SMU Professor Ravi Batra's significant work outlines why America has become a debtor nation. The main cause is free trade. This policy has caused real wages to fall for 80% of the work force despite increased productivity because of manufactured goods falling relative price. This phenomenon is known as "agrification". Moreover, poor leadership has allowed foreign nations such as Japan, South Korea, and China to sing free trade's praises while following protectionist policies as tariffs, quotas, exchange controls and the like at home. The post WWII General Agreement on Tariffs and Trade rounds or negotiations have resulted in a lack of reciprocity for American exports. Before GATT lowered tariffs, to permit imports to flood U.S. markets, the country was largely a closed, self-sufficient economy. However, since we have become an open economy the country has become awash with red ink in the current or trade account. To remedy this critical situation, Dr. Batra suggests a national policy of "competitive protectionism". This solution entails raising the average tariff from 5% to 40% while promoting domestic competition to spur innovation by prohibiting most mergers and monopolies. The result might be an improved living standard for Americans. The standard of living has declined for most workers as measured by the real wage since 1973 - - the year the U.S.A. became an open, free trade economy. Comment Comment | Permalink | Was this review helpful to you? Yes No Yes No (Report this) (Report this)
31 of 36 people found the following review helpful: 4.0 out of 5 stars Myth of "Free" Trade now needs a follow-up, May 31, 2004 By John Schuler (Tualatin, Oregon USA) - See all my reviews (REAL NAME)Batra has done a fine job of pointing out the problem. Some want more figures, but the key here is the concept of "averaging". For that, I wish Batra had given us a simple example like the one below: With some 6 Billion People on the planet, 5 Billion earn less than $1,000 per year (say $5 Trillion) - only about 1 Billion earn around $25,000 or more ($25 Trillion) - with 300 Million those in the USA. So, if 6 Billion people "share" the $30 Trillion total World GDP, that means an "average" of $5,000 for each person.
While a peasant in China might be temporarily better off, it would mean the economic end of the USA, Japan and Europe, then total collapse for the West. If China's current goal is to conquer the West, they can do it without a shot fired - just keep exporting while we keep importing and closing factories.
I only hope that Batra writes a follow-up book quite soon and offers up an overview that all of us can internalize. My further hope is that he can present his comments on CSPAN, CNET and CNN before the US election in November.
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25 of 33 people found the following review helpful: 4.0 out of 5 stars Well thought out, June 2, 2000 By A CustomerWell done. It's a shame however that Batra doesn't follow through on this topic in his later books, and gets side-tracked instead by other factors which at best have secondary impact on global economy and ecology. After suffering an entire generation (30 years) of decoupling of per capita productivity and per capita real wage, one wonders how much more stress the US economy can take before it collapses. Then again, what are the limits of human ingenuity and resiliency? Can these factors reverse the damage done by the Free Trade policy? Batra's addressing this factor would have been extremely helpful. Comment Comment | Permalink | Was this review helpful to you? Yes No Yes No (Report this