Friday, October 5, 2012

Opinions on free trade

The polling being a little sparse, the most interesting set of numbers to come out this week has to do with what Canadians think of free trade. I invite you to read my analysis of a new Nanos Research poll on the subject for The Huffington Post Canada here.

In short, Canadians do not have a consensus opinion on our free trade agreements with the United States and Mexico but are peachy keen on new ones with the European Union and the Trans-Pacific Partnership (which does not include China).

The regional variations are not very surprising, but it is interesting that they emerge from the survey nevertheless. Take a look at the analysis.

That Canadians seem to be opening up to the idea of free trade with very foreign countries (concerns about the cultural infiltration of the United States is one of the reasons why Canadians have never warmed up to NAFTA completely) is in some way demonstrated by no major party in the House of Commons being an adamant opponent to it.

The Conservatives have tried to sign as many free trade agreements as possible and the Liberals are also in support of free trade. Under Thomas Mulcair, the New Democrats are opening up to the idea of free trade too, a turn towards the centre that - when looking at these Nanos numbers - makes a good deal of sense for them. Quebecers and British Columbians, the two electorates that I would consider the party's first two planks in an NDP government, are among Canada's most open to new free trade agreements and to our agreements currently in place. A more cautious approach, rather than their traditional opposition, may be the smartest one for the NDP to take.

29 comments:

  1. Let's all face facts here. The Tories will sell ANYTHING !!

    The other two parties are more balanced. So drop the Tory numbers and see what you get !!

    Meanwhile back off from China as rapidly as possible !

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    1. Peter,

      Canada's GDP has tripled since 1989! There is no question Free Trade (NAFTA) is good for Canada.

      The only negative effect of NAFTA was to create an artificially low Canadian dollar primarily due to the States dominating our export market. Although as I recall you are in favour of a low Canadian dollar policy.

      JB

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    2. Anon 11;05
      "Although as I recall you are in favour of a low Canadian dollar policy. "

      What are you babbling about !!

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    3. You were a strong supporter of Mulcair's Dutch disease comments, vigourously defending the truthfulness of such statements. I suggest you review your posts from the Summer.

      JB

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    4. It was more of the BoC, Chretien, Martin and international currency markets that kept the loonie low, not NAFTA.

      Also, not entirely sure Peter was on board with Dutch Disease either :P

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    5. Kain

      Thanks. I did opine that Mulcair's "Dutch Disease" had a certain logic to it.

      Given Canada's poor record on productivity a low dollar does help us.

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    6. We had a poor record on productivity because of the low dollar. We had no incentive to improve our productivity, because the falling dollar was doing all the work for us.

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    7. The low currency was the effect of free trade. Chretien-Martin-BoC low dollar policy was the only option since, our products were uncompetitive vs. the USA or Mexico.

      JB

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  2. Considering the wall to wall propaganda in the Establishment for the past 20 years or so in favour of Free Trade, that so many people oppose it is a cause for hope. As far as respectable opinion is concerned, opposing Free Trade is the equivalent of believing the Earth to be flat.

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  3. Free Trade = the averaging-out of cultural values between the countries signing the agreements. (money=a way to average individual differences in value within one country, free trade=the same thing between different societies)

    So this high support for free trade is really a direct result of the Liberals' past efforts to make Canada more open and culturally inclusive. Perhaps the problem with NAFTA was that it tilted the balance too heavily toward the United States, and Canadians are now eager to bring back some balance by also aligning their values more closely with the countries of the EU and some small Pacific states.

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  4. The US Canada free trade agreement did help make the Canadian economy more competitive. Unfortunately GATT signed in 1994 and NAFTA didn't benefit the majority of middle and working class Canadians. Free Trade with the United states didn't bleed manufacturing jobs and infrastructure from Canada to the degree that is being lost today to China

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  5. Did the survey ask what Free Trade means to the people it interviewed? Did it mention any alternatives so the choice was meaningful?

    Some supporters of Free Trade equate it with a natural law, on par with gravity. But the "laws" of economics are created by people, not nature. Trade agreements are political decisions that deserve close scrutiny when it comes to who benefits and who suffers from them.

    Whatever benefits might exist for some people, Free Trade is largely an economic scheme that privileges investors' rights above all others, especially above human and environmental rights. Indigenous people got a problem with mining companies taking their land? Tough; companies are free to do what they want, especially if fines for poisoning rivers and polluting the atmosphere hardly make a dent in their profits. Productive workers think they deserve a living wage and job security for making profitable goods or services? Tough; companies are free to move and exploit workers whose rights aren't as well protected elsewhere.

    Sure, trade is a fact; any economy engages in it. Free Trade sounds nice; who's against freedom? That's when we have to ask, "freedom for whom?" Only for those who own enough capital to invest and trade in international markets? That's a very narrow definition of freedom, and an even narrower segment of the world that has access to it. The perverse result of this twisted conception of freedom is that the great majority of people on this planet who exercise practices of *freedom* to protect their land and their livelihoods are somehow against "freedom" if they resist the suffering that results from "free" trade. The meaning of freedom is vacuous in any version of Free Trade that positions itself above the regulations that protect and sustain the environment, and the rights and freedoms of non-investors who are the majority of people on this planet. Otherwise "free" trade is just a political scheme that obscures its artifice behind "natural laws" created by men to legalize the tyranny of a minority over people and the earth.

    There are plenty of other ways of trading goods and services that take the rights of people and the environment into account, and hold them higher than the rights of international investors and global capitalists. Whatever name that trading scheme goes by, it's the ordering of these rights that matters, and that ordering is what makes it human-constructed and political, as is the case, always.

    Without a discussion about the meaning of "free" trade and its alternatives, the finding of the survey--that people are basically split on the question of supporting it--is unsurprising. What is surprising is that, in the absence of any meaningful discussion about alternatives, that nearly two-thirds of people still think free trade agreements have either been harmful or ineffective. It's also surprising that, in spite of that lived experience, more than a third of people still think that what hasn't worked in the past might work in the future. This seems to be more the result of a political culture in denial of its failings, and a serious lack of visioning alternative possibilities, more than any triumph of "free" trade.

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    1. According to Adam Smith the laws of economics are not created by man but the famous "hand of God" and human nature: You own something I want; I will need to trade with you to acquire it. In theory the trade should make both of us better off since; I acquire something I want in exchange for something you want.

      JB

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    2. It was actually an "invisible hand", not the "hand of God". Smith was not a very religious man.

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    3. Adam Smith used the term "invisible hand" three times (notably, in 'The Wealth of Nations'). But it has been pointed out :

      The invisible hand, Smith wrote, destroys the possibility of a decent human existence "unless government takes pains to prevent" this outcome, as must be assured in "every improved and civilized society." It destroys community, the environment, and human values generally—and even the masters themselves, which is why the business classes have regularly called for state intervention to protect them from market forces.
      (http://www.chomsky.info/articles/199303--.htm)

      Smith's notion of the invisible hand is very broadly misunderstood and misrepresented.


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    4. Right you are Chimungera and Eric,

      I looked for my undergraduate copy of "On the Wealth of Nations" but, could not find it.

      You have provided a very interesting Chomsky quote. What I was trying to convey is the "laws of economics" are not anthropomorphic creations but more akin to the traits that determine human nature. They exists because we know them to be true: supply must equal demand for a market to be at equillibrium-how could it be any other way? Some may call this a "natural law" although I think such a term negates the role of free will in the trading process. It may be natural for humankind to trade with one another but, it is not "natural law" that humankind will trade with one another.

      JB

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    5. @Anonymous, how exactly are economics not created by man when economics depends upon value, and value is decided upon by people? Meat is valueless to a vegetarian. Many things that have discernible economic "value" are not even as tangible as meat, but may be religious or philosophical in nature. How much do your ideals cost? How much income are you willing to forego to stay true to them? If you have any ideals at all, and everyone does, they are a major part of your economic footprint in society.

      The "freer" the market, the more local ideas of value are overridden in favour of an average over a bigger territory. Essentially, it's like an expanding empire - more available resources and variety, but also more complexity and costly maintenance, and potential for unrest.

      This averaging of value is not decided by the principle of "one man=one vote", but by "one dollar=one vote".

      Normally, our "one dollar=one vote" system of values is balanced by our "one man=one vote" system of values. Both are necessary.

      Free trade tilts the balance in favour of dollar-votes rather than people-votes because dollars can move from jurisdiction to jurisdiction to find the better deal much easier than individual people can, so they have more leverage.

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    6. Econmics depend upon rationality and scarcity. Rationality is a trait of humankind not created by it. Scarcity is mostly a function of the natural world execpt in cases where humankind modifies it.

      Religion does not have a discernable economic value except when quantified; church income equals X% of GDP, salaries of clerics equal X dollars or the willingness to pay of John Bloggs is $100 in order for him to attend the eucharist on Sunday. One may be able to say Christianity has more value than religion Y because it has more adherents but, since, religion itself does not trade in a market one can not give it an economic value except perhaps in a conceptual context.

      I am always skeptical when one turns a conversation into partisan or philosophical rhethoric. Why or how would a freer market constrict values? Why would the opposite not be true? Surely the increase in trade will bring with it an expanded range of ideas and cultures diversifying or altering a domestic value set. If values are only local how can we have human rights?

      Why do you average value? The average value of what? One dollar can not possibly equal one vote in Canada. Some 14.7 million votes were cast in the last eelction, election expense reimbursement (not the total spent by the parties but a per centage thereof) total some $55 million. 4 dollars for every vote. We know some parties spend more per vote than others. I am unable to rectify this inconsistency with your "principle" of "one dollar=one vote".

      Free Trade does not change electoral law so I don not understand the mechanism by which free trade increases the dependancy on money in politics. In Canada since, free trade more stringenet regulations were put in place to restrict the role of money in politics.

      JB

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    7. For those who just want to talk about economics in terms of data, what do you think about Jim Stanford's recent analysis in the Globe and Mail? The cold, hard facts show that Free Trade hasn't lived up to its hype. Most worrying is the betrayal of a promised productivity dividend--even though Canadians are working harder than ever, their wages have stagnated since the '80s.

      http://www.theglobeandmail.com/commentary/did-this-historic-trade-deal-help-canada-no/article4593360/

      For those willing to think of trade and economics beyond data alone--as diverse social and political practices in which we cultivate livelihoods--then what about other forms of trade that meet the needs of people and the planet? Fair trade is just one example. There are many other forms of trade that aren't exclusively capitalist. Many people who have democratic control over their economic lives like it that way and don't want to give (more of) it up to an investor-class. Others who have been dispossessed of their livelihoods might want their land and sovereignty back. What happens when "free" trade between investors infringes on the ways other people have of cultivating livelihood? Do we respect their right to resist the economic models that are imposed on them by those empowered by these trade deals? If not, then what does freedom mean when these trade deals mean many people can't be free?

      It's amazing how some people still believe there's only One True Economy and see no problem in imposing it everywhere around the world under the guise of freedom. Haven't we seen that strategy go terribly wrong too many times before? Why does economic fundamentalism still have a grip on so many people after we've learned to let go of so many other destructive fundamentalist logics?

      Ed Fast, Canada's International Trade Minister, is a case in point. He derided critics as "free trade deniers" and called them a threat, suggesting that even questioning his economic fundamentalism was somehow blasphemous. The nominal association of his catch-phrase with "climate change deniers" is a particularly ironic and Orwellian way to project the government's denial of facts onto critics, especially given the government's propensity to deny the scientific consensus on man-made global warming. Questioning the social and political implications of "free" trade is hardly a denial of facts. Far from being a threat, criticism of "free" trade not only embraces the evidence, it is necessary to ensure we have a non-fundamentalist space in which to rethink economics so that we can change the practices which have contributed to the social, political, and environmental crises of our day.

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    8. here's an easy way to determine whether or not free trade has been "good" for a country or not: look at the inter-country trade deficits and surpluses. Trade with the US for example:

      http://www.census.gov/foreign-trade/balance/c1220.html

      From 1994 to 2011 (all full years of trade since NAFTA came into effect), Canada has accumulated ~$767 billion (USD); to put it in perspective, Canada's economy is (nominally) 1.74 trillion. The way GDP is calculated, exports increase GDP while imports decrease GDP; thus Canada has acquired $767 billion extra in output and incomes had there been no trade deficit (or trade in general) at all. I've had trouble finding good data over Canada-Mexico, but the 2011 trade deficit amounted to $15 billion; assuming that Canada was in deficit with Mexico more than not since 1993, free trade with Mexico has been unambiguously bad for Canada's national economy.

      And remember, currency valuations have more to do than anything with balance of trade, something almost never talked about in articles concerning outsourcing or globalization. Fortunately Mulcair is trying to put SOME economics back into the political debate, we'll see if anyone continues listening or begins following suit.

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    9. It is a good idea to measure the benefit of trade using trade balances however, it is possible for a country's GDP to rise and still have a trade deficit. A country's GDP could grow 200% but it may have a trade deficit especially vis a vis other countries (If a country's GDP rises 200% and its trade deficit is 2% does it really matter?). In addition trade defeicits/ surpluses do not take into account financial or capital transfers. For instance CNOOC's take over of Nexen will not effect Canada's trade numbers. However, CNOOC's purchase will effect Canada's Balance of Payments account.

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    10. Smith did actually use "the invisible hand" to refer to divine guidance. As mentioned, he used it three times, but he first was on a book about Moral Theory, not economics. And there it is clearly a reference to God (though a non-inteventionist God, of the sort poular among educated men at the time - he was effectiovely saying that the universe was so well designed that these positive outcomes just naturally occured).

      In economics, the Invisible Hand didn't actually become a terribly important concept until the Monetarists started to criticise Keynesians.

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    11. @Anonymous, I don't understand your reasoning, I'm afraid.

      You're using professional economic language. I'm not an economist, I've just been doing some thinking lately about what money is on a fundamental level. Bear with me, and see if this makes sense:

      It seems to me that the very first prerequisite for money is not rationality or scarcity as you say, but people. It all starts with the idea that one person wants something done, and another person can do it.

      If nobody can do it, money won't be used.
      If nobody wants it, money won't be used.
      If somebody wants it but can do it themselves, money won't be used.

      If somebody wants it AND needs somebody else do it, that's when money is used (or barter).

      So money is fundamentally a way to get other people to do what they would not do of their own volition.

      Are you seeing now why I might say that money and values can be related?

      Say one person wants both A and B about equally and has to decide what to pursue. If choosing A will leave him with more money, he'll probably go with A.

      Why might choosing A leave him with more money than choosing B? Maybe because a lot of people want A, or maybe one really rich person wants A. Or maybe a lot of poor people want B while one really rich person wants A, and the really rich person has enough money to override all the poor people who want B. Or maybe if it were just up to the local community of that man, choosing B be better, but a foreign area recently signed a free trade deal with his area and over there A is really valued (note I didn't say "popular", because it's not the same thing when money is involved), so he chooses A.

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    12. (cont...)
      My "principle" is not "one dollar=one vote". What I am saying is that the principle of the ideal democracy is "one man=one vote", while the principle of the ideal laissez-faire capitalist system is "one dollar=one vote" (it's how corporations are ruled - he who owns the most shares gets the most say). They are actually opposing systems - you can have more democracy or more capitalism, but not both.

      "Why or how would a freer market constrict values? Why would the opposite not be true?"

      I didn't say it would constrict values.

      Here's what I am saying:

      A FREE TRADE DEAL will average the values between the participating territories on the principle of "one dollar=one vote".

      A DEMOCRATIC POLITICAL UNION will average the values between the participating territories on the principle of "one man=one vote".

      We're talking about the unattainable ideal, of course.

      "Surely the increase in trade will bring with it an expanded range of ideas and cultures diversifying or altering a domestic value set."

      Yes, that's what I'm saying. The local value set is changed because it becomes unprofitable.

      "If values are only local how can we have human rights?"

      We can't. If we really had "human rights" that made everybody happy, we wouldn't need prisons. If we really had no regional differences between values, we wouldn't have different legal systems.

      If there really was no disagreement about human rights, we wouldn't need to be constantly defending them and promoting them.

      When you look at the economic share of complex philosophical values (as opposed to more simple wants), don't just look at church donations as % of GDP. Another example would be charities. Some artwork would certainly fall under this category, too. Also foreign aid. Also the military, because that's really the whole reason for its existence (the countries spending the most on militaries are the ones who feel that their neighbours don't share their values). Also police. The military is for defending "us" from deviants without, the police is for defending "us" from deviants within. "Us" being in large part whoever has the most economic clout, which may or may not be representative of the average citizen, depending on how power is distributed in the country.

      I hope that cleared up some things, please do say if anything is unclear.

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    13. Esn,

      This conversation did not begin about money but about economics. Economics does not need money and money is not inherently a mechanism for labour as you state: Its fundamental purpose is to act as a medium of exchange. Therefore, I can not agree that; " money is fundamentally a way to get other people to do what they would not do of their own volition".

      In fact many ways exist for people to exercise others' labour including; persuasion, coercion and trade.

      Secondly your theory that: "Say one person wants both A and B about equally and has to decide what to pursue. If choosing A will leave him with more money, he'll probably go with A". Only works if no other costs are involved. A reasonable person will go with the option that best improve his utility.

      The principle of the capitalist system can not be "one dollar=one vote". In the first place capitalism can exist without voting or money. Secondly, not all companies have shareholders and not all shareholders vote. Not all assets under capitalism have a democratic structure and finally sometimes even if they do votes are inconclusive and people will end up in court or mediation. Thirdly, capitalism and democracy are not opposing systems. At base both allow individuals the right and trust in their competence to make choices.

      I am afraid the rest of your writing is trying to explain a philosophical/ partisan ideology. It is a discussion I am hesitant to participate in.

      I will mention before I sign-off the purpose of human rights is not to make anybody happy. They are inalienable freedoms that should be beyond the reach of government-in theory at least.

      JB


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  6. I am curious if the poll asked if Canadians agree we should loose our rights to controlling our water resources to European and US Corporations? Or did the poll ask if Canadians would accept higher drug prices and less autonomy over their medical system due to CETA demands? Or if they want to lose their rights of public ownership over certain utilities? I'm sure you would get different polling numbers if these questions were put to Canadians. Unlikely Nanos will do that though. They should do a poll on whether Canadians would prefer Fair Trade over Free Trade. The pathetic thing is you cannot criticize Free Trade without being demonized by the media and corporations as being anti-economy. As such no true dialogue can take place on suggesting alternatives like Fair Trade or Eco-Trade. Thus parties like the NDP are "warming up" to Free Trade. However, if they warm up too much there will be fractures in the party.

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    1. I'm at a loss as to why Canadians would want public ownership of utilities.

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    2. In a word: Walkerton. Public ownership means the utility will have deeper public oversight and, more importantly, be run in the public's interest. Private utilities limits public oversight due to "competitive advantage" complaints and is run in the interests of the shareholders who could be in Munich or China or God knows where. Regardless, shareholders want returns on their investments not good public management. Put another way, if good public management, in the interests of the people it serves, comes in conflict with profitability (and it often does), profitability wins because that is the ultimate focus and goal of the company. This by the way is not a radical idea spouted by crazy left wing "enviro-nazis" like myself. The defining issue in Abbotsford BC's last mayoral election was the privatization of their water utility. Abbotsford (a hot bed of conservatism) rejected privatization by 71% against and also kicked out their mayor who was a big supporter of the "P3" project. And in a great show of anti-democratic totalitarianism Abbotsford's federal MP, Conservative Ed Fast, told his constituency that regardless of their democratic choice there would be no federal money for any water project unless they accepted P3. So rather than a bottom up democracy where Ed Fast goes to Ottawa and fights for his constituency he revealed the Conservatives top down approach where Ottawa dictates to the constituency.

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