The Challenge of Free Trade: How Does One Side Win When Everyone Cheats?

 

I used to be a believer in Free Trade. No matter what, I thought the trade policy of America should be that there are no limits whatsoever to trade. If the other side had all sorts of restrictions, it did not matter, because it was always better for Americans on the whole to have total free trade. Why did I believe this? Because learned people said it was so, and that was good enough for me.

However, as I have aged, I have grown more an more uncomfortable with the idea that one side trading free and the other side putting up restrictions is always best for the most Americans. It is counterintuitive, to say the least. For instance, how can it be better for me as an American, that American farmers cannot sell their goods in the EU so that EU farmers are protected? How does that help Americans as a whole, exactly, when American farmers have to compete on an uneven playing field? Less competitive EU farmers get the benefits of higher prices, while American farmers have to run even leaner. How does that help the average American?

From a security standpoint, the US armed forces are buying electronics from one of our two rivals. I cannot imagine that the Chinese government is using this to spy on us somehow, but setting that aside, if we went to war with China, where will get the parts? It makes no sense to outsource a strategic industry to another nation. At least to me. I am sure it makes 100 percent sense to the Free Traders. All Free Trade, no matter what, all the time. Nothing is zero-sum, everything is win-win, even when the other partner is a geopolitical rival. Germany should not worry if it is dependent on Russia for its power, because that is the best way to get power, and if the whole Germany power industry goes down, well, that is just free trade to Russia. No worries.

So, I no longer believe in Free Trade at all times. If you are a free trader, I’d love to have my mind changed.

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  1. #OMyGod Inactive
    #OMyGod
    @IanMullican

    A-Squared (View Comment):

    #OMyGod (View Comment):

    A-Squared

     

    Then I have absolutely no idea what you are talking about.

    You say you don’t believe in free trade but you are not willing to say that you endorse protectionism. What else is there in opposition to free trade?

    Nothing in opposition, but not 100% free trade: “fair trade” as a means to achieve free trade. I.e. a tariff to reduce tariffs. It’s not pure free trade due to a temporary tariff, but it’s certainly not protectionism.

    “Fair Trade” is a term invented by the left wing opponents to free trade to rationalize tariff and non-tariff barriers to free trade.

    If you are for temporary tariffs with the hope of eliminating tariff and non-tariff barriers to free trade, then you are for free trade, which Bryan unequivocally says he no longer supports.

    Hmmm., I’d have to look up the history of the term.  I believe Bryan holds the same positions I do given this thread, so perhaps we’re all just getting the nomenclature wrong?  Maybe we can use this space to better define terms for use going forward.  The internet definition of “Free Trade” is “international trade left to its natural course without tariffs, quotas, or other restrictions.”  Being left to its natural course without tariffs seems to imply that my fair trade definition is in fact NOT the free trade that you’re talking to, but close to it.

    That being said, there is still some adamant opposition to Trump using the tariffs in this thread.  If we’re all for the definition of free trade that you used, i.e. “If you are for temporary tariffs with the hope of eliminating tariff and non-tariff barriers to free trade, then you are for free trade…”, what do you make of current events regarding trade?

    • #121
  2. A-Squared Inactive
    A-Squared
    @ASquared

    #OMyGod (View Comment):
    That being said, there is still some adamant opposition to Trump using the tariffs in this thread. If we’re all for the definition of free trade that you used, i.e. “If you are for temporary tariffs with the hope of eliminating tariff and non-tariff barriers to free trade, then you are for free trade…”, what do you make of current events regarding trade?

    I would guess most of those people don’t think Trump believes in free trade and wants the tariffs to be permanent.  Trump has a long history of being an anti-free-trade mercantilist.  

    A week ago, that was my firmly held position.  I know Trump has tweeted a couple of times that he offered zero tariffs to Europe, but as Trump supporters always tell me, we should ignore his tweets. 

    His announcement last week about negotiating toward zero tariffs with Europe on non-auto industrial products was, I thought, the first meaningful indication that he actually meant it and I celebrated it in another thread.  

    • #122
  3. Ekosj Member
    Ekosj
    @Ekosj

    Jamie Lockett (View Comment):
    As long as the present value of the temporary cost is less than the present value of the future benefits, A should take this action. It is the exact same calculation one would make to analyze whether or not to forego some present consumption and invest that forgone consumption into some interest bearing investment. As long as the present value of the cash flow from the investment is bigger than the present value of the cost, one forgoes the consumption and makes the investment.

     

    Jamie Lockett (View Comment):

    Ekosj (View Comment):

    Jamie Lockett (View Comment):

    Ekosj (View Comment):
    Is A also worse off? Yes.

    If A was worse off than A would not have engaged in trade.

    A is better off than in a no trade situation, but worse off than in the situation where B imposes tariffs.

    I thought that was clear.

    B is worse off too. So the proposed solution is to make both participants even worse off?

    Temporarily.   Yes.   You are fixated on a static, one period analysis.     The proper analysis is done over a longer time horizon.   Multiple periods.     I’m certain that was clear.    

    As long as the present value of the temporary cost is less than the present value of the future benefits, ‘A’ should take this action. It is the exact same calculation one would make to analyze whether or not to forego some present consumption and invest that forgone consumption into some interest bearing investment. As long as the present value of the cash flow from the investment is bigger than the present value of the cost, one forgoes the consumption and makes the investment.

    • #123
  4. Ekosj Member
    Ekosj
    @Ekosj

    Hank Rhody, Probably Mad (View Comment):

    Jamie Lockett (View Comment):

    Ekosj (View Comment):

    Jamie Lockett (View Comment):

    Ekosj (View Comment):
    Is A also worse off? Yes.

    If A was worse off than A would not have engaged in trade.

    A is better off than in a no trade situation, but worse off than in the situation where B imposes tariffs.

    I thought that was clear.

    B is worse off too. So the proposed solution is to make both participants even worse off?

    No, it really isn’t. The proposed solution is to make both sides temporarily worse off in order to restore free trade between A and B, thus making them both better off in the long run.

    There’s quite a bit of assumption there; that you can accurately make that calculation and that B will respond as you expect them to, but it’s a starting point.

    There is always the option of doing nothing and accepting an endless stream of losses resulting from B’s tariffs.   A could send a harshly worded letter.   

    • #124
  5. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Hammer, The (Ryan M) (View Comment):

    Bryan G. Stephens (View Comment):

    Hammer, The (Ryan M) (View Comment):

    Bryan G. Stephens (View Comment):

    Jamie Lockett (View Comment):

    Bryan G. Stephens (View Comment):

    Jamie Lockett (View Comment):

    Bryan G. Stephens (View Comment):

    Jamie Lockett (View Comment):

    If trade didn’t make both parties better off it wouldn’t occur.

    If there are national security concerns then the federal government would do better to support those businesses by purchasing from them. Lockheed isn’t going out of business anytime soon.

    OK, what about things like microchips and what not? Does that mean we should subsidise their manufacture at home?

    Subsidize no, but make purchases from US-based vendors doesn’t seem unreasonable.

    So, in theory, that is government support for some industry, and therefore all free trade all the time is not always 100% a good idea?

    I don’t see how the US government purchasing planes from Lockheed is a major impediment to free trade. Can you flesh it out for me?

    I am talking about computer parts, but hey, if Free trade is 100%, why not buy all our defense stuff from the EU. Bet we could get better prices.

    ok – I’ll bite on that. Why not? If states in the EU can make high-quality computer parts or even “defense stuff” at a lower price than we can here in the US, why should we not purchase these things from them and utilize our resources elsewhere?

    Because the greatest power in the world should not oursource its weapons development to others. That is why. And if you cannot see that, you have no sense of long term strategy.

    Actually – I cannot see why. I would like you to explain to me why, as a matter of fact. Because I disagree that I lack a sense of long-term strategy. Quite the opposite, in fact.

    What is your worst-case scenario, exactly? We suddenly go to war with the entire world? Ok… so, then do we also suddenly lose our entire defense capabilities? Our weapons and technology become outdated so quickly that we just roll over in defeat? We entirely lack the capability to produce anything? I suppose that, under this scenario, we bear virtually no influence across the world in other ways, right? So how exactly did we allocate those now-freed resources that we lack the capacity to exercise any global influence, such that virtually no other technology-producing nations will trade with us?

    I’d really like to know how this worst-case scenario works out, such that it is so essential that we be permanently self-sufficient (and this is even stipulating that we wouldn’t actually be self-sufficient if necessary).

    I am not sure what sorts of war you think we will be fighting in the future. Considering how long today it takes to design and produce a new aircraft, I don’t think we would have time to produce it. 

    • #125
  6. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Mike H (View Comment):
    I think worrying about “strategic interest” could similarly be used to justify almost anything. Just speculate on a very unlikely but hugely damaging event, and everything becomes permissible in mitigating it.

    This always seems to be the out: Because things might be, heck, will be abused, better to not risk it at all. 

    I clearly do not think China should understand how all our military devices work. That people on this forum think that it is A-OK for them to know how, and be able to duplicated it in the most up to date way possible is mind blowing. 

    • #126
  7. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Jamie Lockett (View Comment):

    Hammer, The (Ryan M) (View Comment):

    Bryan G. Stephens (View Comment):

    Hammer, The (Ryan M) (View Comment):

    Bryan G. Stephens (View Comment):

    Jamie Lockett (View Comment):

    Bryan G. Stephens (View Comment):

    Jamie Lockett (View Comment):

    Bryan G. Stephens (View Comment):

    Jamie Lockett (View Comment):

    If trade didn’t make both parties better off it wouldn’t occur.

    If there are national security concerns then the federal government would do better to support those businesses by purchasing from them. Lockheed isn’t going out of business anytime soon.

    OK, what about things like microchips and what not? Does that mean we should subsidise their manufacture at home?

    Subsidize no, but make purchases from US-based vendors doesn’t seem unreasonable.

    So, in theory, that is government support for some industry, and therefore all free trade all the time is not always 100% a good idea?

    I don’t see how the US government purchasing planes from Lockheed is a major impediment to free trade. Can you flesh it out for me?

    I am talking about computer parts, but hey, if Free trade is 100%, why not buy all our defense stuff from the EU. Bet we could get better prices.

    ok – I’ll bite on that. Why not? If states in the EU can make high-quality computer parts or even “defense stuff” at a lower price than we can here in the US, why should we not purchase these things from them and utilize our resources elsewhere?

    Because the greatest power in the world should not oursource its weapons development to others. That is why. And if you cannot see that, you have no sense of long term strategy.

    Actually – I cannot see why. I would like you to explain to me why, as a matter of fact. Because I disagree that I lack a sense of long-term strategy. Quite the opposite, in fact.

    What is your worst-case scenario, exactly? We suddenly go to war with the entire world? Ok… so, then do we also suddenly lose our entire defense capabilities? Our weapons and technology become outdated so quickly that we just roll over in defeat? We entirely lack the capability to produce anything? I suppose that, under this scenario, we bear virtually no influence across the world in other ways, right? So how exactly did we allocate those now-freed resources that we lack the capacity to exercise any global influence, such that virtually no other technology-producing nations will trade with us?

    I’d really like to know how this worst-case scenario works out, such that it is so essential that we be permanently self-sufficient (and this is even stipulating that we wouldn’t actually be self-sufficient if necessary).

    Lets put aside the fact that countries that trade extensively rarely go to war with one another and just ask: doesn’t this apply to virtually any product? We have to make all our food here because if we don’t and war breaks out people will starve. We have to make all our clothing here because if we don’t and war breaks out everyone will be naked! We have to…

    Yes, a nation should be able to feed itself if it wants to engage in a long war. In fact, starving someone out was the way to defeat an enemy in the old days.

    • #127
  8. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    tommybdeepv (View Comment):

    tfw you check the browser to see if you hit ricochet.com or dailykos.com. What will change your mind on free trade is when President Warren enacts tariffs and they all of a sudden become the worst thing ever, again.

    I don’t appreciate being told I am Dailykos. Guess I am guilty of wrong think

    • #128
  9. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    tommybdeepv (View Comment):

    And here’s Milton Friedman addressing this issue: https://www.youtube.com/watch?v=59YWFR8lCEc

    I have seen this before. It used to carry me.

    However, if trade restrictions hurt both sides, then using trade restrictions to force the other guy into a better deal also makes sense. 

    • #129
  10. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    A-Squared (View Comment):

    Bryan G. Stephens (View Comment):

    Point of fact, I am not endorsing anything, I am saying I no longer believe in free trade.

     

    Then I have absolutely no idea what you are talking about.

    You say you don’t believe in free trade but you are not willing to say that you endorse protectionism. What else is there in opposition to free trade?

    I don’t think free trade is a magic bullet that in all ways, all the time, is best. That is hardly endorsing full on protectionism. 

    In fact, I have now seen on the last page, a great argument for using restrictions to get the other guy to lesson his, and then everyone wins. 

     

    • #130
  11. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    A-Squared (View Comment):
    I would happily support legalizing reimporting drugs to the US, but it won’t make prices in the US any cheaper, it will just raise prices in sub-Saharan Africa where most can barely afford it. The existing laws against re-importing drugs are exactly the kind of protectionism you are endorsing in this thread.

    So now we cleared things up, are you saying that removing all importation of drugs laws that prices would still not go down in America? Why?

    • #131
  12. Umbra of Nex Inactive
    Umbra of Nex
    @UmbraFractus

    A-Squared (View Comment):

    I would guess most of those people don’t think Trump believes in free trade and wants the tariffs to be permanent. Trump has a long history of being an anti-free-trade mercantilist.

     

    Exactly.

    Whatever happened to, “Nothing is so permanent as a temporary government program?” 

     

    • #132
  13. A-Squared Inactive
    A-Squared
    @ASquared

    Bryan G. Stephens (View Comment):
    I don’t think free trade is a magic bullet that in all ways, all the time, is best.

    Someone smarter than me said, there are no solutions, only trade-offs. 

    Believing in magic bullets is a left-wing utopian phenomenon. 

    • #133
  14. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Steven Seward (View Comment):
    The only reason economists say that we have a “trade imbalance” (or deficit or surplus) is that they only count certain tangible items in the exchange, like steel and widgets. They don’t count the intangible stuff like when foreigners buy our savings bonds or invest in our stock market, but the trades are on a completely even basis.

    If there is no trade imbalance, why then have the term at all?

    • #134
  15. A-Squared Inactive
    A-Squared
    @ASquared

    Bryan G. Stephens (View Comment):
    In fact, I have now seen on the last page, a great argument for using restrictions to get the other guy to lesson his, and then everyone wins. 

    Now I’m confused. If you believe everyone wins when trade barriers are lowered, then it sounds like you believe in free trade, which you’ve consistently decried throughout this thread. 

    • #135
  16. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    A-Squared (View Comment):

    Bryan G. Stephens (View Comment):
    I don’t think free trade is a magic bullet that in all ways, all the time, is best.

    Someone smarter than me said, there are no solutions, only trade-offs.

    Believing in magic bullets is a left-wing utopian phenomenon.

    Well then we can agree on that.

     

    • #136
  17. Mike H Inactive
    Mike H
    @MikeH

    Bryan G. Stephens (View Comment):

    Mike H (View Comment):
    I think worrying about “strategic interest” could similarly be used to justify almost anything. Just speculate on a very unlikely but hugely damaging event, and everything becomes permissible in mitigating it.

    This always seems to be the out: Because things might be, heck, will be abused, better to not risk it at all.

    No! Just don’t risk it unless you show your work!

    I clearly do not think China should understand how all our military devices work. That people on this forum think that it is A-OK for them to know how, and be able to duplicated it in the most up to date way possible is mind blowing.

    And how do steel tariffs and farm subsidies further this goal?

    • #137
  18. Jamie Lockett Member
    Jamie Lockett
    @JamieLockett

    Ekosj (View Comment):

    Jamie Lockett (View Comment):
    As long as the present value of the temporary cost is less than the present value of the future benefits, A should take this action. It is the exact same calculation one would make to analyze whether or not to forego some present consumption and invest that forgone consumption into some interest bearing investment. As long as the present value of the cash flow from the investment is bigger than the present value of the cost, one forgoes the consumption and makes the investment.

     

    Jamie Lockett (View Comment):

    Ekosj (View Comment):

    Jamie Lockett (View Comment):

    Ekosj (View Comment):
    Is A also worse off? Yes.

    If A was worse off than A would not have engaged in trade.

    A is better off than in a no trade situation, but worse off than in the situation where B imposes tariffs.

    I thought that was clear.

    B is worse off too. So the proposed solution is to make both participants even worse off?

    Temporarily. Yes. You are fixated on a static, one period analysis. The proper analysis is done over a longer time horizon. Multiple periods. I’m certain that was clear.

    As long as the present value of the temporary cost is less than the present value of the future benefits, ‘A’ should take this action. It is the exact same calculation one would make to analyze whether or not to forego some present consumption and invest that forgone consumption into some interest bearing investment. As long as the present value of the cash flow from the investment is bigger than the present value of the cost, one forgoes the consumption and makes the investment.

    Except what is being advocated here is that government mandarins know what the long term benefits will be and force the choice on people through taxation. 

    • #138
  19. Jamie Lockett Member
    Jamie Lockett
    @JamieLockett

    Bryan G. Stephens (View Comment):

    Mike H (View Comment):
    I think worrying about “strategic interest” could similarly be used to justify almost anything. Just speculate on a very unlikely but hugely damaging event, and everything becomes permissible in mitigating it.

    This always seems to be the out: Because things might be, heck, will be abused, better to not risk it at all.

    I clearly do not think China should understand how all our military devices work. That people on this forum think that it is A-OK for them to know how, and be able to duplicated it in the most up to date way possible is mind blowing.

    No we don’t. Stop arguing in bad faith. 

    • #139
  20. Hank Rhody, Probably Mad Contributor
    Hank Rhody, Probably Mad
    @HankRhody

    Umbra of Nex (View Comment):

    A-Squared (View Comment):

    I would guess most of those people don’t think Trump believes in free trade and wants the tariffs to be permanent. Trump has a long history of being an anti-free-trade mercantilist.

    Exactly.

    Whatever happened to, “Nothing is so permanent as a temporary government program?”

    Fair point, but I wish it was more explicitly stated up front. “I don’t trust Trump to do it well” is a different argument than “It doesn’t work.”

    You know, because a “Nuh-uh! Yuh-huh!” argument about Trump would have been more productive.

    • #140
  21. Jamie Lockett Member
    Jamie Lockett
    @JamieLockett

    Bryan G. Stephens (View Comment):

    tommybdeepv (View Comment):

    tfw you check the browser to see if you hit ricochet.com or dailykos.com. What will change your mind on free trade is when President Warren enacts tariffs and they all of a sudden become the worst thing ever, again.

    I don’t appreciate being told I am Dailykos. Guess I am guilty of wrong think

    And yet you casually throw around accusations of people wanting the Chinese to know how our military works. Therapist: heal thyself. 

    • #141
  22. Hank Rhody, Probably Mad Contributor
    Hank Rhody, Probably Mad
    @HankRhody

    Jamie Lockett (View Comment):

    Bryan G. Stephens (View Comment):

    Mike H (View Comment):
    I think worrying about “strategic interest” could similarly be used to justify almost anything. Just speculate on a very unlikely but hugely damaging event, and everything becomes permissible in mitigating it.

    This always seems to be the out: Because things might be, heck, will be abused, better to not risk it at all.

    I clearly do not think China should understand how all our military devices work. That people on this forum think that it is A-OK for them to know how, and be able to duplicated it in the most up to date way possible is mind blowing.

    No we don’t. Stop arguing in bad faith.

    Check with the Hammer Man. Seems like he was arguing that exact thing a page or so ago. To give him credit for the nuance, that whatever advantage they’d gain from being able to duplicate our most up-to-date hardware would be outweighed by the advantage we’d get from free-trading up until the point of war.

    • #142
  23. Jamie Lockett Member
    Jamie Lockett
    @JamieLockett

    Bryan G. Stephens (View Comment):

    Steven Seward (View Comment):
    The only reason economists say that we have a “trade imbalance” (or deficit or surplus) is that they only count certain tangible items in the exchange, like steel and widgets. They don’t count the intangible stuff like when foreigners buy our savings bonds or invest in our stock market, but the trades are on a completely even basis.

    If there is no trade imbalance, why then have the term at all?

    Because old style leftists and union bosses needed something to bleat on about. 

    • #143
  24. Umbra of Nex Inactive
    Umbra of Nex
    @UmbraFractus

    Hank Rhody, Probably Mad (View Comment):

    Umbra of Nex (View Comment):

    A-Squared (View Comment):

    I would guess most of those people don’t think Trump believes in free trade and wants the tariffs to be permanent. Trump has a long history of being an anti-free-trade mercantilist.

    Exactly.

    Whatever happened to, “Nothing is so permanent as a temporary government program?”

    Fair point, but I wish it was more explicitly stated up front. “I don’t trust Trump to do it well” is a different argument than “It doesn’t work.”

    You know, because a “Nuh-uh! Yuh-huh!” argument about Trump would have been more productive.

    This has nothing to do with Trump. I don’t trust anybody to do this well.

    • #144
  25. Steven Seward Member
    Steven Seward
    @StevenSeward

    Bryan G. Stephens (View Comment):

    Steven Seward (View Comment):
    The only reason economists say that we have a “trade imbalance” (or deficit or surplus) is that they only count certain tangible items in the exchange, like steel and widgets. They don’t count the intangible stuff like when foreigners buy our savings bonds or invest in our stock market, but the trades are on a completely even basis.

    If there is no trade imbalance, why then have the term at all?

    I agree!  The term is misleading.  It makes it sound like one side is getting more than the other side.  What they should say is “China is exporting a ton of cheap factory goods to the U.S in exchange for a few airplanes, pharmaceuticals, and savings bonds.”  But this is not as easy as saying the trite sound byte “Trade Imbalance.”

    • #145
  26. Hank Rhody, Probably Mad Contributor
    Hank Rhody, Probably Mad
    @HankRhody

    Umbra of Nex (View Comment):

    Hank Rhody, Probably Mad (View Comment):

    Umbra of Nex (View Comment):

    A-Squared (View Comment):

    I would guess most of those people don’t think Trump believes in free trade and wants the tariffs to be permanent. Trump has a long history of being an anti-free-trade mercantilist.

    Exactly.

    Whatever happened to, “Nothing is so permanent as a temporary government program?”

    Fair point, but I wish it was more explicitly stated up front. “I don’t trust Trump to do it well” is a different argument than “It doesn’t work.”

    You know, because a “Nuh-uh! Yuh-huh!” argument about Trump would have been more productive.

    This has nothing to do with Trump. I don’t trust anybody to do this well.

    Also a fair point.

    Assuming that free trade is a better state for both players than any one-sided protectionist deal, what methods would you suggest for breaking down someone else’s protectionism?

    • #146
  27. A-Squared Inactive
    A-Squared
    @ASquared

    Bryan G. Stephens (View Comment):

    A-Squared (View Comment):
    I would happily support legalizing reimporting drugs to the US, but it won’t make prices in the US any cheaper, it will just raise prices in sub-Saharan Africa where most can barely afford it. The existing laws against re-importing drugs are exactly the kind of protectionism you are endorsing in this thread.

    So now we cleared things up, are you saying that removing all importation of drugs laws that prices would still not go down in America? Why?

    It’s simple math.

    To make it simple, let’s imagine a drug that cost $5 per dose to manufacture is sold in the US for $100 a dose and country B for $6 (in your example, they were selling for just above the cost of manufacturing).  That is profit optimizing under the current regime because the drugs sold in country B cannot be re-imported in the US.

    If you allow re-importation, any dose sold in country B can be sold in the US for, say, $6 (with $1 per dose in transportation costs.)  Under the current regime, the manufacturer makes almost all its profit in the US.  If you allow re-importation, the company would never sell for $6 in Country B because whatever doses it sold it in country B for less than the US Price plus the cost of transportation would just wind up in the US undercutting the $100 US price.  In that case, the profit maximizing thing would be to charge $99 a dose in Country B or stop selling in country B altogether and only sell in the US given how marginal the sales in Country B are.  If anything, since none of the development costs are recovered in country B, the price in the US would rise slightly (but only slightly given how little profit is coming from Country B.)

    If we allowed re-importation, the price in other countries will rise without the price in the US falling because the lowest selling price the manufacturer would be willing to accept anywhere in the world would be the US price less transportation costs.  I suppose an alternative would be to never seek approval in the US and continue to sell in the rest of the world, which, given the high cost of approval might be more likely, but that would make the drug illegal in the US, and if there is anything the war on illegal drugs has taught it, it is that making drugs illegal just drives up their price.  Either way, the US pays more.  

    There might be some drugs that have small US markets that would see a decline in US prices, but in aggregate it seems obvious to me that re-importation would increase prices overseas rather than decrease prices here.   

    • #147
  28. Simon Templar Member
    Simon Templar
    @

    Hank Rhody, Probably Mad (View Comment):
    Assuming that free trade is a better state for both players than any one-sided protectionist deal, what methods would you suggest for breaking down someone else’s protectionism?

    Not exactly on point but I think we should contemplate a 100% trade embargo on all nations that support terrorist organizations.  Even though I don’t trust them, I suppose ‘State’ would make the call on which nations those are.  I might then also put tariffs of some sort on countries that traded certain items with those embargoed nations as well.

    • #148
  29. Umbra of Nex Inactive
    Umbra of Nex
    @UmbraFractus

    Hank Rhody, Probably Mad (View Comment):

    Assuming that free trade is a better state for both players than any one-sided protectionist deal, what methods would you suggest for breaking down someone else’s protectionism?

    I don’t know. My expertise is in history, not economics.

    But history tells me that protectionism is a disaster.

    • #149
  30. lowtech redneck Coolidge
    lowtech redneck
    @lowtech redneck

    Mike H (View Comment):

    Jamie Lockett (View Comment):

    Why should we tax Americans to subsidize a small minority of them?

    There’s this nostalgia about rural farming America that I just find baffling. It doesn’t exist any more. You’re basically just subsidizing a bunch of big conglomerates.

    What’s not to get about the nostalgia?  The country, and much of classical liberalism, was founded upon the ideal and cultural legacy of the yeoman farmer.  As society has become more urban, its become less conservative and less classically liberal.  To say nothing of the desire to preserve small-town life, with its cultural solidarity, community support, and sense of belonging, things that greater material prosperity has limited capacity to compensate for.  A society centered around rural farming may be gone forever, but a desire (however misplaced) to preserve or promote it is a perfectly understandable impulse.

    One cannot hope to change people’s minds if they fail to understand, or are dismissive, of the concerns that motivate policy preferences, however misguided those may be.

     

    • #150
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