Questioner: In a debate I had with a capitalist once, he asserted that most US investment occurs in European and developed Asian countries, saying that that means that free trade is beneficial. Your reaction?
He’s right that most Foreign Direct Investment (not only US) is in developed countries, and the rest is mostly in a small number of countries. But the gross numbers are almost meaningless. Egypt had more FDI than South Korea until about 10 years ago, but it was mostly in the extractive industries, while Korea, which radically violated the rules and therefore was able to develop, controlled and targeted FDI for the purposes of economic development. In the mid-1990s, during the period of great enthusiasm for “emerging markets” and the great investment opportunities they offered, Commerce Department figures for US FDI in the Western Hemisphere (minus Canada, considered part of Europe, rightly) showed that 25% went regularly to Bermuda, about 15% to the British Cayman islands, and about 10% to Panama. Not to build steel mills. The rest was largely takeovers, much of it close to robbery. One has to look at what is behind the numbers, always.
I doubt very much that you met a capitalist who believes in free trade. To my knowledge, that is close to a non-existent category. What “free trade” was he talking about? Certainly not WTO, NAFTA, etc. They are remote from any notion of free trade. In fact a large part of what is called “trade” is not trade in any serious sense at all, but rather interactions within huge command economies (corporations) that happen to cross borders — about 2/3 of US “trade” with Mexico, apparently. Note that all such numbers are estimates, because the private tyrannies that dominate the international economy are largely unaccountable.
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