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. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    Bryan G. Stephens (View Comment):

    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.

    There are currently close to six million jobs available in trades across this country. The problem isn’t that we lack jobs, its that we lack people willing to do them.

    • #61
  2. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Jamie Lockett (View Comment):

    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?

    I am not proposing that, I am saying that is what other nations do to drug companies and we don’t.

    Is that clear now?

    • #62
  3. Hammer, The (Ryan M) Member
    Hammer, The (Ryan M)
    @RyanM

    Bryan G. Stephens (View Comment):

    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.

    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.

    Yet you are advocating against free trade… so apparently you do have some idea of what to do about the growing lack of low-skilled jobs, otherwise you wouldn’t use it for justification of that position, right?

    Unless what you’re saying is that “free trade” is not a panacea, and of course we still have things like “the loss of low-IQ jobs,” but you’re not telling anyone anything new, there.  Nobody thinks it is a panacea, just that any other system will be worse, and that most attempts to meddle with the economy in order to “help” those low-IQ workers will be worse.  It’s not an indictment of free trade, it is simply an observation that the world is an imperfect place…  of course, free traders recognize this.  It is why we are in favor of free trade!

    • #63
  4. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    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. 

    • #64
  5. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Jamie Lockett (View Comment):

    Bryan G. Stephens (View Comment):

    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.

    There are currently close to six million jobs available in trades across this country. The problem isn’t that we lack jobs, its that we lack people willing to do them.

    Ah, that old saw. 

    • #65
  6. Hammer, The (Ryan M) Member
    Hammer, The (Ryan M)
    @RyanM

    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?

    • #66
  7. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    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.

    Because the government has other requirements for its defense assets than cost. Hence why it spends astronomically on products from US based vendors when it could get “cheaper” products from elsewhere.

    • #67
  8. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

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

    Bryan G. Stephens (View Comment):

    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.

    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.

    Yet you are advocating _against_ free trade… so apparently you do have some idea of what to do about the growing lack of low-skilled jobs, otherwise you wouldn’t use it for justification of that position, right?

    Unless what you’re saying is that “free trade” is not a panacea, and of course we still have things like “the loss of low-IQ jobs,” but you’re not telling anyone anything new, there. Nobody thinks it is a panacea, just that any other system will be worse, and that most attempts to meddle with the economy in order to “help” those low-IQ workers will be worse. It’s not an indictment of free trade, it is simply an observation that the world is an imperfect place… of course, free traders recognize this. It is why we are in favor of free trade!

    I disagree, I have seen free trade often talked about as a panacea. Free traders do not acknowledge the pain suffered and are quite dismissive, and often are in industries that don’t suffer job loss. 

    What is really interesting is I did not get much of want I was interested in here, but more of the same. Not numbers, but mostly, derision and “so what you are calling for is..” statements. 

    I will be looking at New Zeland as suggested, but have not had time yet. That was in the first post. 

    • #68
  9. JudithannCampbell Inactive
    JudithannCampbell
    @JudithannCampbell

    Hammer, The (Ryan M) (View Comment):
    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 of National Security; do we really want potential enemies like China knowing that much about how our defense stuff works? Granted, the EU probably isn’t a potential enemy, but do we really want to give them that kind of leverage? There are things in life more important than getting the lowest price. 

    • #69
  10. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    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.

    • #70
  11. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    Bryan G. Stephens (View Comment):

    Jamie Lockett (View Comment):

    Bryan G. Stephens (View Comment):

    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.

    There are currently close to six million jobs available in trades across this country. The problem isn’t that we lack jobs, its that we lack people willing to do them.

    Ah, that old saw.

    Why are there close to six million unfilled jobs in the trade professions around the country?

    • #71
  12. Bryan G. Stephens Thatcher
    Bryan G. Stephens
    @BryanGStephens

    Jamie Lockett (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.

    Because the government has other requirements for its defense assets than cost. Hence why it spends astronomically on products from US based vendors when it could get “cheaper” products from elsewhere.

    That is a better answer for Ryan than I had. It also means that free trade is not always the right solution on strategic matters. Which was my point. 

    Now, I am off to dinner, so y’all feel free to beat up on me while I am gone.

    • #72
  13. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    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?

    Like spending that money on new tech that no one else has. 

    • #73
  14. AltarGirl Member
    AltarGirl
    @CM

    Re-importation of pharmaceuticals undoubtedly has it’s roots in our FDA testing and certifications. Not tariffs.

    • #74
  15. AltarGirl Member
    AltarGirl
    @CM

    Bryan, these people live in the NAP world. Maybe they should go back to sleep.

    P.S. what if we got our defense tech from… Russia!

    • #75
  16. Hammer, The (Ryan M) Member
    Hammer, The (Ryan M)
    @RyanM

    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):

    Misthiocracy, Joke Pending (View Comment):

    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.

    Yet you are advocating _against_ free trade… so apparently you do have some idea of what to do about the growing lack of low-skilled jobs, otherwise you wouldn’t use it for justification of that position, right?

    Unless what you’re saying is that “free trade” is not a panacea, and of course we still have things like “the loss of low-IQ jobs,” but you’re not telling anyone anything new, there. Nobody thinks it is a panacea, just that any other system will be worse, and that most attempts to meddle with the economy in order to “help” those low-IQ workers will be worse. It’s not an indictment of free trade, it is simply an observation that the world is an imperfect place… of course, free traders recognize this. It is why we are in favor of free trade!

    I disagree, I have seen free trade often talked about as a panacea. Free traders do not acknowledge the pain suffered and are quite dismissive, and often are in industries that don’t suffer job loss.

    What is really interesting is I did not get much of want I was interested in here, but more of the same. Not numbers, but mostly, derision and “so what you are calling for is..” statements.

    I will be looking at New Zeland as suggested, but have not had time yet. That was in the first post.

    You are arguing with a straw-man, then.  When you say that you are not in favor of free trade, you are necessarily suggesting that you are in favor of something else.  Though you have expressly denied it, I think it is fairly clear that what you’re supporting is the Trump tariffs.  That is a concrete thing that we can discuss – you don’t get to shift it around and say “oh, no, I’m not talking about tariffs, I’m just pointing out that free trade doesn’t work.”  Well…  free trade is not a panacea.  Nobody thinks it is.  It only “works” or “doesn’t work” in relation to whatever else it is that we are discussing.  So, what are you advocating as an alternative to free trade?

    • #76
  17. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    JudithannCampbell (View Comment):

    Hammer, The (Ryan M) (View Comment):
    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 of National Security; do we really want potential enemies like China knowing that much about how our defense stuff works? Granted, the EU probably isn’t a potential enemy, but do we really want to give them that kind of leverage? There are things in life more important than getting the lowest price.

    Free Trade does not mean the US government has to purchase critical components from companies located in hostile countries. They can simply make “made in America” as a requirement on their RFP for their next invisible fighter jet. If that is a critical requirement there’s nothing wrong with that. There are other things that businesses/government look to when assessing purchases or making a cost/benefit analysis than just price.

    • #77
  18. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    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):

    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.

    Because the government has other requirements for its defense assets than cost. Hence why it spends astronomically on products from US based vendors when it could get “cheaper” products from elsewhere.

    That is a better answer for Ryan than I had. It also means that free trade is not always the right solution on strategic matters. Which was my point.

    Now, I am off to dinner, so y’all feel free to beat up on me while I am gone.

    Not a single thing I said has implications for free trade. Just because one of my requirements for a vehicle purchase is that it is German doesn’t mean I want to force everyone else to buy German cars. 

    • #78
  19. Ekosj Member
    Ekosj
    @Ekosj

    Ok.    Everybody agrees that A and B will be better off if they trade freely.

    Lets begin is a state where A and B trade freely.

    Suppose B imposes tariffs and subsidizes producers.    Maybe they are dumb.    Maybe they are obstinate.    Maybe the force of Ricardo’s arguments are lost on them.    Maybe they have other priorities than economic utility.    Whatever.

    A still trades freely with B.

    Is B worse off than if they traded freely? Sure.    Is A also worse off?    Yes.

    Lets call the amount of A’s loss LA.   But that’s not the end of the story.    A loses LA not only this period but in Every period going forward, for as long as B imposes tariffs and subsidies.    So A’s true loss is today’s loss plus the discounted present value of that stream of future losses.    That total depends on the number of periods and the interest rate.

    Just to give some scale, let’s call LA -100.    That’s -100 this period and every period going forward.    If interest rates are 4% and we look 25 periods into the future, the total present value of A’s loss is about -1500.   ( I’m doing this on the subway on my phone … I could have a fat finger error in there)

    Suppose A could take some action to induce B to trade freely.     Suppose further that that action is itself costly, but temporary.    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.

    • #79
  20. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

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

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

    • #80
  21. Hammer, The (Ryan M) Member
    Hammer, The (Ryan M)
    @RyanM

    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). 

    • #81
  22. Ekosj Member
    Ekosj
    @Ekosj

    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.   

    • #82
  23. Hammer, The (Ryan M) Member
    Hammer, The (Ryan M)
    @RyanM

    JudithannCampbell (View Comment):

    Hammer, The (Ryan M) (View Comment):
    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 of National Security; do we really want potential enemies like China knowing that much about how our defense stuff works? Granted, the EU probably isn’t a potential enemy, but do we really want to give them that kind of leverage? There are things in life more important than getting the lowest price.

    You are assuming a pretty two-dimensional world.  Yes, we really are ok with enemies like China understanding how stuff works.  Do you think they currently lack this understanding?  Do they know how to make computers and cellphones and heat-seeking missiles?  Do you honestly believe that our advantage over these “enemies” is that they simply don’t understand how to do stuff?  Why was it that we prevailed over Russia during the cold war?  Was it a technology-gap that caused Germany to lose WWII?

    Fact is, that’s not leverage.  It’s not an advantage over us.  They already know how to do all that stuff; they understand how our defense works.

    What really makes us different from these “enemies?”  Well, in no small part it is our thriving economy…  and what do we have that they don’t?  A comparatively free market.

     

    • #83
  24. Mark Camp Member
    Mark Camp
    @MarkCamp

    Bryan G. Stephens: I used to be a believer in Free Trade…Why did I believe this? Because learned people said it was so, and that was good enough for me.cause learned people said it was so, and that was good enough for me.

    That’s where you went wrong.  Don’t make the same mistake again.

    You started off well.  You asked the right question.

    “…I thought the trade policy of America should be that there are no limits whatsoever to trade”

    Is that true or false?  It can only be one or the other.

    But you went about answering it the wrong way.  Why?

    Because most learned people don’t know what the hell they are talking about.  Alexandria Occasional-Cortex majored in Economics at BC.  She is a learned person.

    She is also a complete idiot.  Donald Trump is a complete idiot, too, when it comes to this question.

    You need to figure out the answer for yourself.  It’s not easy, but Ricochet can help.

    • #84
  25. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    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?  

    • #85
  26. Mike H Coolidge
    Mike H
    @MikeH

    Bryan G. Stephens (View Comment):

    Mike H (View Comment):

    Bryan G. Stephens: 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.

    What do you mean, for me “as an American?” Do you mean you in particular with respect to your Americanism or do you mean how is this better for the average American? Well, let’s think this through.

    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?

    The price that American farmers sell things for in America has to be the same as what the EU farmers sells them for in America. So, either you get higher prices at the point of sale for farmers, meaning everyone else in America is paying more for all the products derived from farmed foods, or the farmers are selling at lower prices meaning the average American is paying less for those same products. Similarly, if EU farmers are getting “higher prices” that means everyone in the EU buying those products are being screwed over. It’s a strange area to be envious of the EU.

    So, the “average American” does better when things are cheeper since the average American is not a farmer. In fact, less than 2% of the population are employed in agriculture, while a hell of a lot more people are employed in businesses who process those goods and so do better when farm products are cheeper. Why are we so worried about “farmers?”

    I used them as an example, because there is an imbalance.

    Does this also apply to strategic sectors?

    Does what apply? Economics? Of course. It always applies. 

    What I think you’re getting at is, when the war/disaster interest of the United States is theoretically reliant on certain sectors, should we still blindly follow the recomendations of economic law?

    While there might be a case to be made for something like that, I find most worrying about such things to be far overblown, and it can be used to justify almost anything since rarely is a fair accounting of the pros and cons attempted.

    There are plenty of things we could speculate would have horrible consequences but are also incredibly unlikely, like climate change.

    The fear of climate change could be used to justify almost any constraint on the economy.

    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.

    I think this should make us highly skeptical about calls for this or that constraint, especially when there doesn’t seem to be a coherent consistent rational or a limiting principle.

    • #86
  27. Jamie Lockett Inactive
    Jamie Lockett
    @JamieLockett

    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…

    • #87
  28. WI Con Member
    WI Con
    @WICon

    AltarGirl (View Comment):

    The issue with Ricardo’s Comparative Advantage is that Ricardo assumed immobility of labor and capital, neither of which exists today. Two scenarios:

    1) Capital Mobility: If America is free trade and Country X is not, and a US business wishes to trade there, then moving the business to X expands the market to that company. Now they can freely trade with the US and X. Which country benefits? X. Who benefits? The owner of the company and the X employees who now work for him.

    2) Labor Mobility: If America produces a good at a higher cost than Country Y, rather than trade with Country Y ala Ricardo’s model, workers from Country Y come to America for the higher wages. Now that there are more people to work, wages drop, making production in America cheaper. The plant stays in America, however the depressed wages fail to allow purchasing power for other goods in the economy (housing), demanding more involvement from government to bridge the gap. Which country benefits? America (without considering an increased support for socialist policies). Who benefits? Business owners and Y employees who managed to get a job at a higher wage than in Country Y.

    In both cases, American workers lose. In one case, America wins, but with a serious cost to freedom.

    I’d also add that Ricardo didn’t state much about government interference and regulation as a factor-if I recall correctly, his theories were more about natural resources and relative expertise of the manufacturers. This is where I feel that the GOP and Free Market-types have failed us and done little to restrict regulations, I’d argue that labor unions have, rightly, received their ‘hair-cuts’ but now that a great deal of manufacturing has off-shored, I don’t necessarily agree that they should simply be treated as American companies if they don’t manufacture here and finance, marketing and accounting are the only sectors still here. Our Blue Collar Americans are perfectly justified in feeling shortchanged. I’m open to reexamination if this arrangement.

    • #88
  29. JudithannCampbell Inactive
    JudithannCampbell
    @JudithannCampbell

    Hammer, The (Ryan M) (View Comment):
    Yes, we really are ok with enemies like China understanding how stuff works.

    You might be ok with it, I am not.

    • #89
  30. JudithannCampbell Inactive
    JudithannCampbell
    @JudithannCampbell

    Hammer, The (Ryan M) (View Comment):
    Was it a technology-gap that caused Germany to lose WWII?

    Maybe; if Germany had the atomic bomb, things might have ended differently. The technology gap definitely caused Japan to lose WWII.

    • #90
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