Are Free Markets Really Free?

“It [the U.S.] is yet another Civilized Power, with its banner of the Prince of Peace in one hand and its loot-basket and its butcher-knife in the other.”– Mark Twain, 1901

“For globalism to work, America can’t be afraid to act like the almighty superpower that it is.…The hidden hand of the market will never work without a hidden fist—McDonald’s cannot flourish without McDonnell Douglas, the designer of the F-15. And the hidden fist that keeps the world safe for Silicon Valley’s technologies is called the United States Army, Air Force, Navy and Marine Corps.”— Thomas Friedman, 1999

“Free market” capitalism is the sacrosanct fetish of this nation. Few would dispute that. But how “free” is it? Let’s take Haiti as an example.

Haiti’s rich soil could once grow enough food to feed itself and other countries to boot. In fact, it once did. Rice is the staple of the Haitian diet, and up until the 1980s, the country imported little if any rice. But trade liberalization policies, demanded by the International Monetary Fund and World Bank in exchange for loans, lowered the 35% tariff on imported rice to just 3%. The result? Haiti was flooded with cheap U.S. rice (an industry subsidized by our government). Unable to compete, Haitian rice production collapsed, so that today, most all of the rice consumed by Haitians is imported.

This is a scenario repeated every day in the developing world. Is that a free market? It’s free if you’re wealthy and can compete. It’s free if your government lavishes vast subsidies on your industry. If we look at the so-called “miracle economies” of Asia, such as Japan, South Korea and Taiwan, their growth was insured at first through a form of trade protectionism.

“Free trade” then is really just another stacked deck, stacked high against the developing world.

For an in-depth history of the Haitian rice trade and the effects of trade liberalization, click here.
For an interesting discussion on this topic, click here.

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