CLINTON'S FOLLY, NAFTA !
47 million American jobs sent to the third world.
He had to do that to get into office!

The first year Bill Clinton was in office, December of 1993, he delivered what he'd promised the Fortune 500: the NAFTA TRADE TREATY which allows American corps to abandon factories, move to other countries, enjoy dollar a day workers, no inspection requirements, jeopardizing American health and safety,  discarding loyalty to America and its union workers and every citizen that buys a lowclass, cheap product imported into our recessionary hands.

TRUTH DIG published CHALMERS JOHNSON's "TAKE" on this bought politician's 'creation.' This is the online newspaper you want to read and it's free.
** * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Tom Friedman's Folly: The Lies Behind 'Free Trade'
     By Chalmers Johnson, author of "BLOWBACK"
(How CIA COVERT OPS RUINED THE PLANET )
a writer for the TRUTH DIG WEBSITE.

February 5, 2008 (NOTE: at this point in time, Famous, quirky NY TIMES reporter Editorialist Tom Friedman was the #1 Apologist for NAFTA. Some call him IGNORANT  Some think he was bought by the Fortune 500 and is a mouthpiece for corporate greed strategies. In which case he was paid well and he's crazy like a fox. Maybe you should read up on his lunacy before you tackle a critique on him.(below)

Ha-Joon Chang is a Cambridge economist who specializes in the abject
poverty of the Third World and its people, groups, nations, and empires,
and their doctrines that are responsible for this condition. He won the
Gunnar Myrdal Prize for his book "Kicking Away the Ladder: Development
Strategy in Historical Perspective" (2002), and he shared the 2005
Wassily Leontief Prize for his contributions to "Rethinking Development
in the 21st Century." The title of his 2002 book comes from the German
political economist Friedrich List, who in 1841 criticized Britain for
preaching free trade to other countries while having achieved its own
economic supremacy through high tariffs and extensive subsidies. He
accused the British of "kicking away the ladder" that they had climbed
to reach the world's top economic position.

 OK, I'm on Top. Step Away from the Ladder!

Chang's other, more technical books include "The Political Economy of Industrial Policy" (1994) and "Reclaiming Development: An Economic Policy Handbook for
Activists and Policymakers" (2004).

His new book is a discursive, well-written account of what he calls the
"Bad Samaritan," people in the rich countries who preach free markets and
free trade to the poor countries in order to capture larger shares of the
latter's markets and preempt the emergence of possible competitors. They
are saying 'do as we say, not as we did' and act as Bad Samaritans, taking
advantage of others who are in trouble." Bad Samaritans is intended for a
literate audience of generalists and eschews the sort of exotica that
peppers most economic writing these days -- there is not a single
simultaneous equation in the book and many of Chang's examples are taken
from his own experiences as a South Korean born in 1963.

Ha-Joon Chang's life is conterminous with his country's advance from being
one of the poorest on Earth -- with a 1961 yearly income of $82 per person,
less than half the $179 per capital income in Ghana at that time -- to the
manufacturing powerhouse of today, with a 2004 per capita income of
$13,980. South Korea did not get there by following the advice of the Bad
Samaritans. Chang's prologue contains a wonderful account of how
post-Korean War trade restrictions and governmental supervision fostered
such projects as POSCO (Pohang Iron and Steel Co.), which began life as a
state-owned enterprise that was refused support from the World Bank in a
country without any iron ore or coking coal and with a prohibition on trade
with China. Now privatized, POSCO is the world's third largest steel
company. This was also the period in which Samsung subsidized its infant
electronics subsidiaries for over a decade with money made in textiles and
sugar refining. Today Samsung dominates flat-panel TVs and cell phones in
much of East Asia and the world.

Chang remembers quite clearly that as a student "We learned that it was our
patriotic duty to report anyone seen smoking foreign cigarettes. The
country needed to use every bit of foreign exchange earned from its exports
in order to import machines and other inputs to develop better industries."
He is frankly contemptuous of New York Times columnist Thomas Friedman's
best-seller The Lexus and the Olive Tree (2000) and its argument that
Toyota's Lexus automobile represents the rich world brought about by
neoliberal economics whereas the olive tree stands for the static world of
no or low economic growth. The fact is that had the Japanese government
followed the free-trade economists back in the early 1960s, there would
have been no Lexus. Toyota today would be, at best, a junior partner to
some Western car manufacturer or, worse, have been wiped out.

In Chang's conception, there are two kinds of Bad Samaritans. There are the
genuine, powerful "ladder-kickers" working in the "unholy trinity" of the
International Monetary Fund (IMF), the World Bank, and the World Trade
Organization (WTO). Then there are the "ideologues -- those who believe in
Bad Samaritan policies because they think those policies are 'right,' not
because they personally benefit from them much, if at all." Both groups
adhere to a doctrine they call "neoliberalism." It became the dominant
economic model of the English-speaking world in the 1970s and prevails at
the present time. Neoliberalism (sometimes called the "Washington
Consensus") is a rerun of what economists suffering from "historical
amnesia" believe were the key characteristics of the international economy
in the golden age of liberalism (1870-1913).

Thomas Friedman calls this complex of policies the "Golden Straitjacket,"
the wearing of which, no matter how uncomfortable, is allegedly the only
route to economic success. The complex includes privatizing state-owned
enterprises, maintaining low inflation, shrinking the size of the state
bureaucracy, balancing the national budget, liberalizing trade,
deregulating foreign investment, making the currency freely convertible,
reducing corruption, and privatizing pensions. It is called neoliberalism
because of its acceptance of rich-country monopolies over intellectual
property rights (patents, copyrights, etc.), the granting to a country's
central bank of a monopoly to issue bank notes, and its assertion that
political democracy is conducive to economic growth, none of which were
parts of classical liberalism. The Golden Straitjacket is what the unholy
trinity tries to force on poor countries. It is the doctrinal orthodoxy
taught in all mainstream academic economics departments and for which
numerous Nobel prizes in economics have been awarded.

In addition to being an economist, Ha-Joon Chang is a historian and an
empiricist (as distinct from a deductive theorist working from what are
stipulated to be laws of economic behavior). He notes that the histories of
today's rich countries contradict virtually all the Golden Straitjacket
dicta, many of which are logically a result rather than a cause of economic
growth (for example, trade liberalization). His basic conclusion:
"Practically all of today's developed countries, including Britain and the
US, the supposed homes of the free market and free trade, have become rich
on the basis of policy recipes that go against neo-liberal economics." All
of today's rich countries used protection and subsidies to encourage their
manufacturing industries, and they discriminated powerfully against foreign
investors. All such policies are anathema in today's economic orthodoxy and
are now severely restricted by multilateral treaties, like the WTO
agreements, and proscribed by aid donors and international financial
organizations, particularly the IMF and the World Bank.

Chang offers some fascinating vignettes of men and books that were
infinitely more important in the economic development of the rich countries
than Adam Smith's The Wealth of Nations. These include a precis of a
virtually unknown book by Daniel Defoe, A Plan of the English Commerce
(1728), on Tudor industrial policy in developing England's woolen
manufacturing industry. As a result of many of Defoe's ideas, manufactured
woolen products became Britain's most important export industry. Chang
continues with a short life of Robert Walpole, the chief architect of the
mercantilist system. By 1820, thanks to Walpole's protectionist policies,
Britain's average tariff on manufactured imports was between 45 and 55
percent, whereas such tariffs were 6-8 percent in the Low Countries, 8-12
percent in Germany and Switzerland, and around 20 percent in France.

Turning to the United States, Chang focuses on Alexander Hamilton, the
first American secretary of the treasury and the man who coined the term
"infant industry." Although he did not live to see it, by 1820 Hamilton's
40 percent tariff on manufactured imports into the United States was an
established fact. Hamilton provided the blueprint for U.S. economic policy
until the end of the Second World War. The 19th and early 20th century U.S.
tariffs of 40 to 50 percent were then the highest of any country in the
world. Throughout this same period, it was also the world's fastest growing
economy. Much like contemporary China, whose average tariff was over 30
percent right up to the 1990s, neither American nor Chinese protectionism
inhibited foreign direct investment but rather seemed to stimulate it. With
the U.S. abandonment of overt protectionism after it became the world's
richest nation, it still found measures to advance its economic fortunes
beyond what market forces could have achieved. For example, the U.S.
government actually paid for 50 to 70 percent of the country's total
expenditures on research and development from the 1950s through the
mid-1990s, usually under the cover of defense spending.

The Third World was not always poor and economically stagnant. Throughout
the golden age of capitalism, from the Marshall Plan (1947) to the first
oil shock (1973), the United States was a Good Samaritan and helped
developing countries by allowing them to protect and subsidize their
nascent industries. The developing world has never done better, before or
since. But then, in the 1970s, scared that its position as global hegemon
was being undermined, the United States turned decisively toward
neoliberalism. It ordered the unholy trinity to bring the developing
countries to heel. Through draconian interventions into the most intimate
details of the lives of their clients, including birth control, ethnic
integration, and gender equality as well as tariffs, foreign investment,
privatization decisions, national budgets, and intellectual property
protection, the IMF, World Bank, and WTO managed drastically to slow down
economic growth in the Third World. Forced to adopt neoliberal policies and
to open their economies to much more powerful foreign competitors on
unequal terms, their growth rate fell to less than half of that recorded in
the 1960s (1.7 percent instead of 4.5 percent).

Since the 1980s, Africa has actually experienced a fall in living standards
-- which should be a damning indictment of neoliberal orthodoxy because
most African economies have been virtually run by the IMF and the World
Bank over the past quarter-century. The disaster has been so complete that
it has helped expose the hidden governance structures that allow the IMF
and the World Bank to foist Bad Samaritan policies on helpless nations. The
United States has a de facto veto in both organizations, where rich
countries control 60 percent of the voting shares. The WTO has a democratic
structure (it had to accept one in order to enact its founding treaty) but
is actually run by an oligarchy. Votes are never taken.

Because of the shortcomings of neoliberalism, the main international
development bureaucracies as well as much of the academic economics
establishment have been busy trying to find plausible scapegoats or
excuses. One of the most transparent was Paul Wolfowitz's emphasis on
poor-country corruption during his short tenure as president of the World
Bank. He propounded the increasingly popular view that the World Bank gave
good advice that failed because Third World leaders were corrupt and
subverted its implementation. The problem with this idea is, as Chang puts
it, "Most of today's rich countries successfully industrialized despite the
fact that their own public life was spectacularly corrupt." He has in mind
places like the late 19th century United States and post-World War II East
Asia, about which Chang as a South Korean speaks with insights from the
inside, and China today.

Among the conundrums encountered in trying to argue that corruption has
subverted neoliberalism are the cases of Zaire (yesterday, the Congo) under
Gen. Mobutu and Indonesia under Gen. Suharto. Both Mobutu and Suharto were
flagrantly corrupt, murderous military dictators of the sort often
preferred by the United States, but with one major difference -- whereas
Zaire's living standards fell threefold during Mobutu's rule, Indonesia's
rose by more than the same amount during Suharto's rule. The explanation
seems to be that in Indonesia, the money from corruption mostly stayed
inside the country in the hands of Suharto's numerous relatives, who used
some of it to create jobs and incomes. In Zaire, the proceeds from
corruption went straight into Swiss banks and other hidden foreign
accounts. Corruption is, of course, a problem, but to say that it is the
reason for the spectacular failures of neoliberal economic programs is
unconvincing.

Rather than acknowledging that free trade, privatization, and the rest of
their policies are ahistorical, self-serving economic nonsense, apologists
for neoliberalism have also revived an old 19th century and neo-Nazi
explanation for developmental failure -- namely, culture. Chang believes
that this reflects the popularity of Samuel Huntington's thesis that we are
experiencing a "clash of civilizations" or Francis Fukuyama's contention
that trust extending beyond family members critically affects economic
development. Fukuyama argues, astonishingly, that the absence of such trust
in the cultures of China (the fastest growing economy on Earth today),
France, Italy, and (to some extent) Korea makes it difficult for them to
run large firms, which are key to modern economic development. This is not
so different from the 19th century German economist and sociologist Max
Weber, who in 1904 identified the Confucian/Buddhist countries of China and
Japan as economically backward because they did not have the Protestant
ethic.

Chang argues that culture simply does not work as an explanation for
economic success. Extremely broad categories such as "civilization,"
"Christian," or "Muslim" obscure more than they reveal, and the modern
histories of Germany, Japan, China, and many other countries suggest that
Protestant-work-ethic-type cultures are the results of economic
development, not their cause. In the early 19th century, the British
endlessly generalized about Germany and Germans, calling them "a dull and
heavy people" and "indolent," saying "the Germans never hurry," they are a
"plodding, easily contented people ... endowed neither with great acuteness
of perception nor quickness of feeling," they are "not distinguished by
enterprise or activity," they are "too individualistic and unable to
cooperate with each other," they are "overly emotional," and "the [German]
tradesman and shopkeeper take advantage of you wherever they can, and to
the smallest imaginable amount rather than not take advantage of you at
all. ... This knavery is universal."

It is discouraging to see this kind of thought rampant again in economic
discourse, this time directed against the poor people of Africa, Latin
America, and elsewhere. Commentators who denigrate the Philippines as East
Asia's only Catholic and therefore Latin American-type culture forget that
only a half-century ago it was the second richest country in Asia (after
Japan). Cultural explanations offer powerful support for the List/Chang
proposition that economically successful nations are almost pathologically
afraid of competitors coming up from below and therefore try to block their
progress by kicking away the ladder. It is time to recognize, particularly
in the English-language economic press, that a "level playing field" leads
to unfair competition when the players are unequal. We have no trouble
recognizing that a boxing match between people with more than a couple of
pounds difference in weight is unfair. Why should we accept that the United
States and Honduras should compete economically on equal terms?

One of the strengths of Chang's new book lies in the half-dozen lucid
chapters on particular, often rather technical aspects of development and
international trade. These add up to a jargon-free primer on contemporary
economic thought leavened with a sound knowledge of history. The best of
these are on trade liberalization, foreign investment, public versus
private enterprises, patents and copyrights, and macroeconomics. The most
interesting of these are on trade liberalization and what today are rather
ostentatiously called "intellectual property rights."

We live in an allegedly enlightened age of free trade. Nonetheless,
European citizens support their dairy industry with subsidies and tariffs
to the tune of 16 billion pounds sterling a year. This amounts to more than
1 pound per cow per day, when half the world's people live on less. The
pattern is repeated with regard to a vast range of agricultural commodities
grown in rich, developed countries. The U.S. subsidizes corn and exports it
to Mexico, where it is the staple diet of most of the people. These
exports, however, drive small Mexican farmers into bankruptcy and encourage
their illegal immigration into the United States, where a racist backlash
is directed against them. In many cases, the American proponents of farm
subsidies are one and the same people who stir up hatreds against Mexican
farm workers. Japan is one of the world's richest countries, with a
remarkably even per capita income distribution, but it still lavishly
subsidizes its extremely inefficient rice growers and prevents the import
of rice that could easily compete on price with domestic rice. This system
helps perpetuate the one-party rule of the Liberal Democratic Party by
mobilizing rich, protected farmers, who vote for the conservatives.

What's wrong with such practices? All countries have domestic political
interests, and successful politicians cater to them. The problem is the
hypocrisy surrounding "free trade" and the lies that distort political
rhetoric in virtually all economically advanced countries. According to
Chang, "Belief in the virtue of free trade is so central to the neo-liberal
orthodoxy that it is effectively what defines a neo-liberal economist. You
may question (if not totally reject) any other element of the neo-liberal
agenda -- open capital markets, strong patents, or even privatization --
and still stay in the neo-liberal church. However, once you object to free
trade, you are effectively inviting ex-communication." Under the
Anglo-American-dominated World Trade Organization, a great deal of trade
liberalization has taken place, but it has virtually all come at the
expense of infant industries or cash crops in developing countries and has
enriched exporters and consumers in rich countries. Not surprisingly, the
system allows for protection and subsidies much more readily in areas where
the rich countries want them and rejects any exceptions for developing
countries. This is the main reason for the current revolt by virtually all
Latin American countries against further U.S. interference in their
economic policymaking.

Reduction of tariff revenues also plays havoc with national budgets in poor
countries. Because they lack efficient tax collection capabilities and
because tariffs are the easiest taxes to collect, developing countries rely
heavily on them. Add to this lower levels of business activity and higher
unemployment that results from IMF-ordered trade liberalizations, which
reduce income tax revenue. When such countries are then put under further
IMF pressure to reduce their budget deficits, falling revenues mean severe
cuts in spending, often eating into vital areas like education, health, and
physical infrastructure, damaging long-term growth.

Neoliberal theorists believe that when it comes to golden straitjackets
"one size fits all" -- except for those countries rich enough to afford a
private tailor. The chief effect of the golden straitjacket has been not to
promote growth but to turn healthy countries into basket cases. "In the
long run," writes Chang, "free trade is a policy that is likely to condemn
developing countries to specialize in sectors that offer low productivity
growth and thus low growth in living standards. This is why so few
countries have succeeded with free trade, while most successful countries
have used infant industry protection to one degree or another."

Another salient aspect of the neoliberal canon has a much less hoary
history than free trade. The idea of the state intervening to grant a
monopoly to an inventor or a creative artist to exploit his or her device
is relatively new and was once thought to be contrary to the idea of
liberalism. Chang observes, "The technological 'arms race' between backward
countries trying to acquire advanced foreign knowledge and the advanced
countries trying to prevent its outflow has always been at the heart of the
game of economic development." During the 18th century, this competition
took on a new dimension with the emergence of modern industrial
technologies that had much greater potential for productivity growth than
traditional technologies. The result was a vicious international
competition to recruit skilled foreign workers, machine smuggling, and
industrial espionage. The origins of patents, copyrights, and protection of
trademarks are to be found in Britain's attempts to protect its advanced
technologies by erecting legal barriers against their outflow. The other
industrializing countries in Europe and the United States had to violate
those laws in order to acquire superior British technologies.

The first measure to protect IPRs (intellectual property rights) was a 1719
English ban on the migration of skilled workers. The law made it illegal to
recruit experienced workers for jobs abroad -- known as "suborning."
Emigrant workers who did not return home within six months of being warned
would lose their right to lands and goods in Britain and their citizenship
would be revoked. This was followed by a new act in 1750 prohibiting the
export of "tools and utensils" in the wool and silk industries, extended by
the Tools Act of 1785 to the export of many different types of machinery.
The development of science in conjunction with industry meant that a lot of
disembodied knowledge could be written down in a language that could be
understood by anyone with appropriate training. Once an idea is written
down in general scientific and engineering language, it becomes much easier
to copy. It thus became more important to protect the ideas themselves than
the workers or machines employing them. Beginning with some German states
in the 16th century and with Britain in 1623 with the Statute of
Monopolies, governments granted 10 years of protected monopoly to inventors
of "new arts and machines." Britain introduced the first copyright law in
1709 and the first trademark law in 1862.

It is not obvious that providing incentives to inventors and accepting the
social costs of monopolies increase innovation or do anything more than
enrich corporations who can file endless patent infringement suits and slow
down change by making frivolous but patentable minor changes in old
techniques. According to Chang, "The patent lobby talks nonsense when it
argues that there will be no new technological progress without patents."
For example, nonprofit organizations, such as universities, subsidize a
great deal of research. Several classical students of innovation, such as
the economist Joseph Schumpeter, discounted the importance of patents.
Schumpeter believed that the natural if short-lived monopoly that comes
with invention was more than enough. One thing is certain: Extending the
term of protection for existing work, which is advocated by all the Bad
Samaritan rich countries, cannot create new knowledge.

The United States is the most serious protectionist. In 1998, the U.S.
Copyright Term Extension Act extended the period of copyright protection
from the life of the author plus 50 years to the life of the author plus 70
years. The Disney Corp. led the fight for this extension since the
copyright on Mickey Mouse, created in 1928, was due to expire. As a result
the new law became known in some circles as the Mickey Mouse Protection
Act.

Despite the enormous sums paid to lawyers for work on patent law, it should
be understood that as a practical matter patents are important in only
three industries -- computer software, entertainment, and the
pharmaceutical industry. But they are a critical stumbling block for
economic development. Some 97 percent of all patents and the vast majority
of all copyrights and trademarks are held by economically advanced
countries, which use them to deny medicines, textbooks, and computers to
underdeveloped countries, exploit epidemics such as HIV/AIDS to extract
excess profits, and kick away the ladder for countries trying to catch up.
As Chang concludes, "The most detrimental impact [of the patent system]
lies in its potential to block knowledge flows into technologically
backward countries that need better technologies to develop their
economies. Economic development is all about absorbing advanced foreign
technologies." Among the best things we could do today to help the Third
World would be to shorten the period of protection, drastically raise the
originality bar, and make compulsory licensing and imports of generics
easier.

With "Bad Samaritans," Chang has succinctly and comprehensively exposed the
chief structures of economic imperialism in the world today. What is now
required is the leadership to undermine and dismantle the barriers that
keep so much of the world so poor.

Chalmers Johnson, president of the Japan Policy Research Institute and
professor emeritus at the University of California, San Diego, is the
author of numerous books, including "Blowback: The Costs and Consequences
of American Empire," "The Sorrows of Empire: Militarism, Secrecy, and the
End of the Republic," and "Nemesis: The Last Days of the American Repub

<----- BACK TO THE IMPORT EXPORT TRAINING SEMINAR

<------BACK TO THE GOV LIES/ CONSPIRACY  INDEX

<----- BACK TO THE LEGACY TRADE SEMINAR
 
<------BACK TO THE SECRET OLIGARCHS OF PLANET EARTH

<------ BACK TO THE SECRET BIZ DEALINGS OF EMPIRE