Tag: free trade

Trade Has Trade-Offs. This Should Not Surprise Anyone.


twenty20_85ea418a-89da-4a41-a4d9-4a455c35e585-e1457715218419“There are no solutions. There are only trade-offs,” economist Thomas Sowell writes his excellent Conflict of Visions.

And so it is with trade. Trade has trade-offs. But certainly most economists would agree with this recent statement in a blog post from Moody’s economist Adam Ozimek: “Trade increases aggregate welfare in the U.S. and past trade deals have benefited most Americans.”

In a 2012 IGM Forum survey of economists, 96% (weighted by confidence) agreed or strongly agreed that, “Freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment.” And 98% agreed, “On average, citizens of the U.S. have been better off with the North American Free Trade Agreement than they would have been if the trade rules for the U.S., Canada and Mexico prior to NAFTA had remained in place.” Likewise, a 2014 IGM survey found 93% agreed, “Past major trade deals have benefited most Americans.”

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From ETWN News:  [….] Last month, a new federal law was enacted to prohibit importation of goods made with forced labor into the U.S., a big boost in the fight against labor trafficking.Since the 1930 Tariff Act, which prohibited such importation, one clause exempted this prohibition for when “consumptive demand” required such goods be imported. […]

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A couple of recent items that should gladden the hearts of our resident “free traders.” Carrier, an Indianapolis-based heating, ventilation and air conditioning company owned by United Technologies, announced it is closing a manufacturing plant in Indiana and moving production to Mexico… eliminating 1,400 American jobs. Ford Motor Company announced that it was investing over […]

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Were the Mercantilists Right After All?


An imaginary seaport with a transposed Villa Medici, painted by Claude Lorrain around 1637, at the height of mercantilism.

I have found my views on free trade “evolving” over the past year or so. The Red Fish of 2010 or so would have happily provided a lengthy dissertation on the benefits of NAFTA and free trade to any group who wanted to listen. Or didn’t want to listen. 2010 Red Fish was like that.

China is Going to Get Wealthier: That’s a Good Thing


File:Chinese flag (Beijing) - IMG 1104.jpgChina may be having a hiccup in the economic rise it has been experiencing over the past decades. But should China wind up as comparable in economic status to the United States, it might be a good thing all around.

China has had it rough economically for a long time. It was defeated in the two Opium Wars with Great Britain and split between the Spheres of Influence of the Great Powers. The disastrous Taiping Rebellion further disgraced the Qing Empire in the Victorian Era. It was immediately followed by China’s humiliating loss of Korea to the Japanese Empire in the First Sino-Japanese War. This led to the collapse of the Qing Empire, the creation of a republic, and the outbreak of civil war between forces loyal to the Kuomintang-led government and forces loyal to the Communist Party of China. Meanwhile, decades-long Japanese imperial policies matured, prompting Japan to instigate the Second Sino-Japanese War in 1937 and hastening the onset of World War II. The Communists won the Civil War and Mao Zedong came to power, a series of catastrophes in itself.

This century-long period of political depravity clearly doomed the Chinese economy. But following Mao’s demise, China began to slowly to thaw. It began experimenting with free markets in such arenas as farming and businesses, leading to the expansion of its private sector economy. The Party didn’t interfere so long as it didn’t threaten the state sector. Ronald Coase and Ning Wang tell the story of China’s economic transformation in an essay based on their book, How China Became Capitalist.

Back-to-School Trade Quiz


Quiz Trade Cardss1. I am a trade protectionist because:

a. I don’t think people in this country should be able to get cheaper and/or better stuff from overseas. Consumers have too much stuff. Other people here who take cheaper and/or better stuff from overseas and build it into products which they then sell here and overseas are making things way too complicated.

b. I don’t think people who live overseas and who I don’t know and whose languages I probably don’t speak should be able to make a living. I think more people, who I also don’t know but who live closer to my house, should be able to make a living. How increasing the input costs for products a business might make and stifling competition in those products accomplishes this I’m a bit hazy on at the moment. That does not alter the fundamental truth of the proposition.

Donald Trump: A 21st Century Protectionist Herbert Hoover


Hoover-TrumpHere’s a historical fact that Donald Trump, and many voters attracted to him, may not know: The last American president who was a trade protectionist was Republican Herbert Hoover. Obviously that economic strategy didn’t turn out so well — either for the nation or the GOP.

Does Trump aspire to be a 21st century Hoover with a modernized platform of the 1930 Smoot-Hawley tariff that helped send the U.S. and world economy into a decade-long depression and a collapse of the banking system?

We can’t help wondering whether the panic in world financial markets is in part a result of the Trump assault on free trade.

The Libertarian Podcast: The Fight Over Free Trade


In this week’s episode of The Libertarian podcast from the Hoover Institution, I lead our own Richard Epstein through a discussion of the many controversies birthed by the debate over the Trans-Pacific Partnership. Do trade deals put the screws to American workers? Is the quest for fast-track authority another example of presidential overreach? Should the public be worried about the secrecy around the TPP? Does this deal present threats to American sovereignty? All those topics and more will be addressed when you listen to the show below or subscribe to The Libertarian via iTunes.

The Game Theory Argument for Fast-Track Trade Authority


While public debate rages over the Trans-Pacific Partnership, the real issue before Congress right now is merely whether or not President Obama should be granted fast-track authority, which allows him to negotiate a treaty on behalf of the United States and then present it to the Congress for a straight up-or-down vote with no amendments allowed. As I note in my new piece for Defining Ideas at the Hoover Institution, there’s a very strong game theory rationale for giving the president this ability:

… [F]ast-track is a good solution to a complex two-stage bargaining game. At stage one, the President and his trading partners are well aware of the prospect that the Congress could turn down a trade treaty if it is perceived, no questions asked, to put the United States in a worse position. So Congress will agree to a treaty that is better than the status quo ante for the U.S., but not so one-sided that it will drive our potential trading partners away. Hence, a stage one agreement will leave everyone better off.

It’s Time for Conservatives to Defend… President Obama


Obama.Shocked-1For six years, conservatives have been hammering the Obama administration. While the lay observer may decry this seemingly out-of-the-ordinary level of partisanship of late, it must be acknowledged that President Obama himself is arguably the most left-of-center person to hold the office since FDR. This president has pushed, with varying levels of success, some of the most liberal/progressive policies ever to be championed by someone people take seriously. This leaves conservatives with little to actually chew on and weigh supporting for any significant period of time. That all being said… well… we all know the saying about a broken clock.

And that clock currently says it is time for conservatives to come to the defense of President Obama.

This past month, President Obama has been focusing on the issue of international trade. In a shocking departure from his fellow uber-liberals, the president is actually supportive of increasingly liberalized (in the classical sense) trade structures. This comes as the president is seeking to gain Congressional approval of increased trade promotion powers and the Trans-Pacific Partnership (TPP) free trade agreement with Pacific Rim nations.

The Fed’s Failed — And That’s a Good Thing


shutterstock_236267482Don’t expect any miracles from the economy. But don’t expect a collapse either.

In political terms, it’s kind of a Mexican standoff. Team Obama says they saved us from another Great Depression. And they point out that 3.1 million jobs have been created in the last 12 months. Republicans counter that this is the slowest post-WWII recovery on record and that real GDP is roughly $2 trillion below potential. They add that the labor-force participation rate is 62.7 percent, a 39-year low, and that there are at least 15 million people who work but can’t get jobs.

Yet both sides may actually come together for a major pro-growth initiative: an Asia-Pacific free-trade deal that will lower tariffs and other barriers. Lower tariffs are lower taxes.

There’s No Good Conservative Case Against Fast-Track Trade Authority


shutterstock_142905070 (1)The Senate Finance Committee is taking up the topic of “fast track” trade authority today, which would empower President Obama to negotiate trade deals, namely the Trans-Pacific Partnership, an ambitious free-trade area that would cover most of our Asian trading partners (except China) and rival the European Union in size. Some conservatives, however, are resisting the proposal, claiming that it only further consolidates power in an already out-of-control executive. While I’ve been a staunch critic of President Obama’s executive overreach, I don’t think that argument holds up here. As I write at National Review:

…Critics are missing the mark by confusing fast track with Obama’s executive power grabs. Fast track does not delegate any power to the executive branch. Under fast track, the president does not exercise any new authority that he lacked before. Under normal constitutional practice, the president negotiates an international agreement and then submits it to Congress for approval. Fast-track doesn’t change that fundamental order. President Obama can negotiate any agreement he likes, and Congress is free to vote it up or down.

Instead, fast track lives up to its name: It gives expedited congressional consideration to any trade agreement. It promises that any trade agreement will be considered within a short period of time and without amendments — promises necessary in order for our trade partners to take negotiations seriously. Fast track only changes the internal procedures of Congress, which are only within Congress’s power to change, on the timing and speed of the vote on the agreement. In fact, there are some innovations in the bill that might allow even a negative vote in the House and Senate committees to effectively derail a bill. If the executive branch does not closely consult and engage Congress, the bill could also lose the promise of an expedited vote. In that event, any Obama trade pact would undergo the rules that apply to any ordinary bill, which could never come up for a vote or be so encumbered with amendments that our foreign partners will pull out.

Is Obama’s Quest for Trade Promotion Authority One More Example of Executive Overreach?


Some conservatives may worry that supporting President Obama’s bid for trade promotion authority undermines their criticism of his abuses of the Constitution’s executive power, an angle that was highlighted in a Washington Post story by David Nakamura earlier this week. We needn’t fret about these claimed contradictions, however — they are product of intellectually lazy or sloppy journalists who don’t understand the Constitution’s separation of powers in the first place.

The most important difference between trade promotion authority — informally known as “fast-track” among the trade cognoscenti — and Obama’s unilateral orders on immigration, drugs, healthcare, welfare (take your pick) is that Congress has authorized the former. With trade authority, Congress delegates authority to the President to negotiate the best deal possible with our foreign partners, but he has no opportunity to put the agreement into effect himself. Congress still has an up-or-down vote on the trade deal.

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US Constitution – Article 1, Section. 10. “No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it’s inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be […]

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