How Free Trade Works

American businessman wants to make a profit.

Thinks to himself, “American labor is too expensive.”

Hears free trade deal with country X just passed both houses and Moderate President X signed it this morning, which means imports from country X have no duty.

Now realizes he can hire a bunch of workers from country X for way cheaper and at decent quality, and then export them back to America for super cheap and not face a tariff.

Takes product and sells it, not to country X’s citizens, but to the American consumer (who is somehow an entity apart from the American worker…)

American businessman makes large profit, American worker loses job, poor unemployed American buys cheap country X product, and cheap foreign labor gets exploited as long as its labor is cheaper than its neighbor.

The era of the race to the bottom. A new equilibrium is set.

"Theytookerjobs!" In the race to the bottom, cheap labor wins out. Maybe domestic industries would want to protect the American worker, or maybe, just maybe, the American government would want to protect domestic workers. I guess not.

Progressives are not even united on this issue, as any Berkeley student who took Robert Reich’s Wealth and Poverty class would know. In the class he defended NAFTA and free trade as offering far more benefits than drawbacks, and then he goes on to assert that the government he is no longer a part of needs to initiate full employment policies (like those two complement one another).

“Busts of American Presidents’ heads that sit in our museums are made in China, that’s how pathetic this is”-Bernie Sanders

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Posted on October 13, 2011, in Economics and tagged , , , . Bookmark the permalink. Leave a comment.

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