Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
Back-to-School Trade Quiz
1. I am a trade protectionist because:
a. I don’t think people in this country should be able to get cheaper and/or better stuff from overseas. Consumers have too much stuff. Other people here who take cheaper and/or better stuff from overseas and build it into products which they then sell here and overseas are making things way too complicated.
b. I don’t think people who live overseas and who I don’t know and whose languages I probably don’t speak should be able to make a living. I think more people, who I also don’t know but who live closer to my house, should be able to make a living. How increasing the input costs for products a business might make and stifling competition in those products accomplishes this I’m a bit hazy on at the moment. That does not alter the fundamental truth of the proposition.
c. I believe in fair trade, not free trade. Fair trade is a doctrine that in California in the 1960s said that you cannot sell liquor at a discount or in a supermarket. The more modern meaning is that a nation must have elaborate negotiations akin to what peacocks and peahens go through to have peachicks in order to trade with other nations. The alternative is to have none of that and unilaterally just lower your own barriers to trade all to hell. Simpler, perhaps, but other countries will then be left to pay more for goods and create jobs by some mechanism I am still hazy on. While our country would be forced to endure the “advantages” of free trade. It’s just not fair.
d. Boeing. There I said it. I love him. I want to be his girlfriend. But who am I kidding? He’s always looking at that stuck-up foreign-exchange student from Nor-swe-denmark or East Jesus, Finland or something. She doesn’t understand him. No one does. I do. He’s just too busy making totally ultrabitchin’ airplanes and missiles and satellites in his garage to open a bank account. We all need to pitch in, show some school spirit, and open one for him. Just like those big cheaters in Franco-Germany do for their Mr. Bitchin’ or whatever they call him over there. Miss Wooden-Shoes-and-Tulips knows all about it. Instead the mean kids are making him have to move away. Well, while they’re saying “don’t let the door hit you in the butt on your way out, Boeing,” I’ll be in my room playing Leader of the Pack OVER and OVER and OVER again and waiting by the phone. And crying. You won’t understand. That’s why I hate you. By the way, just for you’re information, I’m not the conceited one. You’re conceited.
e. Frankly, I’ve never been all that clear on what “trade protectionism” actually means. Are we protecting precious trade from something or are we protecting ourselves from the depredations of trade? Either case, I say a mercy-killing works. So while trade sleeps peacefully on the couch, let us go upstairs and get a pillow. Then approaching ever so quietly (but muttering “Trade, you were too good for this world. Trade, thy guilt is great.”), we …
f. We need to manage our trade balances more effectively. Did you know that we’ve run serious trade deficits for most of our nation’s history? Does our chronic and persistent impoverished condition now finally at long last make sense to you? We could be Argentina, people. Fortunately the sure and simple cure for a trade deficit is a recession. I am confident that as a nation we have all the theoretic economic savvy and political will necessary to pull that off.
g. Other. ____
Pencils down.
(By the way, I have no intention of following this thread. I’ll be in my room playing Deborah OVER and OVER and OVER again. Because I like the song. Not that you’d understand. And if Donnie, Bernie, or Boeing call, tell them they can KMRIA. If they don’t know what that means, tell them to read Ulysses. Which is a book. And not the Tennyson poem. Geez.)
Published in Domestic Policy, Economics, Foreign Policy, General
The reason that a lot of the US textile business moved to Asia is that Asia has a comparative advantage in producing textiles. If we let them make the polo shirts and we make the machine parts and then we trade our machine parts for their polo shirts we are both better off. We end up with more polo shirts and machine parts than if we made both ourselves, and so do they.
The US produced 22.5% of world GDP in 2014, with only about 4.6% of the world’s population. With all the companies moving overseas, there is still a lot being produced here. The more productive we are, the higher our standard of living.
Your tariff will only hurt the American consumer by driving prices higher, will stifle competition, and will not really help the American worker. Jobs will be saved in the factory that didn’t move, but jobs that would have been created by the demand for stuff that the Irish would have bought from us will not be created.
And we make the machine parts…
http://www.manufacturingnews.com/news/09/0331/machinetools.html
Headline: How does an industry survive without orders?
I love that free traders always bring up comparative advantage, like a mantra, but never mention Triffin’s dilemma, for example.
Shrug.
Big green- I have a different idea of who doesn’t have a good grasp of the facts. Anyway, have a good day.
The cure for that is to improve the world’s currency practices, not to restrain trade.
By making better machines. Your cited article, from 2009, should be considered in view of these data from 2014:
The only non-political fact you have provided here is your personal experience with the auto industry. The rest is pure speculation. If you don’t believe any of the facts I have provided above, you are free to research and get educated.
I love how someone that has a negative personal experience with free trade always ignores the broader benefits of it and want to “punish” the rest of the nation. Incredibly selfish behavior.
Triffin’s dilemma has to do with certain potential modest negatives of being a reserve currency. It is not exacerbated by free trade.
And tariffs and trade restrictions will further weaken the current advantages you state and exacerbate net job losses by masking the truly serious obstacles to U.S. economic growth that need immediate attention: our outrageous corporate taxes, regulatory overreach within the SEC, FDA, CFPB, EPA, FCC, NRLB, etc., and high-level political corruption which impedes nearly every effort for reform. Meanwhile, we fret about trade imbalances.
Comparative advantage isn’t a “mantra”, it’s basic logic. It’s taught the first week of economics 101 in high schools throughout the world.
And for the last time, I am not and have never been a member of any “elite” class, political or otherwise. Just an average ordinary American from rust belt country who comes to his own conclusions based on the evidence.
When I was first taught about comparative advantage (in graduate school, not high school) I found this simple example to be compelling:
An attorney in a one-man office charges $500 for her time to her clients, and she is well worth it. She is also an excellent typist, capable of typing 100 words a minute. Her practice requires her to do about 10 hours of typing per week, leaving, say, 30 hours for time chargeable to clients at her going rate. She doesn’t bill out the typing time.
She advertises for a typist but the best one she can find can only type 50 words per minute. She will therefore need to work 20 hours to get all the typing done.
If the attorney hires the typist and pays her $20 per hour that will free up 10 hours for the attorney to bill out to clients for a total increase of revenue of (500)(10) = $5,000. She will have to pay the typist (20)(20) = $400.
The typist wins because she is making a nice hourly wage, higher than she could make elsewhere, or she wouldn’t take the job. The attorney wins because her income has gone up by (5,000) – (400) = $4,600. The clients win because the attorney has an additional 10 hours available to take on more clients.
Notice that all this benefit accrues even though the attorney has an absolute advantage in typing and lawyering over the typist.
This is why I think discussing this topic is like discussing religion. Nothing free traders say can ever be falsified. You say Asia has a comparative advantage in textiles, so we sell them machine parts. Thinking you meant machine tools, I googled US machine tool industry, and came up with that. That took about five seconds, and I think I demonstrated that the US machine tool industry is in trouble.
You can, however, easily navigate your way to the home page of that organization, which I just did, and found this:
http://www.manufacturingnews.com/news/factorylessgoodsmanufacturers0820131.html
“For the purpose of balance of payments, goods that are manufactured overseas for U.S. companies are not going to be considered imports any more, they are going to be just U.S. production,” notes William Powers of the International Trade Commission.
Another win for free trade!!!
I will note that I have never said nor do I believe that the US exports nothing, even to China, even machines.
More about that, next reply.
Once again you are begging the question. You assert the awesomeness of free trade, which I dispute, which you follow up by another assertion of awesomeness.
This is not helping you argument. Neither is your complaint that I am “selfish” or the nonsense assumptions you have added to what I argue above, which I didn’t bother to respond to previously.
My negative experience is what is called “experience.” It informs how I view the world, and how I view your happy time assertions. Multiply my sort of experience by millions and you explain why Mitt Romney is not president.
That’s why I mention politics in the context of this argument. Since I believe we’d be much better off with a president Romney, despite his disagreement with me on this issue, I’d really like the GOP to STFU about this issue for a while- perhaps even mouth a few platitudes like Trump has done.
But no, because the GOP is the stupid party it just can’t hide the contempt for people such as myself, or stop lecturing and insulting us.
You know, like you’ve done here.
I’m familiar with “comparative advantage. I can recall examples from two different economic textbooks- one using oranges as an example, another coffee- that were used when I took economics in college.
My problem is that neither example is a manufactured good. So I wondered just how so many other countries just happened to develop comparative advantages that were driving manufacturing inside the US into bankruptcy.
That’s where Triffin’s dilemma comes into play. The relevant aspect is that eventually the labor of a nation whose money is used as a reserve currency will find that labor priced out of the market.
Seem familiar? That’s how every other friggin’ nation on this planet suddenly was able to get a comparative advantage over the US, for everything from textiles to machine tools.
Man with the axe- yeah, improving the word’s currency practice would fix this- but the US government has no interest in making this happen. That’s a problem, I say.
Anyway- I’d never heard of Triffin’s dilemma until a random commenter at Zerohedge happened to mention it.
MBF- Pro-free trade economic principles are taught everywhere, concepts that that imply that free trade will be a disaster for the US are taught- well, not everywhere.
This aligns with the idea that the US government believes itself to be global hegemon but that’s another miserable though related topic.
I am not begging the question…you claim to understand comparative advantage, you chose not to respond to my question about free trade within the US, refused to respond to my question about you trading with more rather than fewer partners and have not responded at all to the reasons for “job losses” (the vast majority not a result of free trade) I have mentioned. So, since we have dealt with the overblown canards regarding the negatives of free trade there is no further “proof” required. You answered the questions by omission.
Romney isn’t the president primarily because he is a poor retail politician. Now, I know that you would link this back to free trade, but the man that won the election has behaved similar to what Romney would have on free trade so that dog doesn’t hunt.
As for your “experience” argument, it doesn’t hold water. You had a poor a poor experience with it and I am sorry for that. However, it is a fallacy to conclude that the majority of other citizens had a similarly poor experience. They haven’t. It has been a good thing for many, many people and even you in some respects. Your desire to deny the nation these benefits is indeed selfish.
Every other “friggin'” nation on this planet does not have a comparative advantage over the US. The value of manufactured goods produced in the US is higher than it has ever been. Exports too. Not sure why you just choose to ignore this. Fortunately, Triffin’s dilemma in this respect is balderdash and the US has not found its labor priced out of the world market.
I suggest you do some research on the cause of the vast majority of “job losses”…it isn’t global free trade, that’s for sure.
They used to do that in France. This is pretty well known, since it’s played an important part in the history of economics. I find it’s slightly less well known that they still have them in Brazil. You’ll have to work harder than that to make your reductio absurd enough to be a parody, rather than an actual policy maintained by people with actual power.
I think that this is untrue by definition, unless there is an exact clone of the US out there. The rest of your statement is true, and the US is not struggling to keep up economically with Mexico, Japan, China, Russia, Bangladesh, or wherever the bete noire du jour is, but if you’re trying to instruct someone you should keep your terminology disciplined.
Big Green- I chose not to answer your question about free trade within the US as it struck me as an obvious attempt at a slur. I support free trade within the United States because the United States is one nation. Plus, it was written into the Constitution.
About Romney, I have no doubt he is not president courtesy to his terrible lack of political ability. But my view is that it shouldn’t have even been close when running against such an incompetent disaster as Barry Obama- and one important reason why it was close is that too many voters recall losing their job during the Bush administration, and thought poorly of him and his party as a result.
And yes, I know Barry supports free trade too, as did Clinton before him, and democrats going all the way back to Jefferson Davis. But the GOP is such a stunning pile of ineptitude that it happily accepts any blame the democrats want it to accept, and this is no exception. This is also why a former reality TV star is crushing the rest of the GOP field like a bug, including the guy who was going to raise so much money that no one else would dare run against him.
About my selfishness- oh, yeah. I am quite thoroughly selfish and self interested, like everyone else, and I find your attempt to make me feel bad about that hilarious.
This follows from the use of the US dollar as a reserve currency and the historical importance of the United States and its manufacturing economy.
What do you expect the slow process of the US collapse to look like?
Anyway, when it pays to film American workers, move the machinery they previously operated to another country, and then resume using it in exactly the same manner as the US workers did, and training the foreign workers using those films- yeah, I say that means American labor is being priced out of the world market.
And just wait until the TPP goes through. Then foreigners will be able to move here, replace American workers, get food stamps and medicaid- and probably vote, too.
Won’t that be awesome? Free trade FTW.
Fair point…I was attempting to paraphrase something in his post and I should have added “in all products and services” at the end of the sentence.
If you are of this view…then you should extend it globally for starters with the understanding that there are significant differences in labor costs and other regulations within the borders of the US.
You are absolutely correct that free trade is effectively enshrined in the Constitution, perhaps you could ask yourself why that is the case. Why did they consider it so important? It was primarily for two reasons if you read the Federalist papers….the first was that they thought that free and unfettered trade would enrich the citizens of the nation and secondly it would foster cohesion and common cause.
I have no interest in making you feel bad about it, I am simply making a statement in regards to the consequences of the policies you support. Everyone is “self interested” but your selfishness here is much different than what Adam Smith espoused….you want to deny other people the ability to trade freely. That is deeply unconservative.
You still totally ignore the fact that the value of manufactured goods in the US is higher than it has ever been. Exports too. How can this be possible if all American labor and production is being priced out of the world market? No doubt some of it is, but there is also no doubt that the bigger impact on the reduction in the number employed in manufacturing in the US is a result of efficiency and automation in the US. US reserve currency status has very little, if anything, to do with this dynamic.
As for TPP, I do share some of your concerns specifically related to what you outlined above.
As for as a slow decline, it will entirely come from within like it has for most civilizations. Making promises that can’t be kept, unnafordable entitlements and debauching the currency. I could argue that unfettered free trade will actually delay it. Let’s see, folks in other countries toil away making “stuff”, they ship it here and we give them pieces of paper that only have value to purchase US goods. If anything, Trump has it exactly backwards, we are taking them to the cleaners.
Some very relevant thoughts from Don Boudreaux of the Cafe Hayek Blog
“Yes. And it matters not how Americans (or, more generally, how denizens of whatever country is considered to be the ‘domestic’ one) gain greater access to goods and services produced globally.
If the Chinese become zealous devotees of a religion whose doctrine requires that they serve Americans by shipping to Americans goods and services free of charge, then Americans are made better off. If the Chinese innovate in ways that lower their costs of production – and distribution and, thus, enable them to sell goods and services to Americans at lower prices – then Americans are made better off. If the Chinese invent new products and offer to sell these new products to Americans at prices that Americans find attractive, Americans are made better off. If the forces of international competition oblige Chinese producers to lower their export prices to levels closer to their costs of production, then Americans are made better off. If the Chinese government forces Chinese citizens to subsidize the production of goods and services sold to Americans so that Americans can purchase these goods and services at artificially low prices, then Americans are made better off (although Chinese citizens, other than those involved in the export trade, are made unjustifiably worse off). If the Chinese monetary authority buys U.S. dollars with newly created yuan in order to (of necessity temporarily) make Chinese exports artificially inexpensive for Americans to buy, then Americans are made better off (although Chinese citizens, other than those involved in the export trade, are made unjustifiably worse off).
The above reality is missed by people, such as Donald Trump (but hardly limited to him) who judge trade to be ‘successful’ only if the jobs and businesses that it visibly – that is, directly – creates in the domestic economy are perceived as being greater than the number of jobs and businesses that it visibly destroys. This error is among the oldest and most difficult to kill in economics – not only because this error is serviceable to domestic producers who greedily seek protection from competition, but also because it appeals to people who refuse to think beyond what is immediately and blindingly obvious.”
This concept of the “visibility” of jobs seems to dominate these types of discussions.
cd
The seen and the unseen. — Bastiat
Free trade between the states was written into the Constitution because the Founders wanted the United States to be one nation. Free trade between the US and other nations was not written into the Constitution-quite the opposite.
You baseless assertion that it was written into the Constitution strikes me as an attempt to be deceitful. And your silly attempts to shame me by claiming I am “not conservative,” after previously attempting to make me feel guilty by complaining that I am “selfish,” remind me of when I used to argue with leftists.
Pitiful.
Free trade between the US and other nations is not in the constitution because our constitution has nothing to do with other nations. Trade agreements how we trade with other nations.
We can have free agreements with some nations and not with others. From an Economics pov (understanding that there will be localized consequences) Free trade leads to more prosperity over time at a national level.
Follow the context of the discussion. I was clearly referring to free trade between the states being written into the constitution….not between nations. I was not being deceitful. Free trade between nations is not in The Constitution because it is a document dealing with domestic issues and doesn’t lay out specifics in regards to relations with other nations. Geez.
I am not trying to shame you or make you feel guilty. Stop being so sensitive and just deal with the argument at hand. Your position here is deeply unconservative and you clearly want to deny other citizens of this nation the benefits of free trade. It is selfish.
I don’t think calling a spade a spade is attempting to shame someone…especially someone that chooses to ignore or dismiss any shred of evidence that is counter to their world view.
Just to note that when you start finding yourself using single word sentences to deride your interlocutor, that’s a pretty good sign that you should be making an extra effort to be polite and generous in your assessment of their comments. It’s much easier to steer closer to the boundaries of the CoC when you’re not really feeling the respect.
Xennady = troll = dis-engage
Xennady can get angry about the issue, but I’m confident that his beliefs on this are genuine. There are sometimes good reasons to disengage (for me, this time, it’s time based; I find I can get sucked into conversations and research with Xennady on this stuff), but this is not one of them.
Finding a conversation to be frustrating is always a good reason to disengage from it, although if one chooses not to, sometimes those can end up being the most rewarding and educating conversations.
“The above reality is missed by people, such as Donald Trump (but hardly limited to him) who judge trade to be ‘successful’ only if the jobs and businesses that it visibly – that is, directly – creates in the domestic economy are perceived as being greater than the number of jobs and businesses that it visibly destroys.”
I note that the United States has not done especially well in job creation in recent years. I argue that a significant reason is the complete indifference of the US government as to where economic activity takes place, along with second order effects related to the unwillingness of Americans to go deep into debt in order to learn skills that they expect to be completely useless when that potential source of employment departs the United States. In other words free traders such as yourself want to recite liturgical poetry about the seen and unseen per the prophet Bastiat but you do not seem to notice that the unseen also includes jobs not created because free trade moves the economic activity that creates them out of the country.
Plus, the loss of jobs generates another problem- the unwillingness of the electorate to vote for people deemed to be supporters of the policy of indifference to the actual United States and its economy.
Hence, the election of Barry Obama, and the surprising success of Donald Trump.
Also- I note that at the time you called me a troll I had not responded to you in any way.
You make good points. To be blunt commenting on the internet is something I do for fun, and often I don’t have enough time or interest to put in genuine work.