Skip to main content

Free trade doesn't work, the global economy is a myth and the U.S. has been duped during trade negotiations for the past 40 years according to economist Ian Fletcher.

HUFFPOST: You argue that protectionism is more "American" than free trade. How would you respond to libertarian types who might see this as an assault on America's deeply-held capitalistic values?

IAN FLETCHER: Libertarians simply don't know their history. Take out a $10 bill and have a look at the portrait on it. Alexander Hamilton, founding father and intellectual architect of American capitalism, was a protectionist, and protectionism was American policy from Independence until after WWII. The reality is that a blend of government support for economic growth along with vigorous market-oriented competition has been the American tradition from the transcontinental railroad to the Internet. Entire industries like semiconductors and aircraft were effectively launched by Cold War military industrial policy. Is it an accident that nations, like China, that still do this sort of thing are cleaning our clock right now?
Click hear to read the entire interview at The Huffington Post.

HUFFPOST: You thoroughly and convincingly document, supported by countless inconvenient facts, how protectionism has been much more beneficial to the U.S. throughout history than free trade. If protectionism is clearly the better economic policy, why is the U.S. so resistant to change?

The U.S. isn't totally resistant to change on this issue, and it is, in fact, changing. Since the late 1990s, one can trace public opinion and congressional majorities inexorably turning against "free" trade, which has really been a distinctive, offshoring-focused approach to trade policy to benefit multinational corporate interests. Why has it taken so long? Corruption, both the obvious kind driven by campaign finance, and the subtler kind deriving from the laziness, complacency, and intellectual arrogance of economists.

The "American" multinationals, which are no longer American corporations but find this fiction convenient on Capitol Hill, and other free trade advocates have prevailed because a critical mass of American voters has not yet seen through the delusional economics of free trade, and because America can still borrow money abroad and sell off assets to cover its trade deficit. But this music is going to stop fairly soon.

HUFFPOST: But doesn't foreign competition force U.S. corporations to become leaner and more productive?

IAN FLETCHER: Sure, but I'm not against foreign competition. I'm not against trade either. I'm against free trade and the ersatz version thereof we are being subjected to, neither of which are the same thing as trade per se. Companies need enough competition to keep them on their toes, but not so much as to knock them off their feet. The U.S. color TV industry hasn't exactly been driven to heights of efficiency by foreign competition--because foreign competition killed it. And a lot of that competition wasn't free at all; it was subsidized by foreign nations seeking a foothold in strategic industries, i.e. those with a future.

HUFFPOST: India's prime minister recently suggested offshoring processes to India makes American corporations more productive overall. Is there any validity to this statement?

IAN FLETCHER: This is a mirage created by the fact that if you offshore the low-productivity jobs from an American company, the jobs remaining in the U.S. will have, by definition, higher productivity--creating the illusion that the company is now more productive. But jobs have still been lost, and there is, pace laissez-faire economic theory, no guarantee that the workers who formerly held them will find new jobs of equal or greater value. What works on the level of the individual company is a net loss for the economy as a whole.

And it's erroneous to suppose that merely upgrading skill sets will be enough to protect American wages and employment levels if we do nothing to fix our employment situation. Educating people for jobs that don't exist because they've moved abroad will not magically cause jobs to come into existence.

Click hear to read the entire interview at The Huffington Post.

Originally posted to Michael Hughes on Wed Dec 08, 2010 at 01:11 AM PST.

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  a little off topic but (0+ / 0-)

    what the indian PM said

    India's prime minister recently suggested offshoring processes to India makes American corporations more productive overall.

    makes some sense. he did not say it is good for the american worker or wages . but if an AMERICAN corpaoration can offer its product with less wage costs because off outsourcing the productivity off this corporation should be higher or do i miss something here. again he talked about the corporation and not the american worker . and the old mantra whats good for GM (or wallmart ) is good for the USA is just that an old mantra.

  •  Nice post. Thanks for sharing. It's a shame it (0+ / 0-)

    didn't get more play.

    This is a huge part of our problem.


    Democracy - 1 person 1 vote. Free Markets - More dollars more power.

    by k9disc on Wed Dec 08, 2010 at 02:53:18 AM PST

  •  A few concerns on this (1+ / 0-)
    Recommended by:
    gerald 1969

    Firstly, that everyone who disagrees with him only disagrees because they're either corrupt, lazy or stupid.  Anyone who dismisses other points of view in that manner is just hard to take seriously.  Unfortunately it's a common explanation about why free trade advocates differ from opponents, but it's just not credible, and it's not how serious analysts would approach such a policy debate.

    Secondly, I'm wondering if his ideas have really been thought through. A 30% tariff on everything?  Even things we don't make?  I don't see what economic benefit a 30% tariff on bananas would have or how it is going to help anybody find a job in the United States.  And just where did the 30% number come from?  Was there any research behind it or just a number he pulled out of a hat?

    There also doesn't seem to be any analysis of just what effect a sudden imposition of tariffs would have on the global economy, including the U.S. economy.  What effect would it have on inflation?  On prices of inputs to our industry?  Who benefits and who suffers?  Is a radical shakeup in trade and supply chains the best thing for a still uncertain global economy?  How would it affect export industries?  Would developing economies suffer?  I know there's not a lot of concern for how other countries would suffer when U.S. unemployment is high, but there are foreign policy repercussions that would have to be dealt with if this policy were pursued.

    This may all be in his book, but I wonder.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site