Monday, September 19, 2016

A Crony Economist Spills the Beans on "Free Trade" Agreements

Joseph Stiglitz is about as insider as you can get when it comes to economists. He was chairman of the Council of Economic Advisers and was also, at one time, chief economist at the World Bank.

He has a new book out The Euro: How a Common Currency Threatens the Future of Europe. In the book, he writes an acknowledgement to George Soros. That's an insider.

What has caught my attention as I start to read the book is where Stiglitz writes this (my bold):
I had served as economic advisor to President Clinton as chairman if it's Council of Economic Advisers in the 1990s. We worked on opening of borders for trade between the United States, Canada, Mexico soon NAFTA the North American Free Trade Agreement. We worked, too, onecreating the World Trade Organization, launched in 1995, the beginning of an international rule of law governing trade. NAFTA, launched in 1994, was not as ambitious as European Union which allows free mobility of workers across borders. It was  much less ambitious then the Eurozone--- none of the three countries shares a currency. But even this limited integration post many problems. Most importantly, it became clear that the name "Free Trade Agreement" was itself a matter of deceptive advertising; it was really a managed Trade Agreement, managed especially for corporate interests particularly in the United States. It was then that I started to become sensitive to the consequences of the disparity between economic and political integration
Solid free market economists have always made the point that these "free trade" agreements are not really about free trade. They are crony backroom deals.

Uncritical endorsement of them is an error, That said, crony trade deals may be better than no trade deals.

As I have stated before, if say an important drug is allowed to be sold across a border from one specific crony manufacturer, it is certainly going to help those who need the drug and will now have access to it because of the trade agreement. However, if it is a crony manufacturer that is only allowed to sell the drug across a border, and not competitors who may offer it at a better price or a superior product, then it is the duty of economists to make it clear that these are crony deals and not free trade deals and certainly refrain from endorsing them as "free trade" deals.

When a crony economist like Stiglitz goes out of his way to make this point, it is pretty much an obligation for true free market economists to do the same.


1 comment:

  1. Exactly. Free trade requires no ink, unless it's to repeal previous meddling laws or treaties. International trade should be like trade between the states: just ship the goods from seller to buyer, and mail the check in return. No government thugs necessary.