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. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    HeavyWater (View Comment):

    Bryan G. Stephens (View Comment):

    HeavyWater (View Comment):

    When a government engages in trade protectionism it is essentially placing economic sanctions on itself.

    Under free trade, I, living here in Indiana, have access to avocados, potatoes, automobiles, clothing and furniture made anywhere in the world.

    Under trade protectionism, I only have access to those goods made in the United States.

    If an effective, powerful anti-cancer drug were invented in Brazil, you can be darned sure that even a die hard supporter of Trump would prefer a regime of free trade over protectionism if he were diagnosed with cancer.

    Similarly, if you really like German sports cars, you aren’t going to like the US government getting in between you and your favorite German auto import.

    Free trade, free association, free speech and free enterprise.

    You mention drugs. Right now, the world steals the IP of American drug development. Brazil is not about to invent anything. The world milks off our development. Americans, right now, pays the development costs, and everyone else gets them much closer to production costs. Will the Free Traders defend that?

    I won’t defend the theft of intellectual property.

    But remember, Trump hasn’t been making the case for trade protectionism just based on defense of intellectual property rights. He’s been talking about trade deficits, as if trade deficits are bad.

    If I buy groceries from a supermarket, I have a trade deficit with the supermarket. That’s not a bad thing.

    I hope Trump talks more to Larry Kudlow and less to his secretary of commerce. He’ll soon realize that he went down the wrong road on trade. But maybe that’s hoping too much. Back in the 1980s, Trump said that Japan was eating our lunch economically. He’s been wrong on trade his entire life. Oh, well. Nobody’s perfect.

     

    I am not really talking about Trump in this post. In fact, I did not mention his name at all. So, as a Free Trader, what should the response be to the theft of IP? I assume economic sanctions are not on the table, as that is not free trade. What is your proposed solution?

    • #31
  2. A-Squared Inactive
    A-Squared
    @ASquared

    Bryan G. Stephens (View Comment):

     

    You mention drugs. Right now, the world steals the IP of American drug development. Brazil is not about to invent anything. The world milks off our development. Americans, right now, pays the development costs, and everyone else gets them much closer to production costs.

    Not really. Most pharmaceutical research happens offshore and, from what I recall from the last time I did significant work in the pharma industry, many if not most drugs get approved in Europe before they do in the US because their approval process is much quicker and cheaper. 

    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.  

     

     

    • #32
  3. Misthiocracy, Joke Pending Member
    Misthiocracy, Joke Pending
    @Misthiocracy

    Bryan G. Stephens: 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. 

    How would putting a tariff on Russian energy imports help average Germans?  The result would be increased prices for nearly everything they buy.

    The problem with Germany’s energy trade isn’t that it’s too “free”, but rather that Germany is too dependent on a single supplier for a particular commodity.  Germany should be diversifying its energy consumption, so that it can take advantage of competition between different suppliers. 

    German energy production didn’t shut down because German consumers preferred cheaper foreign imports.  The German government chose to shut down domestic coal and nuclear plants in favour of importing “cleaner” natural gas.

    It would be like if the US government decided to ban the manufacture of automobiles because car factories are icky.  In that case it would have no choice but to import all its cars.  That wouldn’t be an example of “free” trade.

    • #33
  4. HeavyWater Inactive
    HeavyWater
    @HeavyWater

    Bryan G. Stephens (View Comment):

    HeavyWater (View Comment):

    Bryan G. Stephens (View Comment):

    HeavyWater (View Comment):

    When a government engages in trade protectionism it is essentially placing economic sanctions on itself.

    Under free trade, I, living here in Indiana, have access to avocados, potatoes, automobiles, clothing and furniture made anywhere in the world.

    Under trade protectionism, I only have access to those goods made in the United States.

    If an effective, powerful anti-cancer drug were invented in Brazil, you can be darned sure that even a die hard supporter of Trump would prefer a regime of free trade over protectionism if he were diagnosed with cancer.

    Similarly, if you really like German sports cars, you aren’t going to like the US government getting in between you and your favorite German auto import.

    Free trade, free association, free speech and free enterprise.

    You mention drugs. Right now, the world steals the IP of American drug development. Brazil is not about to invent anything. The world milks off our development. Americans, right now, pays the development costs, and everyone else gets them much closer to production costs. Will the Free Traders defend that?

    I won’t defend the theft of intellectual property.

    But remember, Trump hasn’t been making the case for trade protectionism just based on defense of intellectual property rights. He’s been talking about trade deficits, as if trade deficits are bad.

    If I buy groceries from a supermarket, I have a trade deficit with the supermarket. That’s not a bad thing.

    I hope Trump talks more to Larry Kudlow and less to his secretary of commerce. He’ll soon realize that he went down the wrong road on trade. But maybe that’s hoping too much. Back in the 1980s, Trump said that Japan was eating our lunch economically. He’s been wrong on trade his entire life. Oh, well. Nobody’s perfect.

    I am not really talking about Trump in this post. In fact, I did not mention his name at all. So, as a Free Trader, what should the response be to the theft of IP? I assume economic sanctions are not on the table, as that is not free trade. What is your proposed solution?

    I don’t have one, except perhaps take these issues to the World Trade Organization.  

    I admit that free trade doesn’t solve all of our problems.  But I think it’s like Winston Churchill’s comments on democracy.  It’s the worse system except for the alternatives. 

     

    • #34
  5. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Also, 

    I see no one has even addressed the very real loss of jobs for people of lower IQ. Note, I had trade as 1/3 of those items. It seems to me, if you want to sell me on free trade, you need some numbers to show that all those people who lots jobs got new ones.

    Of course, I want to know how soon they got them. How much did their standards of livings fall? Did they lose their homes? Did their marriages fail? How bad was it for them? 

    If someone came to me and said “Hey, if you spend an extra $100 a year on goods, and everyone does it, 30,000 Americans won’t face bankruptcy” I’d have to think about it.

    • #35
  6. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    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. 

    • #36
  7. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    Bryan G. Stephens (View Comment):

    HeavyWater (View Comment):

    When a government engages in trade protectionism it is essentially placing economic sanctions on itself.

    Under free trade, I, living here in Indiana, have access to avocados, potatoes, automobiles, clothing and furniture made anywhere in the world.

    Under trade protectionism, I only have access to those goods made in the United States.

    If an effective, powerful anti-cancer drug were invented in Brazil, you can be darned sure that even a die hard supporter of Trump would prefer a regime of free trade over protectionism if he were diagnosed with cancer.

    Similarly, if you really like German sports cars, you aren’t going to like the US government getting in between you and your favorite German auto import.

    Free trade, free association, free speech and free enterprise.

    You mention drugs. Right now, the world steals the IP of American drug development. Brazil is not about to invent anything. The world milks off our development. Americans, right now, pays the development costs, and everyone else gets them much closer to production costs. Will the Free Traders defend that?

    It’s not “American” drug development. It’s Johnson and Johnson or Merck’s drug development. There are existing remedies for this kind of theft. 

    • #37
  8. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    A-Squared (View Comment):

    Bryan G. Stephens (View Comment):

     

    You mention drugs. Right now, the world steals the IP of American drug development. Brazil is not about to invent anything. The world milks off our development. Americans, right now, pays the development costs, and everyone else gets them much closer to production costs.

    Not really. Most pharmaceutical research happens offshore and, from what I recall from the last time I did significant work in the pharma industry, many if not most drugs get approved in Europe before they do in the US because their approval process is much quicker and cheaper.

    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.

     

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

    Funny, though, you seem to be saying that increasing imports (i.e. free trade of drugs) would not decrease prices. I don’t understand. Furthermore, the lower prices for drugs in other nations are enforced by those governments. So, if we had total free trade on drugs with no price controls, which seems to be what Free trade wants, it would not lower our prices and make it worse elsewhere? 

    • #38
  9. Misthiocracy, Joke Pending Member
    Misthiocracy, Joke Pending
    @Misthiocracy

    Bryan G. Stephens (View Comment):
    I see no one has even addressed the very real loss of jobs for people of lower IQ. Note, I had trade as 1/3 of those items. It seems to me, if you want to sell me on free trade, you need some numbers to show that all those people who lots jobs got new ones.

    Firstly, you’ll have to show to me that all those people lost their jobs because of trade and not because of advancements in technology, minimum wage laws, occupational licencing, environmental regulation, land-use regulation, occupational health and safety regulation, etc. etc. etc.

    Are you saying that all people doing those jobs in China have low IQ?  Most studies show China has some of the highest average IQ stats of any country.

    Furthermore, it wouldn’t really fill consumers with confidence to suggest that “Made In America” means “made by dullards”.

    • #39
  10. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Misthiocracy, Joke Pending (View Comment):

    Bryan G. Stephens: 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.

    How would putting a tariff on Russian energy imports help average Germans? The result would be increased prices for nearly everything they buy.

    The problem with Germany’s energy trade isn’t that it’s too “free”, but rather that Germany is too dependent on a single supplier for a particular commodity. Germany should be diversifying its energy consumption, so that it can take advantage of competition between different suppliers.

    German energy production didn’t shut down because German consumers preferred cheaper foreign imports. The German government chose to shut down domestic coal and nuclear plants in favour of importing “cleaner” natural gas.

    It would be like if the US government decided to ban the manufacture of automobiles because car factories are icky. In that case it would have no choice but to import all its cars. That wouldn’t be an example of “free” trade.

    OK, so we would never have a situation short of government intervention, where a state could become to dependent upon one source of foreign energy?

    • #40
  11. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    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?

    • #41
  12. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Jamie Lockett (View Comment):

    Bryan G. Stephens (View Comment):

    HeavyWater (View Comment):

    When a government engages in trade protectionism it is essentially placing economic sanctions on itself.

    Under free trade, I, living here in Indiana, have access to avocados, potatoes, automobiles, clothing and furniture made anywhere in the world.

    Under trade protectionism, I only have access to those goods made in the United States.

    If an effective, powerful anti-cancer drug were invented in Brazil, you can be darned sure that even a die hard supporter of Trump would prefer a regime of free trade over protectionism if he were diagnosed with cancer.

    Similarly, if you really like German sports cars, you aren’t going to like the US government getting in between you and your favorite German auto import.

    Free trade, free association, free speech and free enterprise.

    You mention drugs. Right now, the world steals the IP of American drug development. Brazil is not about to invent anything. The world milks off our development. Americans, right now, pays the development costs, and everyone else gets them much closer to production costs. Will the Free Traders defend that?

    It’s not “American” drug development. It’s Johnson and Johnson or Merck’s drug development. There are existing remedies for this kind of theft.

    Being told by a government “Sell at our prices, or we will just manufacture it anyway and you get nothing” is done all the time. What are the remedies for that? I don’t think companies have much recourse in those instances. 

     

    • #42
  13. #OMyGod Inactive
    #OMyGod
    @IanMullican

    I’m in the same boat you are Bryan, I’m cooling to absolutely 100% free trade as it is.  Here is a starter on MAGAnomics for those interested.

    Some haven’t come to the realization yet that the tariffs are a means to an end, and not the end themselves.  It’s been stated repeatedly by Wilbur Ross that the goal is 0 tariffs, 0 non-tariff trade barriers, and 0 subsidies.  I’m not sure why everyone doesn’t see this yet, and the temporary tariffs were a way to get partners who have been taking advantage of us to the table to get rid of THEIR tariffs, subsidies, etc.  How is this a bad thing?  

     

    • #43
  14. HeavyWater Inactive
    HeavyWater
    @HeavyWater

    Bryan G. Stephens (View Comment):

    Misthiocracy, Joke Pending (View Comment):

    Bryan G. Stephens: 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.

    How would putting a tariff on Russian energy imports help average Germans? The result would be increased prices for nearly everything they buy.

    The problem with Germany’s energy trade isn’t that it’s too “free”, but rather that Germany is too dependent on a single supplier for a particular commodity. Germany should be diversifying its energy consumption, so that it can take advantage of competition between different suppliers.

    German energy production didn’t shut down because German consumers preferred cheaper foreign imports. The German government chose to shut down domestic coal and nuclear plants in favour of importing “cleaner” natural gas.

    It would be like if the US government decided to ban the manufacture of automobiles because car factories are icky. In that case it would have no choice but to import all its cars. That wouldn’t be an example of “free” trade.

    OK, so we would never have a situation short of government intervention, where a state could become to dependent upon one source of foreign energy?

    I am pretty sure that Singapore is dependent on foreign sources of energy, food and lots of other stuff.  Singapore is a small city state.  I bring it up because Singapore demonstrates why free trade is beneficial.  If Singapore pursued a protectionist trade policy, it might be able to produce its own energy and food, but at much higher cost and lower standards of living would result.

     

    • #44
  15. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Misthiocracy, Joke Pending (View Comment):

    Bryan G. Stephens (View Comment):
    I see no one has even addressed the very real loss of jobs for people of lower IQ. Note, I had trade as 1/3 of those items. It seems to me, if you want to sell me on free trade, you need some numbers to show that all those people who lots jobs got new ones.

    Firstly, you’ll have to show to me that all those people lost their jobs because of trade and not because of advancements in technology, minimum wage laws, occupational licencing, etc.

    Are you saying that all people doing those jobs in China have low IQ?

    Gosh no. People with high IQ can do them. What I am saying is we have less jobs for people with low IQ, and many of the ones we used to have had gone off shore. Low skilled jobs have been offshored for ages now. Maybe there are many new jobs for low skilled workers to replace those jobs lost, that pay just as much. I am not aware of them, however. The Service Industry sure does not. 

    Something happened to jobs when they went to China. We just lived through the lowest workforce engagement in history of the nation. Something happened. What was it? Trade had no effect at all? Jobs being moved did not cost people work, at all?

    • #45
  16. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    HeavyWater (View Comment):

    Bryan G. Stephens (View Comment):

    Misthiocracy, Joke Pending (View Comment):

    Bryan G. Stephens: 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.

    How would putting a tariff on Russian energy imports help average Germans? The result would be increased prices for nearly everything they buy.

    The problem with Germany’s energy trade isn’t that it’s too “free”, but rather that Germany is too dependent on a single supplier for a particular commodity. Germany should be diversifying its energy consumption, so that it can take advantage of competition between different suppliers.

    German energy production didn’t shut down because German consumers preferred cheaper foreign imports. The German government chose to shut down domestic coal and nuclear plants in favour of importing “cleaner” natural gas.

    It would be like if the US government decided to ban the manufacture of automobiles because car factories are icky. In that case it would have no choice but to import all its cars. That wouldn’t be an example of “free” trade.

    OK, so we would never have a situation short of government intervention, where a state could become to dependent upon one source of foreign energy?

    I am pretty sure that Singapore is dependent on foreign sources of energy, food and lots of other stuff. Singapore is a small city state. I bring it up because Singapore demonstrates why free trade is beneficial. If Singapore pursued a protectionist trade policy, it might be able to produce its own energy and food, but at much higher cost and lower standards of living would result.

     

    Sure. Though, I don’t think Singapore or New Zeland are great comparisons for America or Germany. I mean, let’s be honest, trying to have strategic reserves only makes sense as a great power. 

    • #46
  17. I Walton Member
    I Walton
    @IWalton

    Mike-K (View Comment):

    I Walton (View Comment):
    it rests on market adjustments, innovation, adaptation, and when trade hurts it’s because we’re doing dumb things that shackle our economy. Protectionism is one of those things along with regulations, taxes and rotten schools that make trade painful.

    The other factor you seem to not mention is the massive theft of technology China has indulged in, often with the help of people like Bill Clinton who approved Loral shipment of ICBM navigation technology and Soviet theft but mostly of defense secrets which did not do them much good.

    China is our big rival and they have been the beneficiary of uneven trade practice since Nixon. Like Affirmative Action, it is well past the time for us to end that favoritism. It may require temporary tariffs but this is nothing like Smoot-Hawley, that affected all of Europe.

    Yes not in the discussion  and since China will be challenging us into the foreseeable future we had better select tools, weapons and levers that do not harm us so obviously and which are sustainable.  Strengthening the administrative state is our problem not the way out of our problems. Strategic trade controls strengthen the administrative state as well, and don’t work well, but target the culprit directly and  do less harm to us, at least in the short term.   Restricting technology sales and punishing those who steal them strengthens the state as well and aren’t easy either but will harm them more than us again in the short term.  Not granting so many visas may cost us something but is aimed at technology transfers but reduces our influence in the long term.  So most weapons are problematical because they strengthen the State but if we consider ourselves in a strategic long term struggle with China we may have to play hardball.  I’d much prefer just sound domestic tax and regulatory policies that make us economically and strategically stronger while we wait for China’s long term disease of corruption growing out of their centralized system to gradually rot them from within as it always has in the past.   We’ve a great deal that we can do where we have control, right here in the US.  We don’t control other countries. We can jab and hope.  That’s a domestic political strategy, pr, elections, not a foreign, economic  or trade policy.  Fixing our own system is just a lot harder than posturing and doing things that please some interests. 

    • #47
  18. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    Bryan G. Stephens (View Comment):
    I see no one has even addressed the very real loss of jobs for people of lower IQ. Note, I had trade as 1/3 of those items. It seems to me, if you want to sell me on free trade, you need some numbers to show that all those people who lots jobs got new ones.

    First, you must establish that those jobs were lost to trade and not automation, or shifts in consumer taste or a thousand other reasons that could cause job loss. This is the problem with central planning (and yes Trade Protectionism is central planning) no one possesses the knowledge necessary to turn the dials in such a way as to achieve the optimal outcome. Conservatives are rightfully quite wary of elites and their plans: why do you think the mandarins are suddenly capable of achieving better outcomes than the market? 

    Jobs actually lost to NAFTA (a good example of Free Trade working): https://www.businessinsider.com/did-nafta-cost-or-create-jobs-2017-3

    Hard to tell basically. 

    Bryan G. Stephens (View Comment):
    Of course, I want to know how soon they got them. How much did their standards of livings fall? Did they lose their homes? Did their marriages fail? How bad was it for them? 

    How is it possible for anyone to provide you with that information? Can you prove that trade protectionism would have prevented these occurrences?

    Bryan G. Stephens (View Comment):
    If someone came to me and said “Hey, if you spend an extra $100 a year on goods, and everyone does it, 30,000 Americans won’t face bankruptcy” I’d have to think about it.

    Good for you, there are charities you can donate to in that case. Why would you force people who maybe can’t afford that $100 to donate it to a cause you deem worthy? What of those people who lose their jobs because the price of steel went up to satiate the steel lobby and their boss cuts their workforce by 25%? 
     

    • #48
  19. HeavyWater Inactive
    HeavyWater
    @HeavyWater

    Bryan G. Stephens (View Comment):

    HeavyWater (View Comment):

    Bryan G. Stephens (View Comment):

    Misthiocracy, Joke Pending (View Comment):

    Bryan G. Stephens: 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.

    How would putting a tariff on Russian energy imports help average Germans? The result would be increased prices for nearly everything they buy.

    The problem with Germany’s energy trade isn’t that it’s too “free”, but rather that Germany is too dependent on a single supplier for a particular commodity. Germany should be diversifying its energy consumption, so that it can take advantage of competition between different suppliers.

    German energy production didn’t shut down because German consumers preferred cheaper foreign imports. The German government chose to shut down domestic coal and nuclear plants in favour of importing “cleaner” natural gas.

    It would be like if the US government decided to ban the manufacture of automobiles because car factories are icky. In that case it would have no choice but to import all its cars. That wouldn’t be an example of “free” trade.

    OK, so we would never have a situation short of government intervention, where a state could become to dependent upon one source of foreign energy?

    I am pretty sure that Singapore is dependent on foreign sources of energy, food and lots of other stuff. Singapore is a small city state. I bring it up because Singapore demonstrates why free trade is beneficial. If Singapore pursued a protectionist trade policy, it might be able to produce its own energy and food, but at much higher cost and lower standards of living would result.

    Sure. Though, I don’t think Singapore or New Zeland are great comparisons for America or Germany. I mean, let’s be honest, trying to have strategic reserves only makes sense as a great power.

    Maybe.  But the reason why the United States has restrictions on imported sugar isn’t due to national security.  It’s because American sugar farmers lobby the US government for protection against less expensive imported sugar.  

    This sugar protectionism might be good for sugar farmers.  But it’s not good if you are a business consumer of sugar or an individual consumer of it.  

    There will be some beneficiaries of trade protectionism and there will be some people/businesses hurt by trade protectionism.  

    Quite often, as is the case with sugar protectionism, the protectionists win the policy fight because the costs of protectionism are spread among the general population while the benefits are concentrated to a single industry.  

     

    • #49
  20. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    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? 

    • #50
  21. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    Bryan G. Stephens (View Comment):

    Jamie Lockett (View Comment):

    Bryan G. Stephens (View Comment):

    HeavyWater (View Comment):

    When a government engages in trade protectionism it is essentially placing economic sanctions on itself.

    Under free trade, I, living here in Indiana, have access to avocados, potatoes, automobiles, clothing and furniture made anywhere in the world.

    Under trade protectionism, I only have access to those goods made in the United States.

    If an effective, powerful anti-cancer drug were invented in Brazil, you can be darned sure that even a die hard supporter of Trump would prefer a regime of free trade over protectionism if he were diagnosed with cancer.

    Similarly, if you really like German sports cars, you aren’t going to like the US government getting in between you and your favorite German auto import.

    Free trade, free association, free speech and free enterprise.

    You mention drugs. Right now, the world steals the IP of American drug development. Brazil is not about to invent anything. The world milks off our development. Americans, right now, pays the development costs, and everyone else gets them much closer to production costs. Will the Free Traders defend that?

    It’s not “American” drug development. It’s Johnson and Johnson or Merck’s drug development. There are existing remedies for this kind of theft.

    Being told by a government “Sell at our prices, or we will just manufacture it anyway and you get nothing” is done all the time. What are the remedies for that? I don’t think companies have much recourse in those instances.

     

    You realize that what your proposing is “sell at our prices or we will tax our citizens until those prices are reached anyway”, right?

    • #51
  22. I Walton Member
    I Walton
    @IWalton

    Bryan G. Stephens (View Comment):

    I Walton (View Comment):

    Hang On (View Comment):

    I Walton (View Comment):
    The best thing is to continue to reduce regulations, fix our schools, lower our taxes and replace distorting taxes with taxes fall on consumptions and imports not work, savings and investment. That is what caused the miraculous change in New Zealand.

    It’s not completely clear in this sentence, but if you’re saying taxes should fall on consumption, aren’t tariffs consumption taxes?

    And on fixing schools, I agree. But (you knew but was coming) it’s not and shouldn’t be a federal matter (unlike in New Zealand). Where they went was to nationwide charter schools. It required alot of parent buy-in, time and effort. There are places that’s not going to work. Helen Ladd has written about this.

    I Walton (View Comment):
    We don’t have to passively accept China’s cheating, but we have to use sustainable and effective tools, not clumsy special interest driven protectionism and subsidies.

     

     

    I am sure I don’t like any VAT of any type. I am all for end consumption taxes being a Fair Tax guy.

    This still does not address strategic issues. If we have to buy all of our computer parts from China, that hurts our security. Data is hard enough to secure now, what is to stop the Chinese from building backdoors into everything?

    Fair tax is more expensive, easier to cheat on.   Are you familiar with the VAT as imposed in New Zealand?  Are you sure you are not confusing it with a turnover tax?  Or thinking about it as Europeans impose it?  New Zealand cut income taxes by half, and with a uniform 10% VAT ended their domestic and external debt in a year.  It almost self collects if no good is excluded and the rate is uniform.  It can’t be cheated on.  Unlike the fair tax,  is collected on imports and enjoys a border tax adjustment for exports.  We have to figure out how to deal with China’s dominance in a lot of the technologies.  Tariffs on steel and aluminum do not address these issues.  

    • #52
  23. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    Bryan G. Stephens (View Comment):

    Misthiocracy, Joke Pending (View Comment):

    Bryan G. Stephens (View Comment):
    I see no one has even addressed the very real loss of jobs for people of lower IQ. Note, I had trade as 1/3 of those items. It seems to me, if you want to sell me on free trade, you need some numbers to show that all those people who lots jobs got new ones.

    Firstly, you’ll have to show to me that all those people lost their jobs because of trade and not because of advancements in technology, minimum wage laws, occupational licencing, etc.

    Are you saying that all people doing those jobs in China have low IQ?

    Gosh no. People with high IQ can do them. What I am saying is we have less jobs for people with low IQ, and many of the ones we used to have had gone off shore. Low skilled jobs have been offshored for ages now. Maybe there are many new jobs for low skilled workers to replace those jobs lost, that pay just as much. I am not aware of them, however. The Service Industry sure does not.

    Something happened to jobs when they went to China. We just lived through the lowest workforce engagement in history of the nation. Something happened. What was it? Trade had no effect at all? Jobs being moved did not cost people work, at all?

    Would you put similar restrictions on technological advancement?

    I mean I can create instant 100% employment tomorrow: outlaw all mechanical equipment from backhoes to computers. 

    • #53
  24. Hammer, The (Ryan M) Member
    Hammer, The (Ryan M)
    @RyanM

    Jamie Lockett (View Comment):

    Mike-K (View Comment):

    I Walton (View Comment):
    it rests on market adjustments, innovation, adaptation, and when trade hurts it’s because we’re doing dumb things that shackle our economy. Protectionism is one of those things along with regulations, taxes and rotten schools that make trade painful.

    The other factor you seem to not mention is the massive theft of technology China has indulged in, often with the help of people like Bill Clinton who approved Loral shipment of ICBM navigation technology and Soviet theft but mostly of defense secrets which did not do them much good.

    China is our big rival and they have been the beneficiary of uneven trade practice since Nixon. Like Affirmative Action, it is well past the time for us to end that favoritism. It may require temporary tariffs but this is nothing like Smoot-Hawley, that affected all of Europe.

    What does theft have to do with trade?

    Also:  Define “uneven trade practices.”  This is a term that gets thrown around _a lot_ these days, but it needs to be defined for it to have any useful meaning.

    • #54
  25. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Jamie Lockett (View Comment):

    Bryan G. Stephens (View Comment):
    I see no one has even addressed the very real loss of jobs for people of lower IQ. Note, I had trade as 1/3 of those items. It seems to me, if you want to sell me on free trade, you need some numbers to show that all those people who lots jobs got new ones.

    First, you must establish that those jobs were lost to trade and not automation, or shifts in consumer taste or a thousand other reasons that could cause job loss. This is the problem with central planning (and yes Trade Protectionism is central planning) no one possesses the knowledge necessary to turn the dials in such a way as to achieve the optimal outcome. Conservatives are rightfully quite wary of elites and their plans: why do you think the mandarins are suddenly capable of achieving better outcomes than the market?

    Jobs actually lost to NAFTA (a good example of Free Trade working): https://www.businessinsider.com/did-nafta-cost-or-create-jobs-2017-3

    Hard to tell basically.

    Bryan G. Stephens (View Comment):
    Of course, I want to know how soon they got them. How much did their standards of livings fall? Did they lose their homes? Did their marriages fail? How bad was it for them?

    How is it possible for anyone to provide you with that information? Can you prove that trade protectionism would have prevented these occurrences?

    Bryan G. Stephens (View Comment):
    If someone came to me and said “Hey, if you spend an extra $100 a year on goods, and everyone does it, 30,000 Americans won’t face bankruptcy” I’d have to think about it.

    Good for you, there are charities you can donate to in that case. Why would you force people who maybe can’t afford that $100 to donate it to a cause you deem worthy? What of those people who lose their jobs because the price of steel went up to satiate the steel lobby and their boss cuts their workforce by 25%?

    I am not saying I want to force anyone to do anything. Nor do I advocate trade policy by lobby. I was for the death of the IMEX Bank. Seems I cannot be on the right side of anything.

    What we are talking about is greater good here, right?

    • #55
  26. Hammer, The (Ryan M) Member
    Hammer, The (Ryan M)
    @RyanM

    Bryan G. Stephens (View Comment):

    HeavyWater (View Comment):

    When a government engages in trade protectionism it is essentially placing economic sanctions on itself.

    Under free trade, I, living here in Indiana, have access to avocados, potatoes, automobiles, clothing and furniture made anywhere in the world.

    Under trade protectionism, I only have access to those goods made in the United States.

    If an effective, powerful anti-cancer drug were invented in Brazil, you can be darned sure that even a die hard supporter of Trump would prefer a regime of free trade over protectionism if he were diagnosed with cancer.

    Similarly, if you really like German sports cars, you aren’t going to like the US government getting in between you and your favorite German auto import.

    Free trade, free association, free speech and free enterprise.

    You mention drugs. Right now, the world steals the IP of American drug development. Brazil is not about to invent anything. The world milks off our development. Americans, right now, pays the development costs, and everyone else gets them much closer to production costs. Will the Free Traders defend that?

    What does that have anything to do with free trade?  That is intellectual property law.  It is why we have patents and trademarks.  That is in no way impacted by tariffs.

    • #56
  27. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Jamie Lockett (View Comment):

    Bryan G. Stephens (View Comment):

    Misthiocracy, Joke Pending (View Comment):

    Bryan G. Stephens (View Comment):
    I see no one has even addressed the very real loss of jobs for people of lower IQ. Note, I had trade as 1/3 of those items. It seems to me, if you want to sell me on free trade, you need some numbers to show that all those people who lots jobs got new ones.

    Firstly, you’ll have to show to me that all those people lost their jobs because of trade and not because of advancements in technology, minimum wage laws, occupational licencing, etc.

    Are you saying that all people doing those jobs in China have low IQ?

    Gosh no. People with high IQ can do them. What I am saying is we have less jobs for people with low IQ, and many of the ones we used to have had gone off shore. Low skilled jobs have been offshored for ages now. Maybe there are many new jobs for low skilled workers to replace those jobs lost, that pay just as much. I am not aware of them, however. The Service Industry sure does not.

    Something happened to jobs when they went to China. We just lived through the lowest workforce engagement in history of the nation. Something happened. What was it? Trade had no effect at all? Jobs being moved did not cost people work, at all?

    Would you put similar restrictions on technological advancement?

    I mean I can create instant 100% employment tomorrow: outlaw all mechanical equipment from backhoes to computers.

    Pretty sure I am not calling for that, and that is putting words into my mouth. I have no idea what to do about the growing lack of low skilled jobs, regardless of the cause. That is going to disrupt society, and shrugging our shoulders is not going to help. Regardless of what you think, or what I think, people blame trade. Telling them to just go find another job is not a winning strategy. And having spent 7 months just recently without a job and being someone who is highly skilled, it is quite insulting to boot.

    • #57
  28. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    Bryan G. Stephens (View Comment):

    Jamie Lockett (View Comment):

    Bryan G. Stephens (View Comment):
    I see no one has even addressed the very real loss of jobs for people of lower IQ. Note, I had trade as 1/3 of those items. It seems to me, if you want to sell me on free trade, you need some numbers to show that all those people who lots jobs got new ones.

    First, you must establish that those jobs were lost to trade and not automation, or shifts in consumer taste or a thousand other reasons that could cause job loss. This is the problem with central planning (and yes Trade Protectionism is central planning) no one possesses the knowledge necessary to turn the dials in such a way as to achieve the optimal outcome. Conservatives are rightfully quite wary of elites and their plans: why do you think the mandarins are suddenly capable of achieving better outcomes than the market?

    Jobs actually lost to NAFTA (a good example of Free Trade working): https://www.businessinsider.com/did-nafta-cost-or-create-jobs-2017-3

    Hard to tell basically.

    Bryan G. Stephens (View Comment):
    Of course, I want to know how soon they got them. How much did their standards of livings fall? Did they lose their homes? Did their marriages fail? How bad was it for them?

    How is it possible for anyone to provide you with that information? Can you prove that trade protectionism would have prevented these occurrences?

    Bryan G. Stephens (View Comment):
    If someone came to me and said “Hey, if you spend an extra $100 a year on goods, and everyone does it, 30,000 Americans won’t face bankruptcy” I’d have to think about it.

    Good for you, there are charities you can donate to in that case. Why would you force people who maybe can’t afford that $100 to donate it to a cause you deem worthy? What of those people who lose their jobs because the price of steel went up to satiate the steel lobby and their boss cuts their workforce by 25%?

    I am not saying I want to force anyone to do anything. Nor do I advocate trade policy by lobby. I was for the death of the IMEX Bank. Seems I cannot be on the right side of anything.

    What we are talking about is greater good here, right?

    I’m talking about liberty. It is the only metric by which I judge the value of policy proposals. 

    • #58
  29. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    I Walton (View Comment):

    Bryan G. Stephens (View Comment):

    I Walton (View Comment):

    Hang On (View Comment):

    I Walton (View Comment):
    The best thing is to continue to reduce regulations, fix our schools, lower our taxes and replace distorting taxes with taxes fall on consumptions and imports not work, savings and investment. That is what caused the miraculous change in New Zealand.

    It’s not completely clear in this sentence, but if you’re saying taxes should fall on consumption, aren’t tariffs consumption taxes?

    And on fixing schools, I agree. But (you knew but was coming) it’s not and shouldn’t be a federal matter (unlike in New Zealand). Where they went was to nationwide charter schools. It required alot of parent buy-in, time and effort. There are places that’s not going to work. Helen Ladd has written about this.

    I Walton (View Comment):
    We don’t have to passively accept China’s cheating, but we have to use sustainable and effective tools, not clumsy special interest driven protectionism and subsidies.

     

     

    I am sure I don’t like any VAT of any type. I am all for end consumption taxes being a Fair Tax guy.

    This still does not address strategic issues. If we have to buy all of our computer parts from China, that hurts our security. Data is hard enough to secure now, what is to stop the Chinese from building backdoors into everything?

    Fair tax is more expensive, easier to cheat on. Are you familiar with the VAT as imposed in New Zealand? Are you sure you are not confusing it with a turnover tax? Or thinking about it as Europeans impose it? New Zealand cut income taxes by half, and with a uniform 10% VAT ended their domestic and external debt in a year. It almost self collects if no good is excluded and the rate is uniform. It can’t be cheated on. Unlike the fair tax, is collected on imports and enjoys a border tax adjustment for exports. We have to figure out how to deal with China’s dominance in a lot of the technologies. Tariffs on steel and aluminum do not address these issues.

    I get what VAT is: It is where every step in production pays a cut to the government. Where the government can raise taxes and no one can tell because they did it way in the back of the line, and the costs just get passed on. 5% here, 5% here, 5% here, and a huge price tag at the end the buyer does not see. And here I am getting lectured about how lobbies distort things, and you are proposing one of the most evil ways to tax people, because the government can do it in secret?

    Wow. Just wow. 

    https://www.nationalreview.com/2015/11/value-added-tax-vat-rand-paul-ted-cruz/

    But what if the VAT already exists thanks to well-meaning but misguided Republicans? Raising the VAT rate would be a comparatively simple option for our hypothetical left-wing president. And because it has such a broad tax base (all “value added” in the economy, including wages paid to workers), even small rate increase would generate a lot of revenue to finance bigger government. Moreover, because the VAT is a hidden tax that is collected by businesses, the workers and consumers who would pay the additional tax typically would not realize that government was to blame as their living standards declined. And I’m sure this future statist president also would boost tax rates on the “rich” and also impose higher levels of double taxation.

    There, there is a statement from National “Free Trade” Review on why a VAT tax is wrong. 

     

    • #59
  30. AltarGirl Member
    AltarGirl
    @CM

    HeavyWater (View Comment):

    When a government engages in trade protectionism it is essentially placing economic sanctions on itself.

    Under free trade, I, living here in Indiana, have access to avocados, potatoes, automobiles, clothing and furniture made anywhere in the world.

    If we do not produce it, then there are no tarriffs. Under a trade treaty (which still needs to exist no matter how free our trade is, because other countries have different policies), then we still have access to those things with or without a tariff on some other product. Tariffs only apply to things we produce. So you still have access to it, just not at a price at which our own companies can’t compete with without going belly up, for whatever reason, whether it be labor cost or regulation or tax… or the other country’s own subsidizing.

    Under trade protectionism, I only have access to those goods made in the United States.

    If an effective, powerful anti-cancer drug were invented in Brazil, you can be darned sure that even a die hard supporter of Trump would prefer a regime of free trade over protectionism if he were diagnosed with cancer.

    If we do not have a drug that cures cancer, then there is no tariff. Again, tariffs only increase the price if it competes with a local good. It does not prevent access. Trade treaties prevent or give access.

    Similarly, if you really like German sports cars, you aren’t going to like the US government getting in between you and your favorite German auto import.

    Free trade, free association, free speech and free enterprise.

     

    • #60
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