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How the US has lost its economic sovereignty

NAFTA and other free trade agreements impose many costs, including the lose of economic sovereignty
NAFTA and other free trade agreements impose many costs, including the lose of economic sovereignty
Photo by Spencer Platt/Getty Images

Beyond the problem of increasingly foreign owned debt, America and many other countries cannot raise taxes, regulate their industries, or apply punitive economic measures against foreign entities on behalf of their Peoples’ interests without risking a recession due to too much unhealthy global competition. In fact, thanks to an unrealistic pursuit of supposed “free trade” policies, which do not insulate vulnerable, yet critical, sectors of domestic economies or protect the interests of citizens, these countries will tax their own populations, but not those wishing to access their domestic economies. Practically speaking, these nations have lost their economic sovereignty. This reality forces great nations to beg for the favor of corporate interests over the interests of their populations and domestic businesses.

Although the US government does much to ensure security and stability for the global market, its current level of expenditures is both unsustainable and over- taxes its domestic economy. Looking at the fiscal troubles faced by America and many other Western nations, it is tempting to simply blame excess spending. Economic entropy, however, dictates rich nations in a free market, competing with significantly poorer countries, must lower their standard of living and government activities to achieve equilibrium. Wealthier individuals and corporations, which can more readily outsource and sell abroad, will benefit in the short-term thanks to this unhealthy competition, yet they will be hurt in the long run alongside the rest of the world’s population.

To borrow a concept from biology, “free markets” are susceptible to population crashes where excesses in resources lead to unsustainable consumption and growth, i.e. bubbles, before the complete collapse of the economy. While the wealthy may weather these storms, even benefiting during recoveries, these crises destroy Middle Class lifestyles and leave the already struggling destitute. In addition, a failure of governments to alter the mechanisms behind these increasingly frequent events creates a downward spiral that ultimately overburdens governments with too much debt and not enough revenue to compensate. The collapse of modern governments, which provide far more social benefits than anyone might understand, will destroy much of the global economy.

Company’s like Goldman Sachs do not exact multibillion dollar profits on a consistent basis by simplifying their policies. In fact, they thrive in our economy, which fails to immediately punish unhealthy behavior, with complex deals that lack oversight and transparency. As such, the US cannot be successful with oversimplified, no-government economic policies. Every area of study uses “free models” to help students and outsiders understand the fundamental components of a concept. In economics, free trade is a stripped down model that ignores most economic realities, so scholars can more readily understand economic relationships between two or more economies. This means the free trade model can only be successfully applied in the real world under some very specific conditions that reflect the broader interests of a population and its governments. In our global market, the loose use of supposed “free trade” policies has played a major role in many of our fiscal problems.

Corporations thrive by negotiating business deals that guarantee their interests will be met. A lack of ethics, vision, and concern for long-term interests has also created an atmosphere where managers of these businesses are rewarded for short-term decisions that hurt the broader interests of domestic economies and the global economy. Government is, therefore, charged with ensuring the long-term, broader successes of their economies. Blindly relying on the guidance of businessmen and women who are more and more willing to cost our economy thousands of dollars rather than unnecessarily lose one cent to the poor and the government leads to economic policies that cannot address the underlying problems of our society nor stabilize our economy. Moreover, government must step up to the plate to govern our economies and reassert their economic sovereignty before we can fully tackle issues like national debt.