2016-06-12

Trade Agreements -- The Physics Just Does Not Work....

Proponents of Trade Agreements like NAFTA have touted these complex negotiated agreements as good for the American workers, suggesting jobs available to the US would increase.  Additionally, the new avenues of trade would bring increased revenues to the US, allowing US companies to increase exports, thus opening new doors for increased wealth for one and all.  Additionally, trade deficits were prophesied to decrease and manufacturing would start to grow again as a result of reduced tariffs on US import to participating companies.

All these benefits to the US citizens were supposed to stem from the new freedoms supplied to companies, both large and small, to do business across participating borders.  I am particularly interested in the 'end result' of benefit to the average US citizen - to me, that is the end result that counts.  I don't care about corporations, and frankly, I don't give a damn about the US Government either any more.  To be honest, they are basically the same thing in my view: Wall St. has now become the Uncle in Uncle Sam.

There is much ado about the TPP, and how trade agreements are such a good thing.  I keep looking for statistics that show how good a thing NAFTA has been for the average American.  Can't seem to find any.  There are stories of how one company (usually large) or another did well.  Their stakeholders (..er... shareholders) certainly did, the CEO and top brass certainly did, but the people who have a real vested interest in the companies, in other words, the employees, did not do well at all.  And that is reflected in our overall economy in my view.  NAFTA is not the cause of our woes, it is just one of the many substantial contributors.

Being just a simple schmuck, I am inclined to ask the following question:  If we engage in business with countries where the labor pool is unskilled and valued at a tiny fraction of our labor pool, will the value of their labor pool go up, or will the value of our labor pool go down?

Silly me:  I think that the basic principle of of water applies here:  Water will always seek the lowest, or closest to gravitational center, that it can to come to rest.  Another apt analogy is that a high energy state seeks a low energy state, pretty much the same thing.  Guess what - Economics works the same way, and it follows that wages and therefore standard of living will act accordingly.

If we want to maintain our standard of living, we don't want NAFTA, and we don't want TPP.  They are not targeted to US citizens living in an increasingly better world.  Quite the opposite in fact.

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