If Global Free Trade Is a Race to the Bottom…

If global free trade is a race to the bottom, as many who view income disparities as the root of all evil claim, then shouldn’t we applaud the implied social justice of the resultant world where we’re all dirt poor? At least we’ll all be equal, because even rich mens’ salaries will eventually be pulled down to less than a dollar a day, right?

If you aren’t in favor of global free trade, you have to explain why not everyone, if it is left unfettered to the end of time, will become poor, especially when the global economy grinds to a halt. Or you’ll have to explain how equality of incomes isn’t a requirement for social justice.

I suspect a world of truly free global trade (no subsidies, no tariffs, no barriers) would raise the floor of poverty to above the current UN definition in real terms. I also suspect some people who are currently winners would temporarily lose income in real terms. I am positive that income inequality will increase, because I don’t believe free trade is a universal race to the bottom.


Because the lower cost of living in Columbia, SC didn’t abate the rise in salaries in DC during the last economic boom. Had it been a true race to the bottom, and labor wages been the sole determinant of income, DC would have quickly adjusted until they dropped to Columbia, SC levels.

Guess what, we’ve been through a recession, a terrorist attack, and two wars, and it still pays better to live in DC than Columbia, SC. Yet there is a freer market, including more mobile labor, between the two areas than there is between the US and Mexico as a result of NAFTA. If the “race to the bottom” types are right, I should be working for Columbia, SC wages. And before you say “oh, but the political system is the same,” I would note that in general, regulations are less strict in South Carolina than they are in the District, including a lower minimum wage. So an “off the books” South Carolinian could send money home to his family just as well as a Peruvian. Have you checked the residency status of your accountant lately? Does she speak with a funny accent?

I await the calls to ban South Carolinians from travel to the District, lest they take ahr jarhbs! Or will we not hear them because South Carolinians are, in the majority, white?

2 thoughts on “If Global Free Trade Is a Race to the Bottom…

  1. Global Free Trade isn’t an absolute race to the bottom. It’s a game of last man standing. As more and more poeple get sucked into poverty, the few at the top begin to bloat. Protectionism comes back into play when they feel the pinch themselves.

    The issue isn’t where we’ll end up, because at some point someone will wise up and affect change. The issue is that under such drastic volatility, most people won’t be able to secure their own futures, instead being tossed about by the games markets play.


  2. Yes, it’s been terrible to plan my future with a steadily rising income. Strangely, they’ve been rising in South Carolina as well. So why does crossing a “international” as opposed to an “internal” border suddenly change all the rules, if the rules are free trade?

    Despite the fact that you’re wrong about the outcome, you have hit on the primary reason that market reforms fail. The short-term volatility (usually a few years’ worth) as distortions caused by the games governments play are corrected is on too long a scale to be politically acceptable (c.f. Brazil or Argentina lately).

    This is why I’m beginning to think that people in general deserve socialism (or its real-world implementation, oligarchism). A few will benefit at the expense of the many, and anytime they gripe about it, the batons will come out and they’ll be beaten into shutting the hell up. Without capitalist economies to prop them up, democratic socialist regimes will quickly become oligarchic regimes and clamp down on dissent.

    Hey, it works for Mugabe. Give it ten years and it will be working the same way for Chavez.

    So, yay oligarchy! Allow the ubermenschen to rule! Fuck liberty anyway, because taking responsibility for planning for your own future is hard, kind of like math. Bread and circuses for all!


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