When Free Trade Does Not Work

“Trickle-down economics is a myth. Enriching corporations — as the TPP (Trans-Pacific Partnership) would — will not necessarily help those in the middle, let alone those at the bottom.” On the Wrong Side of Globalization, New York Times, March 15, 2014

Free trade does not work if you are dealing with a country that uses slave labor or sacrifices other important issues like the environment or safety. Improving the environment does not happen without costs. The United States invests in technology to help improve our air quality and purity of our drinking water.  Saving our forest land comes with a price. Investing in solar energy helps future generations to live in a better environment but presently it is expensive compared to fossil fuels.

Slavery was banned 150 years ago, even though treating the future generations of the slaves equally is still a work in progress. If other countries still use slaves, we effectively are supporting their bondage and putting our work force at a competitive disadvantage by buying the goods and services they produce. The same is true with a minimum wage law. The company with a domestic production facility that uses unskilled workers is at a competitive disadvantage over other companies that use unskilled workers in other countries that will work for lower wages because of the forces of supply and demand and no minimum wage laws. Continue reading

China And Five Baits

If you are under the age of 50 you should be concerned about China from an economic and global power standpoint. Some believe China is seeking peace with the rest of the world. Based on their long history, I am not convinced. For China long-term is hundreds of years and for the United States it is the next election cycle. China’s focus is always on the long-term.

Much of this post is from a book, On China, written by Henry Kissinger, the Secretary of State under President Nixon and a research paper of the National Intelligence Council titled Global Trends 2030: Alternative Worlds.

Whether the future will prove China’s wish for peaceful co-existence depends on whether its middle class will sufficiently benefit from economic growth and not allow their leadership to throw it away by creating enemies with trading partners. This requires the country becoming more democratic and less inclined to be a threat to the rest of the world. The jury is still looking at the evidence.

To complicate the matter further, China’s leadership class is becoming more corrupt daily.
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Inequality And Education

We need to change the way we pay for public education. There is a direct relationship between education and inequality. In the past education was less of a necessity. Here in the Midwest you could work in an auto plant without graduating from high school and earn a solid middle class living with health insurance and a pension. Things have changed.

Today you not only need a high school diploma but some additional technical training to qualify for that same line job. Further, we are all competing in a global economy and as a result the domestic auto industry can no longer go along with raising the wages of union members and pass that increased cost onto the consumer. The consumer will go elsewhere. Continue reading

Emerging Countries and the U.S.

If you were living in or overseeing an emerging country like Brazil, Mexico, Kenya or South Africa how comfortable would you be to have your nation solely rely on your affiliation with the United States for your future?

From afar you see the U.S. having a difficult time taking care of its own business. You see a group of politicians threatening to shut down their government in order to prevent the enactment of a healthcare program that was passed according to law and a Supreme Court ruling it is constitutional. These politicians are willing to risk the credibility of their government in the eyes of the world for the sake of remaining in good standing with a splinter group called the Tea Party. Continue reading

Let The Good Times Roll

If one does not recognize limitations it can lead to psychological problems. We no longer are standing alone on the mountain. We are in the lead but other countries are clawing at our behind.

Over the years we became fat and out of shape. We led the good life for decades and relaxed by taking on excessive debt rather than recognizing our superiority is slipping. We borrowed in excess to let the good times roll and we lost our work ethic thinking we were invincible and wanting more.

The second reason for our decline is more admirable. We encouraged the rest of the world to be like us. At the end of World War II we were the last industrialized country standing and we did not use this superiority to take over the rest of the globe. We encouraged countries to take the route of democracy. We gave them aid and bribed them to become like us. Many of these countries did it and others like China, India and Brazil are now bonafide competitors. A second wrung of nations such as the southern African countries are aggressively in the game

The result is some of our children have grown up, left home and no longer do everything we want or say. Now we are truly in a competitive world and one of the luxuries we no longer can afford is to be the worlds policeman. We are burning resources in an attempt to hang on to this superiority at the expense of our own future. Like all parents, we still love our children but now we must spend more time looking out for our self…. http://lstrn.us/1cNpYjc