The "free trade" question remains, as it has been for centuries, one of the most muddled, polemicized questions in all of public policy. That is not surprising, for it touches on two perpetual pressure points: economic opportunity, and national sovereignty/defense.In recent years, a third vital concern has been added to the list of things thought to be imperiled by "free trade": the environment. Now, therefore, many people are united in their distaste for "free trade". A great deal of well-publicized controversy surrounded the implementation of the North American Free Trade Agreement (NAFTA), the "Uruguay Round" of the General Agreement on Tariffs and Trade (GATT) and the European Community. Bitter controversy has also surrounded the issue of trade between the US and regimes it has judged to be unworthy of support, such as those in China, South Africa, Cuba and Iraq. The US’s record in such matters has been inconsistent, to say the least.
Lots of people express support for removing trade restrictions. But there is also a strong and growing backlash of people who, although perhaps not ready to support protectionism per se, are deeply suspicious of the perils they see in unrestricted international markets.
And perils there are. High-wage manufacturing jobs are lost, to be replaced by low-wage, low-security "service sector" work. More and more manufacturing is done by workers in developing countries, where wages are vastly lower. Multinational corporations "out-source" their production lines to the places with the lowest costs of labor, safety and environmental regulation. The rapid advance of information technology makes such complex, interconnected production processes more and more profitable. In the world’s affluent nations, there is widespread support for imposing costly limits on industry to protect wildlife. Such "luxuries" are not feasible for debt-ridden developing countries. Development pressure on the world’s few remaining wilderness areas intensifies — carried on mostly by marginalized peasants seeking whatever land they can find.
Henry George argued convincingly for free trade — true free trade, that is — in 1886, in a world that, though not without complexities of its own, must seem simple next to the mindbending interconnectedness of our own time. Are there not many more concerns, today, than George ever dreamt of? Can we responsibly support a "free trade" policy in today’s world economy?
The rest of this course will examine three urgent questions in today’s "free trade" debate. Does free trade
- benefit multinational corporations at the expense of working people and communities?
- hinder the economic progress of the world’s less-developed nations?
- contribute to further degradation of the environment?
As we have done so far in the course, our primary method will be to make logical deductions from basic principles. The basic economic definitions from Progress and Poverty, as defined in our first course, will be used consistently. We will not forget, however, to make sure our deductions stand up to the test of facts.