Free Trade? Free Aid?

RE: an email that I received from a friend that references a Charles Krauthammer editorial from 6/24.

While I generally find Mr. Krauthammer to fall into the category of a political hack, and this article doesn't dissapoint me in that respect, I think that the issue that he puts on the table with his clearly one-sided view is one that I would like to understand better.

First, as to the Dems being bankrupt of ideas, I don't know that they can claim that title with any more validity than can the R's. Both parties seem pretty beholding to the interests and masters that they serve, and the ideas that both push seem pretty clearly to come from those masters.

As for the obstructionist cry, this is nothing new - whenever one party controls everything - as the Dems have occasionally in the past as well - one of the few tools that the minority party has is to pull any trick they can out of their hat in order to try and slow the tide of idealistic landslide that is going against them. Again, neither party seems worse than the other at this historically.

The real good issue to me here is CAFTA, and free trade in general. Ignoring CK's partisan ranting, there seem to be those on both sides of the aisle who support it, as well as those on both sides who reject it. Generally though, it does seem that while NAFTA under Clinton had pretty broad support from both sides, CAFTA under Bush appears to get the majority of its support from the R side of the aisle.

I have been trying to understand more about free trade and foreign aid in recent months, and am not sure that I am any less confused now... While on the one hand, most people generally support the notion of free trade, the truth is that we have in our country a standard of living that is higher than the standard of living in the rest of the world. If we clear the boards completely, and implement trade that is truly free across all borders, then it is only a matter of time until we have a universal standard of living in the world - that is that all workers will receive essentially the same wage for the work that they do. I know that this is an oversimplification, but generally, it seems to me that this is what free trade means - that we buy from the cheapest (most efficient) producer regardless of where they live, meaning that at the end of the day, all workers in the world compete with one another to produce a product most efficiently.

I suppose that this is a very "Christian" notion - the idea of equality for all - but are we really willing to pursue this as a nation? This means that we are going to give up a lot, and I really haven't seen any evidence that Americans today are willing to sacrifice much, and certainly no evidence that American leaders have the courage to ask for sacrifice.

So on the one hand we have the very egalitarian notion of equality that true free trade seems to represent, but what about the other hand? How could anyone oppose this? What I think I understand is that opposition to many things labeled as "free trade" proposals are opposed on the basis that what they are really doing is moving production jobs from our country and economy into the economy of other nations, and that in those nations the goods are produced in ways that are often (though not always I would suppose) less than humane by our standards in this country.

Regarding the first objection, (moving jobs away from out country), I think that this is something that is clearly happening in our country, and I think that there is good and bad in this. The good is that we are, in fact, providing jobs to people in other countries who need these jobs, (for those who are interested in the human and "fair" side of the issue - usually known as liberals), and we are finding a way to deliver these goods to consumers in this country who are interested in the financial side of the equation - producing more for less - generally known as capitalists). This is good. The other good side is that when you provide jobs to people overseas, you are creating more consumers. (While this seems to be logical, the question is whether or not these new consumers will purchase anything that is produced in this country - will it benefit anyone but shareholders of the corporation who exported the jobs and the goods?) The down side of the equation is that there are, in fact, those in the country who are losing jobs as a result. In the end, I tend to feel personally that this balance between the two sides of the equation is a difficult one to resolve into a clear "right or wrong" answer. I believe that the world as a whole is better off with more open trade, but I have to realize as well that it is not a panacaea.

Regarding the second objection - that human rights are often abused - I think that I feel more committed to one side of the argument than the other. At its base, capitalism is a predatory economic system. It is based on "survival of the fittest". Unfettered, it leads to a distribution of wealth equation that moves more and more of the wealth within an economy into the hands of fewer and fewer people. One of the beauties of this great country is that along with a capitalistic economic system, we have a Bill of Rights that recognizes the role of government in protecting Human Rights from the inevitable abuses of government itself as well as from the inevitable abuses of entities such as corporations (though certainly not JUST corporations). The job of the corporation is to move as much wealth as it can into the hands of the shareholders - pretty simple really. If unfettered, it is unlikely that many corporations will be influenced to act in the interest in society or human rights - except when those interests coincide with their interest of moving wealth into the hands of shareholders. In our country, the government, (especially under the progressive influence of leaders within the 20th century), has used its power to fetter the ability of the corporation to act in its own interest when the interest of individuals or society is harmed as a result. Some say that this power has been used too much. This may be, though I suspect that most Americans would side with the individual before they would side with the corporation. Some also say that the laws (or fetters) that have been enacted have been abused by some, for example via unreasonable lawsuits. This seems clearly to be the case. These cases are widely discussed, and become part of folklore, (remember the McDonald's coffee that went for $12 million?), and they often seem quite unfair. The "other hand" to this argument is that these silly judgements cause corporations to be extremely vigilant with regard to protecting workers and customers. Again the balance - where would most Americans want the scale to lean?

The bottom line is that workers in this country are pretty darn well protected. In addition to making generally good wages (by world standards), workers here do not have to worry about inhumane working conditions, (unless they don't speak English and/or are illegal aliens, in which case they are certainly less well-protected in most cases). When we export capitalism in a generally unfettered fashion, as with free trade proposals that do not guarantee human rights and dignity, then we will certainly get human rights abuses - just as we would (and did) in this country without the progressive legislation of the 20th century. Is this something that we want to support? I think that most Americans are not quite that selfish. I trust that most Americans would rather spend more rather than support human rights abuses. Though we are certainly not saints. If we have leadership that does not recognize both sides of the equation here, and is not willing to assure "fairness" in free-trade agreements that guarantee that corporations must use standards of human rights and dignity in the overseas production of goods, and "hides" this side of the equation from us, I think that we are often too lazy to look for ourselves to see the true "costs" of decisions that we make.

Regarding NAFTA, I hear both sides of that equation. I hear that it was a bad agreement, and has resulted in the loss of many American jobs. People who make this argument seem to back it up with pretty good statistics. I hear that it was a good argument, and has resulted in better prices for American consumers, and additional markets overseas. These people seem to back back up their argument with strong statistics as well. Could both be true? Maybe we did lose jobs here, create more jobs and consumers overseas, and generate a good result for shareholders of those corporations?

It is unclear to me. I would love to hear the opinions of others who have given this thought.

An interesting thing that I learned recently involves the notion of free trade as it is tied up in the notion of foreign aid and foreign policy. We have been taught to give with an open hand and a sheltered eye. Not a blind eye, being a bad steward, but an eye that ignores whether or not the recipent will give back to us in some way. But in the real world, that is not how foreign aid works. Most of the foreign aid that we "give" is tied very tightly with our policy objectives - giving to people who do what we want them to do. The cold-hearted side of me says this is OK in many respects, and the warm-hearted side of me tends to pretend I don't understand. However, there is a more insidous side of the equation at work that I have just come to understand recently. That is the idea of "tied aid". Specifically, most of the aid that the US provides to other countries has the stipulation that the money must be spent to buy products from US companies. On the surface, this seems reasonable - it would be nice if we received some benefit back from the dollars, thought this is hardly a "sheltered eye". The last time the government released statistics regarding how widespread this practice is was in 1996 under Clinton, when about 72% of the dollars that we gave in aid was tied to the requirement to spend the money with American companies. Bush won't release these numbers, but most estimates have the number much higher today than it was 10 years ago.

So what's wrong with this practice? Three things as I see it.

First, the value of the aid is greatly reduced, as the products and services could usually be purchased from local companies or companies in other countries for less than it could from American companies. Remember the notion of free trade? If we are really for free trade, why would we tether our aid to the requirement to purchase from the highest priced provider (in most cases)? So I question just how much "free trade" really has to do with the free trade arguments.

Second, fewer people benefit from the aid. If a sub-saharan African country requires drinking water, and a Kenyan company can provide the water for $1 a barrel, but our aid to that country is tied to the requirement that they spend it with an American company, and the American company charges $10 a barrel, then 9 out of 10 people are left thirsty.

Third, in the example above, the American company has no incentive to be efficient - they know that the money must be spent with them. This makes this form of foreign aid nothing less than corporate welfare. While I might support "welfare" and "aid" to those truly in need, I have a problem with my government calling something "humanitarian aid" on the one hand, while violating free trade principles, human rights by aiding fewer people, and essentially handing corporations donations cloaked in this half-truth.

These things are all tied together as I see it. Both R's and Dems have been struggling with these issues for quite some time. Both free trade and aid to the needy are issues that I think people of all stripes support, and they are tied together in ways that defy simplistic descriptions.

So, I can't figure out whether CAFTA is something that I support or not...

I do know that I am angry about the way that we tie our humanitarian support to American companies.