Free Trade?

[Charles Stucker]

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.

 

[The Rabbi]

Could you sum up the point here in one sentence?

 

[Charles Stucker]

Could you sum up the point here in one sentence?

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

 

[antagon]

Could you sum up the point here in one sentence?

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

is the point for free trade to work, or the economy altogether? free trade, free markets, and free enterprise are different critters, too, no?

 

[Neubarth]

Could you sum up the point here in one sentence?

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

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

 

[The Rabbi]

Could you sum up the point here in one sentence?

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

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.

 

[Charles Stucker]

Could you sum up the point here in one sentence?

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

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.

Would you care to address any of the points in the OP, or just dismiss it unread?

 

[The Rabbi]

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

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.

Would you care to address any of the points in the OP, or just dismiss it unread?

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.

 

[Charles Stucker]

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.

Would you care to address any of the points in the OP, or just dismiss it unread?

I both read it and addressed it. What else do you want?

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.

 

[antagon]

Would you care to address any of the points in the OP, or just dismiss it unread?

I both read it and addressed it. What else do you want?

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.

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.

 

[Samson]

Would you care to address any of the points in the OP, or just dismiss it unread?

Sorry, man, but I'm not going to read the whole OP....from the first paragraph it sounds compelling, but then, my eyes glazed over, and I began to wonder if I should have chicken and rice cassarole, or pork chops for dinner tonight.

 

[Samson]

Free Trade?

--------------------------------------------------------------------------------

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.

OK, so, conservative economists are correct, in principle. Free Trade is Good. Protectionism is Bad

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.

Yes, the same goes for Japanese companese[sic] that build factories in the USA

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.

Using the word "Protectionism" in a different context here is a little confusing. You should say "security for corporate investors." One of the reasons everyone on the planet likes to invest in US companies is because the investment often benefits from this security. This is a good thing for US companies, investors, and government since the company is taxed.

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.

The wages in the host country are based on the competitive wage in the country.

 

[Shorebreak]

What about the fact that free trade between a developed nation and a developing nation is not fair trade?

For example, Manufacturer A making widgets in Pittsburgh must charge a minimum of $25 dollars per widget to break even when selling in bulk. By the time his widget hits the US retail shelf it will cost the consumer $45.

Manufacturer B making the same type of widget in Guangzhou must charge a minimum of $4. By the time it hits the US retail shelf it will cost the consumer $33 - but because he is priced so far below Manufacturer A's minimum price, he charges $6 rather than $4 with a final retail price of $35.

Manufacturer B ends up with 50% margin as opposed to zero margin for Manufacturer A (lots of growth potential for B but none for A), plus he undercuts manufacturer A's price by 23%, capturing many of manufacturer A's customers.

So what can Manufacturer A do with "free trade"? Easy. He can close shop in Pittsburgh and put more people to work in Guangzhou. He can even price lower than Manufacturer B because he can cut out the $2 margin. He still shows value on the US stock market because he's still a US manufacturer, but all of the value of his goods have moved overseas, with the exception of the portion that he puts in his bank account.

So... free trade is working because now both companies can compete on a level playing field.

But what about all of Manufacturer A's employees, and all of the peripheral businesses who relied on their paychecks in order to provide services?

They're not part of the free trade equation.

From a US perspective, free trade has everything to do with the bottom line in business, but nothing to do with the economic impact on US families and communities. It is a pro-global, anti-American set of policies that can not be beneficial to the United States on any level.

 

[midcan5]

We need to remove 'free' from these discussions.

[ame=http://www.amazon.com/Myth-Free-Trade-Pooring-America/dp/0684833557/ref=sr_1_1?ie=UTF8&s=books&qid=1260394708&sr=1-1]Amazon.com: The Myth of Free Trade: The Pooring of America (9780684833552): Ravi Batra: Books[/ame]


Democracy - Not "The Free Market" - Will Save America's Middle Class

PS interesting just today I heard a congressman mention the power global corporations have.

 

[The Rabbi]

What about the fact that free trade between a developed nation and a developing nation is not fair trade?

For example, Manufacturer A making widgets in Pittsburgh must charge a minimum of $25 dollars per widget to break even when selling in bulk. By the time his widget hits the US retail shelf it will cost the consumer $45.

Manufacturer B making the same type of widget in Guangzhou must charge a minimum of $4. By the time it hits the US retail shelf it will cost the consumer $33 - but because he is priced so far below Manufacturer A's minimum price, he charges $6 rather than $4 with a final retail price of $35.

Manufacturer B ends up with 50% margin as opposed to zero margin for Manufacturer A (lots of growth potential for B but none for A), plus he undercuts manufacturer A's price by 23%, capturing many of manufacturer A's customers.

So what can Manufacturer A do with "free trade"? Easy. He can close shop in Pittsburgh and put more people to work in Guangzhou. He can even price lower than Manufacturer B because he can cut out the $2 margin. He still shows value on the US stock market because he's still a US manufacturer, but all of the value of his goods have moved overseas, with the exception of the portion that he puts in his bank account.

So... free trade is working because now both companies can compete on a level playing field.

But what about all of Manufacturer A's employees, and all of the peripheral businesses who relied on their paychecks in order to provide services?

They're not part of the free trade equation.

From a US perspective, free trade has everything to do with the bottom line in business, but nothing to do with the economic impact on US families and communities. It is a pro-global, anti-American set of policies that can not be beneficial to the United States on any level.

Everything was going great until the last paragraph. You cannot separate "the bottom line in business' from "the economic impact on US families." They are one in the same.
Yes, some workers will get hit. But other workers will do well, unloading imported goods, trucking imported goods, wharehousing imported goods, selling imported goods and servicing imported goods.
The alternative, trade protectionism, has been a proven loser, impoverishing entire countries.

 

[Neubarth]

What about the fact that free trade between a developed nation and a developing nation is not fair trade?

For example, Manufacturer A making widgets in Pittsburgh must charge a minimum of $25 dollars per widget to break even when selling in bulk. By the time his widget hits the US retail shelf it will cost the consumer $45.

Manufacturer B making the same type of widget in Guangzhou must charge a minimum of $4. By the time it hits the US retail shelf it will cost the consumer $33 - but because he is priced so far below Manufacturer A's minimum price, he charges $6 rather than $4 with a final retail price of $35.

Manufacturer B ends up with 50% margin as opposed to zero margin for Manufacturer A (lots of growth potential for B but none for A), plus he undercuts manufacturer A's price by 23%, capturing many of manufacturer A's customers.

So what can Manufacturer A do with "free trade"? Easy. He can close shop in Pittsburgh and put more people to work in Guangzhou. He can even price lower than Manufacturer B because he can cut out the $2 margin. He still shows value on the US stock market because he's still a US manufacturer, but all of the value of his goods have moved overseas, with the exception of the portion that he puts in his bank account.

So... free trade is working because now both companies can compete on a level playing field.

But what about all of Manufacturer A's employees, and all of the peripheral businesses who relied on their paychecks in order to provide services?

They're not part of the free trade equation.

From a US perspective, free trade has everything to do with the bottom line in business, but nothing to do with the economic impact on US families and communities. It is a pro-global, anti-American set of policies that can not be beneficial to the United States on any level.

Everything was going great until the last paragraph. You cannot separate "the bottom line in business' from "the economic impact on US families." They are one in the same.
Yes, some workers will get hit. But other workers will do well, unloading imported goods, trucking imported goods, wharehousing imported goods, selling imported goods and servicing imported goods.
The alternative, trade protectionism, has been a proven loser, impoverishing entire countries.

Oh learned man of the sacred texts, Trade Protectionism has not always been a proven loser. In the long run it is, but some protectionism has been used by almost all industrial countries to one benefit or another. The United States has a large population of very low IQ people. To put them to work, we need to bring back jobs for the less intelligent. Some form of protectionism is in order. It is either that or we can try to do what India does by killing off their low IQ peasants.

 

[Annie]

In the great scheme of things, Free trade is dead. It would take stronger leaders than the strongest democracies possess, to make possible. Dead, gone. Caput.

 

[The Rabbi]

What about the fact that free trade between a developed nation and a developing nation is not fair trade?

For example, Manufacturer A making widgets in Pittsburgh must charge a minimum of $25 dollars per widget to break even when selling in bulk. By the time his widget hits the US retail shelf it will cost the consumer $45.

Manufacturer B making the same type of widget in Guangzhou must charge a minimum of $4. By the time it hits the US retail shelf it will cost the consumer $33 - but because he is priced so far below Manufacturer A's minimum price, he charges $6 rather than $4 with a final retail price of $35.

Manufacturer B ends up with 50% margin as opposed to zero margin for Manufacturer A (lots of growth potential for B but none for A), plus he undercuts manufacturer A's price by 23%, capturing many of manufacturer A's customers.

So what can Manufacturer A do with "free trade"? Easy. He can close shop in Pittsburgh and put more people to work in Guangzhou. He can even price lower than Manufacturer B because he can cut out the $2 margin. He still shows value on the US stock market because he's still a US manufacturer, but all of the value of his goods have moved overseas, with the exception of the portion that he puts in his bank account.

So... free trade is working because now both companies can compete on a level playing field.

But what about all of Manufacturer A's employees, and all of the peripheral businesses who relied on their paychecks in order to provide services?

They're not part of the free trade equation.

From a US perspective, free trade has everything to do with the bottom line in business, but nothing to do with the economic impact on US families and communities. It is a pro-global, anti-American set of policies that can not be beneficial to the United States on any level.

Everything was going great until the last paragraph. You cannot separate "the bottom line in business' from "the economic impact on US families." They are one in the same.
Yes, some workers will get hit. But other workers will do well, unloading imported goods, trucking imported goods, wharehousing imported goods, selling imported goods and servicing imported goods.
The alternative, trade protectionism, has been a proven loser, impoverishing entire countries.

Oh learned man of the sacred texts, Trade Protectionism has not always been a proven loser. In the long run it is, but some protectionism has been used by almost all industrial countries to one benefit or another. The United States has a large population of very low IQ people. To put them to work, we need to bring back jobs for the less intelligent. Some form of protectionism is in order. It is either that or we can try to do what India does by killing off their low IQ peasants.

The fact that it has been used is not proof that it is good for an economy. In fact it is always bad for an economy because for every winner there are multiple losers. Look at what happened when Bush put in steel tariffs. The steel companies loved him. However the auto, appliance, etc (anyone who used steel) companies hated it as it drove up costs and mde their prodcuts more expensive. There were a small number of winners and a large number of losers.
The issue of unemployment is separate. Eliminating the min wage would go a long way towards what you say.

 

[Shorebreak]

What about the fact that free trade between a developed nation and a developing nation is not fair trade?

For example, Manufacturer A making widgets in Pittsburgh must charge a minimum of $25 dollars per widget to break even when selling in bulk. By the time his widget hits the US retail shelf it will cost the consumer $45.

Manufacturer B making the same type of widget in Guangzhou must charge a minimum of $4. By the time it hits the US retail shelf it will cost the consumer $33 - but because he is priced so far below Manufacturer A's minimum price, he charges $6 rather than $4 with a final retail price of $35.

Manufacturer B ends up with 50% margin as opposed to zero margin for Manufacturer A (lots of growth potential for B but none for A), plus he undercuts manufacturer A's price by 23%, capturing many of manufacturer A's customers.

So what can Manufacturer A do with "free trade"? Easy. He can close shop in Pittsburgh and put more people to work in Guangzhou. He can even price lower than Manufacturer B because he can cut out the $2 margin. He still shows value on the US stock market because he's still a US manufacturer, but all of the value of his goods have moved overseas, with the exception of the portion that he puts in his bank account.

So... free trade is working because now both companies can compete on a level playing field.

But what about all of Manufacturer A's employees, and all of the peripheral businesses who relied on their paychecks in order to provide services?

They're not part of the free trade equation.

From a US perspective, free trade has everything to do with the bottom line in business, but nothing to do with the economic impact on US families and communities. It is a pro-global, anti-American set of policies that can not be beneficial to the United States on any level.

Everything was going great until the last paragraph. You cannot separate "the bottom line in business' from "the economic impact on US families." They are one in the same.
Yes, some workers will get hit. But other workers will do well, unloading imported goods, trucking imported goods, wharehousing imported goods, selling imported goods and servicing imported goods.
The alternative, trade protectionism, has been a proven loser, impoverishing entire countries.

Two things:

First, clearly it's true that you can't separate the bottom line from it's economic impact. Free trade in it's current construct is structured without regard for that connection. That was my point.

As for protectionism, we were economically on top of the world until the corporate globalist media propagandized all of you into believing that we should expose our local community business economies to unregulated communist dictatorship economies with near-slave labor. In my vocabulary, protectionism is equivalent to security. I'm 100% for it.

 

[The Rabbi]

We were "on top of the world" post WW2 because we bombed out everybody's else's industrial capacity and so were the sole provider of steel, autos, etc. Once those countries' economies rebuilt they became competitive again and were kicking our unionized, protected butts.
If protectionism worked, then E.Germany would be a world economic power. Instead when the Wall fell we found an industrial complex hopelessly outdated because there was no incentive to invest in newer more productive techniques and machinery.