Jim Stanford writes in today’s Globe and Mail that, “Global trade flows are collapsing. But it’s not because protectionism is raising its ugly head. Rather, it’s the meltdown of the market economy, not anti-market intrusions by governments, that is behind the meltdown of world trade. This is a key distinction because it runs headlong against the long-standing myth that ‘protectionism’ caused the Great Depression (rather than the other way around).”
FREE TRADE HAS HURT THE CANADIAN ECONOMY
“Canada’s trade has been flagging for years. As a share of our total economy, exports have declined steadily from 45 per cent of GDP in 2000 to just 30 per cent by the end of last year. Again, far from being the result of protectionism, this dramatic decline in trade is actually an unintended result of free trade itself. NAFTA pigeon-holes us as a continental supplier of energy and other resources. Those industries boomed – for a while. But non-resource industries were squeezed out, and an increasing share of output and employment was shifted to non-traded domestic industries (economic winners such as doughnut shops and discount stores).”
FREE TRADE HAS ALSO HURT THE AMERICAN ECONOMY
“By the same logic, free trade clearly contributed to the financial catastrophe in the U.S. that is dragging down the whole global economy – and hammering world trade. The U.S. incurred massive trade deficits for years, as U.S. corporations fled in search of lower wages and compliant governments. Americans kept borrowing and spending despite their industrial decline, building up a financial overhang that is now collapsing.”
THE FREE MARKET GOT US IN THIS MESS, FREE TRADE WILL ONLY MAKE IT WORSE
Free-market nonsense about the all-knowing “efficiency” of private markets got us into this mess in the first place – by intellectually justifying deregulated financial practices that were obviously immoral and destructive. Free-trade nonsense about how unrestrained global markets must be allowed to guide our recovery, no matter how unbalanced trade flows have become, can only make matters worse.
Jim’s full op-ed can be read at http://www.theglobeandmail.com/servlet/story/RTGAM.20090218.wcotrade19/BNStory/specialComment/home.
To find out more about his book ‘Economics for Everyone’, please go to http://www.caw.ca/en/4000.htm.
You can also read his blog on The Progressive Economics Forum at http://www.progressive-economics.ca/author/jim-stanford/.