Issue 48 Free Trade April 4, 2013

What is free trade? Well it is not free stuff. It is the ability of nations to trade with each other without limit, or penalty. In short, you can buy and sell goods anywhere in the world without being taxed with a tariff.

Why is free trade good?: Free trade allows for commerce to occur anywhere in the world. It allows for new business opportunities in other countries raising potentially poor countries out of poverty. Basically, America would trade with everyone; Britain would trade with everyone, and so on and so forth. By being able to sell goods across the globe unhindered by burdensome regulations, exceptions and fees (all of which free trade does if done correctly) allows massive economic growth and investment.

Another side effect of free trade is that you would also trade with your enemies. You are most likely thinking, how is that good? Well, think about it, you are trading goods with the people of the enemy country, but it is the government who is bad. By restricting trade of the enemy country you actually hurt their economy, but at the same time you make the people suffer from poverty. Also, by interacting with populations from other countries, ideas and culture are shared that influence the people of the enemy country to possibly be sympathetic to you. Let’s face it, it is not people who start wars, it is government.

What it requires: For this system to work, countries must sign a treaty with uniform trade laws to govern basic safety, and protect from illegal goods from entering a country (aka slave labor, or a dangerous items that a government does not want). It will require cooperation in enforcement between the countries and the total elimination of discrimination in respect to where a good or service comes from.

Under a free trade system, people must be able to move freely around the globe. In other words, we all would have an open boarder’s society, while still maintaining some form of customs to log each person going in and out of the country in question. There can be no manipulation of currency, no governments giving financial aid to their businesses, no special tax breaks or privileges and all goods going in and out of a country paying exactly the same amount. Even the United States constitution dictates taxing every good or service entering or exiting the country at the same rate. All this provides fairness and prevents one-up-manship and trade wars.

What people fear about Free Trade: The biggest fear is that people will lose jobs to other people in other countries due to competition. Well the fact is that is going to happen regardless. When a country trades goods to another, it does not necessarily mean that that good will not be then traded to a different country. Sure it may become slightly more expensive, but if it comes from a place where workers and costs are real cheap, then they have a leg up on the competition no matter where the good or service comes from. Your job will always be at risk of competition both in country and out of country.

What people also fear is that losing the protections of government as well of the privileges of tax breaks, aid and currency manipulation. This relates back to losing ones job or business, but in truth, protecting any business in this manner is in fact crony capitalism. It is basically propping up one business at another businesses expense. There is a lot of money involved in our current crony capitalist structure (both here in America and abroad). By losing these benefits, it may slow down a big business, but it allows competition from small businesses to fill the gap left behind. Also, skilled workers who may be let go will more often than not find a job quickly. The only time they will not is if the market is bad, but the market usually recovers within a year so long as governments stop trying to manipulate the economy with more (you guessed it) crony capitalism.

Free trade: It is a system that embraces the true freedom of true, uncorrupted capitalism (also known as a free market). Countries are attempting to get on board by creating free trade agreements with their allies such as Japan with the United States, the North Atlantic Free Trade Agreement (NAFTA) between Canada, U.S. and Mexico, and soon a possible free trade agreement between the U.S. and the members of the European Union. Though there is still manipulation of the market, even limited free trade is raising countries out of poverty as people are able to invest in these countries and make their people as well as themselves profitable. Is it not time we had a system built on fairness and true uncorrupted trade?