COMMENTARY
Free trade has been a 'mantra' for corporate success for much of the last fifty years, but the idea is deeply flawed. The conceptual model for free trade has its origins a long time back when economic performance depended heavily on nature and what nature would provide. The 100 year war between Britain and France was a lot to do with the ability of France to grow grapes and make wine ... something that was essentially impossible in the English weather. Trade became an important way of improving standard of living because of the economic idea of 'comparative advantage'.

But in the modern economic era where technology is a core driver of productivity, and nature less important in the profit equation ... then comparative advantage for profit seeking investors is simply labor cost and the associated costs of doing business. In this environment investors crowd into areas with the lowest cost of labor and the lowest cost of doing business, that is low taxes, low regulation and lax laws.

The Dylan Ratigan graphic shows the story of the recent free trade agreement between the USA and South Korea. From the US perspective there is a problem ... the loss of 159,000 jobs. The US business community wanted the opportunity to profit from investment and trade with South Korea on favorable terms and lobbied for the agreement spending $279 million in the process. In spite of protests in both the USA and South Korea, the trade treaty was ratified by the law makers.

There is no discussion of the value destruction associated with the agreement. The world needs to be a fairer place much more than it needs to be a more profitable place for investors. At some point a monetary economy and a capitalist market economy does not work any more to satisfy the reasonable needs of the global population ... but this is being ignored by both educators and economic practitioners, not to mention politicans and law makers. It is a train wreck that will certasinly happen.

Dylan Ratigan has a lot more to say on subjects like this.
Peter Burgess