Corporate Welfare Disguised As “Free Trade”

Economic historian Robert Higgs recently pointed out that, when the state engages in “bribing or intimidating foreign governments to assist big multinational corporations,” we call it “U.S. foreign policy.” In like manner, when the U.S. presses the overseas outlets of its hegemony to tolerate more of those giant corporations’ products, we describe the result as a “free trade agreement.”

Beset by a November jobs report that detailed few new jobs and unemployment at “a seven-month high of 9.8 percent,” President Obama is in desperate need for a showpiece that might make the economy appear anything but completely stagnant. Cue the conclusion of a new free trade agreement with South Korea, hailed by Obama as, according to the Associated Press, “a big victory for American farmers and ranchers, the aerospace and electronics industries, and U.S. automakers.”

When finalized, the pact will be the most expansive U.S. trade agreement since the North American Free Trade Agreement (“NAFTA”), a deal that forged the linkage networking the corporatist systems of the U.S., Canada and Mexico. And contrary to their libertarian namesake, that’s all governments’ “free trade agreements” do — spread the same system of state-corporate nexus over a broader area for the benefit of a coterie of companies that already dominate our lives.

Representing a rare moment of candor from the state, the interests enumerated by the President as winners in the U.S.-South Korea agreement actually will reap its benefits, but that doesn’t mean what we might think. More than just “winning” in some metaphorical sense, the corporate players that come out on top in the game of state-capitalism are indeed beating something. The fulcrum of our economic system, a zero-sum game with winners and losers, is how best to maneuver the utensils of the state to sidestep true free trade, and the rules of the game make that a breeze for established participants.

The U.S. economy, assuming that we understand it to be more than just its corporate oligarchy, is the real loser in agreements like this one, which underpin what Murray Rothbard accurately branded a “cartelized economy.” By implying that the success of, for example, Big Agribusiness and American car companies is the success of the American economy at large, the President engages the idea that Higgs’ book Against Leviathan traces to economic fascism, that “[corporate] interests, when properly organized and channeled, are the people.” Parallel to Obama’s praise for the deal, South Korean President Lee Myung-bak called the development a “win-win” for the two countries.

Lee’s is an accurate enough appraisal, but the win-win extends only to the countries’ elites, to the continuing affiliation between corporate and state power. The Export-Import Bank of the United States, a corrupt servant of corporate welfare, underwrites loans to tumefied corporations at the expense of taxpayers and of activities within the economy that are actually productive. The Bank dishes out enormous subsidies, numbered in the billions of dollars, to corporate marauders who exist through a combination of government contracts and various methods of theft-sponsored life support.

The business ventures of all of us lowly commoners have to proceed — to either sink or swim — without the help of the risk-offsetting assurances of the federal government, but the likes of GM and Boeing get the buffer of the Bank and the government’s Overseas Private Investment Corporation (OPIC). Free trade agreements between states create a whole range of freedoms for the chosen peers of the realm — freedoms to steal and preclude competition – but this kind of freedom has nothing to do with the kind anarchists are interested in.

The average American gains nothing through the U.S.-South Korea deal, not new jobs or greater opportunities; instead, he is forced to defray the cost of corporate advantages that surge his cost of living skyward and prevent the kinds of small-scale interactions that could truly ameliorate his workaday life. Anyone who supports real free trade, not sheer corporate welfare and dominance, ought to have serious qualms where these agreements are concerned, recommending instead across the board free trade, the kind that might someday exist between all individuals.

Anarchy and Democracy
Fighting Fascism
Markets Not Capitalism
The Anatomy of Escape
Organization Theory