Unworkable Trade Agreements

The current NABE survey (National Association of Business Economists) may provide light to the expectations for the current year. Rising material costs has lessened in intensity, but Price increases appear stickier. A bad note states that Goods-producing firms were still reducing labor rolls, while a majority of firms intended to hire within the next six months. Capital Spending was down in most firms, reflecting most business enterprise was positioned to hire more labor without repositioning. The report states that Profit margins are generally improving, but I have some doubts on this, as I smell a major Cost shifting to the coming year by business, who want a heavy-loaded Expense Accounting in the face of a Democratic Congress. The only fault with the Report may be the lack of a developing Capital Investment trend.

The United States is again under fire for its Farm Support programs. The American Farm program has much domestic defense what with Business and Politicians covetous of the Voting power of the agricultural States in Congress. It is not an Issue which can be cured easily, like previously in removal of Steel tariffs. I have always been passively opposed to the WTO and multilateral Trade Agreements in general, and specifically for this reason: The United States was bound to be outvoted in international Trade associations, it being the wealthiest Trading partner in the World. He who has the most at stake should not pursue General Agreement about anything.

The United States will undoubtedly face eventual Trade sanctions, as Farm States refuse to surrender their Farm supports, but the United States is outvoted in the WTO. The United States Government will be able to do little, except to attempt to separate the small American farmers from the major Agribusiness corporations, then continue the Farm Supports to the majority of Voters in the Farm States while insisting the Corporate structure assume natural Business practice free of Supports. The hazard here (like playing Golf, only worse) is formed by the fact that Congressional Farm States Votes are actually controlled by Agribusiness–not the majority small farm Voters. If the reverse were true, a reasonable deal could be worked out; small farmers being the most pragmatic of people–I know, as I used to be one. The Corporate structure, on the other hand, will resist any relinquishment of Profits whether earned or criminal in nature. I personally would state, no fan of multilateral Trade Agreements, that the United States should unilaterally withdraw from any Trade organization which backhandedly reimposes a tariff system upon the United States, simply because of cultural and political practice in existence prior to the Trade organization. lgl