The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
) --Free trade is the unfettered competition of businesses in free and open markets. It has never existed in all of history. Globalization, the bastardized proxy for free trade which has been foisted upon us by large, multinational corporations, doesn't bear the faintest resemblance to genuine free trade.
With a nearly infinite list of flaws to choose from, let's begin with an easy one. You can't have fair and unfettered competition in markets if any of the participants are being
subsidized by one or more governments. Thus the necessary precursor before any free trade agreement could ever be implemented is the complete elimination of corporate subsidies.
Free trade is all about companies competing with each other, not just across countries, but around the world. Unfortunately, the corporate servants running our governments have allowed virtually the entire global economy to be hijacked by a few dozen monopolies and oligopolies.
As a matter of definition, none of these companies competes -- ever. So here is a question for all of the vacuous free-trade zealots: how can (so-called) free trade bring competition to the global economy when (essentially) none of the components of this global economy ever compete?
In fact, we must back up still further to get to the crux of the matter. Once beginning economics students have been introduced to the fundamentals of supply and demand, and the virtues of competition, virtually the next principle presented to them is how oligopolies and monopolies are unmitigated evils -- which should
never be allowed to exist in our economies.
What this means is that not only would we have to eliminate/abolish all forms of corporate welfare before any (valid) free-trade agreement could ever be established, but we must also take a political hammer, and smash into little pieces every one of the oligopolies and monopolies which currently pollute the global economy, while parasitically impoverishing each and every one of us.
It is only after all these corporate parasites have been smashed into little pieces that competition can (finally) be restored to our (individual) economies. And obviously it is only after we once again have competitive economies individually that it becomes theoretically possible to enjoy the benefits of free trade. Unless and until these corporate abominations are abolished, it could never be theoretically possible for genuine free trade to exist.
It is equally obvious that given their enormous political power that these corporate mega-parasites are not about to be eliminated overnight. As a practical matter then, what is the best means of coping with a global economy completely poisoned by the influence of these oligopolies and monopolies?
The obvious answer is protectionism. Cynically, knowing that these oligopolies and monopolies are our mortal enemies, the simple fact that they are pushing their pseudo-free trade with all of the influence they can muster tells us by itself that protectionism must be a lesser of evils. Looking at this issue from a theoretical perspective leads us to precisely the same conclusion.
Note that when the free-trade zealots gush about the infinite wonders of their cherished dogma that increased competition is only one aspect of this mythical economic utopia. By erasing borders, this allows corporations to expand in size, which (supposedly) brings us the economic advantage known as economies of scale. By this same logic, as our governments get larger and larger they should also get more efficient. Don't hold your breath.
In fact, at some very finite limit, all benefits from creating economies of scale vanish beneath the inertia and bureaucracy inherent in any and every large institution. Instead of "bigger being better," we rapidly reach the state of bloated behemoths -- which are completely incapable of efficient competition.
Fortunately, we have a near-infinite body of empirical evidence to substantiate this principle, supplied to us by the oligopolies and monopolies themselves. What do these corporate mega-parasites spend most of their time doing (when they're pushing their political servants into some new free trade deal)? Buying up smaller, more efficient corporations, because these corporate giants cannot match their quality, their prices, their service, or some combination of the three.
Protectionism means once again partitioning the global economy according to national boundaries. It automatically opens up new niches in all of these economies (presently being serviced by multinational oligopolies). Thus it also means creating a lot more of these smaller, more efficient, better corporations, while seriously reducing the power/influence/control of the oligopolies by making it much more difficult to dominate markets by brute force alone.
Referring again to basic economic theory, it is another maxim of business that smaller businesses tend to be more labor-intensive (i.e. they hire more workers) while larger corporations are more capital-intensive (i.e. they use far fewer workers).
Western economies are currently in the grip of the
worst structural unemployment in history. Much of this structural unemployment is a direct consequence of (a) allowing the oligopolies and monopolies to exist, and (b) the illusory free-trade agreements they have been able to ram through. Surely even the free-trade zealots can comprehend that with the worst unemployment in our history that we would be better off with economies filled with companies that hire people rather than companies that buy machines (and lay off people)?
In fact, our corporate overlords love to see this horrific unemployment. When there is suddenly 10 people lining up for every job rather than five, wages go down -- as desperate workers undercut each other. When there become 20 workers looking for each job rather than 10, wages fall further. At some point, we cease to have workers at all, and
only have serfs. Thus not only would protectionism ease unemployment, it would put upward pressure on everyone's wages.
As I have noted frequently in past commentaries, in real dollars, average wages for U.S. workers (and most of the Western world) have been falling steadily for the past 40 years. It is time
the pendulum began to swing back.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.