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United States and Free Trade

September 05, 1985

The "free trade" enthusiasts who quote Adam Smith and his historic work, "The Wealth Of Nations," are paying tribute to a man who supported "free trade" in a setting that was completely different than the one in which we are confronted. He wrote 200 years ago. When the Industrial Revolution was in its infancy, and Great Britain was practically the only industrial nation. What would be more logical for a British economist to argue that all doors should be open for British goods? They had nothing to fear from competition because there was none.

It is interesting to speculate what he might have written in the much more complex and competitive world of today.

Countries that endeavor to live by "free trade" are being devastated by national monopolies that talk about "free trade," but practice none of it. The United States, which has made a fetish of "free trade," is being industrially outclassed by competition from other countries, which have the same productive technology and much cheaper wages.

Even Japan, which probably leads the world in industrial efficiency, has a wage rate that is half of ours. Other modern industrial countries such as Korea, Taiwan, Singapore, Hong Kong, etc., have wages that are a fraction of the Japanese. "Free trade," given those conditions, becomes "cheap trade." To compete, American manufacturers must either try to reduce wages, or go overseas. That is exactly what many are doing.

"Free trade," as promoted by President Reagan and the Administration, is really a tragedy for this country. Without protection of our industry, farmers and labor, we cannot maintain our position in the world and our standard of living. Closing of industries, both "smokestack" and "high-tech," high unemployment, the drive to lower wages, farm foreclosures, the new homeless, and the unprecedented budget and trade deficits are ample testimony that the American Dream is being seriously eroded.

Unless we act to protect ourselves and quickly, there will be only an empty shell of our once-prosperous economy. Everything else will have been devoured by ravenous competitive predators.

JACK MARGOLIN

Marina del Rey

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