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Givens: The perils of artificial free trade
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I favor free market economics. However, I'm against a system that calls itself free market but in reality is a series of subsidies that favor large corporations at the expense of small businesses, underdeveloped nations and the health of people and the environment.

 

A true free market economy requires the free movement of goods and labor between nations, allowing for maximum competition. It does not allow subsidization, industrial protections or price controls. However, many people claiming to advocate free market economics are really looking for a free ride. Conversely, many asking for regulations are just asking that companies pay for what they consume.

NAFTA was viewed as a major step toward free trade. Was it really an example of free-market capitalism? The American corn industry has been heavily subsidized since the New Deal, yet Mexican farmers didn't receive equal support from their government. NAFTA flooded the Mexican market with artificially cheap American corn.

Between 100,000 to 300,000 Mexican farm workers were displaced by the loss of their farms or related jobs. Some found work as underpaid laborers in American factories relocated to Mexico. Others immigrated to the U.S. finding jobs in meat processing plants packaging animals fed with that same subsidized corn that ran them out of their homes.

When the oil shortage damaged the Jamaican economy, that nation went to the International Monetary Fund for help. The loan it received required elimination of many agricultural tariffs. The "free trade" was supposed to make them more economically competitive. The Jamaican agricultural industries have been destroyed, unable to compete with subsidized U.S. imports.

People who claim to be free-market advocates insist that these nations are benefiting from cheaper food. How can the economies of those nations advance if they lose the ability to produce wealth in the process? Besides, their businesses aren't failing because they are inefficient; they are failing because they are competing against subsidized competitors.

How can these nations ever pay off their debts and be free of these "free trade" requirements if the only industry they are left with is tourism? A real global free market system requires the free movement of labor. In free-market theory, if a nation only had an edge in one or two industries, the excess of population could immigrate elsewhere.

Since we don't have a world of open immigration, the nation ends up unable to feed itself, produce its own goods and with its population reduced to cheap unskilled industrial labor for foreign manufacturers. This debt system is reminiscent of Jim Crow but involving nations instead of individuals.

Our own nation is victimized by fake free trade as well. Monetary subsidization is not the only way to indirectly skew the market. Businesses that face a lack of liability or regulation are indirectly subsidized. In free market theory businesses must pay for the resources they use. In reality, in some nations a business can destroy a water supply or do major environmental damage without paying.

For the most part, in the U.S. a company that destroys property common or personal must compensate the loss. Nations that allow certain businesses to pollute with impunity are indirectly subsidizing those businesses at the expense of others. For example, they may let a shoe factory pollute a river but the local fishing and farming businesses suffer. This also gives the factories an unfair advantage against companies that must pay for their resources or resource damage.

Our industries simply can't compete against that sort of subsidization. How is competing against subsidized competitors free trade?

Obama suggested eliminating the tax benefit for moving jobs overseas. He was met with Republican resistance because it would make our corporations less competitive on the international market. I'm sure it would affect stock dividends for a few but it might also keep some jobs here protecting our own GDP.

This "free trade" often is referred to as globalization. Its supporters point out that the world economy has grown. The measure of this growth is deceptive.

The Union Carbide Bhopal disaster is a great example. Union Carbide's stockholders profited greatly from India's cheap labor and lax environmental regulations and enforcement. Sure, the company produced cheaper chemicals which in turn lowered the cost of other industrial production. However, Union Carbide's pollution has disabled and killed thousands wrecking the local economy.

Any environmental toll is an unpaid debt we all share. The site is still contaminated and neither Union Carbide nor their now parent company Dow has stepped up to clean the site. Why would they? It would mean they'd have to record the costs and maybe show what's really happening in the world economy.

Brandon Givens is a Gainesville resident. His columns appear frequently.

 

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