Free Trade and the Paulson Plan

Firstly, following my posting regarding the Paulson Plan there was an anonymous comment that wished I was in congress. I would not wish that on my worst enemy! As I am not American, I'm English with Scottish and Jewish heritage (explains a lot that does), I don't think I could be elected. Further I know I don't have all the answers. Personally I look for answers that are fair and would genuinely help people.

Also as an Atheist I doubt that I could get elected, as while there is supposed to be a separation of church and state, religion plays a large role in politics in America. Lastly I would hate to be placed in the public eye as I have enough oddities and mannerisms that I would soon become a figure of fun and ridicule, and I thought that was Sarah Palin's job. So please put that nomination paper away.

However being serious, I hope that people don't punish the politicians to harshly on this one. Had I not studied Economics at University (not from direct choice), I doubt that I could have understood enough to work out that the Paulson plan, now signed into law, looked like a bad deal. I am sure that most of the representatives voted yes reluctantly and more in hope that this will help than knowledge. Speed never makes for good laws.

What made me think that this was not a good idea is that simply in Britain we have been doing something similar with nationalising two of our bad banks. Also we have put in to our banking system the equivalent of three hundred and fifty billion pounds. It make a change for America to follow us British. As our economy is smaller than the US economy, and we have already put in the same amount that the US are now going to, with little real effect, it looks like that money will go down the crapper, as my commentators so colourfully put it.

Personally I think that in both the US and the UK that only when personal and government debt is substantially paid off will we get through this. What is annoying is that it will hurt people that have been careful more than the reckless. Additionally it will hit much harder the poor, as these things always do. How we can afford to pay for the investment in sustainable technology I just don't know.

If it were that businesses were always sensible, fair and ethical then regulation would never be needed. But the reality is that people (who run businesses) will always bend or break the law to make a profit. It is part of the greed culture that business installs. I have previously posted on specific examples of this, where businesses have paid a pittance for logging rights when the trees are actually worth thousands of Dollars each, is just one example of the lack of ethics in trade. Equally there has been a recent example of down right illegal activity where in China dairies have added Melamine to watered down milk to make more profit. The Melamine increases the protein, but it causes kidney stones particularly in children. All this is illegal but it goes on all the time. Here in the UK there are regular prosecutions of food businesses that are breaking the rules all in the name of profit.

The name “Free Trade” is an oxymoron, as in reality rules and regulation are always needed in a market. Also all governments will manipulate a market by regulation, taxes or via subsidies. Had there been an emphasis on Fair Trade, none of this would have happened. While it would also prevent most individuals getting super rich, it would mean that trade and exchange would benefit many and not the few.

Any politician that clears away regulation is naïve, nay stupid, as regulation is normally needed to stop the naïve from doing stupid things. You only need to look at what happened in Russia following the collapse of the Soviet Union to see what an unfettered Free Market is really like. If we had true free trade we would have Illegal drugs made legal, People sold into Slavery, and many other abuses.

Once this matter is part of history I have no doubt that many of the banks and bankers will have been discovered to have done many unethical and illegal things. This is why there really needs to be a system of fair trade adopted to prevent anything like this happening again.

Lastly if politicians adjusted the emphasise to Quality of life rather than Standard of living then we really could start to tackle the majority of the problems around the globe.