Free Trade With All, Entangling Alliances With None




Trade Wars and Protectionism are not Free Trade

by Ron Paul

Two weeks ago, both the administration and the Fed announced with straight faces that the recession was over and the signs of economic recovery were clear. Then last week, the president made a stunning decision that signals the administration’s determination to repeat the mistakes of the Great Depression. Much like the Smoot-Hawley Tariffs that set off a global trade war and effectively doomed us to ten more years of economic misery, Obama’s decision to enact steep tariffs on Chinese imported tires could spark a trade war with the single most important trading partner we have. Not only does China manufacture a whole host of products that end up on American store shelves, they are also still buying our Treasury debt.

One has to wonder why this course of action is being undertaken if the administration really believes its own statements about economic recovery. Why are they still trying to fix something they have supposedly already fixed? The most troubling thing is the rhetoric about free trade given to justify this. The administration claims it is merely enforcing trade policies and that this is necessary for free trade. This sort of double speak demonstrates a gross misunderstanding of free trade, economics and world history. Yet these are the same people the country trusts to solve our problems. This sort of thing should remove all doubt about the credibility of the decision makers in Washington.

The truth is this will hurt American consumers by driving up prices of tires and cars. This will also complicate matters for our already crippled manufacturing and agricultural industries, if and when China retaliates against US made products. Whatever jobs might be saved in the tire and steel industries here as a result of this protectionist measure will likely be lost in other American industries. It is even doubtful that those jobs will be saved, as cheap tires can be obtained from other places like Mexico instead. It is difficult to see any real winners among all the losers where trade wars are concerned. If Unions think this is beneficial to them, they are being penny-wise and pound foolish.

Free trade with all and entangling alliances with none has always been the best policy in dealing with other countries on the world stage. This is the policy of friendship, freedom and non-interventionism and yet people wrongly attack this philosophy as isolationist. Nothing could be further from the truth. Isolationism is putting up protectionist trade barriers, starting trade wars imposing provocative sanctions and one day finding out we have no one left to buy our products. Isolationism is arming both sides of a conflict, only to discover that you’ve made two enemies instead of keeping two friends. Isolationism is trying to police the world but creating more resentment than gratitude. Isolationism is not understanding economics, or other cultures, but clumsily intervening anyway and creating major disasters out of minor problems.

The government should not be in the business of giving out favors to special interests or picking winners and losers in the market, yet this has been most of what has consumed politicians’ attention in Washington. It has reached a fevered pitch lately and it needs to end if we are ever to regain a functional and prosperous economy.



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30 Comments:

  1. @Dfens

    I can not believe there are still people like you that follow the government without questioning anything... If you would actually study a bit of history and current politics; hell, you might acutally learn something. And HAHAHAHA you actually believe Ron Paul's interests are in China? ...man, people are stupid. Wake up... you're just part of the herd.

    FTW??!?!?! PAT BUCHANAN?!?! What a joke...

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  2. What I want to know is how a traitor like Ron Paul captures all this attention from American Conservatives. Conservatives have always been for tariffs. This country's industrial might was founded on tariffs and protecting our industries and resources from being raided by foreign interests. It was the Liberals who were anti-tariff, and now the president who is supposed to be the biggest liberal of all time is the one putting tariffs in place to protect what's left of our decimated tire industry. From Pat Buchanan:

    How could tires made on the other side of the world, then shipped to Albany, [Georgia], be sold for less than tires made in Albany?

    Here's how.

    At Cooper Tire, the wages were $18 to $21 per hour. In China, they are a fraction of that. The Albany factory is subject to U.S. health-and-safety, wage-and-hour and civil rights laws from which Chinese plants are exempt. Environmental standards had to be met at Cooper Tire or the plant would have been closed. Chinese factories are notorious polluters.

    China won the competition because the 14th Amendment's "equal protection of the laws" does not apply to the People's Republic. While free trade laws grant China free and equal access to the U.S. market, China can pay workers wages and force them to work hours that would violate U.S. law, and China can operate plants whose health, safety and environmental standards would have their U.S. competitors shut down as public nuisances.

    Beijing also manipulates its currency to keep export prices low and grants a rebate on its value-added tax on exports to the U.S.A., while imposing a value-added tax on goods coming from the U.S.A.

    Thus did China, from 2004 to 2008, triple her share of the U.S. tire market from 5 percent to 17 percent and take down Cooper Tire of Albany.

    Is this what Ron Paul wants? Does he want to turn us into China? Does he want our factories to pump crap into the air we breathe and the water we drink? And these tires the Chinese make are crap. You take your life in your hands if you put those POS on your car. Is that Ron Paul's America, Wal Mart America?

    Up and down the line Ron Paul agrees with the Communist Chinese. He wants all our foreign bases closed. We just finished closing hundreds of bases all over the world as part of BRAC. We continued closing bases well after 9/11 when we were attacked by the air and were not able to successfully intercept a single foreign controlled airplane. Our defense spending has not gone down one dime since all those bases were closed. All that has happened is our defense contractors have gotten richer. And this is Ron Paul's solution for rising defense costs? This is how he proposes to make us safer? What a bunch of bs.

    The Communist Chinese don't want us devaluing our dollar. They don't want us running up a huge, $9 trillion deficit with them and then paying them back with money that's worth less than what we were loaned. And what's Ron Paul's stand on that? Ron Paul wants us to go to a gold standard. He doesn't want the Chinese to get cheap, worthless dollars back either. He wants us to give them all our gold!

    The Communist Chinese don't want us to have any tariffs. They want us to throw our markets open to their cheap baubles and beads. They want to be able to raid our nations industrial might. They buy our factories and put them up in their country, staff them with slave labor and ship it across the Pacific Ocean to us for cheaper than we can produce it ourselves. They have stripped us of our industrial might this way. And what does Ron Paul say? He's all for the Chinese. He wants the same thing.

    Now you tell me, is that "conservative"? Is it conservative to sell out your country? Is it conservative to look after the interests of Communist Red China before those of your own United States of America? He's always happy to talk about those "black helicopters". He's always happy to tell you to fear those in your own government first. Don't fear the Chinese, fear your neighbor. Fear the police. Fear the military. But he's not a traitor? He's a conservative, right?

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    • I remember a lot of democrat senators before the economic crash won their candidacy based off of "fair trade" instead of "free trade." It seems like that whole concept has gone down the toilet since then... I really was kinda impressed at first, then I realized ALL politicians bullshit ideologies and do nothing about it.

      I don't get this whole notion that we will end the fed from an audit. Nobody supports ending the fed in congress, they just want answers. THE MOST they will do is strip their powers, they wont just "end the fed."

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      • Congress is still going to protect monetary policy and central economic planning. They already said that they going to revise the bill to protect their interests.

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        • For every Austrian economist that says we need to get rid of the fed, we have 10 Keynesian economists that say we need to keep the fed. The whole idea is to persuade both sides with a DETAIL PLAN RELATING TO 21st century economics, on how we can successfully turn their specific doubts into realistic goals. Simple speeches from the 19th century alone are not going to persuade economists of today.

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          • I don't so much question the need to get rid of the Fed. I really don't like the Fed. I don't like the continuous inflation. I think we should have deflation. We have deflation in the computer industry. There your dollar always buys more. Technology effects every aspect of our society, so why do we not have deflation thoughout our economy? The answer is, because of the Fed. And who does this inflation make money for? The private owners of the Fed. That's not a good situation.

            But then the fact is, this is more than just a national problem now. We are in debt up to our eyeballs. We have a federal deficit and a national trade deficit that are sucking credit out of our economy at a huge rate. That's what's destabilizing our economy. It's not the Fed doing it. The Fed is at its limit of how to keep an economy in such poor shape from going over the edge. Sure they helped get it here, but is the answer to go to a gold standard just in time to pay off all these massive debts? I question the timing more than the answer.

            Sure, let's go to a gold standard just in time to pay off the communist Chinese for all they've done for us. That makes sense, right? Let's not protect our industries. Let's not protect our vital national interests and resources. Let's just go to a gold standard and not ask whose best interest that move is in. That's what Ron Paul would have you do. He's pulling the wool over your eyes with his ideology while his strings are being pulled by the Chinese. He is as much the Manchurian candidate as Obama or McCain.

            Then he has the gall to criticize Obama when he does just one little piece of what he promised to do in his election campaign? Hell, Ron Paul threw his support behind Chuck Baldwin, who was even more agains fair trade than Obama. Would he be stabbing him in the back now if he won the election? I guess that answer is, yes!

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          • Ya, I wish the congress would make a big deal out of the trade deficit as they do the national deficit. It's kind of like an unspoken thing there.

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    • This is so right on! You've got it right.

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    • Americans have fought the battle over free trade before. This 3 page or so synopsis of The American School of Economics is very educational and it is blatantly obvious that we are in danger of becoming a colony again:

      "U.S. citizens, and even economists and historians in this country, have often never heard of the "American System" of economics which made our nation great. Worse yet, many confuse it with the British System of free trade and looting."

      http://members.tripod.com/~american_almanac/carey95.htm

      Printed in the American Almanac, 1995

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  3. Thanks for the link, Sean. It is a Ponzi scheme, our whole economy is just that, and we've been led into this scheme partly by Libertarians, whose impractical idealism has blinded them to reality. It's not "free trade" if you're the only one playing by the rules.

    As a segue to another topic you and I have discussed, in your article it says:

    [H]e observes that one unspoken reason that China has gone whole-hog on its massive, $650 billion fiscal stimulus program -- creating more factory capacity in a country that is already reeling from overcapacity -- is that the effort gives it cover to stockpile copper, oil, iron ore and other hard assets that it considers to be better stores of value than dollars.

    This is a way that they can bury us. They can corner the market by owning both the raw material resources and industrial capacity to use them, leaving us with no choice of where to buy our goods. In this case, owning gold or a monetary system based on gold is nothing but a way to transfer our gold to China in exchange for the goods we need to survive.

    This is one of the reasons I have advocated manned exploration and exploitation of the Moon. The Moon is only 3 days away from Earth. It is our nearest treasure trove of increasingly scarce resources. Have you read the latest reports on the existence of water on the Moon? We have to do something to break out of this cycle of dependence or we will certainly lose not only our freedom, but our very nation. Traitors like Ron Paul are doing nothing to help this situation, in fact, they are only making things worse.

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    • I agree. Most of our current technological discoveries and inventions have come from NASA. I think they should be the key leaders to rid us of foreign dependency on energy. This is something that the free market wont change because there is too much profit in the old way of doing business.

      We need to take serious steps to put a balance to global financing. We can't just rely on other countries resources and capital to provide our economic needs. Its foolish, its dangerous, and it's habit forming.

      You are correct, free trade only works if both parties participate. The whole idea of free trade is that both countries will buy goods from each other but this is obviously not the case. If anybody begs to differ, they obviously don't understand laissez's principles, and how a free market is supposed to work.

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      • David B Daniels Hyde Park Mass

        Yes it is the same as the cancer industry allowing a cure for cancer to become known. It is all about money as usual and I agree wholeheartedly about what you said about NASA. NASA is responsible for most of our scientific discoveries which really matter

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  4. China has become a giant ponzi scheme!

    http://articles.moneycentral.msn.com/Investing/SuperModels/mad-world-chinas-bind-is-ours-too.aspx

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  5. Mercantilism is Murder

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  6. It is interesting that Ron wants us to go on a gold standard and not have tariffs to protect our domestic industries and consumers. He pretty much wants exactly the same things the Communist Chinese want. After all, they don't want the Fed debasing our money by turning the printing presses on 24 hours a day. If we did that, then we'd be able to pay off our debts to them with worthless money. Funny how Ron Paul's agenda lines up with theirs so well, isn't it comrade Paul? How does it feel to be a traitor, comrade Paul? Did they give you a lot of gold to sell out your country or was it 30 pieces of silver?

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  7. He's worse than that, Peter. He's a traitor. He's looking out for the interests of Communist Red China over those of his own country. China has been able to convert their own tariffs, money fixing, and value added taxes into a decade of double digit growth, but if we put one tariff on crappy tires that kill Americans just like the lead paint those bastard Chinese companies put on our children's toys and suddenly we are supposed to believe that this is going to lead to a trade war? Bring it on. It's about time we got the balls to fight a trade war. We've become the USP, United States of pussies.

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    • Countries do not grow wealthier by setting up barriers to trade (tariffs).

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    • Yepper, MORE WAR IS THE ANSWER

      I wanna see blood and guts and gore. We are not waging war in enough nations. How will these people come to understand that we rule the world if we don't show them by the barrel of a gun.

      Thankfully Obama has spread the war to a few more countries, because we need to blow up some more civilians and infrastructure so that these people will bow down to America.

      You the Man, Dfens

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      • If you're too much of a pussy to fight a trade war, then you've exceeded even my expectations.

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        • You must have a Master's in wasting time and money.
          Freakin'lil'napoleon.

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          • Waisting money? That's the whole premise of the idea. We waste money by purchasing goods overseas. Its called a "transfer of wealth." I guess your okay with our economy being totally dependent on china to function and to grow. I guess you accept the fact that we borrow so much from china and elswhere to buy their goods.

            No I don't think that we should go into a trade war, and I don't necessarily think that we should just go into protectionism, at least not right now... But I do see the problem and I don't think we should turn our heads and look the other way. That's why the problem has built up so much and lasted so long. The fed is going to be excused for the actions they took when we find out the truth. We are going to find out that the fed bailed out the american consumer with our dangerous consumption habits. We are living way beyond our means.

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          • Our financial system is China's big ponzi scheme. How you don't see this as threatening BOGGLES THE MIND.

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  8. Are you joking? Tariffs are one of the few things our government can do that is ACTUALLY Constitutional. We used to export everything and import nothing. Our trade deficits began when we started to lower our tariffs. Free trade is a fallacy. It will NEVER happen. Other governments aren't as stupid as we are. They actually want their economies to prosper and will take advantage of us to do it. Example: taiwan Steel. their government subsidized their steel to run us out of business. A Constitutional tariff could have prevented that. I'm going back to Pat Buchanan. I love every other idea Ron Paul has, but in the end he is just another ideologue.

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  9. Article 1, Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

    To borrow money on the credit of the United States;

    To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;

    Ron Paul is an idiot! Why doesn't he read that US Constitution he likes to talk about all the time? This country became the industrial power it once was through the use of tariffs, but now Ron Paul, the history revisionist, expects us to believe that tariffs are bad? It's better we should die driving on those cheap crappy Chinese tires than have an temporary 35% duty on the garbage tires they're dumping on our market to force our last few remaining tire manufacturers out of business? What a moRon!

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  10. I would love to see the day when the United States leaves the UN and is no longer a part of NATO; a day when all of our soldiers come home and our overseas bases are closed. Not a single drop of American blood should be spilt in defense of another nation.

    Only without entangling alliances can America ever trade freely with other nations.

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  11. Belief that government is over-regulating business is at high for decade.
    http://www.gallup.com/poll/123101/Americans-Likely-Say-Government-Doing-Too-Much.aspx

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