Sunday, July 31, 2005

Globalization & Free Trade

I'm back!

With the recent passage of CAFTA, I thought this an appropriate time to lay down some ideas about free trade and globalization.

What goes around comes around, and when in relation to trade, comes around and then some. With increasing globalization, countries can specialize, basic resources become cheaper and more abundant, and competition brings about increased efficiency. Free trade/globalization also brings interdependency and constant contact between all cultures. This breeds peace and understanding between the peoples of the world. Thus, globalization brings about increased wealth and peace for all the world. The microcosm for this model is Europe, which after thousands of years of constant war has now found prosperity, peace, and understanding due to the EU, an organization whose primary function is insuring free and fair trade. For these, positive, reasons free (and fair) trade is considered a fundamentally good objective and one that should be encouraged through American policy.

This said, there is a flip side that entails that our country act with some common sense (practicality) whilst globalizing. With specialization comes whole segments of the economy dying off while others expand, with abundant resources waste and faster consumption of the planet, with competition and efficiency comes lost jobs, despite the net gain. The very act of going out and making free trade agreements with other countries requires caution lest you end up on an unfair playing field.

Thus it is essential that our government insures a smooth transition through sound practical policies. The government needs to provide re-education to those who find themselves in an obsolete or uncompetitive job market. They need to make sure that the market's appetite in the short term is satiable in the long term by making sure that we have long-term resources available (this principally applies to energy). We also need to insure that the United States remains the most competitive player out there. This is best achieved through a superior education regime, an excellent infrastructure, and minimal regulations. Finally, we need to make sure everybody's playing by the rules. This is accomplished by using tariffs to punish countries (China) that are, for instance, subsidizing their companies, pegging their currency, and stealing one of our most valuable commodities by not respecting patent laws. If we do all of this on the economic side, there is no reason why globalization cannot be a win-win proposition for all the participants.

The non-economic side also has its flip side. Interdependency can bring about crucial political weaknesses if say, someone else is building your tanks, or in our case, we no longer build big ships, forcing prices through the roof when the navy wants one and there's only one American shipyard left with which to "negotiate". Constant contact between cultures can also breed resentment and misunderstandings, this is occuring in the Middle East when, for instance, they travel to Europe and see the opulent, free, and wealthy culture contrasted against... twenty-something countries who cannot equal Spain's GDP (the Arab League). Fixing the political weaknesses should be rather straightforward: insure that we have strategically essential resources for the short term (the oil reserve) and alternatives in the long term (working on that...), and bolster industries considered essential to our national security, like shipbuilding. The cultural aspect is a little more complicated. When those (case in point) Muslims go and see how rich the rest of the world is and wonder why their, (from their point of view) "enlightened", world is suffering, there's a very small chance that the government controlled media/religion is going to name the true problem: government incompetency due to lack of reform & democracy. No, they'll say it's the Europeans, or even better, the American's fault. "They're abusing you! Obviously they're cheating because they're winning!" I'm sure they aren't the only ones; no doubt the same ideas are pushed by all insecure governments, ranging from North Korea to Belorussia. To counter this will require an extensive system for insuring that where there's contact, there's understanding. To accomplish that it is integral that the practical policy on Islamic Extremism is implemented, as well a general (tactful) push for free speech across the board, for when all ideas are lined up on next to eachother in the global marketplace, the people almost always buy ours.

America should push free trade, but make sure that it is fair. We should also insure that we have a smooth transition to a globalized economy, and protect industries/resources key to our national security. Finally, we need to implement policies which bring about cultural understanding through free speech for all, for therein lies true world peace. Thus stands the practical policy on globalization & free trade as of 7/31/05.

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