Coffee Q1 - Free Trade
Coffee Q1 - Free Trade
- Do you think Free Trade, as it currently exists, is sufficiently beneficial to all of us?
- Would policies related to Free Trade influence your vote in an election?
Coffee Qs are questions we'd like you to think about and talk about over coffee or tea, when chatting with friends and family.
We'll give you a little background and our point of view - but, we'd like to hear what you think too.
Click on the "Post a Comment" tab at the bottom of this blog to give your views.
The topics on this site are of general interest even if there is local content.
For non-English speaking guests, we hope that the Translation gizmo at the bottom of the green block above is helpful - and we hope that our use of the vernacular (local turn of phrase) is not too confusing. We'd like to hear what you think about these questions and issues too.
But mainly we'd like you to start talking about these matters with family, friends and fellow-workers.
Why Free Trade as the topic for Coffee Q1?
Free trade is a form of "political think" that has evolved into political policies that have affected people the world over. It has been subject to major spin by governments, economists and marketing spin-doctors globally.
In our view, Free Trade is a bit like the fairy tale: "The Emperor's New Clothes". This is a fable about vanity, naivety, deception and truth by Hans Christian Andersen. The story is about two tailors who promise an Emperor a new suit of clothes. They tell the Emperor that the suit is invisible to those unfit for their positions, or stupid, or incompetent. They charge the Emperor a fortune and pretend to be making a fabulous costume. The Emperor is too embarrassed to admit that he can't see the tailors using any materials to weave the cloth. When the Emperor parades before his subjects in his "new clothes" most of his subjects are shocked but dare not say anything. Then a child cries out, "But he isn't wearing anything at all!" - and the truth is out. The tale has been translated into over a hundred languages.
We think we are being spun a story by crafty weavers; and that free trade is not as great as we are being told it is.
The Wikipedia article on free trade hypes the benefits of free trade and minimizes the consequences free trade has had in regards to producing: unemployment, business and industry closures and other adverse affects on the economy of ordinary people in the so-called developed countries who have been participating in free trade.
This leads to an important point - there is a general tendency to believe that the content of Wikipedia is accurate and unbiased. Sadly, this is not always so. The content of Wikipedia can be by anyone - including you or me. (Remember governments, big businesses and large organization have a lot of resources to put stuff on line - it is another media to spin). Because something is online does not necessarily make it true. It may be truthiness disguised as truth.
Most of the data on Wikipedia is great. But you should regard all online data with a reasonable amount of skepticism because the information provided may be skewed. While the wikipedia entry on free trade may be factual from some economists' point of view - we think it's time the overall consequences of free trade on ordinary people (not just the rich and powerful) needs to be thought through and talked about by ordinary folk like us.
Watch out for the GDP Trick
There is a great tendency for spin-doctors representing governments, big business and organizations to compare countries, and assess economic progress based upon changes in GDP (gross domestic product). It is important that when you think and talk about free trade that you not be tricked by data that focuses on changes in GDP. GDP is a concocted market value of all officially recognized goods and services within a country in a given period of time. GDP is NOT the same as average income.
Spin-doctors also often deal with GDP as an indicator of a country's standard of living. GDP is by no means a true reflection of the average personal standard of living (which is dependent on actual income and other factors). GDP does not take into account the uneven distribution of wealth within the country.
For example - say a group of 100 people made a total of $100,000 in a week between them. The average would be $1,000 per person which sounds great. But if 5 of those people made $90,000 between them (average of $18,000 for each of the 5) and the other 95 made $10,000 between them (an average of $105 each) - then that is a totally different story. It is fair to say that the quality of living of those making the $18,000/week would be substantially greater than those making $105.
If that $100,000 represented the GDP; and was averaged out amongst all 100 people; then, as you can see, the average of $1,000 would be 10X more than the actual income of the majority of the people. Average incomes are misleading in that they do not take into account wealth distribution - and GDP is a particularly misleading method of assessing economic impact - because for the most part it does not show what is really happening to ordinary people.
If you want to get a more accurate picture of income and employment (and other factors), you might find the data from the ILO (International Labor Organization) an interesting read. Be warned. There is a mind-boggling amount of data. But some of it will make your eyes pop.
Our thoughts on Free Trade:
This is a Blog with the mission to inform and encourage people to think about issues that will likely have an impact on them. Like all Blogs, it reflects the opinions of the writers - which may not be the same as yours.
Here's what we think about Free Trade:
The big sell for free trade is:
- Trade of goods without quotas or taxes (Think of all those throw-away $2 goodies made in other countries; as well as cheaper tools, appliances and vehicles - made overseas).
- Trade in services without taxes or other trade barriers. (This is more than those out-sourced help desk people located around the world who answer the phone when you make an inquiry about a local service. Think of government contracts acquired by overseas firms. Think more tax money going off-shore).
- The absence of "trade distorting" policies that give local production an advantage over production elsewhere. (Think deregulation and privatization; think big businesses moving production overseas to reap a greater profit from cheap labor; think local job losses and local business and industry closures).
- Free access to market information. (This is probably of interest to people with money to invest).
- Inability of firms to distort markets through government imposed monopoly or oligopoly power (in other words another excuse to privatize and deregulate.)
The more people who are laid off, the fewer there are to pay taxes. The fewer people there are to pay taxes, the greater the risk for governments going into debt, defaulting on services of all sorts, including salaries, benefits and pensions. It puts the general public at risk of being subject to a money-grab by government - as occurred in Cyprus, in response to conditions required for a bail-out.
We think the troubles in the Eurozone are partly a consequence of Free Trade. The more countries go into debt to huge banks (share-holder owned by huge corporates), the greater the risk of: further job losses (just read the news about what countries have been required to do to qualify for bail-outs); loss of ownership or control of economic resources; the risk of loss of national sovereignty; along with loss of democratic rights and freedoms - all of which are likely to result in great injustice.
We think there is an increasing risk of a rich elite calling the shots with the cash-strapped countries held under their thumb. The governments of the affected countries (and the people) are expected to fall into line. They are under direction of people who are not only not elected by the people, but are not necessarily even nationals.
Remember, "Button, Button" - the money hasn't disappeared...
"The Emperor's New Clothes" are an illusion.
Free Trade as it currently exists is a danger to the economic well being of ordinary people everywhere, and is a potential threat to democracy and justice.
We think the conditions for "Free Trade" need to change. Policies need to be implemented to create and keep jobs in each nation's own country. Policies need to be changed to prevent losing control of our natural resources and vital infrastructure.
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