Tuesday, May 6, 2014

Ukraine: The Free Trade Solution


Someone made an interesting suggestion about the crisis in Ukraine.  The current push for sanctions that doesn’t seem to be having any effect may not be the best way to go.  The country is in a state of disunity.  Making things worse doesn’t make things any better.

In other words, sanctions are divisive.  You don’t bring people together by pushing them apart.  What is needed is something on which they can get together, not more things on which to disagree.

That is why the suggestion to open up free trade rather than imposing sanctions makes so much sense.  First, of course, it gives everyone an interest in peace and solidarity.  Trade makes profits.  Sanctions make losses.

Cartoon, July 17, 1861.
Second, people are less likely to feel the urge to secede from a country or become an autonomous region if it’s going to cost them money.  The slave-holding states in the U.S. didn’t secede until they thought slavery was in danger; the most logical pro-slavery argument was economic, presented in David Christy’s Cotton is King in 1855.

Third, opening up free trade leads naturally to promoting productive activity instead of suppressing it.

Fourth, promoting productive activity leads naturally to working on ways to sustain it.  This means sweeping reforms in monetary and tax policy, for one thing.  This is because the purpose of production is consumption, so you not only have to figure out how to optimize productive activity, but how people can consume as well.

People must own both labor and capital.
In an advanced technological economy, this necessarily means that people must become owners of capital as well as labor.  This is the only way to bring consumption and production into balance.

From there it’s a short step to restoring power to the people, reform of the tax system, restoration of a money supply that is asset backed and controlled by the private sector, instead of debt backed and controlled by government, and limiting the State to its proper function.

Free trade doesn’t mean laissez faire, anything goes.  It means people are free to participate in production with both their labor and their capital, and to freely trade what they produce for what others produce if they so choose.

#30#

4 comments:

Norman Bailey said...

Hi Mike. Unfortunately it was precisely the opposition of Russia to Ukraine joining the EU that precipitated the crisis.

Michael D. Greaney said...

You're right — I'd say "as usual," but why belabor that?

My feeling was that possibly giving Russia something to lose or raising the issue might spark a debate about better or at least more creative solutions than what has come to characterize the U.S. response to anything: 1) Express shock and outrage, 2) bluster, 3) threaten, 4) fold, and 5) cover up.

Tom Pompowski said...

Isn't that Russia under sanctions not Ukraine? Ukraine is trying to connect with EU and the rest of the West.

The Free Trade agreement requires equal rights for all of parties but Kremlin does not want to grant them to Ukraine. That is why Kremlin is occupying Crimea and engineered local war in Eastern Ukraine.

Michael D. Greaney said...

Yes, I wasn't clear. This is what happens when you don't restate the basic facts, assuming that readers know what you're thinking.