Free Trade Doesn't Work: Is it time to Repeal NAFTA
source: http://www.freetradedoesntwork.com/Excerpt_from_Free_Trade_Doesnt_Work_Ch_12.pdf
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- peterzylstramoore
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....Four congressmen have now moved a bill to repeal NAFTA. Superficially, this means little, as passage of this bill is unlikely in the near future. But more fundamentally, it means a lot because, unbeknownst to most Americans inside and outside the Washington Beltway, free trade is inexorably losing its base of support on Capitol Hill.
This means, for a start, that President Obama's recent brave-faced pledge to move forward with his proposed Trans-Pacific Partnership (interestingly, the dread phrase "free trade agreement" has been carefully left out of the name) is quite likely dead on arrival. Obama himself may know this and may have staged this gesture simply to placate foreign nations and domestic corporate interests.
The lack of any change on trade issues in the Oval Office has distracted most Americans from the fact that in recent years there has been an inexorable movement away from free trade in the House and Senate, driven by the public's relentlessly rising skepticism of free trade.
For example, according to one analysis by Global Trade Watch, no fewer than seven Senate and 30 House seats flipped from pro- to anti-free trade in the 2006 election. Seventy-three percent of winning Democratic candidates in that election emphasized trade as an issue in their campaigns, while 72 percent of losing Democratic candidates did not. Not a single candidate of either party ran on free trade as a positive agenda, and not a single opponent of free trade was ousted by a free trader, in either the House or the Senate. Six anti-free-trade Democrats - Sherrod Brown of Ohio, Claire McCaskill of Missouri, Jon Tester of Montana, Bob Casey of Pennsylvania, Sheldon Whitehouse of Rhode Island, and Jim Webb of Virginia, plus Independent Bernie Sanders of Vermont - captured seats formerly held by free traders.
This trend continued in 2008. Thirty-six new free-trade opponents were elected to the House: 13 in contests against incumbents, 20 in battles for open seats, and three in special elections. (Eight free-trade opponents lost, so the net gain was 28.) And seven new free-trade opponents were elected to the Senate: Mark Begich of Alaska, Mark Udall of Colorado, Jeanne Shaheen of New Hampshire, Tom Udall of New Mexico, Kay Hagan of North Carolina, Jeff Merkley of Oregon, and Al Franken of Minnesota.
Ian Fletcher
http://www.truthout.org/thinking-unthinkable-could-america-repeal-nafta58717
image: http://www.worldsocialism.org/spgb/feb06/images/Free-trade%20cartoon.jpg
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- groups:
- Community, US Politics, Actual News
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- tags:
- NAFTA, Free Trade
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ProjectBat
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Here's a way of looking at it, why don't you like free trade? Well, that's because the easier it is to buy a product then the more competition there is. Free Trade takes a part of a market and if it can't compete it dies out and if America does it best then they do better and make more money. Without free trade, our protected industries grow weak and un-innovative so believe it or not it's something that needs to happen.
- 2 years ago
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ProjectBat
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shanklinmike
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ProjectBat:
NAFTA is not free trade. Refer to my posts below. Peace
- 2 years ago
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shanklinmike
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tommic
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How about a real living wage mandated by federal law. Make minimum wage applicable only to those 16 to 22. Or under sixteen depending upon state working age laws. Every trade or labor job would have a minimum wage called the living wage. Fifteen dollars an hour equates to 30 thousand a year, livable in some sections of the country and marginal at best in others. If employers want good help at a reasonable price, they could have United States citizens working for them instead of illegal workers. Pass an amendment to that legislation that any employer who gets caught using illegal workers to be subject to a fine equal to the last years profit of said company. Would you risk your company to save a few bucks? There would be some modest inflation but in the end Americans would be better off. Exceptions could be made for the agricultural business that depends on migrant workers who follow harvests around the country.
- 2 years ago
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tommic
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remanns
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tommic:
THAT is along the right track. +^d
- 2 years ago
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remanns
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kulahptik
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One more example of corporations running our government.
- 2 years ago
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kulahptik
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diode
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i have an idea, how about we just make our own stuff? oh my god no way, it'd put jobs back into our economy! we can't have that
- 2 years ago
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diode
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remanns
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diode:
+^d !
- 2 years ago
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remanns
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WakeUpPeople
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As long as the USA remains a Corporatocracy, NAFTA will continue to exist.
- 2 years ago
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WakeUpPeople
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Incredulous
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another home run peterzylstramoore -- knocked it out of the park, and the simple truth is that the more pressure people put on their Congressional representatives to end this cheap labor for wealthy capitalists, the sooner we will make progress in this and may other arenas, including environmental well being. Congress may not care about these issues, but they care about keeping their over privileged pompous asses in their jobs.
The untold costs of free trade can be witnessed both on and off the balance sheets. We pay for free trade by making people like Sam Walton's family obscenely wealthy, while they keep their employees conveniently impoverished, and their customers conveniently intoxicated with cheap, worthless goods...
same formula applied by the coal industry in West Virginia, Kentucky and other coal mining areas.
- 2 years ago
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Incredulous
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diabolical44
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it's too late. you can't get the toothpaste back in the tube at this point. we were sold this false bill of goods. telling us it would be good for all. truth is its only good for business owners and union busters.
- 2 years ago
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diabolical44
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remanns
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diabolical44:
+^d Yep.
- 2 years ago
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remanns
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emnevsmom
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You do know......you can live without the lifestyles we have created. People in prison are surviving from food and a little sunshine. What is it with American's that we need more bigger better and fast? I need internet and that's it....wait till they take that away!
- 2 years ago
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emnevsmom
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Nephwrack
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fair trade!
- 2 years ago
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Nephwrack
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shanklinmike
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Nephwrack:
Fair trade is trade open to all, not a few hand selected corporate companies that get international loopholes. That is what NAFTA is, that is what we have lived under for a long time....corporatism. Protectionist efforts are what help build corporatism. Free trade allows more competition and helps the consumer chhttp://i2.crtcdn.net/images/spacer.gifoice.
- 2 years ago
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shanklinmike
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Rodashar
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shanklinmike:
Fair trade would be as useful to creating and sustaining jobs as free trade. Developing nations need to protect their manufacturing base and Developed countries need to trade with themselves. We need to remove the situation where a corporation can hire a worker for 50 cents a day by making it very costly to get that product back into competitive markets. free or fair trade with Mexico is a bad idea. Free or fair trade with any country who feels it can treat it's working class as surfs and slaves is not a good idea.
I think there is some validity to the claim that not having free trade with a developing country will cause an influx of illegal immigrants. I honestly had not thought about it before now. I guess with all that money from your newly revived manufacturing base you might be able to afford some border patrol.
- 2 years ago
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Rodashar
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JETaylor
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It seems to me when NAFTA was started their was plenty to go around, but that wasn't good enough soon after all the illegals came over here and started taking jobs for a small fraction of an American worker. Probably the greatest union buster their ever was. Thanks George
- 2 years ago
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JETaylor
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shanklinmike
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JETaylor:
Why are you so xenophobic? What's up with your racism...you got some serious problems...
Immigration is not bad, unless you're racist......
NAFTA didn't allow more illegal immigration....you look foolish stating such mistruths.
NAFTA is a 1300 page document that allows for international corporatism loopholes while still keeping the protectionist tariff costs on small business. It is Corporatism at its worse......sold to the followers as free trade that is NOT free trade.
Free trade doesn't need a law, we just need to be left alone in order to have free trade.
Anytime someone tells you freedom comes packaged up in a 1300 page document....see through it....it is probably just another corporatist measure....
NAFTA has NOTHING to do with REAL free trade.....just like the republicans have NOTHING to do with REAL Freedom.....
- 2 years ago
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shanklinmike
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peterzylstramoore
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JETaylor:
Illegal immigration exploded at the same time as our free trade policies were pushed on developing countries. Farmers on small plots of land couldn't keep up with our industrialized agricultre, and farmers make up over half the population of most developing countries. Forcing them to open there markets to our goods basically pushed half of the population in those developing countries out of work. They responded like anyone else would respond. By doing everything they could to survive including illegally immigrating, which absolutely as you suggest pushes down wages. But it is not helpful to hold angry views towards them. They are making the best of a situation we imposed on them.
Developing countries should have free trade among similar developing countries. Developed with developed countries. The US had the highest tariffs in the world while it was developing on industry b/c it new that it's infant industries couldn't compete with established industries in Europe. Because they were protected US industrialized and developed. Bc of free trade we are forcing countries to specialize in labor intensive low wage industries rather than nurture and develop manufacturing.
It isn't about us versus them. It's about allowing competition in innovation rather than wage and environmental standards. It's about not creating an international system that causes a race to the bottom in terms of who can pay the most criminal wages, who can disregard the environment, etc. Lower prices from these companies may temporarily help the consumer but the long term effects are the decline in manufacturing, and reduced wages in jobs, and an overall reduction in purchasing power (and subsequent unemployment) as countries are forced to keep their exchange rates artificially low in keeping exports competitive. This leads to consumer spending eventually being fuelled by debt. This is the story of the last 30 years, and the story sucks.
- 2 years ago
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peterzylstramoore
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shanklinmike
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peterzylstramoore:
You are ignoring Mexico's economic situation in this analysis.
You make it sound as if Mexico hadn't gone through fiat currency devaluation....you act as if Mexico has always been the same.
The reason Mexicans are coming to America is actually about the LEAVING poverty. They are trying to escape government created devastation in Mexico....
They wen't through central banking woes years before us...that is the difference.
Illegal immigrants wouldn't come here if they knew business was going elsewhere....your theory does not hold up.
The reason more "illegal" (I don't believe they are illegal) immmigration has occurred has been because of deteriorating conditions in Mexico....not NAFTA.....
NAFTA helps build loopholes for international corporations while keeping the protectionist barriers on small business.....
Once again, we haven't had free trade is a long time, NAFTA is not about free trade....
They just sell it to you as free trade but it's really managed trade.... free trade does not require a document.
- 2 years ago
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shanklinmike
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bailey78
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JETaylor:
Umm just what job did you lose to an illegal? where you a dish washer,lawn care guy,Umm meat cutter,cement finsher, or do you just like to complain?
- 2 years ago
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bailey78
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bailey78
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shanklinmike:
That is a out standing comment, sounds like you know whats happening in the real world. You must be one of the lucky ones that use your brain for something besides giveing yourself a head ache.
- 2 years ago
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bailey78
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JETaylor
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shanklinmike:
I didn't mean to insult anyone my statement was an opinion not any fact that's why I started out It seems to me. I remember when NAFTA was started I thought we was sharing our production with the rest of the world.
- 2 years ago
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JETaylor
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JETaylor
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peterzylstramoore:
In my area, I've seen many things, but nothing like the illegal immigrant explosion of 2001; 20 to a house, tent cities in every plot of woods, shopping carts all lined up as if they where parked. Nobody could compete with the companies that employed them. All 20 would work for one man's pay. It was totaly against the law and our government just turn a blind eye. When George left office they also left, at least in my area, Those houses are empy, tent cities were left in ruin, shopping carts all tossed about...the damage was done.
- 2 years ago
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JETaylor
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JETaylor
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bailey78:
I am no Stephen Hawkins that's for sure. I have been a Union Ironworker from Baltimore for 23 years and have worked on many large jobs (with 1,000 plus men and women) and have seen all trades fall victim to the illigal immigration problem. I'm not refering to legal immigrants they also struggle for equal pay and benifits.
- 2 years ago
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JETaylor
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JETaylor
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shanklinmike:
We can have no "50-50" allegiance in this country. Either a man is an American and nothing else, or he is not an American at all. - Theodore Roosevelt
- 2 years ago
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JETaylor
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artemis6
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I thought NAFTA was a bad idea to begin with . I have see enough jobs go far away to realize we should get rid of it .
- 2 years ago
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artemis6
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bailey78
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artemis6:
that will never happen to many big wigs getting rich off it.
- 2 years ago
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bailey78
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shanklinmike
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NAFTA isn't free trade...it's managed trade. We've never had free trade....ever.
Besides, why would you arrest people for freely talking and interchanging goods? We should be friends with everyone, not closed off and xenophobic!
This sounds like neoconservative rhetoric....it is anti peace.
I say NO trade Wars. I say peace with all countries, trade encouraged!
"When goods don't cross borders, soldiers will." ~Fredric Bastiat
- 2 years ago
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shanklinmike
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phillyphil
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shanklinmike:
managed trade for who's benefit?
most of the trade agreements we have going are one way streets of capital and goods away from less leveraged nations and people.
free trade always *sounds* like a good idea, until we realize that there is a LONG history of colonization and oppression that needs to be corrected before any form of *free trade* makes sense.
the playing field is far from level and not putting restrictions of negotiations on the table to protect workers and weaker economies puts them ever more under the control of the elites of this world.
I am all for freedom, but free trade seems to be only beneficial to those already in power. capitalism only requires for companies to make profit for shareholders, where are the stakeholders, natural resources and wage slaves located in that system? oppression has many forms, even under the guise of free trade.
- 2 years ago
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phillyphil
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shanklinmike
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phillyphil:
You can continue believing whatever you want.
I see how current corporatist companies LOVE protectionism that you fight for them!
They love having you believe that hurting you is help....they love the fact that you blindly support their excess profits through protectionist efforts.
What you are doing is perpetuating the status quo, you are helping give aid to big business when you go against free trade. The last thing a rich person today wants is more market action that would bring competition and drive down his profits.....
That is what MANAGED trade like NAFTA brings you...corporatism.
Once again, if you would research this....you would find this has NOTHING to do with free trade.
Look past the rhetoric.....
- 2 years ago
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shanklinmike
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Rodashar
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shanklinmike:
Fact of the matter is that every country has a working class equally skilled as your own. With free trade if a corporation wants to hire Chinese laborers for 50 cents a day to make clothing of the same quality they will hire that worker verse an American worker who would require 10+ dollars an hour.
Corporations care only about the bottom line. They are naturally greedy and uncaring about social inequality. We have to force corporations to care about people by giving them no incentive to hire that 50 cent a day worker.
Free trade between similar standard of living countries does work and would help keep those important manufacturing jobs at home.
- 2 years ago
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Rodashar
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diabolical44
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Rodashar:
deals like NAFTA stop companies from competing and start making workforces compete in a race to the bottom for wages.
- 2 years ago
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diabolical44
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Rodashar
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diabolical44:
This is true but if the corporations were forced to manufacture with a work force with rights and higher standard of living (for example free trade between Canada and The US) there would be no lower wages given that each country has a comparable standard of living and employee protections.
It is when you include countries like Mexico and China where workers have far less protections and the standard of living and wages are drastically lower that corporations have the option to hire lower wage employees.
- 2 years ago
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Rodashar
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phillyphil
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shanklinmike:
you tell me to look past the rhetoric and then post a video of ron paul spouting his version? i stand with him on many issues including the fact that NAFTA is wrong, that corporations are in control of trade agreements and have a revolving door with regulators.
where i disagree is that "true" free trade is the solution. i think that it masquerades behind a veil of being the force to right the inequities and take power away from Washington, but would in fact make it EASIER for corporations and bankers to exploit the workers and resources in other nations.
i am not in favor of protecting corporations, but rather in favor of having trade restrictions placed and designed in order to protect our economy and that of other nations. we should be facilitating trade but not at the expense of others. in a corporate system where companies are LEGALLY required to make profit, they will continue to make unethical choices in the search for the bottom line. riding the world of regulation will only make this worse.
get rid of corporations in politics, outlaw corporate personhood and start making real legislation that gives back democracy to the people of this nation and the world.
we need to rethink what we are doing, not open the "free trade" floodgates to fix the problem of free trade in general.
- 2 years ago
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phillyphil
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RaceBannon
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welcome to the global economy where all the class problems of one nation now are the problems of the world. I don't even want to imagine the future if this is the path we're going down.
- 2 years ago
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RaceBannon
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s_peak
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RaceBannon:
Seriously.
- 2 years ago
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s_peak
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kennymotown
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Some people in this country need too be schooled about this free trade stuff because they are not old enough to remember when one person in a family could have a job that paid all the bills and were able to buy a house and a new car every couple of years because we were not competing with people's of other country's who's standard of living was not what ours was. Soon after 30 years of this stuff people are realizing the 7 to 10 dollar an hour jobs that are left are not even paying half the bills. If this free trade is allowed to continue nobody will be able to own anything, just a paltry existence and nothing to look forward too. But hey you can still shop at walmart and buy chinese crap if that's what your all about. Being a slave to your master and a very slim chance of winning lotto to base your dreams on. When all boats are allowed to rise, as in decent jobs and decent pay we all benefit, but if you like the idea of only a small amount of people enjoying the riches of this country then you are blind! I feel sorry for these ignorant folks who know nothing of the past and refuse to look beyond their noses, for they are very small minded people.
- 2 years ago
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kennymotown
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s_peak
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kennymotown:
In a world where we share rather than steal... we can all be afforded an amazingly lavish lifestyle that is sustainable and non-toxic. Greed just creates false scarcity and class division... and the blindness continues.
- 2 years ago
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s_peak
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RicothePenguin
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kennymotown:
@Kenny I really wish I could buy stuff made in America :/
I tried boycotting chinese products a year ago (just to see if I could). Unless I planned to make everything myself it was basically impossible. Which is really a shame.
I have nothing against other countries but I do like to support my own. Since the people are close enough that I can see them it hurts a little more to watch them work themselves to homelessness.
- 2 years ago
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RicothePenguin
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kennymotown
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RicothePenguin:
Demand the products made in the USA, I know of a great website that has nothing but American products I'll try and post it later to day when I find it again. Got to go to work see ya later.
- 2 years ago
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kennymotown
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shanklinmike
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s_peak:
Government IS Theft & Force!
Statism IS Terrorism!
- 2 years ago
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shanklinmike
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ProjectBat
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Lol please don't talk such economic nonsense.
Free Trade is the best thing we could get right now. That inherently is more capitalism and that leads to wage inequality, aka exactly what capitalism does and is the only reason people don't like it, but do what? Free trade is the best thing for consumers. Industries that the US sucks at competing with loose that government support and that's a short term loss, but a long term better thing. Think a few years down the road before you post again.
- 2 years ago
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ProjectBat
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phillyphil
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ProjectBat:
think about other people before you post again.
economic libertarians want freedom for themselves at the cost of workers everywhere.
its not all about those dolla bills, consumers and profit margins. we are all people, and inequality is the state of the world right now. we can't pursue freedom and pretend that oppression will rectify itself in the marketplace....
- 2 years ago
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phillyphil
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kennymotown
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Free trade is only free for multi international corporations who pit U.S. workers against the world. It's time to reel it in and bring back huge tariff's, thanks to these corporations and a few hundred multi-billionare unamerican CEO's workers here in our country are forced to compete with people around the globe who are happy to work for a couple of bucks a day. WE ALL LOOSE with this new free trade crap. For thirty fucking years since Reagan started this crap it's been going down hill. If Nike want's to make a pair of tennis shoes for a buck in China and it cost 10 dollars to make it here, then the tariff should be 9 bucks. You will see company's bringing their manufacturing plants back faster then you can say USA.
- 2 years ago
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kennymotown
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missionaryhunter
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Rodashar and Peterzylstramoore both make excellent points. Nothing is black and white, except for my avatar image of Billy Batts.
- 2 years ago
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missionaryhunter
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Rodashar
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I think that he makes some very good points and this is something I have been saying for a long time but I don't think demonizing free trade is the right approach. Free trade has been an incredible boost to exports for both the United States and Canada. The issue I see with free trade is the point that the article makes about cheep labor. I personally think that free trade should exist between countries with similar standards of living and wages as long as the other country is not engaged in free trade with a country that does not support a high standard of living. As an example lets take NAFTA.
When NAFTA was first introduced between Canada and the US exports more than tripled... this is great because it allows for a strong manufacturing base to find competition and sell it's products in other markets. However when you add Mexico to the list you quickly see manufacturing and producing jobs flow south of the border. Mexico does not support a high standard of living or wages for it's citizens and thus labor is cheep there. It costs less for corporations to product goods and since there is free trade, these corporations ship the cheaply made products back into the US for sale.
Lets renegotiate NAFTA and exclude Mexico until such a time as Mexico can provide a suitable standard of living to it's citizens. We can work together to make free trade work and at the same time force other countries to be more socially active with their populations.
- 2 years ago
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Rodashar
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peterzylstramoore
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Rodashar:
I agree that we need to take an evolutionary approach to the issue and distinguish the benefits of good trade from free trade. I also think there is gains from trade among nations at comparative stages in there development. Countries with similar wages, environmental regulations, can compete in innovating. When developed countries trade with developing countries rather than innovating we get competition in terms of who will deregulate their industry the fastest in terms of paying lower wages and disregarding environmental and safety standards.
Similarly when developing countries are forced into free trade, they basically de-industrialize as was the case in the former soviet union and in latin america during the free trade push beginning in the eighties. Asian countries actually continued to develop industry because they were big enough to say no to liberalization, and have continued to protect manufacturing behind tariffs until it's ready to be competitive and at that point slowly opening it up to trade, similarly to how the US protected it's infant industry behind tariffs when it was catching up to Europe. http://mrzine.monthlyreview.org/2009/chang230109.html or see Erik Reinert "how rich countries got rich and why poor countries stay poor" or Chang "Bad Samaritans"
Because Asian countries could depend on our consumption they could hold there wages artificially low, because we would consume there surplus. This has led to reduced wages and a decline in manufacturing here as well as high levels of consumer debt, but artificially high growth there. However, they have a large enough internal market, and developing countries have large enough shared markets that they can compete with eachother, rather than forcing down our wage rates. Middle income countries can also trade amonst themselves. They can develop their own wage and environmental standards according to what is realistic given there productivity level. Also, if stragglers are freely allowed to copy our technologies b/c we don't have to compete with them (b/c they are part of a different market) then what they lose in our consuming power will be made up in the speed in which they can take up our technologies.
- 2 years ago
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peterzylstramoore
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treewolf39
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Rodashar:
Environmental standards are a huge reason america lost manufacturing jobs. Not having to clean-up after yourself saves tons of money.
- 2 years ago
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treewolf39
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Rodashar
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treewolf39:
Environmental issues would definitely be something I would include in the negotiations of the free trade agreement. I think Environmental issues are a huge part of our standard of living. So if a country was a mass polluter they would not be allowed to trade in the free trade markets.
- 2 years ago
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Rodashar
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Dagum
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Free trade isn't Fair trade. End NAFTA
- 2 years ago
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Dagum
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treewolf39
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It is sooooo time. I would like to live in a country that builds quality products.
- 2 years ago
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treewolf39
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slarabee [removed]
- This comment was removed as a violation of community guidelines.
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slarabee [removed]
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bombastinator
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slarabee:
It's likely my expertise is at least as deficient as yours if not more so, but I suspect now may already be too late. At this point repealing NAFTA could crush the world economy. Any action would have to be extremely gradual.
- 2 years ago
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bombastinator
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peterzylstramoore
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bombastinator:
I agree that we need to take an evolutionary approach to the issue. I also think there is gains from trade among nations at comparative stages in there development. Countries with similar wages, environmental regulations, can compete in innovating. When developed countries trade with developing countries rather than innovating we get competition in terms of who will deregulate their industry the fastest in terms of paying lower wages and disregarding environmental and safety standards.
Similarly when developing countries are forced into free trade, they basically de-industrialize as was the case in the former soviet union and in latin america during the free trade push beginning in the eighties. Asian countries actually continued to develop industry because they were big enough to say no to liberalization, and have continued to protect manufacturing behind tariffs until it's ready to be competitive and at that point slowly opening it up to trade. Because they could depend on our consumption they could hold there wages artificially low, because we would consume there surplus. This has led to reduced wages and a decline in manufacturing here, but artificially high growth there. However, they have a large enough internal market, and developing countries have large enough shared markets that they can compete with eachother, rather than forcing down our wage rates. Middle income countries can also trade amonst themselves. They can develop their own wage and environmental standards according to what is realistic given there productivity level. Also, if stragglers are freely allowed to copy our technologies b/c we don't have to compete with them (b/c they are part of a different market) then what they lose in our consuming power will be made up in the speed in which they can take up our technologies.
- 2 years ago
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peterzylstramoore
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Mark701
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NAFTA is a crock of shit and will always be a crock of shit. Everything people were afraid was going to happen because of it, has happened. US jobs have gone overseas. First it was blue collar jobs, now white collar. Even doctors are having xrays read in India. This was predictable from the get go. But a Republican congress once again screwed America by pushing it's passage during the Clinton Administration. Everything Republicans touch turns to dust for the middle class. Very sad.
- 2 years ago
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Mark701
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peterzylstramoore
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Data for the first period, 1947-1973—the data above the grey line—shows there was considerable real economic growth for each quintile. Over the 26-year period, there was approximately 100 per cent real economic growth for the incomes at the top of each quintile, which meant incomes doubled after inflation was removed; thus, there was significant economic growth in the society.
And importantly, this real economic growth was distributed fairly evenly. The data in the fourth line (in parentheses) is the percentage relationship between the difference between 1947-1973 real income when compared to the 1947 real income, with 100 per cent representing a doubling of real income: i.e., the difference for the bottom quintile between 1947 and 1973 was an increase of $11,386, which is 97 per cent more than $11,758 that the top of the quintile had in 1947. As can be seen, other quintiles also saw increases of roughly comparable amounts: in ascending order, 100 percent, 107 percent, 101 percent, and 91 percent. In other words, the rate of growth by quintile was very similar across all five quintiles of the population.
When looking at the figures for 1973-2001, something vastly different can be observed. This is the section below the grey line. What can be seen? First, economic growth has slowed considerably: the highest rate of growth for any quintile was that of 58 per cent for those who topped the fifth quintile, and this was far below the “lagger” of 91 per cent of the earlier period.
Second, of what growth there was, it was distributed extremely unequally. And the growth rates for those in lower quintiles were generally lower than for those above them: for the bottom quintile, their real income grew only 14 per cent over the 1973-2001 period; for the second quintile, 19 percent; for the third, 29 percent; for the fourth, 42 percent; and for the 80-95 percent, 58 percent: loosely speaking, the rich are getting richer, and the poor poorer.
- 2 years ago
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peterzylstramoore
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peterzylstramoore
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peterzylstramoore:
Free Trade also Destroys Developing Countries
The argument that new industries in relatively backward economies need protection and nurturing before it can compete with their superior foreign rivals is known as the 'infant industry' argument. It was first systematically developed by someone whose face most readers would have seen without realising whose identity -- it is Alexander Hamilton, whose portrait adorns the ten-dollar bill.
Hamilton became the first finance minister (treasury secretary) of the US in 1789, at the outrageously early age of 33. Two years later, he submitted his Report on the Subject of Manufactures to the US Congress. In it, he expounded his view that the country needed a big programme to develop its industries. The core of his idea was that a backward country like the US should protect its 'industries in their infancy' from foreign competition and nurture them to the point where they could stand on their own feet. Hamilton proposed a series of measures to achieve the industrial development of his country, including: protective tariffs and import bans; subsidies; export ban on key raw materials; import liberalisation of and tariff rebates on industrial inputs; prizes and patents for inventions; regulation of product standards; and development of financial and transportation infrastructures. Although Hamilton rightly cautioned against taking these policies too far, they are nevertheless a pretty potent and 'heretical' set of policy prescriptions. Were he the finance minister of a developing country today, the IMF and the World Bank would certainly have refused to lend money to his country and would be lobbying for his removal from office.
In recommending such a course of action for his young country, the impudent 35-year-old finance minister with only a liberal arts degree from a then second-rate college (King's College of New York, now Columbia University) was openly going against the advice of the world's most famous economist, Adam Smith. Like most European economists at the time, Smith advised the Americans not to develop manufacturing. He argued that any attempt to 'stop the importation of European manufactures' would 'obstruct instead of promoting the progress of their country towards real wealth and greatness'.
Following the Anglo-American War in 1812, the US started shifting to a protectionist policy, and by 1820, the average industrial tariff rose further to 40%, firmly establishing Hamilton's programme. By the 1830s, its industrial tariff rate became literally the highest in the world and remained so until the Second World War, when its manufacturing supremacy became absolute.
The US may have been the first country to theorise infant industry protection, but the practice had already existed before . The first country to practice it on a large scale is, surprisingly, Britain -- a country commonly believed to be the inventor of free trade.
Declaring that 'nothing so much contributes to promote the public well-being as the exportation of manufactured goods and the importation of foreign raw material' through the King's address to Parliament in 1721, Robert Walpole, the first British prime minister, launched a series of policies that protected and nurtured British manufacturing industries against superior competitors in the Low Countries (Belgium and the Netherlands), the then centre of European manufacturing. The Walpolean policies lasted for the next century. Between Walpole's time and the 1830s, when Britain started to reduce its tariffs (although it did not move to free trade until the 1860s), Britain's average industrial tariff rate was in the region of 40-50%, against 20% and 10% in France and Germany respectively, countries that we today associate with trade protectionism.
Britain and the US, the two supposed homes of free trade, may have been the most ardent -- and most successful -- practitioner of infant industry protection, but they are not exceptions. Virtually all of today's rich countries used deliberate policy measures to protect and nurture their infant industries before they became rich.
Ha-Joon Chang
http://mrzine.monthlyreview.org/2009/chang230109.html
Ha-Joon Chang, from South Korea, also has also written on how the East Asian countries, the only developing countries really rapidly developing today have also used trade barriers to promote industrial development. See his book 'The East Asian Development Experience' most of which is available online here:
http://books.google.ca/books?id=nSqXpDiQ4ggC&pg=PA3&lpg=PA3&dq=ha-jo...=onepage&q&f=false
- 2 years ago
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peterzylstramoore
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phillyphil
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peterzylstramoore:
phew, thanks for your work. thats a lot of history.
cheers
- 2 years ago
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phillyphil
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Ish05
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peterzylstramoore:
that is some interesting history. I came across a few videos that depict the infant united states as founded to being against free trade. It's very interesting. Lincoln's own economic Adviser, Henry C Carey, explicitly attacks free trade in his letters to London. 15 minutes into the video is where this part of U.S history is elaborated. The organization that created the documentary has been met with much criticism. But, is a very interesting part of U.S History that is not being taught in schools today.
http://www.youtube.com/watch?v=RgcdRCWEt4Q - 2 years ago
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Ish05
