We have oft detailed and analyzed the fake-ness of what has for decades passed for “free trade” in Washington, D.C.
DC has for half-a-century-plus removed all government impediments to our market for every other country on the planet. While continuing to allow every other country on the planet to hinder and hamper our exporting companies – with as many government impediments to their markets as they can possibly conceive.
This isn’t free trade. Imagine the United States – and it’s world’s-largest economy – as the hub of a global wheel. And all of the very many spokes are one-way streets, running only inward. On which every other nation delivers us their goods and services – and we can’t get anything out.
Decades of this dumbness has been a key contributor to why we have hemorrhaged millions of jobs and trillions of dollars – bleeding it all out into the international marketplace.
When we think of other-government-impediments to our entering their markets – the two things that immediately leap to mind are tariffs and regulations. They impose huge taxes and regulatory limitations on our imports – dramatically limiting their end of the “free trade” equation.
But there is another market-warping thing these governments do to harm international equity – they massively subsidize the goods and services they then sell on the global auction block.
Every penny a company gets from its government – is a penny less they can charge for their stuff when they sell it. This is not a complex concept.
If two next-door-neighbor kids have ten dollars each to spend on their competing lemonade stands – that’s fair trade. May be the best lemonade at the best price win.
But if one kid’s parents give him an extra ten dollars – that kid has a distinct pricing advantage over his competition. He can conceivably charge 50% less for his sugar water – and how long can his competition compete with that?
These government subsidies are yet another government impediment to our stuff in their nations. Because we have to compete with their government-subsidized stuff – without government subsidies. Plus we have to pay the travel costs to get our stuff there.
And these government subsidies – are often huge.
China Sets Up 30 Billion Yuan Fund to Boost Services Trade Industry: “China has launched a 30 billion yuan ($4.63 billion) investment fund to boost the services trade industry, in an effort to further improve the country’s foreign trade structure.…”
This is, off course, on top of all of the other anti-free trade things China’s government does to warp the global marketplace.
Protectionism in China is Growing: “‘It doesn’t matter which trading partner you talk to – be it the Japanese or the U.S. or neighboring countries or European countries. They all feel the same, that there’s a growing protectionism here’ (said) Michael Clauss, the German ambassador to China.…”
The Missing Trade War Against China’s Digital Protectionism: “Tech companies don’t have a chance of competing right now.”
Think President Donald Trump is initiating a trade war? Really – not so much:
“Gordon Chang…author of the tome ‘The Coming Collapse of China’…was on CNBC on March 10, 2016 – stating the very obvious: ‘People say [President Donald Trump] would start a trade war. Well, no matter what The Donald does he can’t start a trade war because we’re already in a trade war with China. But only they are waging it,’ Chang told CNBC. ‘The question is how do we end it on terms not only advantageous to the United States but also to the international community.’”
“How do we end it on terms not only advantageous to the United States but also to the international community”…indeed?:
“Florida Republican Congressman Ted Yoho has long had a solution. He applies his solely to the sugar trade – but as Trump is now pointing out, we should be applying it to a whole lot more than just that: ‘Rep. Ted Yoho, R-Fla., reintroduced a bill Friday that encourages the administration to target foreign sugar subsidies. Under the “Zero-for-Zero” plan, U.S. sugar policy would also be rolled back in exchange for the elimination of foreign programs, which Yoho says are distorting world prices and inhibiting a free market.”
And thankfully, more and more nations are becoming more readily amenable to said less-government-everywhere approach. For reasons free trade – and budgetary sanity.
Emmanuel Macron Breaks French Taboo on Farm Subsidies: “Facing a multibillion-euro cash crunch in the EU budget, Paris is dropping its insistence on preserving the status quo for farmers….
“Under the current budget, a massive €58 billion a year, or some 40 percent of the EU budget, goes to (Common Agricultural Policy) CAP payments….
“If one thing was ever considered certain in negotiations over the EU budget every seven years, it was that France would prove to be the most defiant bulwark against more liberal Northern and Eastern European economies that regard farm subsidies as an unjustifiably lavish relic of another era.
“But now even France is signaling that the Common Agricultural Policy is not the sacred cow it once was, and that a sweeping new approach is required.”
Well hello. Yoho’s “Zero-for-Zero” – is just such a sweeping new approach. To which Northern and Eastern European nations – and now France – appear to now be quite open.
The “Zero-for-Zero” approach will cost each and every cash-strapped country an annual budgetary outlay of…zero Euros, Pounds, Deutschmarks, Drachmae, dollars, Yuan and whatever other currencies countries are currently using.
And getting the government out – lowers prices for the world’s peoples. In (at least) two directions.
They don’t have to be taxed – to give their governments the money to pay for the massive subsidies.
And removing government from between them and the international trade of goods and services – lowers the prices of the internationally traded goods and services.
Win-win. Replicated exponentially – on a huge global scale.
To quote Warner Brothers’ Goofy Gophers:
And in global unison: