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[post incomplete, I will come back and edit at some point]

 

 

Ok, so about a month ago I promised that I would mix up the posts a bit, but it seems all I’ve done is talk about my terribly boring life. So this weekend was rather uneventful , so I can can the time to forcefeed you all my opinion on the topic de jour. I think the only worthwhile thing mentioning is how I successfully defended a child murderer from prosecution before the ICC at MUN. Good times.

(BTW, I will be mixing up future posts a bit more, as I should have more free time now that the rush week for fraternities is over, and now that I have a laptop. I plan on uploading that 4GB of holiday photos soon.) So here we go:

We are in a terrible age of protectionist sentiment. Even the republicans are supporting a massive waste of taxpayers money. The Nobel Memorial Prize for Economics has been awarded to a protectionist. An intelligent protectionist (one of the few) to be sure, but the outlook remains dim, methinks. So I’m going to do something I don’t often do, and that’s advocate for economic ideology. I’m going to explain why free trade still makes sense, and why more Democrats should get on board.

1. Free trade is not deregulation, and is protecting us from the credit crisis

Deregulation is sometimes good, and sometimes bad. When you have deregulated your financial sector to the point where your regulators are publicly traded companies seeking a profit, like Fannie and Freddie, you’ve got problems. Free trade, that is the removal of trade barriers which exist for purely commercial reasons, is good deregulation. If we go further and remove trade barriers which exist for other perfectly legit reasons like quarantine, then of course it is bad, and it is worse if it undermines stuff like minimum labour conditions. But essentially, free trade is good and its more or less what is protecting us from a global collapse.

For the longest time, we did not think Australia would be severely affected by the credit crisis because we would be lifted up by China and the asian economies. It turns out the decoupling argument is not as strong as predicted (I know this because the Aus econ did go downwards and I got about $100 less off my currency exchange than I should have). But the fact decoupling was imperfect does not mean it does not exist. Let me tell you, conditions in Australia are much better than America right now. So many banks are collapsing its ridiculous. I don;t think Aus has had any banks collapse yet (I may be wrong, I haven;t read the news in 3 months). Europe is getting hit really hard, in fact harder than America. The Euro hit record lows whilst I was there. Do you know why? Because they’re stuck in a single-currency trading bloc. Its free trade within the Eurozone, but essentially its like a giant protectionist fortress as against the rest of the world. When the credit crisis hit, the poorer/slower countries in Europe dragged down the rest as the inflexible monetary policy failed to halt the economy. Get the hint? Australia has diverse terms of trade, with the asian economies, as well as with America and to a lesser extent Europe. Europe, as a internal trading bloc, was not diversified. Its ossified protectionist financial system withstood the pressure even less than America where the plague began.

So how does free trade help? Free trade is an equaliser in the long run. It breaks down competitive advantages within countries as countries jockey for top position in feach industry such as film (see the resurgance of Bollywood in the UK). Even in the short run, we can see the benefits of diversification, which are the only thing preventing a global depression. China is slowed- from about 20% growth to only about 10% I believe, but that is enough to keep the rest of Asia buoyant. China pumps enough money into Asia that those economies in turn do not plunge into recession, and hence can trade with other countries and keep them buoyant. If we had a protectionist system, we could have no doubt that America would remain the top trading force in the world, and we would have crashed with it. Protectionism- aside from absolute isolationism- could not prevent trade. Money will change hands somehow between countries, the question is merely what price is paid for the transaction. The credit crisis would still have hit, but every country would be so closely tied to America that they would have been dragged down.

So free trade, far from being a force for evil, is protecting our economies from isolated damage. If we had adopted freer policies earlier, decoupling might ha:ve worked in its entirety.

2. Free trade is good for the poor starving Africans:

Ok, so we’ve had plenty of bashing of free trade and equality for a long time now, but is there an argument for free trade and equity? I think there is. One thing I can’t understand is why lefties refuse to accept economics as a fact rather than an argument to rail against. They always making up obverse arguments which are absolute twaddle like how its oil companies seeking to exploit Africans in some racist manner. Let me ask you this question- if working for a multinational was not better for that worker, why would s/he do it? Of course it makes them better off. They may be paid peanuts, but peanuts are still full of protein. Let me put it another way. Yes, I would prefer they would be paid a “fair” wage, but we all know that that would destroy every incentive to outsource to that Asias.

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