The Stupidity of Americans for Free Trade

As Trump mulls over imposing new tariffs on Chinese goods, a self-proclaimed grassroots movement is on the rise to counter his measures. A coalition of trade associations called ‘Americans for Free Trade’ is running ads and holding events in Congressional districts.

The Americans for Free Trade coalition claims to be a grassroots movement representing thousands of American workers and households. But take a quick glance at their member list and the associations that have exploited third world labor the most are on it.

It doesn’t take more than common sense to look through this charade. First off, the unemployment rate is the lowest in twenty years and wages are rising for the first time in decades. Why would workers need to join a coalition when things are finally looking up?

Secondly, the so-called free trade agreements benefited multinational corporations but hurt the American worker. The best example is NAFTA. Ronald Reagan began talks on NAFTA. George Bush Sr. framed it and finally, Bill Clinton signed it into law. With the exception of Obama, these were three of the most pro-rich Presidents in modern history and it shows in NAFTA.

Bill Clinton vowed that NAFTA would create stable and high paying jobs in the US. The manufacturing sector has since lost 6 million jobs. A number of other sectors also lost jobs and those that didn’t, suffer from stagnant wages. It wasn’t because Reagan, Bush, or Clinton made a mistake. NAFTA performed exactly as they thought it would.

Big businesses moved their plants to Mexico to exploit cheap labor. The businesses that didn’t, kept the US workforce docile with outsourcing threats.

Small Mexican businesses couldn’t compete with global companies and thus closed down. To stem the flow of immigration into the US, Bill Clinton militarized the border. The timing of his order proves that he knew the impact NAFTA would have on Mexican workers. Until then the border virtually did not exist.

But granting access to the cheap workforce was only an ancillary part of NAFTA. The main aim was to override the will of the people. NAFTA outlawed Government actions that hurt corporate profits.

Chapter 11 gives corporations the right to sue Governments for lost revenue. Let’s say if Mexico passes a labor law that US corporations don’t like, they can sue the Mexican Government for damages. Here NAFTA forces the Government to act against the welfare of the people.

Mexico has paid over $250 Million in penalties so far. The US is yet to lose a case.

This is not free trade. To Adam Smith, free trade meant the free movement of labor. So if a US President wanted free trade, he would remove all barriers at the southern border.
Treaties like NAFTA only protect investors. They provide a secret court for dispute resolutions. NAFTA removed all restraints on the capital flow between US and Mexico and helped companies move plants to the south of the border.

Free trade in this sense is only the free movement of capital. The term globalization also means the same thing. When we hear that globalization has increased, it doesn’t mean that immigration has increased. It means the movement of capital has increased. In Adam Smith’s terms, both globalization and free trade have decreased.

Likewise, when they say that NAFTA increased trade between Mexico and the US, pay attention to what they count as trade. If Carrier moves parts from its’ plant in Mexico to a plant in the US, most statistics count that as trade. There is no credible analysis of actual trade between the two countries but don’t be shocked if it has decreased since NAFTA.

Is this the system that Americans for Free Trade want to save?

Is it just a coincidence that Americans for Free Trade share Koch brothers’ concerns?

The trade associations funding the ‘Tariffs hurt the heartland’ campaign look a lot like the wealthy donors that riled up the Tea Party.

Like the Tea Party, Americans for Free Trade is a self-proclaimed grassroots movement representing the people. Like the Tea Party, it is fighting for deregulation that favors big businesses.

Rather than treat Americans for Free Trade members with the same skepticism as the Tea Party donors, Liberal media have welcomed their efforts. So long they are opposing Trump, they will receive positive coverage.

Even Fox News is running their ads despite their communistic nature. Somehow the rise of workers all across America against a GOP President doesn’t seem communistic to Fox as long as it favors the Republican donors.

The fact is that this is the best time for tariffs. With rising wages, consumers can afford higher prices. And with money leftover from tax cuts, businesses don’t have to increase prices abruptly.

The inflation will go up but interest rate hikes from the Fed will keep it under control. Hyperinflation is out of the question. The dollar is strong as ever and domestic manufacturers have the funds to pay higher prices for raw material.

Many criticized Peter Navarro for calling the tariff impact ‘rounding error’ but he was right. America is not an island nation like the UK. Tariffs would affect some sectors more than others but the overall effect might disappear within 2 to 4 years.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s