Friday, June 20, 2014
We Love Free Trade, Except When We Do Not
Dean Baker criticizes an article written in defense of the US Import-Export Bank. The bank provides below market rate loans that make it easier for US firms to sell their products abroad. Since the US needs to subsidize loans that increase US exports, the article concludes that we are all "Crony Capitalists" whether we like it or not. In other words, we have to make exceptions to the ideology of free trade in order to compete in export markets. Baker's point is that we are only Crony Capitalists when it comes to protecting business interests. We love free trade when we tell workers that they must reduce their wages to be competitive in global markets, and we support free trade even when it means that they lose their jobs. Economic textbooks tell us that we all better off with free trade. Except of course, when we subsidize businesses that compete in global markets.