Wednesday, May 23, 2007

Trade, Wal-Mart and New York Democrats’ Attack on the Poor

The Economist 's lead story this week on globalization ("Tired of Globalization: But in Need of Much More of it"—Nov. 5) mentions Senator Schumer’s proposal to impose a 39% tariff on Chinese imports. As well, the New York City Council, the politburo of the People’s Republic of New York City, has imposed a law imposing health insurance costs on large supermarkets in order to capriciously discriminate against Wal Mart. At the same time, there were anti-trade demonstrations in Argentina concerning the Free Trade Agreement of the Americas and by implication the latest round of tariff-reduction talks that especially affect agriculture.

Schumer is a Harvard grad and, hopefully was exposed to David Ricardo’s concept of comparative advantage in college (although along with the Harvard faculty’s belief that there are no differences between men and women, who knows what laws of economics they have concocted).

These latest assaults on economic freedom do what all restraints on economic freedom ultimately do—assault the poor. Schumer’s bill would forestall economic progress in China, in the long term reducing wage gains and diminishing learning of Chinese workers and future entrepreneurs. The ban on Wal-Mart means that those New Yorkers with low incomes must pay inflated prices for their groceries. The Doha round of trade talks would directly help the farmers of Brazil, Africa and other third world countries and low-wage people in America, while the agricultural tariffs that the demonstators seem to support help domestic producers such as Del Monte at consumers' expense.

I brought these issues up in my class at Brooklyn College, and was interested in how few students (a) had heard of the theory of comparative advantage, (b) had thought about the impact of trade on economic outcomes and freedom and (c) had heard of or were critical of the ban on Wal Mart and protectionism. One student argued that Asians who work in factories would be better off starving to death than working in American factories overseas because of poor factory conditions. This student did not say whether she wished her ancestors had so starved to death in the 19th century. Another student said that it is good that poor people in New York pay higher prices to supermarkets because they would just fritter away the money anyway. I questioned the student whether this wasn't the same economic philosophy that governs North Korea, and why wouldn't he want to live there.

It seems to me that the left’s use of universities and schools to ideologically brainwash students to believe in their failed and erroneous economic theories has worked. It will be a long path to counteract the economic ignorance that the schools and universities have wrought on the American public, and that shows itself in the illiterate discussions of trade among elected officials like New York's Senator Schumer and New York City's politburo, and among left wing demonstrators.

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