19 April 2011

Ron Paul
1999 Ron Paul Chapter 77

Africa Growth And Opportunity Act

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16 July 1999

1999 Ron Paul 77:1
Mr. PAUL. Mr. Chairman, once again Congress demonstrates that it has no fundamental understanding of free trade or the best interests of the taxpayer. The Africa Growth & Opportunity Act is heavy-laden with the Development Assistance (foreign aid), debt forgiveness (so much for the balanced budget), OPIC expansion (thus putting the taxpayers further at risk), and of course a new international regulatory board to be funded with “such sums as may be necessary.” Additionally, the costs of this bill are paid by raising taxes on charity. Free trade, Washington style, is evidently not free for the taxpayer!

1999 Ron Paul 77:2
So what exactly is “free trade” and how far removed from this principle have those in Washington and the world drafted? Free trade, in its purest form, means voluntary exchange between individuals absent intervention by the coercive acts of government. When those individuals are citizens of different political jurisdictions, international trade is he term typically applied in textbook economics. For centuries, economists and philosophers have debated the extent to which governments should get in the way of such transactions in the name of protecting the national interest (or more likely some domestic industry). Obviously, both parties to exchange (free of intervention) expect to be better off or they would not freely engage in the transaction. It is the parties excluded (i.e. government and those out-competed) from the exchange who might have benefitted by being a party to it who can be relied upon to engage in some coercive activity to prevent the transaction in the hopes that their trading position will become more favorable by “default.”

1999 Ron Paul 77:3
Because governments have for so long engaged in one variety of firm-or-industry-benefitting protectionism or another, my “trade free of intervention” definition of free trade is currently quite out of favor with beltway-dominant pundits. Such wrongheaded thinking is not limited to government. In academia, a widely-used undergraduate economics text, authorized by David C. Colander, describes a “free trade association” as a “group of countries that allows free trade among its members and puts up common barriers against all other countries’ goods” — thus here we have free trade associations putting up barriers. (An economic textbook only Orwell could love.)

1999 Ron Paul 77:4
An example of what now constitutes “free trade” Washington style can be found within the US ENGAGE Congressional Scorecard. It is insightful to consider what USA ENGAGE regards as pro-free trade against the backdrop of the non-interventionist notion of free trade outlined above.

1999 Ron Paul 77:5
China Most Favored Nation (MFN), while politically charged, is perhaps the cleanest genuine free trade vote chosen by USA ENGAGE. The question posed by this legislation is whether tariffs (taxes on U.S. citizens purchasing goods imported from China) should be lower or higher. In other words, when American and Chinese citizens engage in voluntary exchanges, should Americans be taxed. Clearly the free trade position here is not to raise taxes on Americans and interfere with trade.

1999 Ron Paul 77:6
The Vietnam Waiver vote classification as a pro-free trade position is particularly indicative, however, of what now constitutes free trade in the alleged minds of the beltway elite. When government forces through taxation, citizens to forego consumption of their own choosing (in other words forego voluntary exchanges) so that government can send money to foreign entities (i.e. trade promotion), this in the mind of Washington insiders constitutes “free trade.” In other words, when demand curves facing the corporate elite are less than those desired, government’s help is then enlisted to shift the demand curve by forcing taxpayers to send money to various government and private entities whose spending patterns more favorably reflect those desired by those “engineering” such “free trade” policies in Washington. Much like tax cuts being a “cost to government” and “free trade associations” whose purpose it is to erect barriers, free trade has become government-coerced, taxpayer-financed foreign aid designed to result in specific private spending and private gains.

1999 Ron Paul 77:7
The Fast Track initiative highlighted in USA ENGAGE’s Congressional scorecard has its own particular set of Constitutional problems, but the free-trade arguments are most relevant and illustrative here. The fast-track procedure bill sets general international economic policy objectives, re-authorizes “Trade Adjustment Assistance” welfare for workers who lose their jobs and for businesses which fail (a gentler, kinder “welfarist” form of protectionism), and creates a new permanent position of Chief Agriculture Negotiator within the office of the United States Trade Representative. Lastly, like today’s legislative mishap, the bill “pays” the government’s “cost” of free trade by increasing taxes on a set of taxpayers further removed from those corporatists who hope to gain by engineering favorable international trade agreements.

1999 Ron Paul 77:8
Constitutional questions aside, like today’s H.R. 434, the fast track bill contained provisions which would likely continue our country down the ugly path of internationally-engineered, “managed trade” rather than that of free trade. As explained by the late economist Murray N. Rothbard, Ph.D.:

1999 Ron Paul 77:9
[Genuine free trade doesn’t require a treaty (or its deformed cousin, a ‘trade agreement’; NAFTA is called an agreement so it can avoid the constitutional requirement of approval by two-thirds of the Senate). If the establishment truly wants free trade, all it has to do is to repeal our numerous tariff, import quotas, anti-dumping laws, and other American-imposed restrictions of free trade. No foreign policy or foreign maneuvering in necessary.

1999 Ron Paul 77:10
In truth, the bipartisan establishment’s fan-fare of “free trade” fosters the opposite of genuine freedom of exchange. Whereas genuine free traders examine free markets from the perspective of the consumer (each individual), the mercantilist examines trade from the perspective of the power elite; in other words, from the perspective of the big business in concert with big government. Genuine free traders consider exports a means of paying for imports, in the same way that goods in general are produced in order to be sold to consumers. The mercantilists want to privilege the government business elite at the expense of all consumers — be they domestic or foreign.

1999 Ron Paul 77:11
Fast track is merely a procedure under which the United States can more quickly integrate an cartelize government in order to entrench the interventionist mixed economy. In Europe, this process culminated in the Maastricht Treaty, the attempt to impose a single currency and central bank and force relatively free economies to ratchet up their regulatory and welfare states. In the United States, it has instead taken the form of transferring legislative and judicial authority from states and localities and to the executive branch of the federal government. Thus, agreements negotiated under fast track authority (like NAFTA) are, in essence, the same alluring means by which the socialistic Eurocrats have tried to get Europeans to surrender to the super-statism of the European Union. And just as Brussels has forced low-tax European countries to raise their taxes to the European average or to expand their respective welfare states in the name of “fairness,” a “level playing field,” and “upward harmonization,” so too will the international trade governors and commissions be empowered to “upwardly harmonize,” internationalize, and otherwise usurp laws of American state governments.

1999 Ron Paul 77:12
The harmonization language in the last Congress’ Food and Drug Administration reform bill constitutes a perfect example. Harmonization language in this bill has the Health and Human Services Secretary negotiating multilateral and bilateral international agreements to unify regulations in this country with those of others. The bill removes from the state governments the right to exercise their police powers under the tenth amendment to the constitution and, at the same time, creates a corporatist power elite board of directors to review medical devices and drugs for approval. This board, of course, is to be made up of “objective” industry experts appointed by national governments. Instead of the “national” variety, known as the Interstate Commerce Act of 1887 (enacted for the “good reason” of protecting railroad consumers from exploitative railroad freight rates, only to be staffed by railroad attorneys who then used their positions to line the pockets of their respective railroads), we now have the same sham imposed upon worldwide consumers on an international scale soon to be staffed by heads of multinational pharmaceutical corporations.

1999 Ron Paul 77:13
The late economist Ludwig von Mises argued there is a choice of only two economic systems — capitalism or socialism. Intervention, he would say, always begets more interventionism to address the negative consequences of the prior intervention: thus, necessarily leading to yet further intervention until complete socialism is the only possible outcome. This principle remains true even in the case of intervention and free trade.

1999 Ron Paul 77:14
To the extent America is non-competitive, it is not because of a lack of innovation, ingenuity, or work ethic. Rather, it is largely a function of the overburdening of business and industry with excessive taxation and regulation. Large corporations, of course, greatly favor such regulation because it disadvantages their smaller competitors who either are not in a position to maintain the regulatory compliance department due to their limited size or, equally important, unable to “capture” the federal regulatory agencies whose regulation will be written to favor the politically adept and disfavor the truly productive. The rub comes when other governments engage in more laissez faire approaches thus allowing firms operating within those jurisdictions to become more competitive. It will be the products of these less-taxed, less-regulated firms which will be the consumers’ only hope to maintain their standard of living in a climate of domestic production burdened by regulation and taxation. The consumers’ after-tax income becomes lower and lower while relative prices of domestic goods become higher and higher. Free trade which provides the poor consumer an escape hatch, of course, is not the particular brand of “free trade” espoused by the international trade organizations whose purpose it is to exclude the more efficient competitors internationally in the same way federal regulatory agencies have been created and captured to do the equivalent task domestically.

1999 Ron Paul 77:15
Until policy makers can learn enough about trade and voluntary exchange to distinguish them from taxpayer-funded aid to bolster corporate revenues, OPIC, Export-Import funding, Market Access Program, and other forms of market intervention (each of which are quite the opposite of genuine free trade), the free trade discussion will remain at worst, a delusional discussion, and, at best, a hollow one.

1999 Ron Paul 77:16
For these reasons and others, I oppose the so-called free-trade-enhancing Africa Growth and Opportunity Act.

1999 Ron Paul 77:2 how far removed from this principle have those in Washington and the world drafted? probably should be how far removed from this principle have those in Washington and the world drifted?

1999 Ron Paul 77:2 international trade is he term typically applied probably should be international trade is the term typically applied.

1999 Ron Paul 77:3 beltway-dominant pundits probably should be capitalized: Beltway-dominant pundits because Beltway is the name of a highway.

1999 Ron Paul 77:3 widely-used probably should be unhyphenated: widely used.

1999 Ron Paul 77:6 beltway elite probably should be capitalized: Beltway elite.

1999 Ron Paul 77:8 internationally-engineered probably should be unhyphenated: internationally engineered.

1999 Ron Paul 77:10 fan-fare PR fanfare? Here the text is unclear because the word is hyphenated at the end of a line of text in the Congressional Record.

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