Are free markets a good thing? …and don’t everyone need someone to answer too.

[Amorphos]

Are free markets a good thing? are they free or why are they limited to given areas, …and don’t everyone need someone to answer to.

A few reasons why ‘free’ trade, and misuse of wealth are bad. Hence why free markets need other bodies to control them, ‘everyone should have someone to answer to‘!

1. NAFTA
2. Canada and ‘free trade’.
3. Worlds biggest financial scumbags?

1. NAFTA
…is the world’s largest free trade area. The agreement between Canada, the U.S. and Mexico links 439 million people and produces $15.3 trillion in goods and services annually. Some of the advantages include a tripling of trade between the NAFTA signatories from $297 billion in 1993 to $903 billion in 2007. Critics say that the agreement has led to a net loss of 879,000 jobs in the U.S., and a decline in labor protection and degradation of the environment in Mexico.

>NAFTA and all the other agreements continues to fly hot and heavy between the political parties, along with the usual playing with statistics to make various biased advocacy points.
However, to me this entire argument boils down to the question of what the end results have been to the United States in the years since these agreements were implemented. In my view, regardless of what job or income statistics are cited, the bottom line is this: are we better off overall as a nation (or world) today than we were prior to free trade, or not?
While one can argue this endlessly, to me the obvious answer is that we are not. The basic bottom line is the overall financial health of the country, and under almost any measure we are worse off. If you look at the extreme, unprecedented trade imbalances and resulting currency flow imbalances against us, there is your answer. Fiscally, free trade has driven us to the edge of bankruptcy not ever seen on a scale like this except by the losers of major wars. Will China forgive some of those debts held in the form of our Treasury Notes? I think not; instead of financial strength, we are open to the possibility of international financial blackmail or some future equivalent. I could not call this “better off”.
In addition to the financially negative position we have allowed ourselves to occupy, the world itself may only now be realizing that it is reaping the dubious benefits of rapid, uncontrolled growth of less developed countries and the consequent rampant pollution and commodities purchasing wars such as the world has never known. The inflationary effects of these events, along with food for fuel policies, have created this current global food crisis whose solution is not yet in sight. None of these consequences are remotely foreseeable without the sudden existence of these free trade agreements. Is the world itself really better off with this unchecked, uncontrolled development? I doubt it. And I doubt the peasant farmers turned factory workers are really all that happy either. The only real winners in all of this are those at the top of the food chain (read: income). Looking at the big picture, the answer to my original question is an unequivocal “no”.

2. Canada and ‘free trade’.
Free Trade has been inimical to Canada in many respects. It has further tied Canada’s natural resource wealth to the United States (which requires our oil, gas, food, etc., to keep prices low). What has happened in Canada, however, is that our economy has become even more resource dependent, and we have been precluded by legislation and by proxy developing a more robust tertiary economic sector (at least, sectors not tied to branch plants). It is complicated, but overall Canada is MUCH WORSE off since Free Trade has been implemented. We have seen a whiplash economy happen in British Columbia wherein the USA has shunned the tenants of free trade (i.e., softwood lumber dispute, which the WTO sided with on Canada in international courts several times, but USA still decided not to play fair), and yet has precluded Canada from finding other trading partners to fill the void. Ditto for the potato dispute in New Brunswick and the cattle dispute in Alberta, Saskatchewan and to lesser degrees Manitoba and British Columbia. All these provinces have suffered because of USA’s continued unfair trade practices under the auspices of “free trade”. You scream at high unemployment rates, but have you ever lived in a province where the norm is anywhere from 8 to 11% unemployment? If that happened — and is currently happening in the USA thanks to your elected idiots that failed to regulate your industries, financial and otherwise, you now are enjoying the fruits of the good ‘ol USA visionary business practices.


3. Worlds biggest financial scumbags? ...i am sure you could add a few ~ quite a few.

AIG

The most recent corporate scoundrel would be the company that asked for a governmental assisted bail-out (ahem, of $85 billion plus an additional $37.8 billion from the Fed) and then used the funds to pass out bonuses to their top executives. Though we understand that top minds in business typically earn big salaries, we were just appalled that they would do it with tax payers’ money. And if anything, it sure as hell didn’t reinforce that the new Obama administration had a good control of its people’s money.

Enron

Enron’s shady dealings of hiding billions of losses shook the nation with its dishonest accounting loopholes. One of the largest bankruptcy in history, CEO Kenneth Lay was convicted on all six counts, including conspiracy to commit securities and wire fraud. He would have faced 45 years in prison plus an additional 120 years in a separate case, but he committed suicide.

Raffaello Follieri

An Italian businessman who once dated actress Anne Hathaway for four years, Follieri is known for being a God swindler, that is, he lied about being the CFO of the Vatican to get wealthy investors to fork over money for property belonging to the Roman Catholic Church. In 2009, Follieri pleaded guilty to 14 counts of wire fraud charges; he is currently serving time in prison.

Tyco International

Former CEO Dennis Kozlowski and CFO Mark Swartz of Tyco International Ltd. took over $170 million in “loans” from the company without shareholders knowledge, with total losses from fraudulent practices amounting to $600 million. Many details were involved and revealed during the trial proceedings in 2002-2005 including a $2 million toga birthday party for Kozlowski’s wife on a Mediterranean island and an $18 million Manhattan apartment with a $6,000 shower curtain–all charged to the company.

Frank Abagnale

The impostor who inspired a movie worthy enough to star Tom Hanks and Leo DiCaprio, Frank Abagnale cashed $2.5 million in bad checks in the 60s, and assumed eight fake identities (a doctor, a lawyer, and a pilot for Pan Am amongst them) all before 21 years of age. Frank is currently a consultant for the FBI since how can you let such a confidence trickster, forger, and escape artist like this go to waste?

Jack Abramoff

Prolific Republican lobbyist Jack Abramoff is currently serving jail time after admitting to three criminal felony counts involving the defrauding of American Indian tribes. Known as the man who was able to sell Washington anything (by bribing them), and for bilking out $66 million from Native American tribes, the movie on this corrupted super-lobbyist is due to come out shortly.

Bernard Madoff

And last but definitely not the least by any means of financial trickery is Bernie Madoff, the 71 year old man currently serving 150 years of prison sentence for being known as the world’s worst ever crook. Running multi-billion dollar Ponzi schemes and having the judge quote you as being “extraordinarily evil,” Madoff screwed over hundreds of people globally–making him a treacherous leech to just about anybody, big investors or even the small local business people who was tricked by the charming Jewish man they believed was just a good old Brooklyn boy from the block.

[BNS]

Yes, the share holders and consumers.

Interestingly enough in the cases of Enron, Tyco, and Madoff (the ones I'm familiar with) private agents such as short sellers were crying wolf long before any of the government regulatory agencies took any notice. Often the misplaced confidence put on these regulatory agencies full of corporate puppets is what allows for these scandals to endure for so long.

[Amorphos]

Indeed.

One thing I am thinking is that…

‘For every ounce of power, there must be an equal part of accountability‘.

I think we put too much emphasis on individual freedom and ownership, when after a point things have to be more interrelated, responsibility goes with holding peoples lives in ones hands. This is where I think govt or local govt should step in, at least up to the point where people cannot be reckless or deviant [or outright scoundrels].

As to free markets, I think you have to have a worldwide one or it isn’t power sharing, but the issues with such vast power and centralisation has to be addressed also [as per the complaints in the op].

[The spartan]

No. First off, "Free Market" is a theory and has never truly existed and probably never will. Second, a "Free Market" screws up all the time, it is called "market failures" and can happen quite frequently. Thirdly, the "Free Market" is built to maximize efficiency, not equity, meaning that you will see massive disparages between classes, and meaning the "Free Market" conflicts directly with government. Lastly, the "Free Market" doesn't give a rat's ass about social welfare!

[Heathen Hammer]

Depends for whom. It is definitely a good thing for rich financial elites, who are going to gain more profits on exloiting workers and resources. But for the majority of population it is a bad thing.

[Xen]

Depends for whom. It is definitely a good thing for rich financial elites, who are going to gain more profits on exloiting workers and resources. But for the majority of population it is a bad thing.

I'd disagree, we see increase in GDP Per Capita in countries with more economic freedom, see graph.

[Alkarin]

I'd disagree, we see increase in GDP Per Capita in countries with more economic freedom, see graph.

lol....because those 'Least Free' countries are being exploited by the large corporations supplying those "Most Free" Nations with their goods. Thats how the Market Works. Capitalism works by enslaving the majority to give excessive freedoms to the minority.

[The spartan]

I'd disagree, we see increase in GDP Per Capita in countries with more economic freedom, see graph.

That would be the rich getting richer, not wealth evening out. Free market increases class disparage, not decreases it. It really is one of the basic concepts.

[Amorphos]

Gonna say, relatively speaking it doesn’t seam that e.g. the EU has dramatically increased wealth for ordinary people, and it seams there is an increasing trend towards low wages for the masses.

I am no economist tho so I will carry on reading you chaps post with interest.

[Heathen Hammer]

I'd disagree, we see increase in GDP Per Capita in countries with more economic freedom, see graph.

First of all, "least free" are mostly capitalist and supported by western multinational corporations. And US is more "free" economically than Sweden, but Sweden has much better living conditions, etc.

[Xen]

First of all, "least free" are mostly capitalist and supported by western multinational corporations. And US is more "free" economically than Sweden, but Sweden has much better living conditions, etc.

I wouldn't attribute better living conditions in sweden to the a slightly less free market (note I say slighly, because the differences between the two are pretty minute) Sweden has a small population which is much easier to take care of in a relativley peacefull part of the world, America has a pretty large population with with a lot of broken borders.

That would be the rich getting richer, not wealth evening out. Free market increases class disparage, not decreases it. It really is one of the basic concepts.

Ah, but in the countries with higher GDPs and freer markets, even though the rich get richer, the poor also get richer, as all nations with high GDPs and free markets have middle and lower classes with incomes that are decent, but in countries with less economic freedom and a lower GDP the poor are infact very poor.

lol....because those 'Least Free' countries are being exploited by the large corporations supplying those "Most Free" Nations with their goods. Thats how the Market Works. Capitalism works by enslaving the majority to give excessive freedoms to the minority.

20-30 years ago these poor nations were not being "exploited" by western nations as western nations did most of there producing in their respective nations, i'd argue that the use of labour in 3rd world countries has absolutely ZILCH to do with free markets and infact will only boost that nations GDP.

It is not enslavement, in a free market, anyone with the motivation and risk taking to succeed can try to succeed and no one is forced to work. Also, to the ops "everyone should have someone to answer too" who does the government answer to?

[Jingles]

It is not enslavement, in a free market, anyone with the motivation and risk taking to succeed can try to succeed and no one is forced to work. Also, to the ops "everyone should have someone to answer too" who does the government answer to?

For every one of them, there are ten who weren't born with his same god-given talents. In a free market you're payed according to how much crap you can sell, not according to how useful you are to society.

[The spartan]

Ah, but in the countries with higher GDPs and freer markets, even though the rich get richer, the poor also get richer, as all nations with high GDPs and free markets have middle and lower classes with incomes that are decent, but in countries with less economic freedom and a lower GDP the poor are infact very poor.

By a lesser margin, yes. You are dancing around the point though, it increases class disparage. The poor people can still become quite unhappy because, as compared to the rich people, they are becoming increasingly poor. You can't really pull an equity example out of the free market, there is no equity, that is the point. You gave it all up to get efficiency.

[Desperado †]

[Amorphos]

Volh Vseslavich

Depends for whom. It is definitely a good thing for rich financial elites, who are going to gain more profits on exploiting workers and resources. But for the majority of population it is a bad thing.

If it could involve a measure of decentralisation it could be a good thing? I am thinking that the removal of tariffs etc between states is a good thing, but the effect of creating even bigger business is not.

Desperado

By that map it appears that wealth dispersal is lower in the usa than much of the eu [green states] and even Africa, not sure what that says? I presume that in places like the usa and china, you have a small high end extreme of the measure.

[Desperado †]

It shows that those countries with more free markets and lower taxation are closer to total inequality (1% of pop. owns 100% of wealth), or further from perfect equality (10% own 10% of wealth, 40% own 40% of wealth) than those countries with more restricted markets and greater (progressive) taxation. Seeing as wealth inequality is immoral (a RBS Chief Executive doesn't work or deserve 100 times more than a hairdresser) those countries with a greater GINI coefficient are less moral.

[Amorphos]

It shows that those countries with more free markets and lower taxation are closer to total inequality (1% of pop. owns 100% of wealth), or further from perfect equality (10% own 10% of wealth, 40% own 40% of wealth) than those countries with more restricted markets and greater (progressive) taxation. Seeing as wealth inequality is immoral (a RBS Chief Executive doesn't work or deserve 100 times more than a hairdresser) those countries with a greater GINI coefficient are less moral.

Interesting, thanks for posting it. May I ask how the numbers and colours work, is green the fairest?

[roy34543]

To be honest the Gini coefficient isnt arguably that good of an argument to use about income inequality when your talking about the US, because being poor in the US is still being quite rich by the standards of the rest of the world.
Anyway , free trade between limited countries isnt neccasarily a good thing, I mean when you think about it, if everyone is taxed 15% for sending somewhere anything in the world, then its technically equal, but if your taxed only 5% to send it to Canada or Mexico, then its unequal because obviously it is more profitable to send it there.
In a way free trade between only a few countries can be a bad thing, because it creates closed markets. Currently its not that bad because the US and Canada have a heavy reliance on exporting goods to each other anyway , and the rest of the market is high-tech, and mexico relies quite a bit on oil. , but in a way free trade between only a few countries creates a "segregated" market , just a bigger one.
Whats needed is global free trade, but its unlikely to ever happen. And global exchange of labour... Lol id eat my own eyes out if that ever happened (well it might if we ever have extensive space travel, until then... no)

[Desperado †]

To be honest the Gini coefficient isnt arguably that good of an argument to use about income inequality when your talking about the US, because being poor in the US is still being quite rich by the standards of the rest of the world.

Well, it is for income inequality, just not for poverty or standard of living (if that's what you're trying to say).

[roy34543]

Well, it is for income inequality, just not for poverty or standard of living (if that's what you're trying to say).

It is, Sometimes the GINI coefficient goes up but the general standard of living goes up as well, So it becomes unfair to gauge how well people are doing based on it.
Well unless you subsscribe to the theory that people dont care about their actual wealtth, they care about their relative wealth... and I do to an extent, but thats not relevant when your talking about free trade between countries of varying levels of wealth.