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April 5, 2006

So-Called "Free Trade" Isn't Trade At All

-- by Dave Johnson

If we have "free trade" with partners in a "free market" why do we have a massive trade deficit? If it really was a "free market" wouldn't our trade "partners" use the dollars we give them when we buy things from them to buy things from us?

The idea of "free trade" is that things are supposed to balance out. We buy things made there, at a cost of jobs for people who had been making things here. But the whole idea is that they get dollars from that exchange, and then can buy things made here, bringing different jobs to the people who are not longer making the things made in China. That's why it's called TRADE -- we TRADE things made there for things made here.

But that is not what is happening. We are not TRADING. We buy goods manufactured in China. China accumulates dollars. But those dollars are not buying things made here. If they were, there would not be a trade deficit with China. So it is not balanced. And there is more than a trade deficit, there is a huge job deficit. The only thing we are TRADING is our jobs for their things. And we are borrowing the money to do that.

But it's worse than that. There is also depreciation of our manufacturing infrastructure. I mean investment in new manufacturing is occurring in China and not here. So not only are we sending jobs to China, we are sending our ability to make things away to China as well. We couldn't just start making things now because we have closed our factories, not bought the latest equipment, etc. We would have to invest in new, modern equipment and train workers in new techniques.

Free trade requires that both trade partners play the same game following the same rules. That is obviously not what is happening today. We are losing our jobs, our pensions, our health insurance , wages are dropping, those with jobs are working longer hours and taking fewer vacations. And we are borrowing massive amounts of money to accomplish that. We have been sold out - literally.

Posted by Dave Johnson at April 5, 2006 8:17 AM

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Comments

So what's the correct name for what's going on? I agree -- it's certainly not "free trade" which implies an exchange of goods. The use of the term "free trade" is just propaganda to give a nice face to what's really going on.

Posted by: MJ [TypeKey Profile Page] at April 5, 2006 9:58 AM

Very well written core argument. Free trade: We buy from them, they buy from us. What we have: We buy from them, they buy U.S.

Posted by: jim from '63 [TypeKey Profile Page] at April 7, 2006 8:10 AM

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