The Know-Nothings Of The 21st Century--And How To Fight Them
By Pejman Yousefzadeh Posted in Economic Antediluvianism | Economy | Free Trade | Mercantilism | Protectionism — Comments (63) / Email this page » / Leave a comment »
I realize that I beat up on neo-protectionists and neo-mercantilists a great deal. But here's the thing: They deserve it. Their arguments have no valuable intellectual content whatsoever, are wholly devoid of facts and indeed, are allergic to any attempt to introduce a dose of reality. Greg Mankiw explains why:
Economists are, overwhelmingly, free traders. A 2006 poll of Ph.D. members of the American Economic Association found that 87.5 percent agreed that "the U.S. should eliminate remaining tariffs and other barriers to trade."
The benefits from an open world trading system are standard fare in introductory economics courses. In my freshman course at Harvard, we start studying the topic in the second week, and we return to issues of globalization throughout the year. The basic lessons can be traced back to Adam Smith of the 18th century and David Ricardo of the 19th century: Trade between two countries creates winners and losers, but it leaves both nations with greater overall prosperity.
[. . .]
Today, Nafta could be hailed as a successful example of the bipartisanship that Mr. Obama promises. Most economists agree with Lawrence H. Summers, a Treasury secretary in the Clinton administration, who has said that Nafta "was really a watershed as to whether America was going to stand for larger markets, was going to stand for forward defense of our interests by trying to have a more integrated global economy."
"It contributed to the strength of our economy," he added, "both because of more exports and because imports helped to reduce inflation."
These are all facts. They are facts that smart people, intimately familiar with the details surrounding trade policy take as givens--much as they take the revolution of the Earth around the Sun as a given. They are also facts that by and large are kept away from the public by demagogues like Lou Dobbs and by the Democratic candidates for President of the United States--and what appears to be the great majority of their fellow Democrats. This attempt to deprive the general debate of valuable and needed facts will, if unchecked, lead to bad policymaking. And that will lead to a reversal in the many extremely considerable prosperity gains that we have achieved thanks to free trade.
I write all of this so that hopefully, readers understand the origins and nature of my passion on the issue of free trade. Free trade is too important an issue to leave to populist demagogues to monopolize. The only way the neo-protectionists and neo-mercantilists can win the debate on trade is if free traders do not make a genuine effort to give the public the facts on the issue of trade. Absent those facts, the forces of economic ignorance stand a very good chance of causing the policymaking process to go awry. But if the general public is in the know when it comes to the facts, the Know-Nothings of the 21st Century won't stand a chance.
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most scientists agree with global warming and global warming is false =
most economists believe in free trade, means that free trade must be false
I will extrapolate from said theorem that since most pilots believe in the theory of lift, the theory of lift must be false. No more planes for me.
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Molon Labe!
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
But seriously, arguing the flip side is like saying.
Because most economists believe in free trade and free trade is true =
most scientist agree with global warming and global warming is true.
My point is merely that because a predominant number of so called "experts" believe something is true is not a reason to swallow it hook line and sinker. -- It may be a reason to give it serious weight and to consider it thoughtfully but not a reason to consider it the gospel.
why you doubt the benefit of free trade and support your neo mercantilist approach. I am done for tonight but will look for it later, cheers.
btw, i did not argue the flip side. I am by nature a contrarian, I just want you to explain your view a bit more.
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Molon Labe!
I distrust economists. *cough*
Anyway. I wouldn't characterize my views as Neo Mercantilist (which is why I insert the "free" term in there when trying to summarize my perspective.)
Since it is late this is more like a drive by shooting so don't ridicule me to much...
I would generally favor the following:
1. Free trade within industry blocks and only when reciprocated by equivilent markets. In other words free trade between the U.S. and Uzbekistan is a big value for them and sucks for us.
2. All Foreign companies should pay an entrance tax,tariff, fee, whatever you want to call it to gain entrance into the massive U.S. Market. Such fee to be determined based on the difference between their per capita income and ours determined yearly. This may sound strange but it would actually create a far more level global trade situation than currently exists.
3. Elimination of all direct government subsidies of American business.
4. I think I would be for the elimination of taxation on income generated overseas. This creates incentives for American business to succeed in Foreign markets. (need to give this one a bit more thought)
5. I would also favor the elimination in the U.S. of any corporate income tax and payroll tax (matching) for small businesses operating under ten million in gross revenue for a period of five years from the creation of the business.
Anyway. I have to sleep.
I'd guess if they have anything to offer us, we'd rather have it at the lower non-taxed price than at a taxed price. More likely a free trade agreement would improve our exports because our goods would be more affordable for them. I don't know of anything Uzbekistan has or makes that would negatively effect our industries.
Your reply is a bunch of bold statements and policy recomendations with no backing for WHY we should follow your prescriptions. Your policy recomendations may or may not be a good idea, but you need to support them. The reasons for enacting them aren't obvious to me (except #4 and #5 and I'm not sure I know what all the ramifications of those would be).
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
I (was) with Fred!
15 Trillion. Let me give you an example. Let's assume you are the king of a nation with 1000 very well off citizens and I am the king of a neighboring nation with 10 very poor citizens.
Your market = 1000 very well off people who have x amount of buying power.
My market = 10 poor people who have Y amount of buying power.
Which market is more desirable? If you trade access to x for access to y that is a sucky trade. (thus my statement)
You are correct that we might like to have whatever thy make for us at the lower price they provide. (this is the mythical "consumer benefit" that Free traders like to point at)
However the net exchange is greater value for less. Thus while the "Free trade" in this instance does act as a policy for the creation of equitable economic globalization it does so by making larger nations "Donors" and smaller nations "leachers" - I think this is the wrong way to run trade.
One could effectively argue, then, that you wouldn't want to trade with a poor country... because they're poor. Doesn't sound like the best of ways to go.
There is only so much we could import from a country like Uzbekistan to begin with... it's not exactly cheap to ship from there, and, as you noted, they don't produce much (hence the low value of GDP). We do, however, produce quite a bit...
You also seem to be forgetting another aspect of trade... assuming we did buy a lot from Uzbekistan, they would now be flush with US dollars. What do you do with US dollars? Either buy American goods or invest in American corporations... in the end, we still further develop our production capabilities.
"No matter how much lipstick you put on the taxation pig, it's still a pig... and it's currently snout-down in your wallet." - Michael Fisk
not so much a specific example.
My point is that any party to an economic transaction has a right and indeed a perogative to gain the greatest value from that economic transaction. In the instance I provide x exchanged for y is a bad value and thus a bad economic transaction.
If we decide to exchange x for y anyway then its just national welfare so let's just call it what it is.
Your last point is well taken however I believe that an observation of developing countries demonstrates that rather than make the people of that country "flush with US dollars" it makes a small select group of oligarchs "flush with US dollars" instead. Thus we only get to sell our fancy electronics to the 50 people in the country who can afford them.
In other words without a system of laws and protections that is equivelent to our own we cannot expect that other countries economic systems will in any way empower or enrich their general populace.
So long as the oligarchs aren't using our money to subjugate their peasant class (and thereby making us potentially accessories to war crimes), the end result of trade should not really worry so much about the distribution of capital. In terms of dealing with another capitalist society, expansion of their industry will do that on its own. After all, they want us to buy more, and would end up investing in their infrastructure and production capabilities to ensure that, thereby also having the convenient effect of putting more and more people into decent-paying (for the area) work.
First you make the argument that we shouldn't trade with them because they are too small economically to buy much from me, then fret over how many people would ultimately be trading with us. If there are fifty wealthy people willing to throw down decent coin to buy our stuff, I say... go ahead.
"No matter how much lipstick you put on the taxation pig, it's still a pig... and it's currently snout-down in your wallet." - Michael Fisk
equivalent exchange of value. If you pay 10 bucks for widgets and sell them out of your house for one dollar how long will you stay in business? -- Try and think of the U.S Economy in the same basic terms.
I don't fret over anything. My statements regarding the 50 people have a two fold purpose: First I am demonstrating that the uneven balance of value exchanged in such a transaction.
Second I am pointing out the problems with Free trade. One of the criticisms Free Trade makes of Mercantilism and or Protectionism is that it enables a commerical elite which then becomes corrupt because of the protections given them by governments. I'm just pointing out that Free Trade does exactly the same thing as opposed to making the trading partner nation wealthy like us so they will eventually buy all our fancy products and level the economic playing field.
Wow. Just wow.
You seem to want to price tarriffs based on access to markets and relative market size. But in the example you gave that tarriff would be 100 times the value of the object. That would just stop trade altogether and NO-ONE benefits from that.
But to the other point... how is getting goods for less a "mythical" benefit? It seems to me that if I'm able to buy say Uzbek textile at 1/100th the price I would have with the tarriffs, I'm able to spend that 99% savings on other goods or invest that money into something that will gain me income. That benefit doesn't seem mythical to me.
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
I (was) with Fred!
rather in the sense of "mythical" proportion. -- something that is overblown.
The example I give based on market size is indeed an extreme one and will never happen. However let me argue in its defense for a moment. If the market is truly free then Uzbekistan is free to form trade agreements with groups of other smaller countries until their combined trading value is equal or near ours. At that point free trade is a legitimate concept. Up until that time it borders on economic welfare.
The problem I have with an anecdotal illustration of benefit is two fold: first an anecdotal illustration by it's nature cannot take into account the complexity that is the U.S. economic beast. Second anecdotal illustrations are easily cast to me an argument.
To deal with your specific illustration:
You are able to purchase your textiles at 1/100th of the price which means that you have cheap textiles. Two things happen at this point.
If the theory of Free trade actually works, eventually the Uzbeks beomome wealthy and no longer want to make cheap textiles at which point you pay more for textiles anyway. Net benefit = short term only.
-- or ---
Only the textile oligarchs get wealthy and cheap textiles continue for eternity. Which means free trade is not really free trade but rather "free exploitation" Net benefit = continued stream of inexpensive textiles.
Which results in the pruning and elimination of local (American)textile industries. Which reduces American GDP, which reduces the American tax base. Which causes state and local governments to raise your taxes. Which reduces your 99% savings to a fraction of what it might have been. Which also creates a labor retraining burden, which acts as a drain on the overall economy; which moves capital and labor into other industries at a higher rate than a more stable economy, which finally causes churn that in and of itself instigates instability.
There are many things wrong with my hypothetical example however it illustrates that the American economy is considerably more complex than any individual anecdote.
They also have the nasty effect of becoming real wars. Increasing trade levels tends to prevent war.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
what I personally believe to be true. Free trade guys are essentially political globalists. Trade is not only an economic policy but a political one. I would have no problem with Free Trade economists if they said: Free trade is a good idea because it will help us all get along and create a broader global economic equilibrium. I do have a problem if the try and say that an individual (specific) country will necessarily be more economically successful as a result.
http://www.businessweek.com/magazine/content/08_06/b4070032762393.htm?ch...
Also, you reference Mankiw who was famously cited for applauding the outsourcing of jobs as being good for America (remarks that even Bush tried to distance himself from). Are you serious? He's your expert? He's your go-to guy?
My father was a mechanic and he lost four jobs in five years right after the passage of NAFTA. Those plants fired everyone, shuttered the doors and moved the whole operations to other countries. And in the last job, he had to drive almost 180 miles round-trip each day. Oh, but he can go and get retrained, you say? Well, he did -- at 55 years old. He went back and got additional training. After a long stretch of unemployment, he finally got a job in his hometown. And, hey, it only took him seven more years to get back to the same level of pay!! God bless free trade!! What a winner it turned out to be!!
After we passed NAFTA, a flood of illegal immigrants started pouring across our borders (which you may be fine with, but I'm not). Now, we have a population of poor, uneducated illegal aliens here that rivals the population of a number of European countries. And we know that poor, uneducated immigrants pay LOTS of taxes, don't we? Surely, they won't be a drag on our country, will they?
So you keep on looking at your models and theories. You go right ahead belittling those who dare to speak out against the free-trade-at-all-cost evangelists. But from where I sit, the one-sided, America-last free trade espoused by you and others is anything but free. It has been a loser in my household and in many aspects nationally on a macro level. If I have to be a free-trade dead-ender to be a Republican, then I'll guess I'll have to extricate myself from the party. That's an ideology that me and my household can't afford to support.
Also, you reference Mankiw who was famously cited for applauding the outsourcing of jobs as being good for America (remarks that even Bush tried to distance himself from). Are you serious? He's your expert? He's your go-to guy?
Mankiw was right to applaud the outsourcing of jobs, because it is good for America: it helps to cut away the economic deadwood in our society and prevents us from propping up dying industries (the primary example being the manufacturing industry). Yes, on an individual basis there are sad stories for those who lose their jobs and for older folks who have trouble retraining/readjusting, but that's just too bad: in the aggregate the American economy - our collective well-being, both now and in the future - is helped immeasurably by this "tough medicine." Those who advocate protectionism, those who attack free trade by using examples like your father to argue that "human cost is too high" are saying in effect that they would happily sacrifice the welfare of the nation in order to provide illusory short-term benefits. One way or another, those jobs are going away - forever. And protectionism in the short term does nothing except trade off the happiness of future generations by pandering to the deadwood of the current one. (It would be akin to refusing to replace a house's wooden foundations with concrete ones because of a sentimental attachment to the "old-fashioned wooden house I grew up in." Except that there's a tornado coming...) That's a trade-off that I find morally reprehensible myself, despite my individual sadness that some people will find themselves in less advantageous situations during the transition from one economy to another.
Now you can read that and say, "screw you, who are you to tell me that I shouldn't care about my dad's plight?" And that's a perfectly valid position to have, personally. But the health and well-being of America (of any country really) as a whole depends on decisionmakers not being swayed by the emotional appeals of these sorts of stories.
Chicagomarylander, you are sounding like the Soviets or Maoists. There were famines, gulags, reigns of terror, etc. You know, how you have to break a some eggs to make an omelet; so they said to the doubters. These same pundits, of course, were not on a cattle car, well fed, and free to express their opinions. You probably have not had your job eliminated or have been termed unemployable in your field because business wants to adjust to those who refuse to learn English in this country. Outsourcing offshore, is it really better? In customer service when you call an 800# you get the feeling that they really don't understand you. What business is doing is not better. You're being shunted to the monkey not the organ grinder.
Even if you know better, it's reassuring that you feel sorry for the mechanic.
...for people who reaped the whirlwind, received compensation well beyond their skill level, and then lost their jobs when the market corrected itself? I'm sorry, but, as somebody who can't do all that much in their field of study with less than a Ph.D., it's really, really hard to empathize with the unskilled worker at GM making $25-$40 an hour.
Yes, it's terrible, but it was also not entirely unexpected. In fact, some of the fallout (i.e. people losing out on their pensions months before they were supposed to collect on them and whatnot) are further proof of why a more liberalized workforce is a good idea, so that employers cannot have that much influence over the economic outcomes of the individuals in their firm. I guess it ultimately can boil down to "one must break a few eggs", but I would rather inconvenience a few people and have the government do one-time assistance than have the same sclerotic employment and business structure constricting American enterprise for several more decades. Those of us who are of the younger generation deserve better than what we're inheriting in terms of business climate. Not to mention bringing in the references to gulags is simply an emotional appeal, only one step better for debate than other similarly nefarious rhetorical devices (which I will not use, as I am an adherent to the school of thought that says the first person to use them in a debate loses).
As far as your outsourcing remark, saying "they really don't understand you"... well, nine times out of ten the local service people don't understand me, and charge me a fortune to tell me that they don't know what the heck I'm talking about. The mercantilists will want to make it so that I'd be out of luck if the local guy can't do anything. I'd rather be able to take my business and my money to somebody who can help me, whether it's Prakesh in Mumbai, Pedro in Montevideo, or Peter in Massachusetts.
"No matter how much lipstick you put on the taxation pig, it's still a pig... and it's currently snout-down in your wallet." - Michael Fisk
Mankiw was right to applaud the outsourcing of jobs, because it is good for America: it helps to cut away the economic deadwood in our society and prevents us from propping up dying industries (the primary example being the manufacturing industry).
Your cavalier use of the term "deadwood" is offensive in almost every conceivable way. My father worked in non-union plants his whole life. He never came close to earning this $25-$40 (a la the autoworkers) per hour that you seem to resent. He earned much less than that. He worked in a lean shop and he was deemed just as expendable as someone who did earn $40/hr in a union shop.
Personally, I have three college degrees (nine years of college) and cutting-edge training. My job has also been offshored, as have the jobs of many friends and colleagues. I guess we're all "deadwood" too, right?
I've got news for you: By your ridiculous notions, almost every single one of us is "deadwood". By sheer numbers alone, China and India and other countries could eventually take almost every single job America could throw their way and still be hungry for more. That includes such "dying" industries as IT, accounting, law, and even many medical jobs. That may be great for a handful of the most senior people and business owners, but it's a formula for disaster in terms of our middle class and our working class (i.e., the "taxpayers").
Have you seen the latest jobs assessment by US News? In their "jobs of the future" section, they encourage people to take on careers that can't be as easily outsourced: Hairdressing, firefighting, food service. That's what we'll be left with. Wake up and get your head out of your models. The type of free trade that folks like you embrace is a death knell for this country. When almost all Democrats and about 2/3 of Republicans think free trade is bad for the country, it's not the result of some mass delusion. It's based on direct and personal observations of how the current version of "free trade" is gutting this country. I hear you calling out -- begging -- for other lemmings to follow you over the edge of the cliff. Sorry, but I've seen what's over that cliff. You go right ahead and jump, though. In the meantime, I and the rest of the "deadwood" will try to find a way to obtain fairer and more equitable trade policies that WILL give us a future where we don't have to fight 25 illegal aliens for that last firefighter job.
Both you and the US News assessment are hyperventilating, just like Pat Buchanan and his ilk were about Japan in the 1980s and 1990s (heck, he was still talking about Japan dominating our economy nearly a decade after Japan's recession began!).
There are some obvious issues with trying to make China out to being the next economic boogeyman.
Worker productivity. Needless to say, it's awful in China. Really awful. Even with their industries modernizing, there are many economic sectors where it takes multiple Chinese workers to do the work of a single American. The initial talk of low wages loses its luster for a lot of outsourcing industries when they realize this.
Education. Yes, China has, in its urban centers, some incredibly well-educated individuals, nearly the rival of America. But that's a distinct minority of their population. Since their government doesn't seem to put educating those living in the interior as much of a priority, I don't see this changing anytime soon.
Demographic factors. Through China's One Child policy, they are ultimately spelling the doom of their own GDP. The next generations are in dwindling numbers, and the gender disparity is going to exacerbate the problem.
Macroeconomic factors. China is running into problems with significant inflation, which will ultimately result in some distress to their financial sectors if left unchecked, and an almost certain recession when they do. Also, they're starting to run out of catch-up economic growth unless they can start developing new technology or somehow get more people into the workforce, and are in that way about to hit a wall not unlike what Japan hit in 1990.
Policy issues inherent to a Communist state. One of the reasons for the advancement of the economies of America and Europe is due to an economic systems that encourage innovation, invention, and creative business ventures that enhance productivity. China's productivity growth currently relies largely on what they can import from the Western world.
Simply put, we can no longer guarantee American economic dominance in a free market. However, a free market would make even a second-tier America wealthier than a Fortress America that remains above an isolationist world.
"No matter how much lipstick you put on the taxation pig, it's still a pig... and it's currently snout-down in your wallet." - Michael Fisk
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
I (was) with Fred!
is to succeed then there should logically be a point when America has peers to share political and economic leadership in the world. We should be glad if the EU, India or Brazil mature to a similar level. Economic freedom is the best guarantor of peace and security.
However, a free market would make even a second-tier America wealthier than a Fortress America that remains above an isolationist world.
I've never advocated a "Fortress America". That's the problem with you free-trading absolutists. Either I accept your version of free trade or I'm a reactionary protectionist who is incapable of fiscal forethought. What I advocate is fairer trade. We have the most advantageous bargaining position in the history of the world just by the sheer size of our economy. Why should we accept (and even clamor for) disgustingly one-sided trade deals where our trade deficit explodes, our dollar shrinks to nothingness, and US companies are rewarded for sending jobs overseas and importing illegal aliens to do the jobs that can't be sent overseas? Do you really think China or other countries would be as magnanimous in giving away their advantages if they were in our position (or will they if/when our positions change)? Why should we give away the proverbial bank and open our markets without receiving reciprocity? Why should we allow manipulation of our currency by foreign markets that are exclusively looking out for their own best interests?
The truth is that cheap lettuce and cheap manufactured goods aren't very cheap at all when you factor in what it costs us. I'm all for a win-win. That's not what is advocated by the slavishly loyalistic advocates of our nation's current trade policies.
I am a free trader, but I have in the past advocated a stronger negotiating hand in regards to such issues as targeted dumping, intellectual property rights, subsidies, and non tariff barriers.
However, you get jumped on immediately as being anti-trade.
China is not the only offender, the EU itself is shameless in their barriers to American products. Most recently they knocked out all American cosmetics because of dubious trace elements, and forced our manufacturers to reformulate their products while they lost market share. Our government does nothing about it as usual.
"Nothing works like freedom, Nothing succeeds like liberty"
Kyle
I'm somewhere in the middle, but definitely less of a free trader than a lot of you. I could definitely live with your plan.
...they don't go far enough.
As kyle8 said, there are still too many arbitrary barriers in international markets, to say nothing of the government's lack of vigor in sticking up for itself, then shooting itself in the head with stupid garbage like the farm bill that allows the EU to start retaliating against us with all the capriciousness of a sugar-addled three-year-old. They don't play fair because, let's face it... we kinda wrote the book on not playing fair.
I still can't figure out your "factor in what all it costs us" argument, other than de rigeur obsession with the short term. We create and lose jobs all the time, for all manner of reasons... to think that we cannot come up with new, good-paying jobs to replace jobs that may go overseas as a result of trade is being highly pessimistic of the creativity of the American economy.
I apologize for the use of the "Fortress America" term, but I'm getting sick of people who sound like Glenn Beck or Lou Dobbs trying to argue on populist terms and ignoring the fundamental economics of the situation. I'm from Michigan. I know people who have lost their jobs as a result of the sclerotic manufacturing industry here. Is it fair? "Fair" is that place you go to every August to see the horses and eat cotton candy. It has very little place in determining what makes the people of the world better or worse off.
"No matter how much lipstick you put on the taxation pig, it's still a pig... and it's currently snout-down in your wallet." - Michael Fisk
currently practiced without using the "fair" argument but I would urge you not to see that as a red flag. It is an interesting observation that many people might in fact defend free trade as the most "fair" economic system. Words are just that.
Anyway I wanted to respond specifically to your statment about "factor in what all it costs us". That is a large part of the issue. Free Trade as proposed and advocated for today is largely an untested model of economic behavior. Sure there are anecdotal examples both for and against but the reality is: no pure Free trade arrangement currently exists between any two nations that I am aware of. This makes it Theory at best.
On the flip side the sad old classic economic system of mercantilism is responsible for making the U.S. the economic superpower it is today. Free trade may be a good idea. It may have potential but we should approach it slowly and with care. At this point it remains a euphemism for social change and a possible, theoretical economic solution.
Have you ever heard of the trade agreement between the United States? That's right, the motley group of small States that decided to band together to allow a common trade and defense pact. Fortunately, they decided to not allow tarriffs on trade between the States which has allowed trade between them to fourish and all parties are better off. Oh sure, some states like California, have imposed many restrictions on goods sold in their state that companies have had to imlpement for all their customers (mean while losing market share while retooling), but in general all the states have played "fair" and benefitted from the deal.
And it's true that the richer states like New York have had to deal with states with lower populations and GDP like West Virginia, but do you really think that a proportional tarriff between those 2 states would have benefitted either?
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
I (was) with Fred!
"They are facts that smart people, intimately familiar with the details surrounding trade policy take as givens--much as they take the revolution of the Earth around the Sun as a given."
"my passion on the issue of free trade"
With all due respect, economists very rarely speak about facts. The closest they come is to speak in terms of stylized facts (http://en.wikipedia.org/wiki/Stylized_facts) and more often, the results of particular studies, which tend to be *much* more hedged and qualified than you suggest. Moreover, I'm not sure what you mean by passion, but I usually think of passion being needed to justify actions which are *not* supported by facts.
I too support free trade, but that doesn't mean I think the arguments in the popular press for it are convincing. In particular the kind of simple two good Ricardian examples in intro macro courses are woefully inadequate. See, for example:
http://www.vanderbilt.edu/econ/faculty/Driskill/DeconstructingfreetradeA...
http://www.feedblitz.com/t.asp?/334265/0/http://www.paecon.net/PAEReview...
via:
http://rodrik.typepad.com/dani_rodriks_weblog/2008/03/why-doesnt-the.htm...
In fact the central issue in free trade agreements is generally who wins and who loses, by how much, for how long, etc. That is both a theoretical issue, and an empirical issue:
I think the real problem that a lot of academic and political liberals have with free trade is that stupid people reap the rewards of dumbness. In a free market, the traders prosper or decline in comensurate measure with their ability to evaluate value and decide on the long term strategic ramifications of a trade.
Liberals tends to desire equality of outcome. That is, they think no one should really get an advantage. They believe that Micahel Jordan should never have scored 55 on the Knicks. The Knicks were exploited; their defense didn't suck.
Free trade is competitive. People will select what they believe to be the best value for their money. That often puts companies and unions in a position where they either give up the guarunteed retirements and executive Leer Jets, or they find a different line of work where the competition is poor enough so that they can continue getting away with inefficient behaviors at the expense of the consumer.
"I believe we must adjourn this meeting to some other place." - The last recorded words of Adam Smith.
to pander as protectionists. Free trade policies (in theory) work to level the global economic playing field. (While in fact enabling the commercial elite just like mercantilism has been criticized for doing) --
This is actually exactly what liberals like, to create policies that on the surface create equality while keeping them in control after all.
: sigh :
I know that you don't have anything better to do, Pat Buchannan, but I wish you'd get over yourself.
"I ain't never votin' fo another Democrat so long as I can draw breath! I'll vote for a dog first!" - Leola Thomas
The political Left likes to look after its own. Being a largely secular philosophy, they don't have to look after anyone else, just themselves.
Unless, of course, looking after somebody else helps curry enough favor for them to win elections, then maybe.
"No matter how much lipstick you put on the taxation pig, it's still a pig... and it's currently snout-down in your wallet." - Michael Fisk
join them once we have become enlightened.
How exactly does making more goods and services available at a lower price to the average shopper at Safeway expand governmental control?
How does letting a whole bunch of firms from other countries compete for a pool of jobs that used to be restricted to a domestic cartel empower a mercantile elite?
In 1960, GM single-handedly sold 60% of the cars that were sold in the US. That is the poster-child statistic for mercantile elitism. Did GM losing this business somehow expand the power of the liberal leaders of Automotive Trade Unions?
"I believe we must adjourn this meeting to some other place." - The last recorded words of Adam Smith.
Each of your examples are irrelevant to my comment.
Perhaps you disagree with me about what constitutes a liberal but I will give you a part of my definition.
A liberal is someone in favor of the globalization of laws, treaties, economics and government for the purpose of perpetrating their wise and all knowing view of global equality. Free Trade as it is practiced and promoted today is an economic policy that promotes and assists this view. This is the reason Bush the first and Bill Clinton were responsible for getting NAFTA passed. They are globalization guys. If you don't agree that globalism is a liberal perspective then you wouldn't get my point.
No one can hold a gun to my head and force me to buy a Prius. No one would bother buying any of these products from foreign countries if they weren't providing the average shopper with better value for their dollar.
SO no, none of those examples were in any way relevant to your comment. Free Trade is about allowing people a full range of choices. It's about putting everything that could be available in the market.
So called "Fair Trade" is about only putting what someone's opinion deems is "fair" in the market. OPEC does that with pertoleum as well. OPEC, to me, is the perfect example of how protectionist "Fair Traders" typically behave.
"I believe we must adjourn this meeting to some other place." - The last recorded words of Adam Smith.
Try to buy a radio/TV/CD player/camera..any electronic device that is made in the USA. There are none. Try buying american Made toys. They do not exist. What about even auto parts. Sure the auto may be "assembled" in the USA but 50% o the parts are not. Wireing harnesses made in Mexico, transmission parts Canada, fuses/bulbs China...
Anyone ever heard of a Japanese inspection of Ag. products. They just leave them on the dock until they start to rot and then they fail the imported product. If they do not want the product imported, it does not get in. Not so in America, everything (even military/defense material) is allowed in as long as it can get on a ship to America.
Sorry folks, Tariffs do not mean protectionism. They can but not as such by default.
Americans are hooked on cheap (unsafe in some cases) oft times useless STUFF, just as surely as a drug addict is hooked on their drug of choice.
dgaines = unable to spell when typing quickly. [Spell checker now being employed]
they are somehow immoral and addicted? When you go to the supermarket, do you seek out more expensive stuff just because those guys need help?
Also, regarding this statement.
Try buying american Made toys.
If your kids are into Pokemon, WWF, or many popular recent children's fads you are buying more American toys than you probably want to next Christmas.
"I believe we must adjourn this meeting to some other place." - The last recorded words of Adam Smith.
and Pokemon, we have already lost the battle.
You made the statement that no toys made in the US were available. That implied that you believed the economic success of the US relied upon the WWF and Pokemon. If it didn't, why would you care whether there were any US toymakers?
"I believe we must adjourn this meeting to some other place." - The last recorded words of Adam Smith.
advocate for "Fair Trade" I was responding above to your previous response to my first comment regarding Free Trade as a liberal idea.
Free trade is an an excuse for national welfare.
If we play baseball and you show up with the yankees and I show up with my sandlot team you can call that competitive but thats a bit of a stretch.
and see what type of reaction you get.
"I believe we must adjourn this meeting to some other place." - The last recorded words of Adam Smith.
can just pass a protective tariff so that they don't have to improve their product line any. Before Toyota and Honda entered the market, GM cars had an average 30 defects per unit, and the consumers were pretty much told to just shut yer mouth and buy one. It's All-American.
The only thing that made American companies actually build half-way decent models that weren't more bug-ridden than Microsoft Windows was foreign competition. If we cut back free trade, we empower domestic companies to go back to not caring whether we like it or not, because we won't have any choice in the matter.
"I believe we must adjourn this meeting to some other place." - The last recorded words of Adam Smith.
a critical role in GM's improvement.
I would not be for tariff's designed to be protective but rather for weighted impedements to our market based on reciprocal market value or at least comparative prices across industries. In other words the creation of a level playing field.
In crafting a policy approach I would like to see us work for a level playing field so that true competition can thrive. In addition I would like us to first serve our own national interests rather than assume that our own national trade interests are somehow rooted in the greatest short term benefit to the consumer.
Drive down Rt 1 in ALexandria, and you will see auto dealerships representing probably 15 different companies from at least four or five different nationalities. The same is true of the shelves of a Safeway supermarket. That is true competition.
In certain instances, Japan does need to be reminded that the batteries that caused the difficulties in the I-Pod Nano were, in fact, made in Japan. I wouldn't mind seeing US trade representatives use the rules already set forth in NAFTA, GATT and the WTO against some of these countries instead of just taking it on the chin.
"I believe we must adjourn this meeting to some other place." - The last recorded words of Adam Smith.
we have a level playing field. I would be for "free trade" in these instances. However in many industries and with many countries the playing field is not level and I would be against "Free trade" in these instances.
of the planet. We account for over 50% of Chinas employment. Same for India,Indonesia,Japan... Our hunger for cheap stuff has helped other countries economy grow more than our own. America employes more people out side the US and we do in the US. Sadly, most of it is being financed with borrowed money. Money borrowed from the same countries we have Free Trade deals with and keep their employment high and growth higher than our own.
I just don't see that as sound policy.
in which we allow our "Partner" to set the Import Tax rate they want to charge American made porducts coming into their country. Then we charge the same rate they set for themselves. When they complain, ask them what rate they want and we will charge the same.
You tell me what products you are allowed to buy and sell as either a customer and a retailer and I'll do the same for you. We can extend that one further. You and I can both be US manufacturers. You tell me which countries I can get raw materials from and I'll do the same for you.
"I believe we must adjourn this meeting to some other place." - The last recorded words of Adam Smith.
the autos produced here were not exportable at a reasonable price due to huge Tariffs added by our "Free Trade Partners". Tariffs which are given back to that countries auto industry so they can undercut the price of American Autos, which they export to us.
Point to ponder. Mexico exportered more autos to America, last year, than America exported to the rest of the planet. That is not fair free trade, I call it insanity free trade.
because they had 30 defects per car on average. As for foreign sales, when you go down to South America, and market a car called the Nova, like Chevrolet did, you get what you deserve, tariffs or not.
"I believe we must adjourn this meeting to some other place." - The last recorded words of Adam Smith.
the material benefits. There are always trade offs. However, on balance we have had, since the liberalizing of international trade begun in the early 1980's, a remarkable period of growth. In addition, we have given consumers the chance to purchase, at very low prices many goods from all around the world.
When I was growing up in the 1970's it was unthinkable that a middle class family could afford snow crab, salmon, Kobe beef, and exotic fruits all in the same week, even if you could get them. However, now I can get them all and for a modest price at my local grocer.
Of course to some extent wage growth in some sectors of the economy have been slowed because of the export of some industrial externalities. But the overall result has been positive.
"Nothing works like freedom, Nothing succeeds like liberty"
Kyle
And all I got was a toy that didn't quite pass the mercury PPM standards set by the Federal Government.
Man is free at the moment he wishes to be. --Voltaire
Companies like Toyota and Kia continue to expand US manufacturing operations and to sell cost-competitive and fuel-efficient vehicles at a profit.
of economists are free trade guys doesn't give me any additinal confidence in their opinions. I find this similar to the fact that the predominant number of scientists think Global warming is a "proven" phenomenon.
I would prefer what I might call a Neo Free Mercantilism.
Anyway, I see a lot of articles from free trade writers that seem to emulate the "Believe us we know more than you" drumbeat of the Global warming guys but in similar fashion it seems they are speaking about an unproven model and projecting their theoretical hopes on the future.