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Feb 14, 2009

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David Brush

Q: How exactly will directing a small percentage of 787 billion going affect the global financial market keeping in mind the TRILLIONS of dollars we will pump into oversees economies through the day to day spending of the American public?

A: It won't!

Pure and utter pro-globalization propaganda.

Michael W. Kruse

It may have a bigger impact then you think. Already Canadian unions are pressing for a "buy Canadian only" posture in retaliation to the American stimulus bill. Actions like these have a tendency to spark tit-for-tat spirals between nations. Just look at history.

The issue isn't the size of money being protected. It is the juxtaposition of saying "We're opposed to protectionism" in response to the global crisis while simultaneously passing a major bill to stimulate the national economy through protectionism. The duplicity is stark.

Clinton understood the importance of trade. Many Democrats have rightly criticized the hypocritical behavior of Republicans in talking about free trade while simultaneously subsidizing and protecting American Agro-Business. I've attacked that here as well. Now when Democrats are in power and the government wants to subsidize big labor through tariffs, that's beyond criticism.

Globalization is a complex set of issues but I'll plead wholeheartedly guilty to being an advocate of open trade. Trade is what keeps basic goods and comforts cheap for the poor in the U. S. Trade is what creates millions of jobs, particularly with small businesses who export to emerging markets. Trade is what creates countless millions of jobs among the poor in emerging nations, generating 2 billion new middle class people in the world in the past decade or so. (See yesterdays post.)

Trade is indispensable in improving the lives of the global poor.

David Brush

I don't disagree with you. Some of the jobs need to be moved to where they can be done more effectively and positively impact more people. The pain is re-equipping the workers here that lose out for other more technically advanced (and higher paying) jobs. I think though that free-trade, from a responsibility standpoint, needs strong accountability and that is why we do need the dissenting voices keeping globalization corralled. While free trade can create more jobs for more people it also puts the control of those jobs in the hands of fewer and fewer people. We have to keep eyes on both ends, equality for the worker and accountability for the owners.

Michael W. Kruse

Thanks David. Here are a couple of observations.

Economic change always has winners and losers. It is part of the process of creative destruction that exists in any dynamic growing organism; whether it is an eco-system, a human body, or a global economy. Old circumstances must die in order for new things to emerge. It is painful and involves grieving.

There is no way to create a world where no one gets economically hurt. I do agree that where there are entire communities affected by a change in industry, a range of public and private measures are probably needed to help ease the transition. But simply blocking change only prolongs the inevitable, frequently makes matters worse. Blanket efforts to buy only American is just such a measure.

If it ever was true that jobs were being concentrated in the hands of fewer and fewer people I don't think that is true now. They dynamics of an industry shapes the number and size of firms. Some industries require a handful of large corporations (automobile assembly). Other industries may have a mixture of various sized firms (clothing retailers) and others are made up of almost entirely small firms (hair stylists).

As nations emerge from poverty they usually start by going through an industrial phase. That means growth of large corporations. While that has sometimes begun with multi-national corporations, the spill-over affect is an increasingly skilled labor pool that generates home grown corporations in emerging nations. Large corporations in China, India, and Brazil are now rivaling the largest corporations in the U.S. or Japan.

Last year, for the first time, more trade was conducted between Pacific rim Asian nations than those nations collectively did with the U.S. Business of all varieties and sizes that have no connection to large first world multi-nationals are mushrooming all over the world but as these nations move pass industrialization they are creating multi-nationals of their own.

Free markets means all buyers and sellers engage in non-coerced transactions with relatively good information about the transactions they refuse to make. There is no "free market" trade with or in a country that does not meet these criteria. Trade can be used as a "carrot and stick" approach to create great freedom in corrupt societies. There also has to be ways to keep multi-national corporations under scrutiny and keep them honest. Trade barriers may be required against nefarious countries or corporations but it needs to be targeted barriers with the intent of getting them to play fair in the free market.

A blanket "buy American only" policy is contrary to all of this. It tries to block the inevitable. It delays change that will be even more painful in the future. Instead of blocking change, unions should be anticipating the future and how they can help the workforce adapt. That's how I see it.

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