This is not a dishonest argument - and it seems to make sense. But it is just an argument - and it is NOT a fact. Going with the theme of my other posts to this discussion, I think this is a good example, again, of an economic assumption the establishment and society has accepted as a cold hard fact - when in truth, it is anything but.
As Robert Greenwald highlights in his new movie "Wal-Mart: The High Cost of Low Price" - there are all sorts of hidden costs in those great low-prices that we venerate as the rationale for corporate-written free trade policy. For instance, as I note in my upcoming book, the best way to see that those low prices aren't all that they seem is to look at whether wages under free trade policies are actually outstripping those supposedly "low" prices. As Gene's colleagues at the Center for American Progress pointed out in 2004, wages are, in fact, not keeping up with inflation. And that trend has continued into 2005. In other words, the supposed gains from "low" prices are outstripped by the losses this trade policy incurs to workers' wages.
To get a real-world idea of what that really means, look at this interesting 2003 report that found a single parent with two children employed full-time at a local Wal-Mart "does not earn enough money to supply the family's basic needs by shopping at that same Wal-Mart." Put another way, the low prices Wal-Mart is able to provide on goods under free trade policies are not enough to offset the low wages workers are now making under these free trade policies.
The second reason is that in many instances, corporate-written "free" trade deals are not really free, and thus don't actually bring down prices. As economist Mark Weisbrot has pointed out, tariffs - a tax on imported goods that can be used to demand/enforce labor/enviro/human rights policies - "rarely increase the price of a good by more than 20 or 25 percent." That's no small amount, to be sure. But all the other restrictive tenets in our current "free" trade pacts can mean a far higher cost.
For instance, according to Weisbrot, patent protected prices "can be ten or twenty times the competitive price" for goods. A good example of this comes from prescription drugs - they are more expensive in America than almost anywhere else in the world, thanks to policies in "free" trade agreements that bar Americans from buying these drugs at the world market price. And this is only one example. As Weisbrot correctly notes, these corporate-written restrictions are really what our current "free" trade policy is all about: expanding a "lucrative form of protectionism across international borders."
Sources:
Robert Greenwald's "Wal-Mart: The High Cost of Low Price":
http://www.walmartmovie.com/
2004 CAP report on how wages are not keeping up with inflation:
http://www.americanprogress.org/site/pp.asp?c=bijrj8ovf&b=124737
2005 Washington Post report on how wages are not keeping up with inflation:
http://www.washingtonpost.com/wp-dyn/articles/a6010-2005apr20.html
2003 report finds Wal-Mart employee can't survive on Wal-Mart wages even when shopping at Wal-Mart:
http://www.corpwatch.org/article.php?id=7048
Economist Mark Weisbrot's discussion of prices under "free" trade:
http://www.commondreams.org/views01/0419-05.htm