Livinglies's Weblog

So here is the issue. The Dollar has lost 30% against the Euro. So Europe is grumbling that US Exports are getting too cheap and hurting their producers. Good for US producers and bad for Euro producers. The free trade people point to this to show how trade is to the comparative advantage of the US and the value of the dollar must find its own level. That is true . But what is also true is that the displacement of both capital and labor is now entering a domino phase across the world. We still have the problem that the European community is starting to feel — because of China, but we will never have the same advantage as China unless we are willing to drop all restriction and regulation on the quality of goods sold. So if we are prepared to export e-coli or lead, we’ll do just fine. In a theoretical sense free trade is unquestionably the best road, except for emerging industries that need help getting started. But free trade is neither right all the time nor is it the whole story. We always seek the simple answers. The whole story includes the fact that while the long-term view favors free trade, we might never get to the long-term goals without paying attention to short-term effects — like massive unemployment and underemployment, massive inequalities of wealth and income, and disproportionate burden of taxes of all types. The third leg of this stool is that free trade is not free if the government steps in and favors the companies that have a death grip on the throat of the politicians who make and enforce the laws. That is how we end up in a tacit tyrrany (see Benjamin Rush, circa 1845) in the medical-industrial-insurance complex with ever-increasing costs and fees while keeping the dirty little secrets away from the busy consumer who foots the bill but he is not quite sure how. It is also how the predatory credit industries with credit cards, payday loans and other devices have institutionalized enslavement of the middle class — by diverting purchasing power from goods and services into wealth accumulation for the few — using interest rates that were always known and generally accepted as being beyond reason.

Filed under: Uncategorized | Tagged: dollar, euro, free trade, unemployment |