Free Trade is, if we must go back to Econ 101, about mobility of three economic factors:

raw materials

labor

finished products

If one or more of these factors is not mobile then Free Trade cannot exist. It's just like hockey: if you take away the hockey sticks, you can still play something, but it sure won't be hockey.

But, virtually ALL economists say free trade is a cool idea. That's what we might have to call willfull ignorance because it's hard to accept the idea that none of these economists know about passport restrictions and, while northerners can easily move to the south, southerners cannot freely move to the north. An honest economist would have to say, "But we DON'T HAVE free trade. It's unatainable if labor movement is restricted." No northern economists have.
 

    Chakravarthi Raghavan puts it this way: "[about the past damage to poor countries caused by free trade] . . . this important condition [mobility of labor] is normally brushed aside in economic literature by assuming either perfect competition in commodity markets or perfect mobility of labour and capital once administrative barriers to trade are removed."

You see, economists simply assume that all labor is mobile because they have never heard of passports, since, you see, they just DON'T GET OUT that often. It's an honest mistake!
 
 

This freedom of workers to move around is fundamental to Interstate Commerce, so revered in the US; they should know about these things. To prohibit a Texan from going to California to seek his fortune in the music industry might seem like a merciful idea but it would be illegal; it's a "restraint of interstate commerce." Workers in the US and the European Union can go where the work is.  That is fundamental to free trade. But in the Global "Free Trade" market they cannot.
    Nonetheless, not a day goes by without someone in the British media raving on about "bogus asylum seekers" and "economic migrants." Same thing in the US.
    Molly Ivins (Seattle Times, Jan 11, 1999, page B5) noticed that the Immigration an Naturalization Service (INS) got a revamping in 1996. More money; more power. Coincidentally this was the year after the WTO was formed in Uruguay. The INS budget was increased to nearly a billion dollars a year; more than the FBI, more than the Drug Enforcement Administration with their famous war on drugs, and more than Customs. Check bouncing in the US is now a deportable crime for LEGAL immigrants. The INS now sports 15,000 armed officers with arrest powers. Says Molly, who noticed the focus of arrests on Asians, Africans, Cubans, Latin Americans and Haitians, "... you notice that immigrants from Europe or Australia do not seem to end up languishing in the hoosegow for years while the INS looks over their paperwork." But minorities do. A Cuban who bounces a check can now get a "life sentence" because they are not deportable, since the US does not have diplomatic relations with Cuba because of ... aaahh... Cuba's human rights abuses.
    When the labor force is locked in by passport and visa laws, we do not have free trade. When refugees are turned away because they are "economic migrants" it is sheer quackery to suggest that money and merchandise should move freely without borders in the name of free trade.
 

So let's make a change to our Hockey Rule Book. Since the restraints on labor movement penalizes poor countries, let's let that be reflected in the Rule Book.

"If Tony Blair genuinely believes in the boundless opportunities of globalization (Financial Times report August 2nd), he should concentrate his energies ... and begin to dismantle barriers to the cross-border flow of labour. 'Just Do It', Mr. Blair."

"Open trade is not just an economic opportunity, it is a moral imperative. Trade creates jobs for the unemployed. When we negotiate for open markets, we're providing new hope for the world's poor. And when we promote open trade, we are promoting political freedom."

Now, what about the free movement of money? That cause any problems anywhere? Well. actually, yes it does. It was the free movement of money that caused the Asian crisis. First of all, observe that while rich countries swamp the poorer countries with "inward investment" money, poor countries cannot reciprocate and buy into rich countries, because they are, well... poor. So this is a one-way street.
 

Second of all, the movement of money, 'capital,' is not a requirement of Free Trade. The IMF demands it. The World Bank demands it. But their darling of free trade, Adam Smith, never said it was necessary. As Noam Chomsky tells it, "go back to Adam Smith -- the basic principle of free trade is free movement of people. Adam Smith assumed there would not be movement of capital... Now we have exactly the opposite. We have to block movement of people by force, and free up movement of capital. And that's called free trade."

James Tobin:
"China doesn't have full convertibility, except of Chinese currency earned by foreigners in trade. You cannot convert Chinese currency into dollars or francs or yen just to move funds around. They have strict financial control very much like the controls that France had in 1945-46 right after the war. In fact, France had exchange controls of some kind until the middle of the 1980s. China receives a lot of direct investments from overseas without having convertibility of capital funds from one currency to another. It's not essential to have that."
    You cannot get too much clearer than that. The truth is "it's not essential to have" currency markets "just to move funds around."  Surely most Westerners will be mystified by that thought. They think their credit-backed money is a commodity.

"Full convertability [exchanging one money for another, ie. pesos for dollars], however, has proven to be incompatible with exchange rate stability. Once countries lift controls on short-term capial movements and allow full convertability of their currencies, the process of exchange rate determination is privatized as well."

Next, we might note that it is the free movement of money itself that destabilizes poor countries. The problem is not so much that rich countries invest in poor countries, but that they get nervous and pull out at the slightest ripples in the economy, and boom: a crash. So it is the poor countries who take all the risks when it comes to free movement of money.
 

Let's go back to that Rule Book. Moving money fast helps rich countries . . .
 
 

Reduce the size of their goal to make it easier to protect and, jeez, give that poor goalie a better stick.

Any other changes today?

Sure, here's just a little one.

"Under current immigration policies as practised by developed countries in Europe and the new world, migrants are accepted from developing countries if they have money/assets, educational qualifications or work skills which will make them useful to the host country. Applicants who possess none of these attributes are rejected.
    It is felt that the developed countries should either deny immigration to everyone or they should let anyone in who wants to come in. By skimming the cream off the top the developed countries ethically speaking are navigating very murky waters where there are serious racist and discriminatory undercurrents. [...]
    How can the developing countries ever expect to advance with this constant leeching of all their privileged and talented people by the developed countries?"

What else can we do for you today?

Well we could let the rich countries make promises they have no intention of keeping, just to sort of get the southern countries into the spirit of Free Trade. For instance in "The Ecologist Report" magazine, September 2000, page 36, Walden Bello, Director of Focus on the Global South, wrote "WTO: Serving the Wealthy, Not the Poor."  Dr. Bello is executive Director of Focus on the Global South. http://www.focusweb.org

Bello noted that three GATT (pre-WTO days) agreements were approved in April 1994 at Marrakesh but are now being ignored.
 

As of 2002, none of these agreements have been implemented.

Worse - the subsidies in the north have increased, says Bello, "through ingenious combinations of export subsidies, export credits, market support and various kinds of direct income payments."

"... overall subsidization of agriculture in the OECD countries rose from $182 billion in 1995  ... to $362 billion in 1998."

To make matters worse the World Bank and have their Structural Adjustment Policies. In this context, some are of particular interest. SAPs include, user fees for essential services like primary health and education or abrupt increases in the price of water in the name of market 'reforms,' more layoffs, less government spending on social programs, less credit for small farmers and small businesses, elimination of subsidies, removal of restrictions on foreign investment, raising of interest rates, devaluation of currencies, deregulation of labor markets, more privatization, pressure to export, slashing of workers' rights and environmental standards, liberalization of trade policies.

The north, you see, can increase its subsidies... but clearly the south should show some restraint here.
 

We need a new rule here.
 
 

One question remains: if economists are willing to lie about free trade then where does the doctrine of deceit stop?  For a bit more on that topic try:

How the Economists Got It Wrong
James K. Galbraith, Ph.D., at the LBJ School of Government at the University of Texas
http://www.prospect.org/print/V11/7/galbraith-j.html
 

The French Economics Students Revolt:
post-autistic economics newsletter (in English)
http://www.paecon.net
http://www.btinternet.com/~pae_news/GEN.htm
 

The American Economics Students Revolt:
346 people have now signed the Cambridge Proposal:
http://www.btinternet.com/~pae_news/Camproposal.htm

Signatories of the "Kansas City Proposal" will be posted at
http://www.btinternet.com/~pae_news/KC.htm
 
 

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