The first problem is that "free trade," as peddled by wingnut commentators, include both unrestricted (and even untaxed cross-border movement of capital, and unrestricted trade in goods. These are two quite distinct policies, but are usually conflated by neolibs, because unrestricted trade in goods is usually - usually, but I think not universally - mutually beneficial. Whereas unrestricted and untaxed movement of capital is much more often a zero- or negative-sum game (but very good for the back pockets of people who pay the salaries of wingnut commentators).
But even unrestricted trade in goods can be problematic. One obvious example being strategic goods: Food, antibiotics, electricity and probably a couple of other things you could mention need to be in really stable supply. If a country is cut off from any of these goods for even a short period of time, it will suffer some very nasty Bad Things.
In those cases, a case can easily be made that security of supply trumps low price, and domestic industries in this sector must be protected - because to put one's faith in foreign suppliers is to hand those foreign suppliers (and the countries in which they are located) a firm grip on your balls.
Another obvious exception to the notion that Ricardian free trade is universally beneficial would be infant industries. Suppose you have a country - La Republica De Los Bananas - that has never produced ball bearings. Sure, it is possible that it might be able to get ball bearings cheaper by buying them abroad than by attempting to start up production at home. But this would be true for virtually any industrial good.
So, if La Republica De Los Bananas wants to industrialise (which quite a lot of non-industrialised countries do), they have to build up a comparative advantage in some industry. And doing that is certainly impossible when you have to slavishly open your markets to competition from established industries abroad.
Which domestic industries to favour, to which extent they are to be favoured and indeed whether to use trade policy to spur industrial development at all are obviously political decisions that have to be made in the context of La Republica De Los Bananas' social and industrial policies, so it's far from obvious that signing away the right to make them is A Good Idea.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
Even their sources and authorities, thinking of Ricardo and Locke, preface their remarks on trade with the phrase, "If a country hath a surplus ..."
It certainly is not about classical Ricardian Free Trade.
Start with the distribution of power to large corporations, and the income distribution follows suit. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
Start with the distribution of power to large corporations, and the income distribution follows suit.
we have deified 'efficiency', and big entities outperform small ones, in the short term, using prevalent, externality-ignoring metrics.
it's the same dynamic as if i joined a co-op of neighbours buying bulk food to save money paying retail.
power in group formation extends by linear logic to explain and partly justify the 'corporate mentality' we see playing out now, where only a few solitary titans gobble up all and sundry.
efficiency...
i order something from the states, it looks cheap, though the shipping comes to as much as the object, it's still worth the outlay, so i order it.
then italian customs block it and want taxes from me to import it. they send me a 3 page form to painstakingly fill out. i call the hotline for help and there's a typically confused bureaucratic reply that leaves me as clueless as before.
i fill out the form, send it, wait another week, and lo, the exact same form arrives again, needing the operation to start all over.
by this point i have found a reasonably priced, though inferior substitute locally, and decide to ditch the futile process of dealing with a comatose bureaucracy. i expect they have sent it back, as that's what they threatened to do while chivvying me to hurry up and fill the form.
this kind of crap is irritating enough at this level, but what if it had been a big order of something perishable, or upon which my business was made or broken, and i'd be yelling like the wingnuts for free trade and all...
this story helped me to understand the fury righties, business groups, (confindustria) have against 'gubmint work' mucking up the smooth swift flow of goods and services. they have a valid point, this is the weak link.
of course this is just the head, the long tail leads to sweatshops and slavery, so fair trade is definitely more sustainable and just, but bureaucracies can be really, really inefficient, with good intentions, but sometimes corrupt, hopelessly stupid implementation.
my shaggy dog story of the day!
sure, corporations need taxing as they hoover up resources, in their insatiable quest for the maximum shareholder dividends, but the taxing process has to be as frictionless as possible, or the baying about 'efficiency', 'lower prices for the consumer' begins, and big is better when it comes to tying up courts, buying political compliance and legislation favouring special (preciousss) interests.
the battles in boardrooms and staterooms are behind closed doors, the public needs more transparency. inefficiency breeds in secrecy, the more that is out in the open, more and better ideas can emerge.
self-organisation... ~"When an inner situation is not made conscious, it appears outside as fate." Karl Jung~
Others are right to note that trade is a form of redistribution. All policy decisions inevitably involve redistribution, whether money or rights or simple degrees of leverage. That's why they're in the political arena.
The real enemy is a lack of assault on the militant free-marketeer ideology backing the corporatist political regime over the last 30 years. When ideas go on long enough without necessary criticism, they eventually become religions, and that's what has happened here. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
