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Paul Streitz

Another Autistic, Free Trade Economist
By Paul Streitz
Sep 17, 2007 - 9:20:44 PM

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Thomas Sowell is another autistic free trade economist. The latest Basic Economic: A Common Sense Guide to the Economy is a paean to the free market and free trade. Mr. Sowell makes the standard arguments for free markets against socialized and central planning.

When dealing with Free Trade he becomes autistic. He only reports information that is favorable to his argument, ignores contradictory information and distorts economic history to make his case. Here his Common Sense Guide to the Economy is not common sense, but the promotion of an economic ideology at the expense of common sense, or an observable, economic reality.

Mr. Sowell states, "Free trade may have wide support among economists, but its support among the public at large is considerably less." In every country, Britain France, Italy, Australia, Russia and the United States, the citizens favor protectionism. This Mr. Sowell blames on "…the problem of getting the general public to understand international trade is due to their not having the facts."

Mr. Sowell does not seem to grasp that economics profession is in the pocket of the multi-national corporations, who profit enormously by free trade. They are the ones who fund the think-tanks and universities that promote the free trade ideology. By focusing on the lowest world wide cost, manufacturing inevitably moves toward the countries with the lowest labor costs. China booms while American workers head for unemployment.

Perhaps, Mr. Sowell should climb out from his ivory palace at Stamford University and visit some ghost manufacturing towns, like Detroit, Syracuse, Bridgeport, etc. These are towns that have become shells of their former selves. No, Mr. Sowell will continue to pontificate, drawing a six figure salary from whom? Who supports the Hoover Institution at Stamford? It is those globalist, multinational corporations who profit from free trade!

At what point does Sowell realize he is a paid flack for millionaires, not an economist. He is certainly not an economist that is interested in the welfare of America"s workers.

The effect of globalization and free trade is to drive up the value of capital (machinery and the means of production) and to drive down the value of labor (those who operate the machines). A machine in China making 1,000 widgets a day produces a higher return on investment than the same machine in the United States because the labor to operate the machine is lower. The inability to grasp the relationship between capital and labor is at the heart of the economic delusions of Free Trade economists.

In Rochester, New York, international trade meant that Kodak"s employment went from 125,000 to 25,000 as but one example. Men and women with high paying jobs in manufacturing, now have low paid jobs fixing furnaces. But according to Mr. Sowell, they did not have the facts. This he blames on "business, labor and agriculture, who wish to escape the consequences of having to compete in the marketplace with foreign producers." But workers ask, "Why should we have to compete with slave labor?"

Mr. Sowell, as the other free trade ideologues, simply ignores the economic history of the United States. The first act of the U.S. Congress was to pass Alexander Hamilton"s protective tariffs, which gave rise to American industry and a country that blossomed economically. These tariffs were whittled away by the Jeffersonian Democrats and the U.S. industry suffered. Basically, the no-tariff Democrats wanted slavery, a small impoverished white middle-class and imported goods at the world"s lowest prices.

When Abraham Lincoln came into office he enacted high tariffs against imported goods and American industry boomed. Those tariffs were essentially in place through the 1960"s when free trade advocates lead by Milton Friedman of the University of Chicago began to peddle free trade.
Milton Friedman dissembled, lied and ignored economic reality. Friedman was essentially a globalist with a utopian scheme: all countries would improve their economies. He ignored the economic history of the United States and focused totally on prices.

Free trade economists are autistic by almost totally focusing on one issue. "If an American consumer did not have the lowest world price for a good, he or she was being cheated." They blithely ignored the impact on employment and ignore the fact that consumers without jobs cannot purchase very much. Milton Friedman is dead, but millions of Americans are bearing the consequences of his delusional economics. Thomas Sowell continues this foolishness.

Thomas Sowell follows the same tradition of ignoring economic reality and using statistics that bolster his case but ignore the impact. For example, he says "Both sides must gain or it would make no sense to continue trading." This is politically stupid to say the least. Certainly, someone gained; it was the American corporations that most quickly send their production offshore. In the last five years, corporate profits as a percent of gross national product have increased forty percent. Workers wages have not increased in real terms in twenty.

In explaining NAFTA, Mr. Sowell says that there were no negative effects to American workers because "In, reality, the number of American jobs increased…." He blithely ignores that the United States increase in jobs is a result of an increasing population due to immigration and the jobs that were created were in low wage industries. In other words, he uses gross national figures to mask the underlying loss of high wage jobs. The increases in jobs in the U.S. economy were jobs in retail, service industries and health care. They were not high paid, technical jobs in manufacturing.

In the last two decades, the difference between the mean and median incomes in America has switched. That is millionaires at the top are increasing the average wage, but the majority of Americans are stuck at the same or lower incomes.

This is consistent with the notion that free trade drives the value of capital up and the value of labor down. American workers are engaged in a race to the bottom. Eventually, American wages will be that of the Chinese.

Free trade was instituted in the United States by a group of utopian economists who created theories and made observations to fit their theories. They ignored the economic history of the world that countries do compete for resources.

Economists such as Thomas Sowell continue to sell their snake oil. This is despite the negative impact of Free Trade on the United States. Now practically every manufactured good made in China, the U.S. runs an enormous trade deficit and has a multi-trillion dollar debt to China. China now holds the economic key to America"s future. When a company starts to go bankrupt and takes out loans, the saying is that the "bank now owns the company." This is true with China.

Max Planck once observed that a new truth (or in the case of an economics, an old truth revisited) does not see the light because of conversions holders of the incorrect, but established truth. They go to their graves first. Milton Friedman went to his grave ignoring the fact that free trade is destructive to all citizens, but enriches the international elites.

Mr. Sowell will go to his grave holding the same erroneous belief in free trade. But what does he care, he is happy in his autistic world, rocking back and forth, singing the mantra of Free Trade.

Paul Streitz
Co-director
CT Citizens for Immigration Reform
amfirst@optonline.net

Go here to be put on the email list for AmericaFirst2008

Paul Streitz, author: AMERICA FIRST, Why Americans must end free trade, stop outsourcing and close our open borders.


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