The Globalist Free Traders have found an evangelist in Thomas Friedman of the New York Times. In his book The World is Flat, Friedman calls periods in history that paved the way for Globalization and Free Trade flatteners but he skips over some of the most major ones. The Lend Lease Act in the World War 2 era is one of them. It changed the course of history and it demonstrated that you can’t do business with people who do not have money. You either have to find a way to get money to them or you have to give them things to restore their economic values in a balanced geopolitical setting. You can not move production from place to place seeking the cheapest labor markets of the world because there is an endless pool of workers who will do most anything to survive and they will never have enough money to buy anything the economic host nation may still have left to sell.
In the end, you have a continuous diminishing process where a working poor class needs cheaper and cheaper prices while the impoverished destitute classes do not make enough money to grow their own economy proving you can not do business with people who do not have money. You can only use them for selfish purposes. This then acts as a boomerang coming back to knock you out too. It is like a dog chasing its own tail. Consumers in the USA shop their way out of their jobs. The money spent at the retail levels quickly fans out to the places where the products are made. The money does not stay in the USA to regrow its own economy.
Who won World War 2? The American workers did. Who lost World War 2 fifty years later? The American workers have. The U.S. has gone through the most massive dislocation of workers in U.S. history with millions losing their jobs. More than 700,000 workers related to the steel industry, over 400,000 auto workers and over a million workers in the computer industry lost their jobs. One third of those over 55 who lost their jobs never found another. Now, workers as taxpayers pay to bring in foreign auto assemblers. The State of Indiana after all things are considered, is paying Honda about 150 million dollars to bring an assembly plant into their state. This will provide 4000 new assembly jobs but recently, close to 20,000 auto parts factory workers have lost their jobs in the state. Taxpayers in other states have paid out even more to get KIA, BMW and other foreign auto assemblers to come to their states. Misssissippi is paying KIA 400 million dollars to assemble KIA automobiles in their state. These autos are describes as being built in the USA and not Made in the USA since the parts come from the wage slave workers of the world. The number of assembly workers in all these foreign plants is only a fraction of the workers of the existing workers in U.S. auto manufacturing plants. They also work for about one half of what the auto workers made in the past.
Who won World War two in the final analysis?
Let us go back in time to 1940. The USA was still coming out of the Great Depression. Tariffs were blamed as the major cause of the depression. However the main cause of the Depression was the stock market crash and the economy took this big hit during a time when tariffs were not even applicable. Free Traders today like to blame the Smooth-Hawley Tariffs as the cause of the Depression, but this bill was passed after the Stock Market crash in 1930 and never really did take hold before Roosevelt took over. Soon afterwards Roosevelt had the authority to lower and raise Tariffs at will in 1934
The next phase ignited the most powerful industrial might in history. Tariffs had no part in the process. Roosevelt knew our nation could not mobilize by semi-independent ways – mobilization had to come as a whole based on many vital needs whether for the military or for civilian uses. President Roosevelt had to sell the war to the American people in a sequence of actions. He started out by doing it with executive orders and schemes. Roosevelt said- what I am trying to do is eliminate the dollar sign – we need to get rid of the silly foolish dollar sign. This was good news to England and Russia who did not have much money left to fight a war.
Thus began the first wave of Free Trade but it was built on giving away products made in the USA.
Many Americans accepted the premise thinking they could stay out of the war while building up our economy at the same time.
Lack of money was the biggest problem in the world. The world was coming out of a Great Depression. After World War 1, the allies wanted Germany to be just one big farm without any production capabilities. Hitler came and filled the void by creating a strong military to invade other countries killing people who were in the way. In the process, Hitler demonstrated how a war machine can create industrial might out of nothing. China and Russia with a elite groups controlling the masses did not have this same capacities but still killed millions for their causes. They killed more than Germany ever did, but the USA chose Germany to be their first enemy. At the same time Japan was claiming a right to the mainland for the sake of their own economic survival. The U.S. approved their claim at the beginning of the century but reversed their agreements with Japan in the 1930s. Japan felt the U.S. betrayed them. This set the stage for Pearl Harbor. After all is said and done, it was really not a surprise attack.
Roosevelt did not want money to get in the way. He took many by surprise when he said, what I am trying to do is to eliminate the dollar sign- we need to get rid of the silly foolish old dollar sign. This also meshed with the new economic theories stating you do not owe anybody and money if you owe yourself. On September 2, 1940, Roosevelt gave Britain 50 Navy Destroyers under his own executive order. This violated international laws and understanding about neutrality. In essence, the U.S.A unofficially declared war on Germany on September 2, 1940.
Around the same time, Roosevelt used an old 1917 law to trade in planes to private manufacturers for newer models with the understanding the private firms would then send the old model planes to Britain at no costs. Then Roosevelt took a further step. After getting re- elected, he had Congress approved the Lend-Lease Act which bypassed any money problems the British and Communist Russia may have had. Right after getting the act passed, Roosevelt made up a list of products we could lend the allies. However, out of the billions of dollars of products sent to the allies, the U.S. was later repaid for just a fraction of the total amounts including the ten per cent of the total U.S. agricultural production that went to Britain and Russia. The U.S.A. also produced and supplied 50% of all the munitions used in World War 2.
Of course, this brought prosperity to the USA. After the war, based on the awesome industrial power, the USA launched the Marshall Plan. This helped restore the local value added economies in Europe and Asia. If we gave Japan this vast economic boost before the war, there would have been really no reason for the war with Japan. Free Traders ignore most of this and chant about non-existent Tariffs that broke our economy during the pre-war era when the undeclared war started years before with Roosevelt’s version of Free Trade. They chant how competition rules the game but as we know this was not the case during the World War 2 era. Then and now it is very questionable if the U.S.A ever had to compete in a global arena. Who, what, when and where concluded we had to compete in a global arena.
Lend-Lease did show that the only thing that works are local value added economies that grow values up several levels from raw product to the retail or end user stage. It also demonstrates , you can not fight any war of any long duration without a strong industrial sector. Today, we have chopped up our local value added economies and scattered the pieces all over the world. In the World War 2 era, we gave away the golden eggs laid by our golden goose industrial might. Now we have chopped up the goose and sent the pieces across the globe. Why have research and development if the manufacturing phase goes somewhere else? Now we have a small high tech army being defeated in a small country with human bombs. Rumsfeld war theories are like a young boy who grew too fast and needs to to get out of any fight fast before his weak stature is exposed.
Finally, President Franklin Roosevelt said, economic diseases are highly communicable. I wonder what he would say today. Free Trade is like sex, you sleep with many partners and subsequently everyone they have slept with. It is an economic epidemic.