Thirty years of free-market reforms have caused debt and inequality to soar, hollowed out the middle class, hobbled income mobility and produced a global economic meltdown we have yet to recover from. So what’s the best way to turn things around? More free-market reforms, of course!
In 2010, Paul Krugman debunked the claim that a US-South Korea free trade deal would “create jobs” and fuel a recovery from the 2009 recession. Who is he? An expert in international trade for which he won a Nobel Prize in economics.
Four years later he turned out to be right. But who needs evidence when you can have flaky ideology that is entirely self-serving to big bad businessmen?
Canada has a huge trade deficit with South Korea. So what happens when free trade is added to the mix? The trade deficit gets bigger.
What’s the significance? A trade deficit means a country is consuming more in goods than it is earning with exports. Like a budget deficit, it is unsustainable in the long term. As a country hemorrhages wealth and jobs its living standards decline. Eventually it will no longer be able to afford the excess imports.
What’s worse is that we will be exporting more raw resources like pork, seafood and lumber while killing off more of our struggling value-added sector. Trading car plant jobs so "beef farmers, salmon fishermen and whisky makers" can benefit is just plain dumb.
Fair managed trade offers Canadians a better deal. This is where government looks out for the best interest of its citizens, not multinational corporations.
Take, for example, the US-Canada Auto Pact. Canada put the squeeze on US auto imports with tariffs. That forced the US to agree to build more cars here to lift tariffs. This created a win-win situation, a la Henry Ford. It created good-paying jobs and economic spinoff that allowed Canadians to buy more cars.
The free trade deal with South Korea does the opposite. The country no longer has to worry about repercussions from not building new car plants here and moving existing production elsewhere.
Free trade has never lived up to the hype. It has killed GDP growth and jobs, not created them. We must demand that economic policy gets results — or reverse it.
Fair trade works. Free trade does not.