When one studies international economics, one will inevitably encounter the topic of “free trade.” As always, it is a good idea to start with a definition, to avoid any possible confusion. Webster’s Collegiate Dictionary defines the expression “free trade,” whose earliest recorded use in the English language dates back to 1606, as “trade based on the unrestricted international exchange of goods with tariffs used only as a source of revenue.” Nowadays, free trade has come to mean the conduct of international business without any governmental interference, such as tariffs, quotas, subsidies, etc. Such a policy allows prices to be the result of nothing but pure supply and demand, without any artificial distortions entering into the process.
The term “free trade” is often used these days in multinational agreements such as the North American Free Trade Agreement (NAFTA), although such arrangements do not eliminate government involvement in trade but create multinational entities to regulate it.
Former Massachusetts Governor and 2012 Republican presidential candidate Mitt Romney unveiled his economic agenda Tuesday, beating President Barack Obama to the punch by two days. (Obama will present his jobs plan in a speech to a joint session of Congress Thursday evening.) Romney’s plan is, as former Labor Secretary Robert Reich put it, “unremarkable, to say the least.”
To his credit, Romney seems to grasp that the private sector, not government, is the source of American prosperity. In the summary of his agenda found on his website, Romney says that his plan “does not promise the immediate creation of some imaginary number of jobs, because government cannot create jobs — at least not productive ones that contribute to our long-term prosperity. It is economic growth, not government growth, that provides productive opportunities for American workers.” (This did not, however, stop Romney from claiming that his plan would create 11 million jobs during his first four years in office.)
Those who are hoping for a more optimistic report of the global economic future should probably not read on. According to a report released by the Union Bank of Switzerland entitled “Euro Break Up-The Consequences,” the death of the euro is inevitable and the long-term effects of such an event will potentially include civil war, the collapse of international trade and sovereign default.
The report lays the foundation of its assertions by declaring, “Under the current structure and with the current membership, the Euro does not work. Either the current structure will have to change, or the current membership will have to change.”
It goes on to reveal that the Union Bank of Switzerland has virtually no faith in the system to which they are ultimately connected. What makes such an assertion so frightening is that the UBS has a “hegemonic influence over the world economy,” notes The Blaze:
As President Obama’s new jobs proposal soon approaches, the U.S. Chamber of Commerce has prepared its own plan for expanding U.S. employment. In an open letter to Congress and the White House, the Chamber called for an array of measures to promote employment, ranging from easing restrictions on oil drilling, providing temporary corporate tax breaks, and increasing spending on public infrastructure.
The Chamber contends that its proposal would create six million jobs by 2013 and help shave the nearly $2 trillion that clutter corporate balance sheets. Some of the proposed measures will likely overlap the President’s new jobs initiative being announced Thursday, but others, such as oil drilling and a corporate tax holiday, are predicted to mainly garner widespread Republican support.
"To create jobs, we must enact policies that promote and sustain stronger economic growth. We must also address extraordinary fiscal and competitive challenges that are smothering growth and driving away jobs," wrote Chamber President Thomas Donohue in the seven-page letter. "There are specific steps Congress and the administration can take right now to spur faster job growth in America’s private sector without adding to the deficit."
The newsprint chronicling Texas governor Rick Perry’s dedication to the Siamese principles of corporate welfare and cronyism continue to pile up. As documented earlier in The New American, during his time in Austin, Rick Perry has shown unrivaled and unashamed favoritism to the largest supporters of his campaigns.
One of the most egregious beneficiaries of Rick Perry’s largesse (and one receiving a lion’s share of the media’s scrutiny) is an economic development program developed by Perry called the Texas Emerging Technology Fund.
This pet project was founded by Perry to act as a state government-controlled version of a venture capital firm. The Texas Emerging Technology Fund would act as an angel -— bestowing financial boons on technology-based start-up companies in the Lone Star State.
The global economy is facing a meltdown, according to World Bank President Robert Zoellick. “We are moving into a dangerous period,” Zoellick said to Bloomberg Television at a Singapore interview. The likelihood of an American recession is made increasingly likely by the danger of an economic implosion in the euro zone.
“I believe the U.S. will have slow growth, I don’t believe it will move to a double dip, but these things are very hard to predict because if you have events trigger uncertainty in Europe, that will flow back to the U.S.,” Zoellick noted, mentioning that the success of the euro zone “depends on the political decisions moving forward.
He added: “Sometimes people hope that you can muddle through by providing financing and liquidity, in the case of Europe, from the European Financial Stability Facility or the European Central Bank.
Information cited in a leaked 2009 diplomatic cable from the U.S. embassy in Beijing shows the Chinese regime knew about American and European suppression of gold prices to maintain dollar hegemony, but that it was buying more of the precious metal anyway. The purpose of increasing its gold reserves, according to report cited in the document, was to encourage other nations to do likewise while making China’s currency more appealing internationally. Another effect of the strategy, analysts noted, would be to weaken the U.S. dollar’s status internationally.
Gold-price manipulation by Western central banks — and the Federal Reserve in particular — has been somewhat of an open secret for decades. But the cable released by WikiLeaks triggered significant interest among metals investors and analysts, some of whom expected the news to cause another surge in gold prices.
Politicians seem to have little trouble understanding how the basic Law of Demand works when it comes to things they want to discourage, like cigarettes — or when it comes to things they want to encourage, like education.
The Law of Demand says that price increases will generally produce lower sales, so the politicians raise the price of cigarettes via more taxation so that more people quit.
“The price of a pack of cigarettes has skyrocketed to $14.50 at some New York City stores thanks to a hefty new tax, leaving even the most nicotine-addicted buttheads considering nixing their fix,” the New York Post reported last year after an extra $1.60 state sales tax was slapped on every pack.
The $1.60 hike raised the total taxes on a single pack to $4.35 at the state level in New York. Additionally, there’s a municipal cigarette tax in the city of $1.50 a pack, producing a combined state and local tax of $5.85 a pack.
Last week’s jobs report could spur further anxiety for President Obama’s 2012 reelection campaign, as the President’s core constituencies continue to struggle with high unemployment. The Labor Department reported dismal jobs numbers for August, with unemployment continuing to hover around 9 percent — a grave concern for Obama’s approval ratings. Young workers, aged 18 to 24, are now burdened with 16.4 percent unemployment, while many more are underemployed. Such affliction for America’s youth could prove fatal for Obama’s 2012 presidential aspirations, as he garnered nearly 70 percent of 18 to 29 aged voters in 2008.
Where has all of America’s labor gone? Following the announcement that the economy added no new jobs in the month of August, President Obama’s Labor Day politicking with GM workers in Detroit was an opportunity for the President to display his grasp of basic economics. And as usual, he failed miserably, blaming America’s economic stagnation on congressional Republican obstructionism.
But the President has a plan, which he coyly referenced without unveiling the particulars (to be revealed later this week, supposedly). Government, he told his audience, must do more to create jobs:
We’re going to see if congressional Republicans will put country before party. We’ll give them a plan, and then we’ll say, do you want to create jobs? Then put our construction workers back to work rebuilding America.
We’ve heard all this before: Spend government money on public works projects like roads and bridges, and the economy will grow. It was FDR’s strategy, and President Obama recycled it in his mammoth stimulus package. And in both instances, it failed miserably, as Americans are now discovering in the case of President Obama’s beloved TARP.