Bush, Steel and "Free Trade" Lies

President Bush's first steps last week to impose broad restrictions on imported steel provided another self-righteous and hypocritical moment, not just for the Republican Party but also for those in America's business establishment that claim that this country wants free trade around the world.

For years, politician, after economist, after business reporter repeats the refrain that free trade is the path to prosperity and the basis of America's economic development, and is an example that the rest of the world should follow. But history does not agree with this assertion.

America was not established on the basis of free trade. Of course we know that much of the basis of this country's wealth was derived from free labor in the form of Black human beings transported against their will from Africa. But in addition to that frequently ignored economic factor, there is the blatant truth that protectionist policies provided the basis of America's economic development. Government subsidies, tariffs, customs duties and a litany of indirect taxes have been attached to and associated with imports and exports since the inception of this country, and they have never been discontinued.

This country even went into a depression because of the excessive nature of its violations of "free trade." The Smoot-Hawley tariff bill, passed between October 1929 and June 1930, specified duties on around 21,000 trade items. Some, like economist Jude Wanniski, credit it as the cause of the stock market crash of 1929. And this was well after 1776 and 1787, when much of the first phases of American protectionism and non "free trade" were taking root at the hands and design of Alexander Hamilton.

There simply exists no such thing as "free trade." It has never existed in the entire history of the United States. Yet the entire political, economic, and media establishment -- full of a combination of sincere, intelligent, ignorant, and wickedly wise individuals -- continue to project an image of America's economic development and growth that simply is not rooted in reality.

It is the height of imperialism for the United States to tell the economically developing world that it must open its markets entirely in order to grow and do business with the U.S., when the U.S., itself, did not grow because it opened all of its sectors to foreign competition. Neither the U.S., Germany, Japan, Korea, England or any country in the West grew to economic prosperity by the means that they recommend -- and at times impose -- upon the economically developing world.

The U.S. only wants these markets opened because it is in the best position to benefit from the access. Because these countries are underdeveloped and have not established themselves, if they let the U.S. into their markets at this early stage, it would be decades before they could ever compete, if at all, with the U.S. The only free markets the U.S. wants these countries to excel in are those areas which require cheap manual labor and natural resources that the U.S. does not have or does not wish to tap into.

Black Caucus member Rep. William Jefferson of Louisiana has repeatedly told us of how the U.S., under the African Trade Bill, denies Africa access to U.S. textile markets that it granted to Korea and numerous other countries that are today credited with moving down the path of free trade. The head start, preferential treatment and subsidies they receive(d) are rarely if ever mentioned.

America knows that the path to economic development and growth for developing countries is not through free trade and instantaneous open access to all of its markets. That approach has never worked. What works is a mixture of open markets and international trade, with the proper amount of protection in a few sectors, as well as government funding of infrastructure.

The latter two factors are the secondary aspects of the big lie. Revisionist historians seem to forget that Alexander Hamilton's economic program for America included tariffs, government subsidies and a total disrespect of British intellectual property rights. Hamilton even supported a program of intellectual piracy that stole the latest technologies from Britain and used them or reproduced them in America. He campaigned for the open violation of British patents. We have no question that Alexander Hamilton, if he were alive today, would be siding with South Africa, India, Brazil and even Cuba on intellectual property right issues and the generic reproduction of medicines like AIDS drugs.

And then there is the second factor -- the assertion made ad nauseam that the U.S. private sector's entrepreneurial spirit and free markets generated this country's economic boom. In fact, the American government poured trillions of dollars into railroads, canals, highways, bridges, dams and power utilities -- not to mention new technologies like the Internet -- to enable that boom. Today, economically developing countries are told that they must not direct taxpayer's dollars to such wasteful endeavors.

President Bush's move to protect the U.S. steel industry is just the latest example of America not walking what it talks. Steel, along with textiles and agriculture, represent the three primary areas where the U.S. practices everything but free trade.

It is startling to watch American politicians, economists and business leaders boldly demand that Africa, Chile and many countries in the economic developing world grant them concessions on intellectual property rights, while they simultaneously deny these same countries access to their agricultural and textile markets. Both sides are attempting to protect nascent domestic markets, but only the economically developing world is branded as protectionist, or anti-free trade.

Hopefully, a bright spotlight cast upon Bush's steel decision, as well as WTO negotiating rounds on agriculture, will expose one of the biggest economic lies that the West has exported freely to the entire world.


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