The Free Trade Argument and Choice
By: Amit Bhushan Date: 24th June 2019
With the tariffs rising, Free Trade related arguments and their manufacturers’ ae back in business. What’s cool about them and should be ignored in their arguments is the impact on free choice amongst consumers. Now, this argument is not about Free Trade and yours truly is not objecting to Free Trade at all, but only about global monopolies being promoted freely under the guise of Free Trade. What’s important to note is that Global Corporations are trying to monopolize business and to do so, what are they resorting to ??? Take information search of any kind- its free and so is your search for ‘finding a cab or room reservation or video game etc. So how does the service come free is because it relies on funding themselves from some other activity viz. adverts by some other product/service providers on the ‘core platform’ for such service providers. And how are such service providers able to sustain is by ensuring a monopoly/almost monopoly in their business which ensures that they have requisite ‘eyeballs/networked clients’ which are attractive for other businesses (to advertise on these platform) as well. So, the monopolistic business model is keeping price down to almost free and penetrating deep into markets (backed of course by spending heavy on technology) and sustaining these by gaining advert spends.
Such businesses are seen as disrupters as they bring-forth a new self-sustaining model, but its impact is being weighed upon by regulators now-a-days. Whether flourishing of such monopolies being good on domestic employment is a question rather than just reducing this to a discussion on Free Trade. Privacy of individual’s data, their storage/retrieval and usage may be some of the other factors in discussion. This has led to a proliferation of a multitude of such disruptors, though now there also seem to be a wave of newer models rising as well. The tumult and trepidation of the policy-makers therefore needs to be understood. Then there is a curiosity on the surviving business models and actions that the monopolists may take in future and therefore what needs to be regulated and how. This becomes even more complicated when there is push and shove regards trade deals amongst nations whereby there is surrender of powers to regulate such monopolists even within the domestic tariff area. Thus a consternation amongst law-makers/policy enthusiast to regulate, but is swiftly given the colour of anti-free trade regulations or simply a tariff order, where-as demand for a broad change in business architecture is not discussed for the fear of its impact of capital investments/bloated valuations for some of the businesses. The fact is some of the regulators are looking to replace global monopolists by replacing them with domestic monopolists hasn’t helped the cause of such regulatory review. The lack of understanding of regulators towards business models of the monopolists including how consumers can be afforded a multitude of choices in these service lines; hasn’t helped the regulators much. And hence a debate of Free Trade rather than Free Choice. If fact, the service provider offering a single choice (without a specific service charge) dominates the discussion as if offering a free hand to consumer to make choice/s.
For the consumer, he/she may be getting a cheaper service apparently sustained on the back of technology and capital or both, however in practice it is monopoly of the corporate which is the chief underlying cause. Now the argument may not hold for every type of business say a game, as people are free to switch to another one from a few thousand offerings, but with regards to some of the businesses like cab or room reservations, information search etc. there seems to be a need for a debate. This debate need not be about Free Trade but around monopolies in business or monopolistic forms of businesses (that needs to be curbed) and how can people be supported to make choice/s for ‘real’. There may be some other technology led startups which may be helping greater choice on the other hand such as ‘food delivery’ startups which spread information more widely along with their logistics support and thus enable more choice to consumers than earlier. When regulations are brought out against the monopolistic forms of business (which can be different for different industry/service segments), that would by itself allow several other self-sustaining business models to rise up. However, by focusing on debate about ‘Free Economy’ not much is achieved now considering the steps already being taken by some of the erstwhile champion nations/corporates et al.
Some diehard fans of Free Trade champions would continue to stick to the same though, instead of looking at ability of people to make choices. This is even as a greater number of businesses are sustained and people have more choices, then only one can expect more employment. Looking at the new political phenomenon purely from Trade/Tariff angle may not provide much of a clue. Some people are looking to regulate the tech-sector or evolve a data led governance, which again is bound to hit limitations or impact ability of people to make choice/s ensuring lesser choices rather than more of them. There may be some ‘real support’ for Trump or Tariffs which is brushed aside in general by Free Trade supporters, however this should propel policy makers that if some policy action or regulations can support evolve a framework which allows for a wider choice for the people/ consumers etc. thus supporting far greater number of business models than presently. This should support a larger number of businesses and business models as well and allowing support for larger employment opportunities for people. This is when some of the businesses under guise of nationalism may be trying to create national monopolies rather supported by some of the like-minded Netas. Let the ‘Game’ evolve….