The irrationality of excessive free trade is coming home to roost. Nonetheless, the promoters of the free trade agreements that have destroyed much of Americas industrial power are still clinging to their failing vision of worldwide riches. In a sense, they have been correct. The big money investment class, the business executive stock options class, and the international banking class have all prospered handsomely. But the rest of us should have saved our money for a rainy day, because excessive free trade is killing the goose that lays the golden eggs.
It must have seemed a good idea at the time: exporting labor costs to third world countries where competent labor could be bought for a fraction of the cost of American labor, not to mention the mounting costs of protecting the American environment, the incessant demands of overly aggressive labor unions, and the ever increasing costs of dealing with the endless stream of regulations imposed by countless government agencies. But now, they should be having some misgivings. The unforeseen side effects of emasculating America’s formerly unrivaled industrial power are emerging in a number of unpleasant ways.
First, and perhaps foremost, the mindset of a great mass of the American population is altering, and not in a good way. The lack of well paying, meaningful heavy or light industry, commerce, and middle management jobs, a very significant number of which have been exported to Asia, has had a deeply depressing effect on young people. At the bottom of the cultural ladder, many young men and women feel that it is hopeless to try to live even a modest version of the American dream. As a result, many turn to dissipative life styles, indulging in street gang activities, participating in civil disturbances such as Black Lives Matter, and Occupy Wall Street, as well as drug use, thievery, violence, alcoholism. Those in the next cultural step up are convinced that they must have a college degree in order to secure satisfactory employment. Because of the Governments push for Student Loan Programs, the cost of higher education has skyrocketed; those who do achieve a degree are burdened with outrageous debt. The quality of the degrees they achieve is, in many cases, greatly diluted. This because of reduced academic standards necessary to accommodate excessive numbers of students who are academically or culturally challenged in the world of higher education. Many are left with nothing to do except attend unruly rallies to protest Income Inequality.
Secondly, worldwide economic well being is facing a crisis. The enormous industrial growth in China has outstripped the Government’s ability to manage productive capacity. Unlike Capitalist governments, which depend on market forces to regulate manufacturing capacity, the Chinese Communists depend on the government bureaucracy, and they have grossly mismanaged this critical economic element. Asian, European, and to some extent American growth has slowed substantially, while the Chinese industrial capacity continued to expand. The result is a worldwide glut of goods and commodities. This will likely result in serious recession, business and banking failure, and wide spread unemployment.
This, coupled with Middle Eastern turmoil, and the problems caused by millions of refugees, means the whole world is in for some tough times ahead. Perhaps this disaster cannot be blamed entirely on Foolish Free Trade, but it played an important part.