The "new normal" world we are now told we live in by the neoliberal free trade zombies [View all]

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What the Price of Your Sneakers Really Says About Free Trade
Jud Lounsbury
The Progressive

In the wake of Brexit, former IMF Chief Economist Kenneth Rogoff blasted free trade critics:

"The popular response looks at jobs, but would they like to pay twice as much for a car? Would they like to have a phone that they pay 100 dollars, cost 500? Would they like to buy things in Wal-Mart that are now three dollars for nine dollars? You don't see all the millions and millions of consumers that are behind this. We get an enormous benefit from trade. Our real standard of living will diminish sharply if we close our borders to say exports from China."

Putting aside the indirect costs associated with "no holds barred" free trade, such as child labor or toxic pollution that finds its way back to us, as well as, you know, losing your job and not being able to afford much of anything, the actual low-price claims are dubious as well.

What has happened in the U.S. is that the number of new cars being sold, per capita, has dwindled. This is in part because many of the American car-making jobs have been eliminated due to outsourcing made easier by free trade deals. The number of people who can afford to buy a new car is not what it once was.

The Henry Ford maxim that you won't sell as many cars if there aren't as many people making a decent wage is proving true.

And phones? Does Rogoff really believe that a phone couldn't be made in the United States for a low-end price point of $100? Considering Apple, the corporation that enjoys the world's largest profit margin, spends only $4.50 for the assembly of the latest $749 iPhone, it's easy to see that cheap overseas labor doesn't have much to do with setting consumer prices.

Obviously there are many sectors where corporations, in order to stay in business, are forced to outsource to a cheaper labor force to keep up with competitors, but this is nowhere near the "new normal" world we are now repeatedly told we live in by the neoliberal free trade zombies.