Ron Paul 9/21/09 “Trade Wars and Protectionism are not Free Trade”

Libertarians couldn't be more educated on foreign policy, but also couldn't be more ignorant on trade. The Smoot-Hawley Tariff raised tariffs from about avg tariffs from about 40% to about 45%. The depression was caused by the collapse of the stock market bubble, bank failures, poor monetary policy, and insufficient government spending to conteract a downturn (until the war).

Unknown to most people in the US, the US had the highest tariffs in the world during the 19th century. As a development policy, tariffs allowed the US to protect it's industry from the far more developed European World, so that during it's infancy as a nation it could catch up and produce developed world products like manufacturing goods rather than becoming a source of low price ag and raw materials. If left to the free market the US initially didn't have the skills or infrastructure or practice, and so it nurtured these skills behind protective tariffs (see Ha-Joon Chang, Bad Samaritans) These tariffs are why the US developed, and is not still using slave or near slave labor for ag and natural resource goods like the rest of the developing world.
The developed world now forces countries into free market and free finance which is holding developing countries in their place as suppliers of cheap commodities. The exceptions are in Asia, Japan and South Korea were we allowed protectionist policies that we did not allow to countries in Africa and Latin America. We were worried about communism in their midst and in countries surrounding them, so we allowed them to develop. They protected their industries and slowly opened themselves up to trade only where it is beneficial as China is doing now.
During the 60's to 80s when tariffs were popular the developing world grew at 3.2% a year. From the 80s to 2000 under free trade policies developing countries grew at .7%.Excluding China which has the highest tariffs in the world.
However free trade also affects developed countries. Countries can free ride purchasing power. In other words our companies can produce things cheaper by not paying high enough wages to buy what's being produced and free ride on other countries for their consumption. However when everyone does this, you get an oversupply of manufactured goods because no-one makes enough money to purchase what is being produced, and so up until the 70s when we really hightened our push for free trade worker wages went up with increased production. This meant a rising standard of living.
Since then they have stagnated because if we raise wages, we start buying goods from other countries rather than our own. Thus in order to maintain consumption we have turned to deptedness. And so personal debt went from 40% of GDP in the 60s to now 100% of GDP, business (non-financial) went from 40% to 80%, business financial went from about 5% to about 120%. Government debt also skyrocket.
Wages aren't high enough to for consumption to keep up with production, and we can't raise our wages, because then some country with lower wages products will come racing in.
In short we need to have labor laws that allow for wages to keep pace with production in our country and around the world. We also need to allow developing countries to protect their way out of underdevelopment, through nurturing their higher wage industries. The libertarian myth of the miracle of the market is just that, a myth. A regulated market as was the case during the era of the highest growth in the history of capitalism, is the answer.

whats thats guy creditbility?

why free trade and not fair trade if you dont mind me asking.

Hey thanks for posting this, I'm untagging it from comedy though.

Ron Paul is and has been right.

I's not paintress - and Ron Paul has been consistently anti-war...

How is being pro-war conservative????