First, a brief announcement. My posting may be eratic for the next 10 days or so, and I may disappear entirely until the 27th of November. However, at the end of the time I hope to be able to offer some of my writings in a book form, for those who would be interested.
Now for today's posting.
I want to discuss free trade - such as represented by the NAFTA and LAFTA treaties. I am going to argue in principle in defense of these treaties, as long as they contain provisions to protect workers and the environment - the latter being understood as protecting people from indirect harm.
I am very much in favor of free trade. However, this is one area where a lot of people confuse being pro-business and pro-market.
Here is one difference.
Under the treaty, a business fires their high-priced workers in America, goes to another country, hires their people for pennies, builds a factory, produces goods, and pockets huge profits as a result.
Or, alternatively, the business expands its operation into another country, giving people wallowing in filth, sickness, and poverty the only real chance to improve their lot in life, lowering the overall price of goods and services, allowing the average American consumer to buy more with their money, increasing demand, creating new jobs, and creating new opportunity, both at home and beyond.
Both of these descriptions are possibilities. Typically, the real situation will lie somewhere between these extremes. I would argue that the truth is somewhere between these two options, and are made closer to one end or the other, depending on the options we choose.
Let's start off by saying that businesses are not the models of social benevolence. What many business leaders call 'free trade' is actually a liberty to harm others - sometimes to the point of death - in order to improve the bottom line.
The actions of the tobacco industry and the energy industry in this country are perfect examples. I will not tire of mentioning how Exxon-Mobile and other countries muddied the debate on global warming with intention deception because its executives felt that defending their profits was worth risking the destruction of every coastal city on the planet.
Here is an example of the difference between being pro-business and pro-market. A person who is pro-market says that, if the actions of the energy companies cause (or put at risk) the life, health, or property of another, then the energy company pays. If tobacco companies act in ways that make their product more addictive or more deadly, they pay their victims for the harm done, and punitive damages.
On the other hand, being pro-business means that a company can kill and main others to their heart's content. If their actions are profitable, then they are good.
Many of the programs that corporations put under the banner of 'free trade' are actually anti-market, pro-business policies.
So, what we need to ask with respect to these treaties is whether they are pro-market or pro-business.
Who pays for the environmental harm that the business produces? Is the country one that allows businesses to harm the life and health of others (by poisoning them with pollution) with impunity? Or does it have laws that say that those who do harm to others pay for the harm done?
Many free-market economists say that the sweatshops that people work in, however deplorable, are better than the squalor that provides the only alternative for these people. Saving people from the horrors of the sweatshop is actually condemning these people to far worse. If the sweatshops were not actually an improvement in the lives of the people, they would not work in the sweatshops. The worker's lot in life is made better, the company profits, and everybody wins.
It is sad to note that this is sometimes true. Those who are anti-trade do, in fact, condemn others to live in a state that is far worse than the sweatshop. As such, these anti-trade activists inflict unspeakable suffering on real people.
On the other hand, this is true only if the people have genuine options. If the company comes in, goes to the government, and demands legislation that makes it hard for people to change jobs (by making it a bureaucratic nightmare), or legislation to prevent other businesses from entering the same area and hiring the same workers, we have an instance of companies setting up serfdoms, and profiting from their exploitation of the serf.
Another way to keep an employee trapped in a job and to prevent them from seeking alternatives is by refusing to give the employees enough time to acquire new skills. Employees who are working 16-hour days do not have time to go to school or to practice some other skill that might pay better.
Yet another popular move among businesses is to require that workers suffer the costs of any on-the-job injuries. The argument that businesses like to use in this case is, "The employee knew that there were risks, and took the job anyway. Therefore, we are not responsible for the costs." Yet, this is a bit like saying, "The driver knew that there was a chance of getting hit by a drunk driver when he got on the roads. Therefore, he voluntarily assumed those risks, and the drunk driver is not responsible." Yes, we are aware that there are risks. Yet, we also hold that the person who turns a risk of harm into actual harm is the person who should pay the consequences.
The pro-business side will say that businesses would never do this, perhaps by saying that businesses need trained employees and would consider this counter-productive. Well, if the businesses would never do this, then they should not object to the treaty containing provisions that prohibit them from doing that which they will never do. If they are protesting, then we have reason to assume that this is something they would do.
Do our trade treaties provide employees with protection from companies limiting their options for employment in order to keep wages low? If they do not, then they are pro-business, and create a situation closer to the first option described above. If they do protect the workers’ options, we can say they are pro-market, and closer to the second option.
We are unfortunate in that both major parties in the United States have adopted a destructive policy. The Republicans seem to favor a pro-business attitude - one that creates rules that will allow companies to harm and even kill others when it is profitable to do so. The Democrats tend to favor an anti-trade policy, that leaves people wallowing and even dying in poverty with no way out.
The correct position would be to allow trade, so long as businesses are not permitted to do harm to others with impunity in the nations that we trade with.