Thursday, July 24, 2008

Beggars Can't Be Choosers

Yesterday, I was listening to a discussion on "free trade" agreements. Included in the discussion was one of Senator Obama's senior economic advisers; one of the rumored "300" or more economic thinkers he supposedly has on his staff. And, what I heard was disconcerting.

What that adviser said, in essence, was that we "should" negotiate our "labor concerns" into any free trade agreement. His position (and I assume Obama's) is that the United States can both protect jobs here and in the country that we are negotiating with, if we include our socialistic concerns. To me this "idealistic crap" is what you would hear at an elitist dinner party of a bunch of college professors and which, in actual practice, is simple folly. This typifies the kind of "economic" experts that Obama has surrounded himself. In a news article that was primarily written about Obama's chief economic expert, Austan Goolsbee, Kevin G. Hall of McClatchy Paper's Washington Bureau wrote this in April: "Barack Obama is surrounded by bright but untested academic economists who are on the cutting edge of research on health care policy, social insurance, technology and taxes.." The description of "bright but untested academic economists" says a lot. Let's not forget that Obama comes out of a university setting so, it is logical that he would gravitate to the highly theoretical side of economics. If elected, it appears that Obama and his economic team will take our economy and move it into the laboratory as if it was some kind of laboratory rat. And, like a lot of rats in experimentation, well, you know the ending. Obama's "economists" are the kind of people that, if you asked them to build a table, they wouldn't even know where to start. However, if you asked them about the impact of a table on society, they could and would talk all day.

Missing in this whole discussion of Free Trade is the "fact" that we are part of a world economy and we are in the midst of a worldwide "sellers" market. We are the high-priced player in a world of lowering prices and we can't dictate anything. Sure, if we had a "lock" on, say, all the heavy equipment in the world or were the dominant player in electronics, automobiles and trucks, airplanes, and a variety of other industries, we could dictate a lot things. But the reality is that we are a "bit" player, these days, in a world market that is not so picky. We are the beggars who can't be choosers. If we want to compete in a country like Columbia, we can't stand on some idealogical labor and/or social principals. In doing so, companies like Komatsu, Volvo, and Hyundai will have Deere and Caterpillar for breakfast in the heavy equipment arena because countries of those companies are willing to sign trade agreements without trying to impose their own socialistic "values" on their trading partners. While we play the game of waiting for a country like Columbia or South Korea to gravel and get down on their hands and knees and beg "us" for a trade agreement, other countries will quickly "button up" their agreements with those countries and will start selling their wares at prices lower than we can compete with. As a result and all the while we stand on principal, we will "continue" to lose jobs in the "rust belt" of America as we fail to negotiate free trade agreements with country after another.

I guess we could "threaten" importation tariffs against countries who won't accept our "mandated" trade terms. But, since Americans don't even buy American, we will ultimately foot the bill for those tariffed goods because, I think, we will continue to buy those all those "imported" items; but, this time, at the higher, tariffed prices. Also, it sends a "protectionist" signal to the rest of the world. Quite frankly, it shows us to be a bully. That kind of posture will invoke the beginning of trade wars between other trading economies in the world. Because we aren't hardly in the position of either quality, innovation, or price, we will surely lose in that battle.

Barack Obama's chief economic adviser, Austan Goolsbee, is apparently for free trade. However, to me, nothing is free if it carries a truck-full of "conditions" along with it. Ask yourself: Is a prisoner really "free" if he has to wear a monitoring device and can't leave his home? "Restricted" trade isn't free trade. And, America can't dictate trade in this world. We would foolishly try to be a "cartel of one" in world that really doesn't care!

Of course, I could be all wet on this. But, it's my lowly opinion and I'm sticking to it until I am proven wrong!

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