Tuesday, April 9, 2013

Free Trade? That Just Means That The Large-Scale Merchants Are in Control of Tax & Tariff Policy

Commentary by Roger Erickson



Regulatory policy too.

Does the following say it all? Or what?

“The [imported fruit] that’s coming in from China is not subject to the kind of regulation that American food is,” said Diane Kearns, a fifth-generation farmer and president of Fruit Hill Orchards, one of Virginia’s largest apple growers with nearly 3,000 acres. “People are being priced out of the business. You can’t make money at it anymore.”

Free trade? That just means the large-scale merchants are in control of tax, regulatory, tariff and public spending policy. "Free trade" is a phrase the parasite lobby coined, to confuse, divide & conquer it's host components.

"But merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains."

Worse, merchants may have no country, but their TBTJ bankers don't even have a conscience ... just a double-entry accounting ledger with no place to enter either fiat OR return-on-coordination. Plus, their purchased politicians apparently don't know about evolution, adaptation, recombination or invention either. In fact, they seem incapable of grasping the difference between static and dynamic value.  Otherwise, all our merchants, bankers and politicians would actually have a country, and let us consume all that it can produce too.

Adding $500 million in overhead costs ONLY to domestic suppliers of food may be yet another demand leakage, especially if most of the test & monitoring equipment comes via large importers using yet another source free from regulation, taxes or tariffs. One can imagine a future where even blonde American's can only follow looped instructions to "breathe-in, breathe-out" by using canned air imported from China, along with the imported audio equipment!

If you want to track families, clans or classes over-taxing and under-funding perceived competitors, just look for the phrase "sold out to larger [merchant] operations."

What about that joke where mother's milk, if sold in any other container, couldn't be legally transported across state lines? Yet it is, daily, whenever a large enough merchant wants it imported from China or elsewhere, which is exactly what Nestle was criticized for doing with powdered baby formula.  What's in YOUR powdered milk?   Merchantamine?

The darkest joke yet may be a future image of people jailed for pissing untested urine into the wind. You'll only be allowed to have a certified robot do that for you, using certified urine - both available only from a certain large merchant.

Don't like it?  Then go buy your OWN Congressperson!  Either that, or apply some moral persuasion to the ones already bought & sold by our existing merchants.  Better act quick, before the Free Trade crusade morphs into Free Fascism.

Every simplistic push for "One Size Won't Fit All" regulation invariably & mistakenly favors the largest merchants. Over time, cultures that survive are those that wake up in time, and revert to distributed, "One Agile Fits Small" resiliency.  Better speak up now, and vote with your feet, or acquire a taste for whatever roadkill dregs the large merchants choose to put on your shrinking menu choices.


20 comments:

Dan Lynch said...

Glad that someone besides me is calling BS on MMT's advocacy of free trade.

Free trade takes away a nation's regulatory sovereignty and replaces it with a race to the bottom. MMT talks about monetary sovereignty but completely ignores regulatory sovereignty.

Free trade is really protected trade for the 1%, who benefit from enforcement of patents and copyrights, and unregulated free market capitalism for the rest of us.

MMT is going to have to rethink its position on free trade if it wants to be taken seriously by the masses.

septeus7 said...

Great Post! Yes Dan, MMT doesn't deal with the calculation problem created for producers caused by demand leakage. No Free Trader has even tried to answer the problem of the input cost information gap lost to importing.

They just start screaming about rigidities or some other Austerian nonsense.

Roger Erickson said...

Who said MMT is for Free Trade? All I've ever heard from Warren is the following:

"IF we're going to import everything people are willing to send us .. THEN we have to lower our own taxes enough so that we can consume everything we can produce AS WELL AS whatever other's are willing to send us."

We have n-way conditionality among currency-criminology-policy-regulation-taxes ... etc, etc.

Unfortunately, we have too many people too ignorant. They "can't see the Forex for their fees!" :) .. if you get my little joke.

Matt Franko said...

But we may want to still draw a hard line when it comes to food in any case...

They'll put our apple growers out of business and you cant just "turn an orchard back on" if the trees are not maintained properly each year...

I know some people who lost their mushroom business some years back to the Indonesians...

Roger Erickson said...

Also in that mix is international externalities.

We eventually have to be careful about accepting anything that an "exporting nation" is willing to send us.

Standards? Melamine in chinese food products? Tainted wallboard?

Plus, that exporting nation's rulers may be willing to export to us, but it doesn't mean that their suppressed, starving or even slave-labor population is fully on board - and inevitably resenting our participation in the scheme.

No one I know of in the MMT camp is ignorant of these issues. The message just APPEARS to get simplified, since the great mass of unwashed economists and politicians (not to mention voters) hasn't even heard that there's a need to head to the station, where something called a train of thought can be boarded.

Gotta build up a head of steam before trying step 2.

Ignacio said...

if you don't believe you are 'out of money', you start to worry more about real goods and services.

Maybe then we would have more balanced trade between nations, if the message gets out there.

But as long as there is a class of hoarding merchantilists in control of the global economy, who believe money is "scarce", and their only objective in life is to accumulate the most the better. And they want to trade goods for that currency, there is not much you can do to stop that.

Roger Erickson said...

"there is not much you can do to stop that"

Yet stop it we must, or it'll stop us in our tracks. There is a way, so we just have to find it.

Ignacio said...

Well, we can do stuff, but we have the losing hand here IMO.

The main problem is some social memes have been propagated and assimilated by the population. Also the matter of 'money' is very uncomfortable for big sectors of the population, just talking about it and challenging any preconceived idea is rejected (strong cognitive dissonance).

I believe there is some sort of 'moral' barrier that makes it hard to explore more options around these issues. I suspect is because for most of the population, money is related to work, and hence any PERCEIVED 'free lunch' triggers some defence mechanism.

Then we have the problem with 'taking control' of a situation, or the lack of faith in the ability of humans to self-regulate themselves. What Matt has been pounding as a lack of faith in any sort of authority.


In an age when we are low on real faith in the power of human intelligence and creativity, and in age of dominating and oppressive social memes which pollute the minds of the people to even explore more options, the task to change public perception which must be the initial move to any real change is really hard, to say the least.

Tom Hickey said...

As soon as "free trade" doesn't advantage TPTB in the US, then they will end it. The poor and middle class? You know, the takers aka "the little people" and the suckers. They are expendable.

Tom Hickey said...

I suspect is because for most of the population, money is related to work, and hence any PERCEIVED 'free lunch' triggers some defence mechanism.

I would say that a great many people believe that work (somehow) creates money, and they would be horrified to know that most of the money being used on a day to day basis in a modern economy comes from money created by bank lending — private debt!

paul said...

"they would be horrified to know that most of the money being used on a day to day basis in a modern economy comes from money created by bank lending" - Tom

For the past 4 or 5 years the net add to the economy from private debt has been negative accounting for debt service…it's a pot with drain in the bottom and we aren't keeping up with the drainage.

Personally I see no way to expand private debt from here without either increasing net spending or dropping the requirement that borrowers make payments.

As for the horrified part, don't they think we borrow the money from China?

Ignacio said...

"As for the horrified part, don't they think we borrow the money from China?"

Yes a lot of people has this think process:

China manufactures (works) -> We borrow money (USD/EUR) they create (by work) -> We consume these goods and our children will have to pay the debts.

It's funny they never stop to think that China has no power to create neither dollars or euros, neither do Chinese (state) banks. And even if they acquire government bonds, these are nominated in such currencies, there is no physical way you can be borrowing from China.


But this takes logic instead of memes to make the connection.

The Rombach Report said...

"Personally I see no way to expand private debt from here without either increasing net spending or dropping the requirement that borrowers make payments."


Reduce the size of the federal budget deficit and/or reduce the current account and, domestic private sector debt must rise by a corresponding amount.

paul said...

"Reduce the size of the federal budget deficit and/or reduce the current account and, "domestic private sector debt must rise by a corresponding amount."

The bolded part isn't true. Must???

Reducing the size of the federal budget deficit would reduce the ability to expand private debt...deficit spending (a portion of it) supports the payment system.

The more we deficit spend the more we can afford to borrow, assuming spending accrues to wages…

Reducing the deficit directly requires lowering the current account deficit or taxing excess savings (wealth accumulation).

The deficit can't be reduced by cutting spending because deficits are ex post…we can't reduce an outcome that has already occurred.

I haven't included the third option…growth…because growth is dependent on net spending in sufficient amounts to offset demand leakages, both internal and external. It is an indirect option.

Lowering the current account deficit is an alternative...it's functionally equivalent to deficit spending...it's just not plausible currently except as a long-term goal.

My comment was targeted at the here-and-now.

The following graphs may help illustrate what we are up against…

https://dl.dropbox.com/u/33741/Debt%20series%20first45.png

https://dl.dropbox.com/u/33741/Debt%20series%20last15.png

Irnakluk said...

Free Trade?
This is the most cruel myth perpetuated by rapacious business interests.
Here is a case in point...
EU after virtually destroying Cyprus now aims it's gun on developing countries.
To quote a news report from India...
http://www.firstpost.com/economy/india-eu-fta-will-imperil-lives-local-industry-say-activists-693949.html

" EU’s demand for intellectual property enforcement and investment provisions – which will require India to go beyond its World Trade Organisation (WTO) commitments – will have an adverse impact on access to medicines across the developing world......Such provisions will not only undermine fundamental rights such as the right to health and access to medicine, they also threaten to subvert the fundamental tenets of the Constitution of India.”

Tom Hickey said...

Irnakluk said... will have an adverse impact on access to medicines across the developing world.

This is a huge intended consequence of "free trade," as well as the imposition of ridiculously restrictive copyright terms on intellectual property.

It doe't take much foresight to see that this is unsustainable. Moreover, the West is increasingly dependent on these intangible forms of wealth for growth.

Irnakluk said...

Tom,

"This is a huge intended consequence of "free trade," as well as the imposition of ridiculously restrictive copyright terms on intellectual property."

India's supreme court has rejected drugmaker Novartis AG's attempt to patent a new version of a cancer drug in a landmark decision that healthcare activists say ensures poor patients around the world will get continued access to cheap versions of lifesaving medicines.

The court ruled that a patent could only be given to a new drug, she told reporters outside the court. "Patents will be given only for genuine inventions, and repetitive patents will not be given for minor tweaks to an existing drug...

http://www.guardian.co.uk/world/2013/apr/01/indian-court-novartis-cancer-patent

Tom Hickey said...

Except the US put huge pressure on India, as the eurocrats just did not Portugal when the supreme court declared an aspect of austerity illegal. The eurocrats are telling the govt to ignore the court or else.

This is hard ball, and it is a good part of the reason that the US maintains the world's most powerful military. But the preferred way is through financial pressure. Which is why the Global South wants to escape from a financial system dominated by the Global North, not only because it is notoriously corrupt.

Roger Erickson said...

speaking of imported medicine and the lower COST of regulation

http://features.blogs.fortune.cnn.com/2013/05/15/ranbaxy-fraud-lipitor/

All depends on which fraud you let calculate the cost of "adequate" regulation.

It used to be just "concentrated profits / distributed costs." Now, as Tom points out, we've crossed an important tolerance limit, and re-arrived back at "concentrated profits / expendable consumers."

Roger Erickson said...

see also

More evidence: “Free trade” really means “free capital flow” — and causes constant bubbles
http://americablog.com/2013/09/free-trade-means-free-capital-flow-and-causes-constant-bubbles.html