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Letters by a modern St. Ferdinand III about cults

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Plenty of cults exist - every cult has its 'religious dogma', its idols, its 'prophets', its 'science', its 'proof' and its intolerant liturgy of demands.  Cults everywhere:  Corona, 'The Science' or Scientism, Islam, the State, the cult of Gender Fascism, Marxism, Darwin and Evolution, Globaloneywarming, Changing Climate, Abortion...

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Wednesday, May 9, 2007

Mommy, there are scary Trade monsters in my bedroom!

Socialist, Marxist and Eco-fascist fantasists unite.

by StFerdIII

Destruction of jobs! Erosion of ‘values’! National champions left to die! Heritage lost! Only the rich benefit! Globalization is Americanisation and McDonaldiziation! Conspiracy theories and nostrums aplenty exist for the comfortably well off, wailing Marxist and the anti-reality socialist to propound against trade, foreign investment and wealth creation. Marxists like their ideological brethren in the eco-fascist movement, [act now or we will all die from something or other], are blind to facts, reality or the scientific calculus where it is clear that an increase in trade helps all in society, even after unfortunate but manageable dislocations.

Trade and corporate development are embedded in nation state pride and emotions. Post World War II throughout the developed world, national governments invested money, prestige and hopes in a plethora of national champions, in every industry that was deemed important to the furthering of state power. Almost all of the primary manufacturing, communications, media, agricultural and finance sectors were riven by state funded or protected firms. Mercantilism the economic equivalent of political realism has been until the past 15 years or so, the policy of choice for state governments.

The results were predictable. If you protect, subsidize, coddle or securitize an industry no one benefits. Consumers pay higher prices for product. Infrastructure is not repaired, investments not made, and assets not replaced. Productivity falls. Innovation lags. New markets, products and services are eschewed for stability, high prices, and the cozy big government-big union-big company model so beloved by caring socialists. Marxism and socialist statism, supposedly so fond of the people, enact political and economic policies which are diametrically against the best interests of the proletariat. Rather ironic.

Only the elites win in the game of Marxist-realist mercantilism. Union leaders, their political knaves whose campaigns they fund, big firms who likewise are large donors as well as benefactors to and from big government, and those inside the system all benefit. Society and consumers only begin to benefit when processes are transparent, government becomes constrained, and union control is limited. When sectors are free from unnatural control and constraints, productivity, competition and new price points are allowed to bloom.

On any given week however one can view the disdain that trade, capital investment or the mores of the market command. An Italian company wants to buy a Spanish firm in a sensitive industry? Well a political review is necessary. American firms want to invest in the Canadian mining and oil sector? Maybe that should be reviewed by the ‘foreign investment agency’. Fellow democratic and advanced nations want to grow beyond their artificial borders to benefit capital owners and shareholders? Tsk tsk, that is a cause for concern. Brave populists, university air-heads, professors and media pundits, rush to erect barricades and weep about lost virtue, job destruction, and corporate slavery at the hands of rapacious and evil foreigners. .

But of course none of the Marxist-socialist-populist posturing is moral or valid. The world GDP is growing at the fastest rate in history, thanks to the slashing of GATT tariffs down to an average of 5%, a plethora of regional, bi-lateral and multi-lateral trade deals designed to free up markets, and the improvement in logistics, communications and transport, which allows products from further afield to reach richer markets on time and at a cheap price.

The richness of our world is due to innovations in trade, technology and of course improvements in productivity. Privatization and deregulation of firms and markets have also opened up national economies to imports. Technological advances in communications and transportation have reduced costs and encouraged trade expansion.

Consider the following: international commerce has grown by 6 % per annum since 1945 [from 1913 to 1945 world trade grew at only 0.5 % annually]; since World War II trade has risen to account for 33 % of world income, up from only 7 % pre 1939; in constant dollars the value of trade has increased from U$60 billion in 1945 to U$ 10 trillion in 2007. These are simply astounding numbers.

As trade has increased in absolute terms and in intensity, we have also witnessed a rise in the integrated nature of the international financial system. The volume of foreign exchange and the buying and selling of foreign currencies is approaching $3 Trillion per day. By contrast the daily export of goods and services is only $40 Billion. Mutual funds and capital accumulations, worth some $20 Trillion are seeking higher returns. They are increasingly backed with borrowed funds. Derivatives and re-packaged securities and debt assets are playing an important role in international investments. Valued at about $550 Trillion (12 times larger than the value of the entire global economy) they contribute to the spiraling complexity of international money and investment flows.

This surge in financial instruments and cross border investments is a defining aspect of improved trade conditions. Available capital flows for developed and less developed economies can stimulate economic activity to a great degree. They are also volatile, and money is pulled quite quickly from risky countries or those who have enacted poor macro-economic or political policy. Such is the integrated nature of a vast and very liquid capital system. It is this liquidity which is so vital for the continual investment and asset renewals which stimulate a modern economy.

Trade is necessary. It is the prime vehicle to open up markets and force other states to enact laws protecting rights, private property and to provide reliable and transparent access to labor, capital and political processes. The hypocritical Marxists and socialists who are so ‘concerned’ about ‘humanity’, should spend more time understanding the benefits of trade, the better and more value-added jobs which are created and the profits which are used to pay for the various welfare state programs which are apparently so necessary for our ‘values’ and existence. If they don’t understand the benefits of trade they can at least do the rest of us a favor and shut up and stop screaming like frightened little children, afraid of the dark, crying for mommy to protect them from phantom monsters in the night.

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