Here’s an excerpt from my recent talk to the Eagle Forum Collegian’s Summit at the Heritage Foundation. I discuss the empirical result from our 30 year experiment with “Free Trade” (as it is currently defined), which to avoid technical terms is best described as “utter failure.” I then move on to the fundamentally flaw in the dominant economic current model, which is the naive assumption that “market forces” efficiently determine global production sites, when in fact it is active government policy that determines where most things are made these days.
Amusingly, I had the opportunity to teach Glenn Hubbard’s otherwise very fine Macroecon textbook (Pearson) this year and Hubbard chose the production of the iPad to demonstrate this theoretical economic principle underlying the “free trade” paradigm. Coincidentally, I just happen to have shot a video inside of Foxconn city where a Foxconn manager explains to me that the production location of the iPad was entirely determined by Chinese government subsidies designed to get Apple business. The Communist Party decides where your electronics are made, not “market forces.” The globalized economy is a command economy, not a “free market.”
The sad thing of courses, is millions of American kids are being indoctrinated in the Free Trade Fairy Tale, while their parents struggle to pay their tuition.
Greg Autry serves as Senior Economist with the American Jobs Alliance, Economist with theCoalition for a Prosperous America and is co-author (with Peter Navarro) of Death by China: Confronting the Dragon – a Global Call to Action. He blogs regularly at: http://www.gregautry.us/blog and on the Huffington Post.