Free Trade?

Discussion in 'Economy' started by Charles Stucker, Dec 8, 2009.

  1. Charles Stucker
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    Charles Stucker Senior Member

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    Not So Free Trade

    Free trade is a mantra for conservative economists. Free trade and market forces cure all ills. Free trade makes everyone prosperous. Free trade will save the free world. Perhaps, but it would require free trade, not something disguised as free trade.

    Free trade does not exist when a company can move their factory overseas and still demand protection from the US government from the nation to which the factory ahs been moved. Diplomatic, covert and military forces all protect the companies from nationalization when they build production facilities overseas. The cost of the military and intelligence agencies are paid for by the government forming a type of protectionism for the corporate investors. Protection the average taxpayer supports without receiving any benefit in return. This protection of companies artificially lowers the cost of moving their production overseas and thus lowers the wages which workers in the country might demand. It can also lower the cost of labor in the overseas factory because the local government dare not insist on better wages for fear of covert operations, again funded by the taxpayer.

    Free trade also does not exist when certain trades and professions enjoy artificial barriers to competition. Lawyers, accountants, electricians, plumbers, even schoolteachers have certification processes which appear designed to limit competition as much as confer professionalism among their practitioners. Consider an electrical engineer whose job is moved overseas; he might easily move into the trade of an electrician, but must first complete a lengthy apprenticeship, yet he cannot and this allows the licensed professionals to charge an artificial premium for their services. This distorts the supply of those services and creates an artificial price protection for the practitioners of those trades and professions. Again the cost of enforcing the protection is paid by all, but the benefits are enjoyed by only a few.

    Labor unions and minimum wage laws also create unusual restraints on free trade. When union membership is required for a job, the union can limit membership much the same as professional licensing does, creating an artificially high price for union labor. The flip side is that many believe that without the freedom to form unions anyone lacking either the capital or acumen to run their own business is forced to take whatever wages business owners deign to give. This is true only when there exists a labor surplus. Similarly minimum wage creates an artificial boundary forcing anyone who lacks the skill to produce enough to earn that minimum wage out of the job market entirely.

    The United States of America endures all these impediments to free trade, so the next time someone is extremely vocal in support of same, check their job. It may be they are one of the people who profits from the not so free trade at the expense of the average citizen.

    Permission given to freely copy and distribute so long as nothing is changed and credit is given.
     
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  2. The Rabbi
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    The Rabbi Diamond Member

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    Could you sum up the point here in one sentence?
     
  3. Charles Stucker
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    Charles Stucker Senior Member

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    Free trade cannot work when certain aspects of the trade are 'subsidized' by the government at the expense of the taxpayers.
     
  4. antagon
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    antagon The Man

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    is the point for free trade to work, or the economy altogether? free trade, free markets, and free enterprise are different critters, too, no?
     
  5. Neubarth
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    Neubarth At the Ballpark July 30th

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    Charles, Free Trade has always worked with government subsidies (Tax breaks and additional incentives.) That is the norm rather than the exception.
     
  6. The Rabbi
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    The Rabbi Diamond Member

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    That is called letting the perfect be the enemy of the good. As Neubarth points out, no trade is entirely free. That doesn't make it less worthwhile.
     
  7. Charles Stucker
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    Charles Stucker Senior Member

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    Would you care to address any of the points in the OP, or just dismiss it unread?
     
  8. The Rabbi
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    The Rabbi Diamond Member

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    I both read it and addressed it. What else do you want? Simply because something has elements of being unfree does not make it entirely unfree, or undesireable.
    "Free Trade" on any basis is more desirable than protectionism, on any basis.
     
  9. Charles Stucker
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    Charles Stucker Senior Member

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    Your request for a one sentence "summation" coupled with your trite dismissal argues otherwise.
    Your insistence that "Free trade is better than protectionism" indicates that either you did not read the OP or you failed utterly to understand it as I had argued that some trades get protectionism of various sorts. Which by the way is essentially the same effect as a subsidy.
     
  10. antagon
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    antagon The Man

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    another one. whats up with the laizez-fairists around here. What makes you want america to change course? wouldnt that crap be better served in a developing economy that isnt so established in sounder, but different economic practice?

    just pop the soap box where theres no subsidy, no navy, no tariffs, and get it cracking there.
     

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