This morning, more than 600 workers in Gateshead were left fearing for the future of themselves and their families in the latest sacrificial offering to the free trade god.
It emerged that the £490m contract to produce the new British passports, to be issued after Britain leaves the EU, was awarded to the Franco-Dutch Firm Gemalto. Under EU procurement rules, the Home Office has been forced to open the bidding process to European firms and the Government believes the new contract will save the taxpayer £100m-£120m.
The Leader of the House Andrea Leadsom extolled the virtues of free trade telling the House of Commons, “we compete in a global marketplace, that is the case and will continue to be the case. UK companies compete on a world stage, they often win business and will continue to do so.”
A spokeswoman for the Home Office added, “we are running a fair and open competition to ensure that the new contract delivers a high quality and secure product and offers the best value for money for customers.”
However, Martin Sutherland, CEO of the current contract holder De La Rue, told BBC Radio 4’s Today Programme that as a foreign-based firm they would be barred from bidding to produce the French passport. As expected this passport debacle is just one further example of the free trade scam in action.
While Marxists must endure much mockery when they trope out the line “but it wasn’t real socialism!”, our libertarian and neo-liberal friends seem to get away scot free when they tell us how the latest economic disaster imposed by globalised free trade, “isn’t real free trade”, or better yet “is in our long-term interests”.
While communists tell us what an excellent theoretical system communism is, in practice it leads to misery and massacres. Similarly, while free trade proponents tell us of the outstanding benefits of international free trade, in reality, it leads to economic stalemate and serfdom.
So how does free trade work in the real world? Let’s consider one of the most ubiquitous items of our time, the iPhone.
It was invented by Apple and the genius Steve Jobs in the free market place of ideas and technologies, right? Wrong. The economist Marianna Mazzucato created a list of the 12 key technologies that made the iPhone possible, from the microprocessors and displays, to touchscreen technology and voice-activated artificial intelligence. Through research institutes and government agencies, the development of every single one of the technologies highlighted by Mazzacuto was heavily, if not completely supported, by the state, most notably the USA. The development of the iPhone wasn’t paid for by Apple or Steve Jobs. It was funded by all of us instead.
Of course, we all know famously that the iPhone is “assembled” in China, but where do the component parts come from and where does the money from your iPhone purchase go? In 2014, Economist Robert Reich asked an audience of 700 US students where they thought most of their money went on an iPhone purchase. 70% thought most would go to the US, 23% opted for china, 4% for Japan, 2% for South Korea and 1% for Germany. The reality however was that of the costs to build the iPhone, a mere 6% stayed in the United States and only 3.6% went to China. 36% of the remaining dollars went to Japan, 17% to Germany, 13% to South Korea and the remaining 27% went to various other countries. So Apple spends only 4% of the component and labour costs of building the flagship product in the USA.
Free trade proponents will argue that the billions of dollars that this represents is much better going overseas. The competition will encourage US citizens and businesses to up their game and they too can then compete in the global marketplace. Except that countries such as Germany, Japan and South Korea heavily support their industries and, in many examples, subsidised them for decades, as in the case of Samsung.
Another favourite, is that these jobs are low quality jobs and will be gone with automation anyway. Yet, as we saw in the figures above, only 3.6% went to China for “low skilled” work. Why couldn’t American workers and American engineering businesses build these components, in America?
In 2016, Professor Jason Dedrick of Syracuse University, estimated the total cost of bringing assembly work back to the USA at between $30-40. Since most of us buy our smartphones on 2-year contracts, this would be around a little over $1 per month.
Isn’t this a price worth paying to provide jobs to our own people? Isn’t it worth paying to stop hostile Nations stealing our technology? If you look at a list of the top tech companies in China, they are all copy cat versions of businesses and technologies developed in the west. One such company, Xiaomi, has based its entire business model on selling Apple knock offs, because of course China doesn’t play by the same rules that we do. They just ignore intellectual property laws, their people have no human rights and they refuse to let the free market price their currency. Yet we supposedly benefit from trading with them under the guise of free trade.
Estimates for the profit margin for the iPhone X are around 64%, so where does this money go? With free trade, comes competition of tax jurisdictions and it just so happens that Apple have paid almost nothing in taxes to the United States on the profits of its iPhone. Instead of re-investing these profits, they hoarded them offshore to the tune of some $252 billion. It’s only now with Trump’s tax reforms that some of this may be reinvested back into the USA.
We must remember though, that Apple has created thousands of good jobs in the USA working in the design and development of their products. Where there is free trade, not far behind it is, the free movement of labour. With the profits made from the iPhone, Apple have lobbied hard for immigration policies which allow for unfettered immigration of “high skilled” immigrants to the United States. The rate at which these immigrants should be paid has always been set lower than the average wage for these occupations. Not only do Americans have to compete with foreigners for these high skilled jobs, the pirates of silicone valley were also caught colluding with each other to suppress wages even further.
Perhaps conditions for the workers in these companies are better than the sweatshops in China? The sacking of James Damore from Google for daring to express a factual opinion that went against the company line suggests otherwise. As does the design of Apples new $5 billion headquarters that looks suspiciously like Jeremy Bentham’s Panopticon, whereby all the inmates can be observed by a single watchman without them being able to tell whether they are being watched.
It was the USA citizens that primarily paid for the development of the iPhone. They watched as all the high skilled engineering jobs, low skilled assembly jobs and money that went into building it, go overseas. They saw how the profits stayed overseas or got spent on a prison-style headquarters while the employees were banned from speaking their mind. They witnessed the mass wage suppression of the few remaining skilled jobs left in the USA through high skilled immigration and collusion. And to top it off they get told they are economic illiterates if they dare complain about it.
You see in a globalised world; national economies are supposed to specialise in certain industries and sectors in order to increase global productivity and efficiency. China, chose to be the sweatshop of the world. They took their people from the fields and their families and placed them in factories of death, where they needed to install suicide nets to prevent the workers from ending their unending misery.
The UK chose to specialise in Financial Services, while the former industries the British people worked in were decimated on the altar of free trade and replaced with low pay, low skilled, low everything service jobs. Even in Britain’s National Health Service they refuse to train their own people to do the work and instead import them from abroad. It’s cheaper than training their own people so the free trade zealots delight in telling them it’s worth it in the long run.
What happens when a country loses vital skills, sectors and capabilities? What happens when a country can’t feed itself, can’t arm itself or provide any of its necessary infrastructure because they don’t specialise in these areas? What happens when the people of a country end up working like serfs, fearing to say or do anything that will cost them their job? What happens to the country when people are economically suppressed because it’s better in the long term? Man cannot live on bread alone, but man still needs bread to live.
Such a nation becomes a slave to any remaining nations or people that do have this capability. This is how we trade our freedom for free trade.
But maybe that wasn’t real free trade.