Free Trade and Protectionism

Discussion in 'Economy' started by Wiseacre, May 26, 2011.

  1. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    I see quite a few posts condemning free trade on the belief that it costs us jobs. If a foreign country can produce a product, service, or commodity cheaper than we can, or one that is higher quality, then either we make changes or we can't compete. If we can't compete then those jobs are lost or reduced in number, and the affected employees will then have to find work elsewhere. But it doesn't really matter if the cheaper product, service, or commodity comes from the other side of the world or the other side of the street, people are going to buy what they want or need based on the lower price.

    The problem begins when the industry that is being undercut by the foreigners goes to DC and gets some form of protectionism. When that happens, you the consumer cannot get the lower priced item, you end up paying more. Which means you got less to spend on other stuff. Which means your standard of living just went down. AND, since you can't buy as much other stuff, jobs will be lost for those things cuz demand drops for them. So, we saved some jobs via the protectionisn, but lost others in other industries.

    AND - what do you think those foreign countries are going to do when the US applies some form of protectionism on their stuff? They're going to reciprocate, right? So now prices go up not just on the first thing but on other things. Downward spiral, suggest reading about the Smoot-Hawley bill that was passed back in the early 1930s. Didn't cause the depression, but it did add to the problem IMHO. Do we need to be creating more enemies around the world ?

    Back in the 1980s, the steel industry was facing tough competition from foreign steel makers. So they went to Washington and cried for some form of protectionism and got it. Jobs were lost anyway, for whatever reasons, but the problem was with the many other companies who used steel to make other things. A lot more jobs were lost as a result of the protectionist policy towards steel than were saved. Most people focus only on the jobs lost by a specific company that moves ops to Mexico, or when a foreign company offers something cheaper than we can. But those jobs are going down the tubes anyway if we can't compete, unless you want to subsidize them for thousands of dollars more than they're worth.
     
  2. uscitizen
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    uscitizen Senior Member

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    We must learn to live with less.
    We are already too far down that path to change course now.
     
  3. Toro
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    Toro Diamond Member

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    Free trade ---> good
    Protectionism ---> bad
     
  4. editec
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    editec Mr. Forgot-it-All

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    You make some valid points but the macro-economic reality is not quite so simple as that.

    Free trade as currently practiced is not a boon to this society.

    Contrary to what you have probably been told, even Adam Smith was not an advocate of free trade (like the FT which the USA is currently practicing).
     
  5. Publius1787
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    Publius1787 Gold Member

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    Those who advocate for protectionism have absolutly no clue of how the balance of trade works. And unfortunantly there arent enough hours of the day to teach a lesson on economics in a forum.
     
  6. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    Couldn't care less what Adam Smith thinks, the guy's been dead for what, 300 years?
     
  7. Toronado3800
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    Toronado3800 VIP Member

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    Hmmmm. In general I agree. In specific cases I support out right bans on imports.

    First, we absolutely need some manufacturing base for military reasons. Yup, we need enough steel plants, wafer plants, bomb plants, whatever to make tanks and planes in the event push comes to shove. I support our militaty and distrust the Chinese enough I am not giving that up.

    How is the military going to keep them privately owned plants running when other placez can do it cheaper? Givernment hand outs or tariffs.

    Next I support tariffs as a political tool. If I dont like the environmental or human rights record of your country enough, here comes a tariff. Get our allies to sign on and you can encourage a foreign country to meet SOME safety or environmental standards. Oh, and if you tariff my exports I will tariff your imports. Not living in the age of the Marshall Plan anymore.

    So yes, I understand the theory of free trade but demand some flexibility.
     
  8. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    But are you ready to pay for it? Fewer jobs, lower standards of living, higher prices? That's the result if you ban specific imports, provide gov't handouts, enact tariffs.
     
  9. Toronado3800
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    Toronado3800 VIP Member

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    Yeah. Its a pretty conservative thing to do. Tariffa were a high percentage of our historical income.

    Plus, if we do go to war with China, do you want to be abke to build F-22's?

    Perhaps we could have the Germans build them for us?
     
  10. Mr Clean
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    Mr Clean Gold Member

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    I'll bet Porsche could build one hell of an F-22.
     

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