How fair is free trade?

Wednesday, May 09, 2007

By Gary Trauner

Wyoming and much of the Intermountain West is currently experiencing an economic boom. Jobs are hard to find and state coffers are filling up. And although the benefits of this “boom” are incredibly uneven (this is the first recovery in modern history where corporate profits consume the lion’s share of the economic “recovery” while wages have stayed relatively stagnant), it is hard to imagine that there might be hard times in the future.

Which brings me to the issue of free trade and outsourcing of jobs. This issue not only affects westerners today, it will have a crucial impact on their future and their children’s future.

It seems as if today’s strongest proponents of free trade believe that corporate profits and cheap prices are the only results that matter, minimizing the impact on people. Trade does not exist in a vacuum. It is a complex issue that defies simple, ideological answers.

Proponents of “free” trade tell us we should let other countries do what they do best, and we in America should concentrate on what we do best. But there is a big difference between doing things more efficiently and simply doing things cheaper. Perhaps China or Guatemala can make t-shirts cheaper than we do (due to workers earning a few dollars a day), but who really thinks they inherently do it more efficiently?

Large corporations are responsible to their owners, otherwise known as shareholders. They tend to define self-interest and success narrowly: increased profitability and increased “shareholder value.” For example, all other things being equal, if a company can pay a well-educated engineer in India $5,000 for the same job that pays $65,000 in the U.S., over time, the company will move jobs to India in the interest of making more money.

While this increases that company’s bottom-line profit margin, it does not benefit engineers who live in the U.S. However, to paraphrase an old saying, what is good for large corporations is not always good for individuals in America.

Until such time as wages and conditions equalize across the planet, we in the U.S. will pay a steep price for having developed a higher standard of living. The truth is that the unprecedented and incredible success of the American economy was made possible by public contributions and the role of government in developing our nation’s infrastructure – roads, anti-corruption laws, regulatory oversight, minimum wage laws, child labor laws, environmental laws, etc. – the foundation for our country’s  becoming a world leader.

 I find it interesting that free trade proponents argue that protecting workers or the environment or the rule of law limits the benefits of such agreements.  Yet, how many people are aware of the fact that NAFTA, the North American Free Trade Agreement, contains copyright and intellectual property profit protections for corporations, yet no real protections for workers or the environment.     

NAFTA also contains protections for foreign corporations that let these companies sue our government; these cases are not argued in open court, but in secret panels before groups like the World Trade Organization, which can  award them unlimited damages – paid for by the taxpayers of the United States.

“Free” trade without protection for workers (both here and abroad) is a bad choice. “Free” trade without the rule of law and support for those people displaced by outsourcing and job losses is a bad choice. “Free” trade that does not require other countries to play on the same level playing field as the U.S. is a bad choice. Finally, “free” trade without ensuring a sustainable long-term economy and the protection of our dwindling natural resources is a bad choice.

I support increased international trade. Trade that is “fair” as well as “free.” But let’s face it – true “free trade” is a myth. All nations utilize “managed” trade, opening up markets when desirable and protecting markets when deemed politically necessary. 

Let’s remember that the whole reason for our economic system is to benefit people. Wyomingites should not support “free” trade agreements that place the interests of corporate entities ahead of individuals, the future sustainability of our world economy and the environment. Because, in the end, what matters most is the impact this has on the hard working people of Wyoming and our country.
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