Two Free Trades

I am reading Gaveling Down the Rabble by Jane Anne Morris. It is an important book; I'll review it when I am done reading it [buy it already: Gaveling Down the Rabble].

Jane uses the word "free trade" a lot, and so do other people. This word might seem to have a precise definition, but it does not. It can mean many things, and that causes confusion.

The obvious meaning of "free trade" is to trade for free. This actually happens to some extent in the United States. When a train or truck with goods passes between two states, there is no tax (aka tariff) on the goods. No, they wait to charge the tax until you buy the goods retail. There is no free trade between me and Walmart; I am taxed on the transaction.

The less obvious meaning of free trade is what Jane Anne Morris decries in her book. It is really about preventing local communities, states, and even nations from having regulatory control of their economies. This also means no local control of our way of life. Usually this kind of free trade involves negotiating low tariffs when goods pass between one nation and another, but it almost never reduces tariffs to zero. Instead its main goal is to allow global corporations to maximize profit by manufacturing goods (or growing food) where labor and other costs are lowest. These trade policies, which should be called trade deregulation, not "free trade", are encompassed in the World Trade Organization (WTO), NAFTA (North American Free Trade Agreement), and similar treaties and organizations.

One effect of both types of "free trade" is to shift tax burders from corporations to consumers, which means from the relatively rich to the relatively poor. Back in the ancient days of the United States there was no income tax. How was this done? True, there was a tax on alcohol, tobacco, and firearms. But the main tax was the tariff on goods entering and leaving the country. That tax was paid by the merchants who engaged in international trade. Of course there was no massive Pentagon budget back then either.

So keep in mind: when you see or hear the phrase "free trade," be sure to find out which definition is being used.