Recently, Ralph Nader seized the venerable podium of Old Cabell Hall and delivered quite a moving bit of rhetoric. But largely, that's all he delivered: empty words without any careful thought to back them up. This year's presidential nominee for the Green Party sp ent over an hour talking on a wide variety of important issues, and while he was eloquent in everything he had to say, sometimes his logic just wasn't there.
Come on, Ralphie, when you bash something as integral and necessary to our existence as free trade, you lose a lot of credibility, and you lose my vote.
Maybe it was just a misinterpretation of his views, but I just can't understand how someone could consciously reject the notion of free trade and expanded globalization, thinking the alternative - an economy closed to the rest of the world - would be better.
The funny thing is, while Nader was speaking out against the World Trade Organization and the North American Free Trade Agreement, the business suit he was wearing was, undoubtedly, made possible through free trade. It's highly probable that the suit was manufactured abroad, and if so, Nader would be perhaps a little hypocritical in his views. But even if the suit was produced domestically, it would still be the result of international trade. How, might you ask?
Free trade opens the door to a variety of production opportunities that would otherwise not be possible in a closed economy. With free trade, product components can be made at a lesser cost in other countries, and then these components are synthesized in the generation of a greater product, offering a wider range of goods.
Nader's suit was probably dyed with ink from India or sewn with wool from Scotland. However, a closed economy would require a textile manufacturer to raise his or her own sheep and make his or her own dyes - a recipe for inefficiency.
In an economy closed to free trade, choosing what to produce also becomes a matter of opportunity cost. Without free trade, people would be less inclined to make a number of items, and thus be less inclined to make quality products, because everyone would need to devote their skills to growing food and procuring life-sustaining necessities.
It's a shame Nader and the rest of his Green Party cohorts don't quite fully comprehend this concept.
It's also a shame Nader cannot conceive of a world without free trade. Imagine, if you will, an America full of small, unproductive towns, where the local farm barely provides enough food for all, as its harvest is subject to nature's whim. Growing up in such a world, most children would be taught to follow their father's footsteps in running the local smithy, and true liberal education would only be available for the prosperous.
In this world, as goods become harder and harder to come by, the prices of necessities increase dramatically, and those who can't afford certain products suffer.
Since most of one's time is spent producing necessities, there is little thought put toward the expansion of technologies and efficient production. Life, in general, would be much harder.
This all sounds a little 17th century, doesn't it? And didn't Ralph Nader say it would be George W. Bush who would be putting us back a few hundred years?
While, in almost all cases, international trade has made the world a better place to live in, there are some truths to the claim that globalization has negative implications to a certain few in the short run. Here, departing from the norm, Nader does make a valid point, and to explain why, let me conjure yet another hypothetical situation.
Suppose the United States produced all its own food and its own textiles. Let's say someone figured out that if the United States specialized in the production of food and traded for British textiles, both countries would prosper. In general, both countries would be better off, but the British farmers and the American textile workers would be hurt in the short run.
Whenever a country engages in international trade, certain domestic industries - namely those in which the country does not have a productive advantage - are worse off. Because it becomes cheaper for America to trade for textiles, the U.S. textile industry suffers, and this can be extremely problematic, especially for someone who is skilled only in the production of textiles.
There are a number of policy options for alleviating the stresses in these industries, such as the government subsidizing programs to pay textile workers not to produce textiles, but in the end it becomes a problem finally solved by the succession of the next generation.
Because if your father was a textile worker hurt by the importation of other goods, wouldn't you want to grow up to be an investment banker, or a neurosurgeon?
Although the transition costs of free trade are indeed great, in the end they are short lived. With this said, there's absolutely no reason why we should listen to Nader's twisted logic and abolish the system of free trade without first trying to work through the kinks.
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