"No subsidies!", cry the Subsidized
Well, not for other people, anyway.
In today’s news, US (and European) heavily subsidized solar power companies are lobbying for protectionist tariffs to protect themselves against Chinese heavily subsidized solar power companies.
I await eagerly the news from six months hence, where in a repeat of the Brazilian cotton fiasco, the US taxpayers find themselves subsidizing the already heavily subsidized Chinese solar power industry to avoid WTO action over the protectionist tariffs we imposed to protect our still heavily subsidized domestic solar power industry.
Of course, none of this insanity is the best utility-based argument for laissez-faire free trade: that continues to be: “the more people who can cooperate, the better everything gets”. But it is right up there.
Equal (not free) trade for Africa
What is going on in Africa defies all concepts that we hold to be true: our concept of neighbour, our concept of civilization, our concept of equality, of love. What Africa says about Europe, and America is withering. It says we’ve built our Houses of Parliament and government on sand, because if we really believed the things we say we believe, we would not let 23 million Africans die of AIDS. You can’t have the benefits of globalization without some of the responsibilities. We are now next-door neighbours through television images, through radio, through the internet, and through easy travel.
The answer to help Africa, which is definitely not more Foreign Aid (we can talk about this another time, I know FA is helpful, but it is not efficient and it is certainly not a long-run solution), is commerce and good government. We should look at foreign assistance as start-up money. Self-sufficiency is the goal. Everyone loves to talk about the free market, yet every major country treats Africa with unfair trade relationships. The poorest people on Earth are not allowed to put their products on our shelves in an even-handed way. They have to negotiate all kinds of tariffs and taxes. It’s not a level playing field. We can sell to them, but they cannot sell to us. In America we had Congress pass the Farm Bill which subsidizes American agriculture and makes it impossible for African farmers to compete.
All successful economies have protected their seed industries until they were strong enough to compete. We cannot deny for others what we demand for ourselves. Successful economies in Southeast Asia had a very careful, gradual journey to competitiveness. They are a great example of how aid can work to start an economy on its road to self-sufficiency. Now let’s give Africa a chance.
We must regulate foreign trade
The US was reeling from a recession in 1981. Unregulated Japanese car sales were devastating GM, Ford, and Chrysler. We were importing nearly 2 million Japanese autos per year yet they were not buying any from us. This unbalanced trade situation, along with poor economic conditions, threatened to destroy our auto industry. If left unchecked, it was obvious the US would become dominated by foreign imports. We’d lose thousands of jobs while doing untold damage to our economy.
Congress responded by discussing various tariff or trade restrictions. The Japanese, seeing the free ride was over, decided to head off potential trade barriers with a voluntary limit on imported cars. They set an import quota of 1.83 million cars effective immediately. This was later raised past 2 million before being abolished in the mid 90’s.
This left the Japanese with a problem. The US market is the largest on earth. How could they increase market share without tipping trade unfairly against us? They realized it’s not unreasonable to demand fair trade, and since the Japanese market would not buy US cars, how could they evenly distribute it? The answer was simple. They built plants in the US. During the next 15 years, every major Japanese auto company had plants in the US building the majority of their cars here for US consumption. There was now no need for imports. Japanese cars became domestic brands using US labor, parts, and sales.
These plants have provided billions of dollars to our economy along with thousands of well paying jobs. None of it would have happened without the threat of an embargo which forced the Japanese into trading fairly with us. No Country can survive while hemorrhaging money into the economy of another nation. If the bleeding isn’t stopped, we will die. We understood that fact very well in 1981 but have somehow forgotten it.
We’re experiencing the same situation now with China and other third world nations. Our trade imbalance with China alone runs to over $300 billion a year. Every one of those dollars represents lost jobs and lost income to our middle class. China gets richer while we grow poorer and that situation cannot continue. We are bleeding to death. We stopped bleeding 30 years ago through wise action on balanced trade. We must do it again before it’s too late. Forcing other nations to treat us fairly isn’t impossible. We did it with Japan and it will work with China too.
- Bob: though i am learning more, apparently this "revolution" like the arab spring is been funded and shaped by the CIA and bankers in an attempt to control it and make things go the way they want .....
- Chris: I thought Soros was funding it?
- Bob: yeah
- Chris: I get the impression he's shorting the Governments and Banks.
- Betting on them to collapse.
- And he'll fund anyone who is opposed to bailouts
- + cuts
- Bob: and then when they collapse????
- Chris: if the governments cut enough from social causes, and give enough to their buddies in Finance, they can end the crisis
- A short is a bet against a company
- There's also lots of derivatives you can use too
- Soros is famous because he shorted the British pound back in the 1990's
- And his hedge fund was fighting with the Bank of England over the rate of Sterling, he was shorting and the BOE was buying £, he won, and earned £10 billion on the business
- I don't understand exactly what way it worked
- But he ruined the BoE's reputation and caused a major devaluation in the pound.
- I think he worked with Jim Rogers for a while
- Jim Rogers does a lot of interviews and is in a lot of youtube videos.
- He's negative on the outlook for the western economies and the big banks, and its a safe bet that Soros would have similar views to Jim Rogers.
- So if I was Soros, I'd be looking to fund the "people", so they can get fight for their share of the wealth, so the government loses out on the money.
- Chris: Same reasoning as the Soviet Union used to fund the trade union movement in the West
- Bob: so what happens when the whole shambolic financial system crashes as it will in a few weeks???
- Chris: Financial systems don't crash, that's just bullshit.
- They only reflect whats happenning in the underlying economy.
- If the whole thing drops, the government will print money to support it, inflation will rise, and everyone will get poorer.
- We live in the first world, the amount of our incomes that goes on things like fuel and food is smaller than someone in the third world.
- At the same time, services and labour remain expensive.
- As a result of free trade, introduced in the 90s, all our industry and production - the basis of our wealth, has been outsourced to the third world.
- So, since we neither have factories to produce stuff, nor the means to generate foreign exchange to pay for stuff, in the future out currencies will devalue and the price of stuff we use will rise.
- Expect to pay something like €5 for a loaf of bread or a litre of petrol, while your wages will remain the same.