Tuesday, October 20, 2009

The Philanthropy of Financiers: excerpt 5

free trade agreements are the outward sign of this globalizing order - NAFTA cements, and promotes, the integration of Mexican subsidiaries into the production networks of US Multinational Corporations (MNCs) - soon, Chile and Argentina are to join the NAFTA orbit - at the same time, Clintonites are promoting integration to the west; the Asia-Pacific Economic Cooperation (APEC) forum, whose summit Clinton attended in Seattle, isn't much now, but free trade promoters would like to see APEC become a Pacific Rim NAFTA - and of course a deal in the GATT world trade talks would generalize an expanded free-trade regime to whole new industries and to nearly the whole world.

to what end? - the argument for free trade has hardly changed, except for a pseudo-scientific overlay of mathematics, since David Ricardo laid it out in 1817 - Ricardo, like generations of model-building economists after him, imagined a two-commodity, two-country world in which Britain was the most efficient producer of cloth (the high-tech product of its day) and Portugal, of wine - Ricardo argued that the welfare of both countries would be maximized if Britain concentrated on making cloth and imported its wine from Portugal and vice versa - for Britain to try to make wine would be a waste of time and money, as would Portugal's attempts to make cloth - but few commodities are like wine, which is best produced only in certain regions - Portugal's lack of access to British weaving equipment, however, had nothing to do with geography; advanced countries guard their technological dominance fiercely.

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