Tag: Tariffs

GLOBAL FREE TRADE: REALLY?

 

The idea of global free trade or that the global market place is an open free market place is a damn lie. This damnation is spread by the World Trade Organization, progressives, many of whom are closet capitalists, globalists, international conglomerate capitalists, so called free-traders, conservatives, RINO’s, business pundits, and most intellectual elites. The lie comes from deep in the elitist Washington, DC, globalist swamp.

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There are at least 6 reasons that the idea of global free trade is a damn lie!

Global free trade does not exist when 1) countries refuse to allow any category of products made in the United States (US) into their country, and we allow the same category into our country; 2) countries impose high tariffs on any category of products imported into their country, and we impose tariffs that are a fraction of those imposed by so-called œtrading partners; 3) other countries subsidize production of categories of products, and we do not subsidize production of the same category of products; 4) other countries do not impose costly environmental, health, and safety regulations on energy and production facilities that are required in the US; 5) other countries tolerate theft of intellectual property for new or improved products from US businesses without paying for use of the intellectual property or imposition of penalties when these products enter US markets; and 6) other countries manipulate international money markets for their benefit. If the so called global free trade experts were honest, they could add to my list of real global free trade impediments. Whether or not the announced Trump Administration tariffs will be good for our economy and labor force in general, the argument that tariffs violate free market principles is void because global free trade does not exit. The argument is based on a lie. No true global free trade market exists.

The result of globalism, as now practiced, is global wealth redistribution. The $800 billion US trade deficit is global wealth redistribution. Virtually all of the so-called œFree Trade agreements involving the US constitute wealth redistribution since they result in trade deficits with the other countries involved. The reality is that the redistribution has cost the US labor force jobs, lost wages, and lowered benefits which were transferred to labor forces in developing countries.

In my opinion, most progressive policy initiatives are based on Marxist philosophy, especially wealth redistribution. Similarly, capitalists seek to expand markets and increase their profitability which requires decreasing costs and opening of new markets in developing countries or increasing income, especially disposable income, in new and existing markets resulting in increased customer purchasing power. Although the ultimate goal, increasing consumer or personal incomes and buying power, is the same for both progressives and capitalists, the method of accomplishing the goal is drastically different. Interestingly, globalism often unites progressives and capitalists when nationalism, protectionism, and tariffs are the subject of debate and discussions.

Unfortunately, US laborers have borne the brunt of the adverse effects of globalism, lost jobs lost opportunities, stagnant wages, and regional economic decline. Through factory relocations to the developing world, capitalists achieve their goal of reducing capital improvement and labor costs, and increased factory productivity. Progressive globalists achieve their goal of global wealth redistribution when new factory wages increase the standard of living, opportunity, and economic development in the regions where new facilities are opened.

Global free trade is a globalist myth. Until a global free market actually exists, the experts should stop insisting that tariffs will impede free trade. Global free trade does not exist. The œexperts should simply tell us that tariffs will increase costs and prices and are the same as taxes. However, if the threat of tariffs, force our so-called trading partners to open markets, reduce their own tariffs, end their subsidies, clean up their own environment, end intellectual property theft, and stop currency manipulation, then tariffs could start progress toward an unfettered global free trade where all the people of the world could move toward greater prosperity.

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TARIFFS, GLOBAL MARKETS, CAPITALISM, AND LABORERS

 

Proposed and existing tariffs will affect global markets. Announced tariffs on steel, aluminum, washing machine, and solar panel imports into United States (US) markets are currently a major economic issue in the news nationally and globally related to global markets. The Trump Administration commitment to renegotiate international trade agreements like the North American Free Trade Agreement (NAFTA), withdrawal from the Trans-Pacific Partnership (TPP) and Paris Climate Accord, and trade sanctions related to efforts to end the Iranian and North Korean nuclear weapon and ballistic missile programs further complicate discussions about tariffs and global markets. Global markets also complicate projections of the impacts of tariffs on the global and US economy and the potential for retaliatory tariffs or other market reactions by other nations. Trade wars are the fear of tariff opponents.

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Tariffs, global markets, and trade agreements affect and threaten manufacturing capacity in the US.

The Trump Administration claims that the US is in danger of losing adequate steel and aluminum capacity to manufacture military equipment during a time of war. The purpose of proposed tariffs is to correct these critical steel and aluminum production capacity issues as a matter of national security. Although US steel and aluminum imports from China are below 10%, the fact that China often floods the world market with these products drives the international price down. Flooding US markets with Chinese steel or aluminum in this situation, often through other countries, makes it even more difficult for US firms to compete in global markets. Since these prices are determined by global markets, China does not have to flood US markets with steel and aluminum to force prices too low for US companies to be competitive. The issue is whether or not tariffs could be maintained long enough to rebuild US steel and aluminum and whether or not global retaliation and potential trade wars would negate the effect of the tariffs.

Causes for the significant decline of US manufacturing in general as well as our steel and aluminum industries are complicated by global markets. Our previous federal tax codes, environmental, health, safety, labor, and zoning regulations add to the costs of products manufactured in the US. Environmental impact assessments, zoning issues, and permitting often take years to complete for large projects adding significant costs and delays for new facilities or expansions. These extra costs, which many of our competitors in do not incur, adversely influence US product competitiveness in global markets. In addition, any construction or natural resource extraction project in the US that is opposed by a significant part of the population can be delayed by demonstrations due to the right of the people peacefully to assemble. Legal actions in our state and federal courts often delay or halt these type projects  which can reduce capacity, increase costs, and decrease our competitiveness in global markets.

In the US, we value clean air and water and the health, safety, and well-being of our labor force. Consequently, the extra costs that we require our manufacturers to incur, and the resultant competitive disadvantage these costs bring, is also part of the calculation that corporations make to locate manufacturing facilities in the US or to locate or relocate facilities to less restrictive countries. For the labor force in Western Europe, North America, and especially the US, progressives and the labor movement have achieved comparatively high wages and benefits compared to other parts of the world. The success of progressives in the environmental and labor movements has resulted in contradictory outcomes related to national and global aspirations which directly influence global corporate capital expenditure decisions related to global markets.

The result is a globalism contradiction for the left, the labor movement, and US capitalists. One of primary goals of progressives on the left is wealth redistribution or income equality on both the national and global scale. In the US, the labor movement has gained wages, benefits, and safe healthy work environments that are the envy of much of the world. Unfortunately, progressive and labor successes in the US are significant reasons for the decline of US manufacturing and competiveness in global markets. The total costs of expenses related to labor, the additional costs related to the anti-capitalist progressive environmental agenda, and progressive taxation resulted in factory closures in the US as corporations relocated factories and jobs to developing countries. The factories built in developing countries are new state-of-the-art facilities built at lower costs and greater worker productivity capacity than the outdated US factories that were closed or remain in the US. The compensation for laborers in the developing countries raises the standard of living for them that multiply as it spreads in local communities. Labor costs in the developing world are usually far lower than similar costs in the US but often much higher than wages before new factories open. In the US, factory closures increase the size of the labor pool for a declining number of manufacturing jobs in old factories now competing with state-of-the-art developing country facilities. Under these circumstances, the US manufacturing labor force is faced with declining number of jobs in old productively disadvantaged factories which can result in lower or stagnant wages and benefits. This is the globalism contradiction for the left. Consequently, in global markets, wealth is being redistributed, but the redistribution is from the labor force in the western industrialized nations to the labor force in the developing nations of the world.

The globalism contradiction for US capitalists and capitalists in the rest of the industrialized west is closely related to the success of progressives and the labor movement and the resultant cost of manufacturing land, labor, and capital improvements. Since the purpose of international manufacturing conglomerates is to maximize corporate profit, cost reduction is an essential responsibility of corporate executives and board members. This necessity stands in direct contradiction to the goals of nationalism, patriotism, and any since of obligation to the labor force, communities, states, and the United States of America, all of which, supported US corporations as they gained economic dominance in global markets. In my opinion, corporations founded in the United States, should give significant consideration to the fact that they would not be in their current global economic situation without the United States of America. These corporations have a debt to pay to We the People who supported their rise to positions of global economic power. This obligation is at the heart of the globalism contradiction for US capitalists.

The tariff and trade negotiation package announced by the Trump Administration is a complicated and aggressive plan to reinvigorate the US steel and aluminum industries and our manufacturing in general in global markets.  During a time of war, the United States must be able to support its military with the best equipment available and supply the needs of the population supporting any war effort. This requires a complete manufacturing base. This is one of the primary objectives of the Trump Administration’s goal to Make America Great Again.

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