Monday, September 12, 2016

Free Trade - Winner & Losers

We hear a lot of talk about the good and bad of Free Trade in the current Presidential Election. Aside from what Donald Trump and Hillary Clinton are saying, there is no doubt that Free Trade has created winners and losers. American Consumers in particular are big winners as a result of Free Trade. All those flat screen TV's and thousands of other items, if made in the United States, would be considerably more expensive and out of reach for many people.  So for people with good paying jobs, their standard of living has been increased by Free Trade. Certainly Baby Boomers, particularly those living in large cities, with college degrees and or marketable job skills have benefited from Free Trade. In a sense, many Baby Boomers have lived the good life because of Free Trade.

However, though American markets are generally open to all countries, we really have never had Free Trade because other countries have imposed tariffs on American goods entering their countries to protect their industries.  And or, currencies have been devalued to make other country's goods cheaper in the United States and our products more expensive in their countries.  This is particularly true related to China that makes it very difficult for foreign companies to do business in their country. Further, it is rare to see an American made car on the streets of Japan, though Japanese branded cars, many of them now made in the United States are all over our country.

Yes, Free Trade has benefited many Americans; but the dark side of Free Trade has been the millions of manufacturing jobs that have left our country in the past thirty years. Those jobs in the past provided Americans, with perhaps just a high school diploma, a middle class life style. In fairness, those jobs are gone not just because of Free Trade; but also because of automation and robotics. It just does not take as many people to produce any product in any country as it once did.  In addition, private sector unions demanding higher and higher wages and benefits and global competition forced many American companies to ship those jobs overseas.

Clearly, four things need to occur so that everyone benefits from Free Trade. First, we need Smart Trade not just Free Trade.   The US government must negotiate better trade deals to make sure other markets are truly open to American companies.  Second, there must be significant job training programs implemented at the Community College level to retrain displaced workers to do the jobs of the future. Third, those people who can't find good paying jobs locally must be willing to move to where the jobs are happening in states with business friendly environments that attract companies. And, finally fourth, we need an all of the above Energy Policy that encourages the use of Oil, Natural Gas, Clean Coal, Nuclear Energy and Renewables to both create good paying jobs that can't be off-shored and to make the United States Energy Independent.

Unfortunately, states with high taxes and burdensome regulations are job killers, not job magnates, so they will continue to lose good paying jobs no matter what is done to stop it. As such, people that can't find work locally must vote with their feet for the good of their families. If government needs to aide in this migration with some financial assistance or grants, it would be cheaper than providing Unemployment, Welfare, Food Stamps.  Most important, there is dignity in work, which is critical to family well being.


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