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Global Free Trade & Detroit In Ruins

22 Dec

Ruins

Image by @Michael via Flickr

The attached video (“Detroit in Ruins”) offers a number of opinions as to why the city of Detroit is a largely wasteland.   This ruin is particularly poignant since “in the day,” Detroit had the highest median income in the USA.  Today, Detroit’s median income is #68.

The video blames Detroit’s liberal government, teachers’ union, and labor unions as the principle causes for the city’s collapse.

All of those accusation may be true, but I want to stress that Detroit has collapsed because: 1) INDUSTRY is the primary source of most urban wealth; and 2) the primary Detroit industry (auto manufacturing) has effectively fled Detroit.

Point:  If you lose your industrial base, you’re headed for poverty and social collapse.

Detroit’s collapse offers a tangible evidence of what’s likely to happen to the entire USA thanks to “global free trade”.

Under “global free trade,” 1) our tariffs have been lowered or eliminated; 2) foreign goods produced with cheap foreign labor can be sold freely within the USA; 3) US industrial corporations cannot compete and remain profitable when forced to pay high American labor prices while competing against cheap foreign labor; 4) US industrial corporations are being effectively forced by low tariffs and “global free trade” to relocate to foreign countries with cheap labor; and 5) the US has been increasingly “de-industrialized” (just like Detroit).

My conclusion, prediction and warning to you is that if you allow global free trade (low tariffs) to continue, the entire nation of The United States of America will tend to degrade to an economic condition similar to that of Detroit’s.

Those who favor “global free trade” will argue that the loss of industrial jobs can be compensated for with “service jobs”; that those “service jobs” will be sufficient to maintain the nation’s economic strength.  But, if that’s true, why haven’t “service jobs” saved Detroit?

Those who favor “global free trade” will argue that those who lose their industrial jobs to foreign competition can be re-educated to take on the new high-tech jobs in the increasingly-efficient “service” economy.   Really?  Well, if so, when do they plan to start reeducating the people of Detroit?

Detroit is evidence that the rationalizations for global free trade do not always work, and may not work at all.

It’s possible the the primary reasons for Detroit’s collapse were its liberal politicians and greedy unions.  But those are local problems subject to local solutions.  Liberal politicians and greedy unions can be reined in, any time the people of Detroit make up their minds to get up off the couch and make something happen.

But global free trade is not a ‘local” problem; it’s not amenable to “local” solution.  When industry flees Detroit for Beijing, that industry is gone–perhaps forever.  Without an industrial base, Detroit will not revive any time soon.

Not all cities have an industrial base.  Some can survive very nicely as “service economies”–but even those local service economies are derived from, based upon, and feed off other “industrial economies”.  If your industrial base declines, the derivative service economies will soon follow suit.

For the past two centuries, the economic foundation for most big cities and the USA in general has been industry.  There is no reason nor evidence to support the theory that, under global free trade, we can safely ship our industries and our industrial jobs overseas, and still maintain our standard of living.

Global free trade will push the USA into higher unemployment, lower wages, lower standards of living, and the kind of social collapse, despair and immorality that are prevalent in much of Detroit–and other 3rd world nations.  Anyone who tells you otherwise is a fool or a treasonous whore who is knowingly working to destroy the several United States.

Most of the people who advocate “global free trade” are in our government.  I leave it to you to decide if they are predominately fools or treasonous whores–or maybe both.

video “Detroit In Ruins”: 00:13:04  http://www.youtube.com/watch?v=1hhJ_49leBw

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7 Comments

Posted by on December 22, 2010 in Economy, Global Free Trade, Treason, Video

 

7 responses to “Global Free Trade & Detroit In Ruins

  1. Tom L

    December 27, 2010 at 2:14 PM

    I think you might be a little hard on the free market crowd with that last comment about treasonous whores. Free trade happens to work fine when neither of the two trading economies is subject to subsidies, tariffs, taxes, or any other kind of government intervention. The reason industry is leaving the US has nothing to do with free trade. It has everything to do with the oppressive conditions businesses such as high federal income taxes, federal sales taxes, state income taxes, state income taxes, and many more fees and other start-up costs. While the US has been busy turning itself into a socialist economy, China has been working hard to turn itself into a more capitalist or free market economy. Obviously they are far from ‘free-market’ since everything seems to fall into varying shades of grey. However, free trade allows people to buy the best product that suits their needs for the most affordable price. That results in net growth in wealth. Industry moving overseas has to do with ‘local’ policies within the US and the fact that the pasture is greener in other countries when it comes to running a business.

     
    • adask

      December 27, 2010 at 3:31 PM

      Insofar as US labor is compelled to compete head-on with foreign labor that is so cheap as to be slave-like, the results will be lower US wages, higher US unemployment, and a tendency for US labor to accept working conditions that are increasingly “slave-like”. These results are not hypothetical; two (higher unemployment & lower wages) can be seen clearly in this country even now. Insofar as the US government knew or should’ve known these results would follow the adoption of “global free trade” and lower tariffs, our alleged “government” intentionally betrayed the American people’s best interests. That betrayal (especially the refusal to secure out borders as part of global free trade) constitutes treason. Insofar as that betrayal was secured by bribing politicians with “political campaign contributions,” those who committed the betrayal prostituted themselves. The term “treasonous whores” therefore still strikes me as appropriate and accurate.

       
  2. Tom L

    December 27, 2010 at 5:51 PM

    And I’d like to mention what most people call ‘free trade’ today, is far from it. Tariffs, import duties and other obstructions are common even for things that are imported from the US into Canada. I had to pay a 40$ duty on a $45 purchase after taxes for a christmas present.

     
  3. Tom L

    December 27, 2010 at 6:00 PM

    I can agree with some of that. Except my point is that the problems you mention are not caused by free trade. They are caused by policies within the US that result in higher expenses for businesses such as unions, high taxes and loose monetary policy. The same can be said for the cheap wages in other countries. They have an oversupply of human labour and therefore the people will accept less in return. However, the oversupply of labour is often due to policies that result in a poor environment to start businesses and a lack of jobs. However, what you are seeing today is businesses moving abroad because many countries have policies that are less oppressive than policies in the US. I agree with many of the problems you mention, but I have to disagree on what you think causes them.

     
  4. adask

    December 27, 2010 at 6:07 PM

    That’s what makes a horse race, isn’t it?

     
  5. Tate F

    January 7, 2011 at 3:00 PM

    I would like to address the contention that an entire country couldn’t possibly exist entirely on a service-based domestic economy; this is untrue. In this case, what is true for a single individual (that an individual can sustain himself by trading his services), can be true for an aggregate of individuals (such as a country). It is conceivable that the U.S. could be entirely service-based [please read Murphy’s article, particularly the section which states that there is nothing magic about manufacturing: http://mises.org/daily/2702%5D.

    As far as the U.S. not manufacturing anymore, that is simply false [please see http://www.cato.org/pub_display.php?pub_id=8750%5D, it is just that it is producing more output with much less labor. This, to me, suggests that the problems might majorly lie with Detroit specifically, not free trade (though this is not at all to suggest that national level policies, such as those mentioned by Tom L, do not contribute significantly to Detroit’s problems, but that Detroit seems to be doing worse than other American cities. This would lead one to think that state and local policy must play a major role).

     
  6. OrthoCon

    January 7, 2011 at 9:49 PM

    As pointed out in the video, American cars have an additional labor cost of over $1,000. This is a huge difference in a competitive market. Because they can’t charge more (or people will just buy more Japanese/Korean cars), they build cars that are $1,000 “cheaper” meaning poorer quality. Hence, your window handle breaks off in a few years. After dealing with a few cr@ppy American cars, people move on.

    The treason is not allowing the American values of hard work, ingenuity, pay for merit do what they will naturally do for American products. First the Chrysler bailout then the GM bailout prevented the necessary medicine being taken by the ailing car companies. If American car companies pay people for doing nothing, the jobs need to go elsewhere. Rediscover the American ideals, and the jobs will come back. Get government out of business.

     

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