Have you ever watched the movie Frankenstein? Where his creator tries to help the ugly guy out by creating a girl friend for him. She’s pretty, he’s ugly, so when she sees him she screams. Frankenstein runs away. Then he meets a blind man who invites Frankenstein to his house. The man gives him some food. In a rough monstrous voice Frankenstein says “food good.” Then he gives him something to drink Frankenstein says “drink good.” He gives him a pipe to smoke Frankenstein says “smoke good.” Well regarding the economy “Free trade good!”
Now I don’t want to go on a rant here, but for the love of God support free trade! The almighty Hillary said “I certainly think the free market has failed.” If that be the case, then it’s time we start storing up can foods, loading shotguns and making preparations to defend the land we own! Free trade allows American workers to specialize in goods and services that they produce more efficiently than the rest of the world and then exchange them for goods and services that other countries produce at higher quality and lower cost. Ask yourself: would the United States be better off if we still had millions of workers making textiles, instead of employed in the dynamic new businesses which have grown up in the last century? would we be better off if clothing cost five time as much as it does today, and we couldn’t afford to buy computers and software? Our economy works on a circular flow, yet every time the government sticks their filthy hands into it, it seems to takes the shape of a triangle. That not good. The law of supply and demand has a price equilibrium which fluctuates accordingly. When the government enforces a price ceiling or a price floor (such as minimum wage) it offsets the equilibrium price and prevents it from fluctuating appropriately which creates a bubble of unemployment. The widely loved Federal Minimum Wage increases unemployment. When it is raised by 10% it decreases employment by between 1% and 3%. Every time the American government enforces a filthy tariff on trade, the U.S. economy suffers.
There is a lot of talk now about the need to support “fair trade.”Seldom, however, does anyone explain either what fair trade is or–even more to the point–to whom trade should be fair. In the name of fairness, different groups advocate different protections for their specific industries and call the comparative advantage of other countries “unfair.” For example, U.S. manufacturers think it is unfair that labor in China is cheaper than labor in the United States, and therefore ask for tariffs against Chinese products. But those tariffs would, in reality, be unfair to millions of U.S. consumers and producers who would be forced to pay higher prices for locally manufactured goods. “Fairness” assumes a dubious character in policies that pick and choose whom to treat “fairly.”The only form of fair trade–if such thing exists–is free trade.
This reminds me of the tariff of 1828, which was the highest tariff in U.S. peacetime history, enacting a 62% tax on 92% of all imported goods. The purpose of this tariff was to protect the industry in the north by increasing the price of European goods which was purchased by the south. The tariff forced the South to buy manufactured goods at a higher price which significantly hurt the economy because it reduced the southern states’ income from sales of raw materials. Also the great depression which began in 1929 (mainly because households did not spend enough on consumer goods and services and business’ lack of investing in new capital) reached it’s worse in 1933 with unemployment at 25%, because of the Smoot-Hawley Tariff Act which was sign in 1930. Also even though economists concluded that the depression would correct itself, the government intervened which lowered unemployment in the short term, but as predicted it lead to high rising inflation rates in the 1960’s which exploded in the 1970’s increasing the unemployment rate.
So where am I wrong here? The socialist “fair” traders who attempt to discredit capitalism and free trade should look at the unemployment rates around the world. America is criticized because they do not have the high unemployment benefits as France does. Yet who has the highest unemployment rate? France! Is it possible that the higher the benefits of unemployment, the more people will be unemployed? duh! The more government intervention in the economy, the worse off it will be. People who want tariffs just to encourage domestic spending end up hurting the same economy in which they try to regulate.
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