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LaRouche: We Need Protectionism,
Not Free Trade

Oct. 17, 2005 (EIRNS)—This statement, originating from Lyndon LaRouche's Oct. 12 webcast, was issued today by the Lyndon LaRouche Political Action Committee.

In his opening remarks to an international webcast broadcast Oct. 12, Democratic leader, economist, and U.S. statesman Lyndon LaRouche argued that the only way to save the U.S. economy is to dump the system which measures the economy by money, and re-adopt the American System which regulates money, by its performance for the physical economy. This is a system of "protectionism," LaRouche said, as against the British system of free trade.

He described it as follows:

"How do we regulate money? By protectionism. How do we protect our production, against cheap trade? We protect it. We encourage things, investments that are good, by being more generous in our tax rates on things that are useful to society, and taxing more highly those things that are less useful. We promote investment in things we need: For example, 50% of a modern economy should be, and is, basic economic infrastructure. Which has nothing to do with the market, as such, directly; indirectly, yes, but directly, no. What is it? It's public utilities. It's public education. It's water systems. It's public transportation. These kinds of things, 50% of a national economy that is healthy is based on infrastructure, which is largely long-term investment in improvement of territory and conditions of life. The other 50% is production. Or services relative to production, which is private.

"So, what you do, is you regulate the economy to make sure that capital is flowing in, through taxation and other mechanisms, to provide the production and maintenance of 50% of the economy which is in public sector. It is in the public sector of the Federal government, or the public sector of the state government, the public sector of the county government, or the municipal government: like your local water system, your local police services, your educational system, all these things. These are things which should be public expenditure.

"Now, some of these things can be franchised to private expenditure, which we do. For example, in a state, we used to create public utilities. A public utility would be, say, a power plant. Now, you want the power plant: So, the Federal government or the state government intervenes, creates a facility, builds the power plant. Now it forms a corporation which is a regulated corporation, as a public utility. And people can invest their savings in these public utilities, which have a generally guaranteed rate of stable return. So, the public utility becomes an advantageous way of direct savings, by people who buy bonds in public utilities, or indirect savings through the banking system. So, the banks depend upon public utilities, under a good system, for a good part of their deposit base. So, you invest in the bank, or you put your money in the bank; the bank in turn uses part of this money which you deposit, to invest in public utilities, which have certain guaranteed protections. Therefore, this is the most secure kind of local investment you could have, under the old regulated system.

"We destroyed this! We said, 'We want free trade. We want to cut out things that are not essential to a local employer!' Which means, no school system—we privatize the school system! We don't care about our population as a whole, we privatize the school system. We take elements which used to be public education, we privatize them!"

As opposed to this disaster, LaRouche concluded, we need to protect our society with regulation, public works, and fair trade.