples of the role of industrial policy in the formation, maintenance, and expansion of American industry but the author, while dealing with a number of them, seems to take particular delight in exposing the hypocrisy of the libertarian Wired magazine crowd.
Another important lesson Americans must learn is that deindustrialization in one area sets off a chain reaction throughout the economy, often unnoticed by those who are not directly affected. Mr. Fletcher writes:
Declining sales undermine their scale economies, driving up their costs and making them even less competitive. Less profit means less money to plow into future technology development. Less access to sophisticated foreign markets means less exposure to sophisticated foreign technology and diverse foreign buyer needs. When an industry shrinks, it ceases to support the complex web of skills, many of them outside the industry itself, upon which it depends. These skills often take years to master, so they only survive if the industry (and its supporting industries, several tiers deep into the supply chain) remain in continuous operation (p. 205).
As America loses key industries, it suffers in the short-term but it also means that future innovations will occur with decreasing frequency because there will not be a large receptive and collaborative space in which these ideas can be developed and refined. And those that do occur will likely be commercialized in foreign countries. Free traders are ideologically committed to the denial of any type of holistic national economy and refuse on principle to think long term–the market is always right and the market is always “happening” in the present.
In addition to educating the public about the dangers of free trade, Mr. Fletcher proposes a tariff. He is aware of the dangers of special interests and political meddling but he argues that if the tariff is sufficiently broad it can work, even with the inevitable political complications. He writes: “We do not need an intricate, brittle, difficult policy that will only create work for bureaucrats, lawyers, and lobbyists. Among other things, any policy too complex for the public to understand will be beyond the reach of democratic accountability, the only ultimate guarantee that any tariff policy will remain aimed at the public good” (p. 232). Specifically, he wants a “flat tax on all imported goods and services” (p. 233). For the sake of argument, he chooses a rate of 30 percent, which is within the historic rate of American tariffs (p. 239). This would, he argues, bring back a number of valuable lost industries, though, to be sure, not all of them. He refers to this as a “natural strategic tariff.” The clothing industry, for example, would find it advantageous to remain on foreign soil but high-tech manufacturing would return to America: “This is the key, as these industries are precisely the ones we should want to relocate. They have the scale economies that cause retainability, high returns, high wages, and all the other effects of good industries” (p. 233). The benefits of a flat tariff, according to Mr. Fletcher, are:
- “It is unlikely to be supported for the wrong reasons (like producer special interests) because it does not single out any specific industries for protection” (pp. 238-39).
- “It would . . . create the right balance of special-interest group pressures: some interests would favor a higher tariff, others a lower one. This is a prerequisite for fruitful debate, as it means both views will find institutional homes and political patrons” (p. 239).
- There would be no danger of “getting stuck with a tariff policy that made sense when it was adopted but gradually became an outdated captive of special interests over time, always a risk with tariffs” (p. 239).
- “The tariff’s uniformity across industries also avoids the problems that occur when upstream but not downstream industries get tariff protection” (p. 239).
- It would curtail the “political bickering that a tariff varying by industry would cause. . .” (p. 239).
- “The natural strategic tariff is also more palatable than most other tariff solutions. Above all, it respects the free market be leaving all specific decisions about which industries a tariff will favor up to the marketplace . . .[it will] operate at the periphery of our economy, leaving most of its internal mechanisms untouched. In fact, the more wisely we control our economic border, the less we will probably need to control the inside of our economy” (p. 240).
After this proposal he deals with some inevitable objections, as well as various proposed alternatives such as a US Value Added Tax (VAT), but none seems to refute his basic logic and each has political or economic problems that are likely insurmountable in America.
In the final chapter of the book, entitled “The End of the Free Trade Coalition,” he discusses whether or not America has the capability to accomplish what he proposes. He notes that Americans are increasingly susceptible to the harmful effects of free trade and that a coalition is possible. The number of jobs untouched directly by trade is diminishing. Even professions like law and advertising, which have traditionally depended on local and/or national cultural knowledge, are increasingly being offshored. And privatization of public services, including the military, will make those occupations increasingly susceptible to offshoring as well (p. 248). What this means is that free trade hurts Republicans and Democrats equally. Those Republicans who have tended to identify with capital (what the author calls the “psychological bourgeoisie”) are starting to feel the effects of free trade and are losing their faith in the concept (p. 248). Democrats, on the other hand, have “sold out so completely to free trade under Bill Clinton (and never came back) that they threw away their natural position, earned over 70 years, as the party that protects Americans from the rougher edges of capitalism” (p. 249). That people ranging from Pat Buchanan to Ralph Nader have argued for protectionism suggests to Mr. Fletcher not “ideological incoherence” but rather that “protectionism can be credibly sold to voters from one end of the political spectrum to the other. The policy can plausibly be packaged as anything from a right-wing tub-thumping America First appeal to a left-wing tie-dyed hippie sob story” (p. 250).
Mr. Fletcher spends the remainder of the book discussing the contemporary free trade regimes of George W. Bush and Barack Obama as well as the economic policies of various other American political bigwigs. One is left with the feeling that no one in power is on the side of the American people any longer–but few readers who have made it this far believed such a thing in the first place.
There are two major flaws with this book that must be pointed out before concluding: the first is that the author does not discuss the rapidly accelerating immigration crisis, its obvious relevance to the plight of white Americans (and, of course, whites around the world) and its connection to globalist free trade; the other is that the author does not see these problems as relating to anything other than economics. He writes: “If free trade is wrong, then it is coldly, factually wrong on its merits, and turning it into a drama of villains and innocents is unnecessary” (p. 80). This is yet another example of a member of one profession not engaging others outside his discipline, as well as refusing to “name names,” something that is endemic to all areas of modern thought but is inexcusable in a field that is as open to easy inspection as that of economics.
These two things are, of course, of the utmost importance and should be incorporated into any and all discussions of free trade within the New Right. It is precisely our ability to provide the missing pieces of information in such important discussions that gives the New Right a distinct intellectual advantage over the mainstream.
These reservations aside, however, anyone interested in these issues will find tremendous value in this book. It is an easy, entertaining, intelligent and thought-provoking work that is packed with information that can help us effectively combat internationalist propaganda and the steady stream of deceptions spewing forth from the parasitic culture-distorting class.
1. http://www.freetradedoesntwork.com/author.htm (accessed September 8, 2015).
http://www.huffingtonpost.com/ian-fletcher/ (accessed September 8, 2015).
2. Clearly, he is generalizing based on mainstream American politics. He makes no mention of the “far-right” anywhere in the book.
3. For the full text of the speech see: Mayhill Fowler, “Obama: No Surprise That Hard-Pressed Pennsylvanians Turn Bitter,” Huffington Post, November 17, 2008, http://www.huffingtonpost.com/mayhill-fowler/obama-no-surprise-that-ha_b_96188.html (accessed September 12, 2015).
For a short audio clip of the quote see: https://www.youtube.com/watch?v=XojFDLdvnJ4
4. In case anyone starts think that this is evidence that “might makes right” please see: Greg Johnson, “The Philosopher Is In: Might & Right,” Counter-Currents, January 20, 2015, https://counter-currents.com/2015/01/might-and-right/ (accessed September 12, 2015).
5. Of the nine department heads who currently make up the CFIUS, only one is definitely a white man: Secretary of Defense Ashton Carter, known for his hawkish pro-Israel views. The rest includes four confirmed Jews, one possible Jew (John Holdren, director of the Office of Science and Technology Policy), a black man, a black woman, and a Portuguese man of indeterminate race (Ernest Moniz, Secretary of Energy).
6. For more on the changing nature of the modern state see: Donald Thoresen, “Beyond Left & Right: Wolfgang Streeck’s Buying Time: The Delayed Crisis of Democratic Capitalism,” Counter-Currents, August 21, 2015, https://counter-currents.com/2015/08/buying-time/ (accessed September 14, 2015).
7. Donald Trump has, for example, called for various tariffs ranging from 20 to 35 percent over the past few years, although not in any systematic and consistent way.
The Honorable Cause: A Review
George Friedman’s The Next 100 Years
Liberal Anti-Democracy, Chapter 6, Part 2: Conclusion
Liberal Anti-Democracy, Chapter 6, Part 1: Conclusion
Liberal Anti-Democracy, Chapter 5, Part 2: Democracy Against the People
Not Pretending to Be Anything: Charles Bukowski
Liberal Anti-Democracy, Chapter 5, Part 1: Democracy Against the People
Thank you for posting this important review of a significant work attacking the “free trade” myth.
I particularly enjoyed:
“Yet the internet developed from military technology and even Google, “the ultimate better-mousetrap free-market success story, was based on research done by founders Larry Page and Sergey Brin at Stanford while supported by National Science Foundation grant IRA-9411306-4 to research digital libraries” (p. 203). ”
Which is consistent with:
When a country is top industrial dog and has all the comparative advantage then enforcing “free trade” is actually a form of protectionism – protecting their export markets.
Free trade outside of that context is simply a betrayal.
Not too long ago a friend showed me an article about concerns among today’s wealthy class. Seems that urban uprisings like the Ferguson Follies and assorted car burnings in Europe has got the upper crust worried. Seems they are looking for new ways to get out of Dodge next time the rioting starts. Private airplanes, yachts and resorts on mountain tops appear to be the new rage.
My commentary was: if the wealthy really want security then: (1) stop importing third world labor into first world countries; (2) have their controlled media stop riling up the underclass over the shooting of thugs; (3) have their bought-and-paid for politicos show a little spine in the face of third world “refugees;” and (4) perhaps show a little spine themselves, not to mention leadership, by reconsidering the lunatic course of globalization.
And while they are at it, they could thrown some of the billions of dollars they disburse via foundations and grants to leftist organizations instead to nationalist groups!
Free-market economists believe that efficiency and utility-maximization occur whenever two nations get exactly what it is they want or need at any given moment.
More accurately, when two nation-states get what they want. Free Trade might make some sense in a world in which there are defined national boundaries, say under a system of national capitalism. If you have national economic leaders who have a sense of unity with the people of their states, then the system could possibly work. But in a globalized world? There’s a dilemma here for both partisans of unrestrained capitalism and socialism.
Capitalism appeared to work pace Fordism (remember to make the Sign of the T) for a century or so. But now that the restraints are off, it is bankrupting Western states both economically and culturally. Capitalist ideologues of the Objectivist spectrum can rationalize the system as being a voluntary exchange of finance, labor of markets and therefore being above statist use of coercive force — this even as their own countries disappear around them.
Socialists might extol the glories of a new international working class as millions of migrants cross borders freely to seek labor. But it’s an illusion because given the global supply of labor, the mobility of transnational capital, and the cacophony of multicultism, there is never going to be any sort of working class solidarity. At best, all workers everywhere will become equalized in poverty.
This gets back to the article I mentioned at the start of this post: regardless of how strong the System appears, it is inherently unstable. You have rootless elites, whose loyalties appear to be to a global overclass. What happens when numerous cities light up in rioting and there is no solid middle class to act as a buffer between the wealthy and underclass? Will a denationalized citizenry be willing to take up arms in defense of states whose borders have long since been opened up?
Look at how ISIS has been able to run amok in Iraq. Despite all the US provided weaponry, the Iraqi military fell apart in the face of what amounted to an armed mob. Even now, the US seems to lack the stamina to commit “boots on the ground,” instead relying on airstrikes, drones and some special forces to carry the fight. How’s that rainbow military working? As for Europe, what sense does it make to march armies into the Middle East when Middle Easterners are today marching into ancient European cities?
All this is worth considering when the time comes for white nationalists to commit themselves to a higher state of the struggle.
“More accurately, when two nation-states get what they want.”
Good catch. Thank you.
However I think they got the title wrong, It should be “Free Trade Works, But Probably Not For You”
So yes Free Trade works, but only for those who push free trade, that is those connected to international trade and financial system. These are the people who own and work for the big international financial houses and banks, and their fellows who get positions in both national and international government financial organizations via the revolving door between them.
Since 1970 the percent of GDP involving US international trade has gone from 8 percent to over 30 percent today. With more then 30% of the US economy involving international trade this has been a huge windfall for the international financial system. With so much of the US and world economy passing through their sticky little fingers its no wonder the world financiers have gotten so rich and why their answer to any economic problem is “more international trade”.
If the international bankers could get away with it they would have Idaho buy all its potatoes from Ireland and Ireland buy all its potatoes from Idaho just so the banksters could get a piece of profit on each potatoe sold.
This is also why they hate domestic trade, since domestic trade can be done with local or regional banking or even done by direct financing. International trade with its different currencies and all the laws about moving money internationally that have been created by the War on Terror and War on Drugs means that only the international financiers have the knowledge and contacts to do the deal without running afoul of the rules and regulations.
And what they hate most is direct trade, you trading your tomatoes for my potatoes, since the banksters don’t get any of that value.
There are reasonable, informed critiques of trade and finance, and there are idiotic, ignorant critiques. The review essay falls under the former category; this comment under the latter.
Good and cogent analysis. Thanks.
It seems supporting free trade is easier conceptually because it involves an absolute claim that can be illustrated in economic formulae like Ricardo’s comparative advantage. But as for drawing the line between a 20% or 30% tarriff, it’s a lot more murky as far as supporting formulae go. Also, it seems the stopler samuelson theorem could be a function comparative advantage on an international scale because the US’s comparative advantage would be in dealing with capital heavy work above labor intensive industry. Finally, Samuelson was a Jew–I just thought I’d point that out. Anyway, the book seems interesting and is well summarized here. I totally agree that the New Right needs more stuff on economics.
‘ It is one of the odd facts of modern geopolitical economy that white nations somehow believe in the efficacy of economic policies that are not practiced by those nations that pose the greatest economic threats.’
As Eamonn Fingleton has pointed out, this is particularly true of the English-speaking nations (‘the Anglosphere’ if you will). His book ‘In the Jaws of the Dragon’, is well worth reading in this context.
Part of the problem is ideological: English-speaking societies are indoctrinated into a particular set of pro-capitalist ideas which they often have great difficulty overcoming because these have been lodged deep into their unconscious minds – to the level of a religious belief, one could say. A good book concerning how these ideas developed and gained currency is ‘The Origin of Economic Ideas’ by Guy Routh.
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