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March 18, 2014

When Free Trade Does Not Work

Free trade does not work if you are dealing with a country that uses slave labor or sacrifices other important issues like the environment or safety. Improving the environment does not happen without costs. The United States invests in technology to help improve our air quality and purity of our drinking water. Saving our forest land comes with a price. Investing in solar energy helps future generations to live in a better environment but presently it is expensive compared to fossil fuels.
"Trickle-down economics is a myth. Enriching corporations — as the TPP (Trans-Pacific Partnership) would — will not necessarily help those in the middle, let alone those at the bottom." On the Wrong Side of Globalization, New York Times, March 15, 2014
From Above NYTimes Article
Slavery was banned 150 years ago, even though treating the future generations of the slaves equally is still a work in progress. If other countries pay their unskilled workforce like slaves, we effectively are supporting their bondage and putting our work force at a competitive disadvantage by buying the goods and services they produce. The same is true with a minimum wage law. The company with a domestic production facility that uses unskilled workers is at a competitive disadvantage over other companies that use unskilled workers in other countries that will work for lower wages because of the forces of supply and demand and no minimum wage laws.

Someone who supports the Trans-Pacific Partnership would argue that without it the laborer in other countries will have a worse fate because there would be no jobs. There is truth in that argument but should it be our working class that pays the price for this global thinking or should it be the oligarch owning and operating the multi-national company?

A side effect of low wage countries lacking a minimum wage is this nations' corporations choose to either open their own manufacturing plants in foreign lands or contract out the low skilled jobs oversees to companies that need not be concerned with enforcing minimum wage laws. Large multi-national companies get the best of all worlds. They get cheap labor as a result of opening manufacturing facilities in second or third tier countries and then sell their products in richer nations at higher profit margins allowing oligarchs to get richer. This in turn widens our equality gap.

All my adult life I believed in the wonders of free markets. It was much easier to rationalize when what was consumed by Americans was made by Americans. The world has changed as my generation became adults.

World War II gave us a competitive advantage in that we were the last industrialized country standing. In the 1950's, 1960's and much of the 1970's the rest of the world was still recovering from the tragedy of the second world war. This is no longer the case and in many instances other countries are kicking our butts in certain industries.

For the good of the nation and our citizens it is time we focus on this reality and adjust. We need to figure out how to redistribute the nation's income more equitably. It is not just with subsidence handouts that keep people and families alive. We must solve the objective of self-sufficiency. The nation needs to attack the problem as if our future depends on it, because it does.

We need to invest in the greatest asset this country has; its people and their grit. We need to raise the education levels as high as possible. This does not mean everyone should strive to get a PhD. It means the country needs to help everyone reach their potential and everyone needs to aspire to get there. When our citizens do great our country accomplishes great things. We need to expand trade schools like American Builders and Contractors operated in Michigan by Jimmie Greene. We need to get better at teaching our children.

We are a great nation there is no reason for not having the best schools and students in the world. This must be our priority. Yes, the nation's future depends on no child being left behind. We must stop looking at providing a child from an impoverished family a quality education as a handout. Instead we need to look at it for what it is, the best investment we can make for this country's future.

How do we pay for this investment? First, 80% of the savings we experience from winding down the military should go into education. Second, we need to figure out a tax on those multi-national companies that are benefiting from globalization. Liberal tax gurus out there will come up with plenty of ideas.

The above strategies if implemented will bring back equality and keep the United States the greatest country on the planet.

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