The Common Market

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The Common Market

The Common Market is a superb illustration of our point. Where does the agitation against the Common Market come from? Almost exclusively from small firms and from farmers in particular. The recent outcry in France against Italian wine imports is a case in point Fiat, in contrast, knows that it must keep the peace with Renault and Citroen. It wouldn't think it wise to dump its cars at sacrifice prices. We don't want to carry this point to extremes. Large firms that are inefficient will seek protection. This explains the protectionist instinct of the French steel industry and now of the American steel industry. Our steel companies have just recently been providing us with another excellent example of the flexibility of the free-enterprise mind. They have moved from a stirring demand for freedom from government interference to a passionate demand for government interference in the form of tariffs, quotas, minimum prices on imported steel and even government-guaranteed loans for modernization of their plant.

The big transnational or multinational firm has built-in protection from both domestic and foreign competition. So it doesn't need tariffs. Raymond Bare has recently said that the world needs organized free trade to offset chaotic economic trade relations. He urges consultation and agreement to regulate trade and ease the impact of changing trade patterns between countries. Organized free trade could mean different things to different people. We?re not sure what Monsieur Barre has in mind. For some it could signify a lot of protection. We are not so emotionally committed to free trade that we welcome the pain it inflicts on ordinary people. Also, we've seen that the big international corporations have their own built-in protection. The pain inflicted by free trade is felt by smaller firms where the market still works. If textile imports into the United States from Japan, Taiwan, Hong Kong, are suddenly so large as to cause serious unemployment in the mill towns of the American South, We would negotiate limits on the inflow and allow time for a less painful adjustment. If French wine growers are going broke because of imports of Italian wine, we would again urge arrangements to ease the distress. We imagine that Monsieur Barre has this kind of regulation in mind, steps designed to minimize pain and shock. One should always be suspicious of absolutes; any good economic policy should be open to compromise. And, needless to say, if Taiwan, Hong Kong, China or Japan is better at producing textiles than we are, they should be allowed to do it. They probably will, in any case. The more efficient producer usually triumphs in the long run.

Learn More About American Fiscal Poilcy

Will To Depreciate

We should add that the will to depreciate is not all that strong. For some years, Arye been a largely absentee professor at the University of Geneva, at the institute there which concerns itself with international affairs. No question is asked us so often as 'Why can't we let the euro fall a bit??They could. But so long as the Swiss do not want internal inflation, they can't have much depredation. The Swiss want also to maintain their reputation as reliable bankers who deal in a currency with reliable purchasing power, and banking is, politically, an extremely influential industry in Switzerland.... see: Will To Depreciate

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