CDZ The cost of "Made in America"

[320 Years of History]

To all of us going about our lives, occasionally sh*t happens. It happened to me last week when at a breakfast meeting I ended up "wearing" part of the meal. It was hardly the "end of the world," but it did mean I had to get a new suit on short notice. Nearby there happened to be a clothier with which I'm familiar (literally familiar, but it's not where I usually buy clothing although I have done before), so after breakfast, I went to get a suit. As the clerk showed me the options, he pointed out that several of them were made in America. Among the suits the guy showed me were:

• ~$700 on sale for ~$420 -- made in China (40% discount)
• ~$2500 on sale for ~1500 -- made in Italy (40% discount)
• ~$1500 on sale for ~$500 -- made in China (66% discount)
• ~$1300 on sale for ~$775 -- made in America (40% discount)
  
  It's worth noting that the seller carries only one brand of goods, it's own brand. That it does, however, merely eliminates the even greater complexity of pricing strategy factors (see the first side note below) across multiple brands of the same good. It doesn't alter the actual economics of the situation.

After making my purchase and realizing the experience can be used to illustrate a concept that a lot of folks rightly don't well understand, I looked to see what other popular sellers (non-bespoke) might offer American made suits. (I didn't look for more Chinese made ones because they are abundant and the range of substantive quality variance is much greater than for American suits.) I found a some (List prices shown below):

• $425 -- American Suit Store Wool Suit
  
• ~$500 -- In Review: The Men’s Wearhouse Made in the USA Abboud Suit
• ~$700 -- Joseph Abboud Navy Modern Fit Suit - Modern Fit | Men's Wearhouse (this is the same suit as the one above. This link is just provided to show how the price has changed in two years)
• ~$1500 - $1700 -- Suits at Hickey Freeman

In looking to find American made suits for this post, I came across some other makers of widely distributed American apparel and textile goods. All of them are pricey in comparison to similar quality goods made abroad.​

I've worn a lot of tailored clothing since I've had to wear a suit or sport jacket nearly every day since high school (except in college/grad school), including bespoke garments, so I think I know a few things about suits men's apparel, although not as much as my tailor and cobbler. Upon looking at the options, the Italian suit definitely stood apart as being nicer. What struck me was how similar the other three were. Sure, there were some minor differences, but nothing that accounts for the wide difference in list prices among the three, although at the sale prices, the delta made a little bit more sense.

What I'm saying is that in substance, the three lower priced suits were suits I saw as comparable enough that among them, I'd have been content with any one of them. Therefore, if I were to buy any of them, I'd choose the least expensive one based on the discernable differences in substance found among the three and on the absolute sum I had to pay for each of them. Duh.

What then struck me is that right there I was seeing an "everyday" example of the impact of free trade. From my retail consulting experience, I knew that list (original) prices are what they are based upon a retailer's/maker's pricing strategies and what they think they can get for the item; however, sale prices much more nearly reflect what a seller will accept as the forces of supply and demand drive prices down and closer to the minimum acceptable economic profit (not accounting profit) (see here for a graphical presentation of the same ideas) as a result of engaging in the business activity of selling a specific good.

Side note:

Pricing strategy for non-essential goods is essentially a psychological game sellers play with buyers whereby monopolistically competitive sellers use a combination of minor differences in substance and production cost to justify large differences in selling price.

It's active even at sales prices, but an in depth discussion of it is outside the scope of this post as it is a marketing tactic sellers use to control economic principles, and this post is primarily an economics discussion not a marketing discussion. It's also worth noting that not every pricing strategy, or even every "flavor" of a given pricing strategy, is applicable to every good or seller, or even every good a given seller offers.

I mention pricing strategy, however, because it's a consumer distraction (ancillary and complicating factor) that does, unfortunately, burden the layman's analysis of the economics of free trade at the very microeconomic level found in this post. Unlike scholarly researchers, I can't for the purpose of this post make pricing strategy go away, so I have to at least mention it so the audience can attempt to make some sense of it's role in the price variability observed above.​

End of side note.

The quick thinking folks will, after reading the content at the preceding two economics links (not the links in the side note), immediately begin considering the ideas found there to specific makers and/or sellers of various goods. In looking at the suits I was considering, they will immediately noticed the impact of free trade the seller, a monopolistic competitor or profit maximizer, gained from being able source suits from both China and the U.S. The Chinese made suits allow the seller to engage in price discrimination, thereby allowing the seller to maximize its profits by selling essentially the same item at a wider range of prices.

​

Side note:

The site from which that video came is an excellent one; it explains theory in a very approachable way. Click on the "subject" link found in the upper left of the page for a list of the various topics -- economics, history, math and more. Its economics discussions are pretty much all a lay person needs to know to accurately discern when their political leaders are saying something that doesn't jibe with well understood principles, thus meriting further investigation to determine whether the pol is speaking (1) based on proven principles or (2) based on whatever they've decided using a PUTA/PUMA/PUYA principle, that is, one that is PUlled-outta Their Ass; or as befits grammar, My Ass or Your Ass...LOL​

End of side note.

Also, quite obviously, the seller is able to offer suits that can be purchased by a larger group of consumers. Indeed, but for the Chinese made suits, the seller could only sell suits to consumers willing to spend at least $775 for a suit. Astute observers will also notice the opportunities for advanced pricing strategy implementation. The presence of the "66% off" Chinese suit is a clear illustration of that opportunity's presence. What else does the "66% off" tell us? It tells us that in all likelihood, the other suits can also be sold profitably at 66% off, and that if/when they don't sell at 40% off, they quite likely will be sold at an even greater discount.

Hopefully the above examples and discussion give the reader some perspective on just how free trade actually benefits them. Obviously, the question of whether the price benefits of free trade outweigh the unavoidable job losses that accompany free trade due to makers seeking greater leeway in attempting to use the mix of actual goods quality and profit maximizing (both economic and accounting profit) pricing and branding approaches is a question that needs to be answered. The thing is that it has been answered. There again, folks who are willing to critically and objectively look for the answer to that question will find it because economists have asked exactly that question. In the links below, one will find the answer found by the writers as well as references to other economists who've also considered that question.

(I've provided links to other economists' research that also answers that question. You'll find those links in the middle of the post here.)


As with all things economic, there are multiple scales at which the principles apply. The discussion above is a very specific illustration of one aspect of free trade that is play for one good that one seller offers. In other words, it's among the lowest levels of microeconomic scales at which the topic can be viewed, the only lower levels being in smaller industries and with smaller sellers. It's important to understand that not every dimension of free trade (or any other economic behavior) will be in play for every seller, all sellers, or even a given seller. Also, critical is that it's the overall impact of free trade across whole markets, industries and nations that one must also consider free trade. To do so is to examine it at macro economic levels, which include states, nations and multinational areas of the world.

It's harder to find macroeconomic illustrations that will be familiar to a broad and lay (to economics) audience. That said, numerous economists have attempted to present the macro-level picture in approachable terms and language. All the same, one must consider the matter, at least cognitively, at the macro-levels because that's where economics and politics most often intersect.

Here are some of the better and more accessible macroeconomic discussions of free trade I've come by:

• The Controversy Over Free Trade: The Gap Between Economists and the General Public (excerpt from the essay's conclusion is below; the supporting argument is the "meat" of the essay)

Free trade policies enable free market forces to allocate resources to their most productive activities. This allows a nation to maximize the value of the goods and services produced within its borders. Free trade also allows consumers to allocate their incomes to maximize the value of the goods and services that they purchase and consume. Numerous models also suggest that the growth prospects of a nation are improved by using free trade policies. Moreover, the findings of empirical studies reinforce economic theory.

Despite these economic benefits, free trade policies are opposed by a large percentage of the U.S. public. The opposition consists of various groups, such as protectionists, labor unions, environmentalists, human rights activists, and economic nationalists. Clearly, the implementation of trade policies creates winners and losers. Not surprisingly, potential losers oppose free trade policies. Moreover, some oppose free trade because of their recognition that others will lose. This clash suggests that many in the general public differ from economists in how they weigh the costs and benefits of free trade policies. Others oppose free trade because of concerns that free trade contributes to the abuse of workers throughout the world, as well as to environmental degradation. Thus, these individuals will oppose reductions in trade barriers until these issues are addressed.

In view of the potential gains of free trade, an important question is how to reduce the opposition to free trade. A first step would be increased education concerning the benefits of free trade. Such a step is not controversial; however, to date, economists have been only moderately successful in spreading this good news to a large audience. Illustrating the gains from free trade using concrete and personal examples, as opposed to theoretical arguments, is one suggestion for convincing a larger audience.

A second step involves reducing the cost to the losers from free trade. A standard view is that the costs of liberalizing trade fall disproportionately upon less-skilled workers. Trade adjustment assistance is one policy option that has generated much political support. A more controversial policy is wage insurance. Questions about the cost-effectiveness of both policies, especially the latter, have been raised.

The most controversial step is to attempt to increase political support for free trade by expanding the issues covered in trade negotiations. Many Americans have real demands that the well-being of workers be safeguarded in developing countries and that the environment be protected. Whether these demands can be best served by linking them to trade agreements is controversial. Arguably, there are better ways to resolve many of these issues. The inclusion of labor and environmental issues in trade negotiations, as well as other issues, may or may not increase domestic political support. However, even if the inclusion of these other issues generated additional domestic support for free trade, it would not necessarily ensure success in negotiations to reduce trade barriers: foreign opposition to the inclusion of these issues, especially in developing countries, might negate any newly gained domestic support.​

• Bilateralism, Multilateralism, and Trade Rules
  
• Embracing the Challenge of Free Trade: Competing and Prospering in a Global Economy
  
• Trade and Jobs
  
• The Fruits of Free Trade
  
• A Perspective on U.S. International Trade (excerpt from the essay's conclusion is below; the supporting argument is the "meat" of the essay)

Free trade is a policy that increases economic well being for a country as a whole. Specialization and exchange are the routes that generate the benefits. Specialization allows for increased productivity and higher wages, while open markets are more competitive and yield lower prices for consumers.

I’ve suggested three themes as to why free-trade policy continues to be a matter of controversy: first, that many trade issues are poorly understood; second, the concentrated nature of adverse trade effects combined with the diffuse nature of trade gains creates a political dynamic favoring protection in some cases; and, third, in some cases voters may prefer to pay the costs of protection for the purpose of sheltering vulnerable groups from the full rigors of open international markets. The challenge for educators, economists, and policymakers is to find ways to increase political support for free trade. It is clear that there is much work left to be done.​

 

[Wilbur Right]

You seem to have missed an important aspect of your well thought out position on free trade.

If you are able and willing to buy a suit for 800 dollars, your income is at a level that you COULD have chosen to support the American producer and suffered no ill effects for paying slightly more.

While sending a strong signal that the upper wage earners support American producers of quality goods.

What would have been wrong with that?

 

[mudwhistle]

Aside from the fact that your op was a bit lengthy, I gather that China is making stuff cheap.
Probably because they pay slave wages.
What you need to consider is this.....free trade only helps those who cheat.

 

[OldLady]

Our culture has come to want much more than it needs to live comfortably and well. Keeping up with the Joneses has become obscene, and companies are aware of the ridiculous price people will pay to impress.
Free trade is good for us, no doubt, but I'd be willing to live with less fiddly bits from China and junky clothes that only hold up to four or five washings. I know there is a lot more to it than that, but having Americans back to work would be worth it, imo.

 

[midcan5]

I know this is the CDZ but surely BS must be called what it is, BS. The piece reminds me of why economics is closer to astrology than science. See a link below. You all remember how economists saw the 2008 crash coming? No!

320 wrote, Hopefully the above examples and discussion give the reader some perspective on just how free trade actually benefits them.

In that quote resides the essential problem, there is no such thing as free trade, and if you doubt that check out monetary manipulation, embargoes, dumping, slave labor, keiretsu, sweatshops, suicide nets, etc etc. When Donald Trump mentioned Japan dumping autos, I thought I'd fall off my seat. Wow. But Americans don't consider their purchases' impact on themselves and their neighbors. 320 mentioned that.

Another element, especially among the well to do is status, Reagan's (mostly fictional) Cadillac mom would now be a Lexus mom. lol Consider Germany's union workers make twice ours and they have free college. Ah, so what's the difference you wonder?

No time now to address topic sufficiently, I may have in the past, check link in my signature for cars. And just for fun Google how nations embargo our products. Free trade you say!

"The US economy died when middle class jobs were offshored and when the financial system was deregulated.... Jobs offshoring benefited Wall Street, corporate executives, and shareholders, because lower labor and compliance costs resulted in higher profits. These profits flowed through to shareholders in the form of capital gains and to executives in the form of “performance bonuses.” Wall Street benefited from the bull market generated by higher profits."

The US Economy Has Not Recovered and Will Not Recover

"While Nike was conducting a huge and expensive PR blitz to tell people that it had cleaned up its subcontractors' sweatshop labor practices, an alert consumer advocate and activist in California named Marc Kasky caught them in what he alleges are a number of specific deceptions. Citing a California law that forbids corporations from intentionally deceiving people in their commercial statements, Kasky sued the multi-billion-dollar corporation. Instead of refuting Kasky's charge by proving in court that they didn't lie, however, Nike instead chose to argue that corporations should enjoy the same "free speech" right to deceive that individual human citizens have in their personal lives."

corporate deceit

How economists rode maths to become our era’s astrologers | Aeon Essays

"The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil." John Kenneth Galbraith, 'The Great Crash of 1929'

 

[OldLady]

I know this is the CDZ but surely BS must be called what it is, BS. The piece reminds me of why economics is closer to astrology than science. See a link below. You all remember how economists saw the 2008 crash coming? No!

320 wrote, Hopefully the above examples and discussion give the reader some perspective on just how free trade actually benefits them.

In that quote resides the essential problem, there is no such thing as free trade, and if you doubt that check out monetary manipulation, embargoes, dumping, slave labor, keiretsu, sweatshops, suicide nets, etc etc. When Donald Trump mentioned Japan dumping autos, I thought I'd fall off my seat. Wow. But Americans don't consider their purchases' impact on themselves and their neighbors. 320 mentioned that.

Another element, especially among the well to do is status, Reagan's (mostly fictional) Cadillac mom would now be a Lexus mom. lol Consider Germany's union workers make twice ours and they have free college. Ah, so what's the difference you wonder?

No time now to address topic sufficiently, I may have in the past, check link in my signature for cars. And just for fun Google how nations embargo our products. Free trade you say!

"The US economy died when middle class jobs were offshored and when the financial system was deregulated.... Jobs offshoring benefited Wall Street, corporate executives, and shareholders, because lower labor and compliance costs resulted in higher profits. These profits flowed through to shareholders in the form of capital gains and to executives in the form of “performance bonuses.” Wall Street benefited from the bull market generated by higher profits."

The US Economy Has Not Recovered and Will Not Recover

"While Nike was conducting a huge and expensive PR blitz to tell people that it had cleaned up its subcontractors' sweatshop labor practices, an alert consumer advocate and activist in California named Marc Kasky caught them in what he alleges are a number of specific deceptions. Citing a California law that forbids corporations from intentionally deceiving people in their commercial statements, Kasky sued the multi-billion-dollar corporation. Instead of refuting Kasky's charge by proving in court that they didn't lie, however, Nike instead chose to argue that corporations should enjoy the same "free speech" right to deceive that individual human citizens have in their personal lives."

corporate deceit

How economists rode maths to become our era’s astrologers | Aeon Essays

"The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil." John Kenneth Galbraith, 'The Great Crash of 1929'

At least two astrologers would come up with the same basic reading from the position of the stars. I gave up trying to understanding economics long ago because two people can take the same situation and give completely different prognostications. Completely different. And both are "right," but which is going to happen? No one apparently knows.

 

[DGS49]

One very basic point that is missed: In retailing, once a garment has been around too long, the original cost becomes irrelevant. Pricing is based on what the market will bear. Period.

I frequently hear people saying that because a garment ultimately was priced at, say, 75% off original retail, that the COST of that garment must be less than that, because "the story wouldn't sell it at that price if it were not profitable."

No. It doesn't work that way. The retailer has to move the inventory in order to realize some cash, and to make room for something that can be sold more profitably. Retail clothing operations frequently sell clothing for less than it originally cost them. You can't figure out the retailer's cost of the item by looking at final sale prices.

 

[jasonnfree]

To all of us going about our lives, occasionally sh*t happens. It happened to me last week when at a breakfast meeting I ended up "wearing" part of the meal. It was hardly the "end of the world," but it did mean I had to get a new suit on short notice. Nearby there happened to be a clothier with which I'm familiar (literally familiar, but it's not where I usually buy clothing although I have done before), so after breakfast, I went to get a suit. As the clerk showed me the options, he pointed out that several of them were made in America. Among the suits the guy showed me were:

• ~$700 on sale for ~$420 -- made in China (40% discount)
• ~$2500 on sale for ~1500 -- made in Italy (40% discount)
• ~$1500 on sale for ~$500 -- made in China (66% discount)
• ~$1300 on sale for ~$775 -- made in America (40% discount)
  
  It's worth noting that the seller carries only one brand of goods, it's own brand. That it does, however, merely eliminates the even greater complexity of pricing strategy factors (see the first side note below) across multiple brands of the same good. It doesn't alter the actual economics of the situation.

After making my purchase and realizing the experience can be used to illustrate a concept that a lot of folks rightly don't well understand, I looked to see what other popular sellers (non-bespoke) might offer American made suits. (I didn't look for more Chinese made ones because they are abundant and the range of substantive quality variance is much greater than for American suits.) I found a some (List prices shown below):

• $425 -- American Suit Store Wool Suit
  
• ~$500 -- In Review: The Men’s Wearhouse Made in the USA Abboud Suit
• ~$700 -- Joseph Abboud Navy Modern Fit Suit - Modern Fit | Men's Wearhouse (this is the same suit as the one above. This link is just provided to show how the price has changed in two years)
• ~$1500 - $1700 -- Suits at Hickey Freeman

In looking to find American made suits for this post, I came across some other makers of widely distributed American apparel and textile goods. All of them are pricey in comparison to similar quality goods made abroad.​

I've worn a lot of tailored clothing since I've had to wear a suit or sport jacket nearly every day since high school (except in college/grad school), including bespoke garments, so I think I know a few things about suits men's apparel, although not as much as my tailor and cobbler. Upon looking at the options, the Italian suit definitely stood apart as being nicer. What struck me was how similar the other three were. Sure, there were some minor differences, but nothing that accounts for the wide difference in list prices among the three, although at the sale prices, the delta made a little bit more sense.

What I'm saying is that in substance, the three lower priced suits were suits I saw as comparable enough that among them, I'd have been content with any one of them. Therefore, if I were to buy any of them, I'd choose the least expensive one based on the discernable differences in substance found among the three and on the absolute sum I had to pay for each of them. Duh.

What then struck me is that right there I was seeing an "everyday" example of the impact of free trade. From my retail consulting experience, I knew that list (original) prices are what they are based upon a retailer's/maker's pricing strategies and what they think they can get for the item; however, sale prices much more nearly reflect what a seller will accept as the forces of supply and demand drive prices down and closer to the minimum acceptable economic profit (not accounting profit) (see here for a graphical presentation of the same ideas) as a result of engaging in the business activity of selling a specific good.

Side note:

Pricing strategy for non-essential goods is essentially a psychological game sellers play with buyers whereby monopolistically competitive sellers use a combination of minor differences in substance and production cost to justify large differences in selling price.

It's active even at sales prices, but an in depth discussion of it is outside the scope of this post as it is a marketing tactic sellers use to control economic principles, and this post is primarily an economics discussion not a marketing discussion. It's also worth noting that not every pricing strategy, or even every "flavor" of a given pricing strategy, is applicable to every good or seller, or even every good a given seller offers.

I mention pricing strategy, however, because it's a consumer distraction (ancillary and complicating factor) that does, unfortunately, burden the layman's analysis of the economics of free trade at the very microeconomic level found in this post. Unlike scholarly researchers, I can't for the purpose of this post make pricing strategy go away, so I have to at least mention it so the audience can attempt to make some sense of it's role in the price variability observed above.​

End of side note.

The quick thinking folks will, after reading the content at the preceding two economics links (not the links in the side note), immediately begin considering the ideas found there to specific makers and/or sellers of various goods. In looking at the suits I was considering, they will immediately noticed the impact of free trade the seller, a monopolistic competitor or profit maximizer, gained from being able source suits from both China and the U.S. The Chinese made suits allow the seller to engage in price discrimination, thereby allowing the seller to maximize its profits by selling essentially the same item at a wider range of prices.

​

Side note:

The site from which that video came is an excellent one; it explains theory in a very approachable way. Click on the "subject" link found in the upper left of the page for a list of the various topics -- economics, history, math and more. Its economics discussions are pretty much all a lay person needs to know to accurately discern when their political leaders are saying something that doesn't jibe with well understood principles, thus meriting further investigation to determine whether the pol is speaking (1) based on proven principles or (2) based on whatever they've decided using a PUTA/PUMA/PUYA principle, that is, one that is PUlled-outta Their Ass; or as befits grammar, My Ass or Your Ass...LOL​

End of side note.

Also, quite obviously, the seller is able to offer suits that can be purchased by a larger group of consumers. Indeed, but for the Chinese made suits, the seller could only sell suits to consumers willing to spend at least $775 for a suit. Astute observers will also notice the opportunities for advanced pricing strategy implementation. The presence of the "66% off" Chinese suit is a clear illustration of that opportunity's presence. What else does the "66% off" tell us? It tells us that in all likelihood, the other suits can also be sold profitably at 66% off, and that if/when they don't sell at 40% off, they quite likely will be sold at an even greater discount.

Hopefully the above examples and discussion give the reader some perspective on just how free trade actually benefits them. Obviously, the question of whether the price benefits of free trade outweigh the unavoidable job losses that accompany free trade due to makers seeking greater leeway in attempting to use the mix of actual goods quality and profit maximizing (both economic and accounting profit) pricing and branding approaches is a question that needs to be answered. The thing is that it has been answered. There again, folks who are willing to critically and objectively look for the answer to that question will find it because economists have asked exactly that question. In the links below, one will find the answer found by the writers as well as references to other economists who've also considered that question.

(I've provided links to other economists' research that also answers that question. You'll find those links in the middle of the post here.)


As with all things economic, there are multiple scales at which the principles apply. The discussion above is a very specific illustration of one aspect of free trade that is play for one good that one seller offers. In other words, it's among the lowest levels of microeconomic scales at which the topic can be viewed, the only lower levels being in smaller industries and with smaller sellers. It's important to understand that not every dimension of free trade (or any other economic behavior) will be in play for every seller, all sellers, or even a given seller. Also, critical is that it's the overall impact of free trade across whole markets, industries and nations that one must also consider free trade. To do so is to examine it at macro economic levels, which include states, nations and multinational areas of the world.

It's harder to find macroeconomic illustrations that will be familiar to a broad and lay (to economics) audience. That said, numerous economists have attempted to present the macro-level picture in approachable terms and language. All the same, one must consider the matter, at least cognitively, at the macro-levels because that's where economics and politics most often intersect.

Here are some of the better and more accessible macroeconomic discussions of free trade I've come by:

• The Controversy Over Free Trade: The Gap Between Economists and the General Public (excerpt from the essay's conclusion is below; the supporting argument is the "meat" of the essay)

Free trade policies enable free market forces to allocate resources to their most productive activities. This allows a nation to maximize the value of the goods and services produced within its borders. Free trade also allows consumers to allocate their incomes to maximize the value of the goods and services that they purchase and consume. Numerous models also suggest that the growth prospects of a nation are improved by using free trade policies. Moreover, the findings of empirical studies reinforce economic theory.

Despite these economic benefits, free trade policies are opposed by a large percentage of the U.S. public. The opposition consists of various groups, such as protectionists, labor unions, environmentalists, human rights activists, and economic nationalists. Clearly, the implementation of trade policies creates winners and losers. Not surprisingly, potential losers oppose free trade policies. Moreover, some oppose free trade because of their recognition that others will lose. This clash suggests that many in the general public differ from economists in how they weigh the costs and benefits of free trade policies. Others oppose free trade because of concerns that free trade contributes to the abuse of workers throughout the world, as well as to environmental degradation. Thus, these individuals will oppose reductions in trade barriers until these issues are addressed.

In view of the potential gains of free trade, an important question is how to reduce the opposition to free trade. A first step would be increased education concerning the benefits of free trade. Such a step is not controversial; however, to date, economists have been only moderately successful in spreading this good news to a large audience. Illustrating the gains from free trade using concrete and personal examples, as opposed to theoretical arguments, is one suggestion for convincing a larger audience.

A second step involves reducing the cost to the losers from free trade. A standard view is that the costs of liberalizing trade fall disproportionately upon less-skilled workers. Trade adjustment assistance is one policy option that has generated much political support. A more controversial policy is wage insurance. Questions about the cost-effectiveness of both policies, especially the latter, have been raised.

The most controversial step is to attempt to increase political support for free trade by expanding the issues covered in trade negotiations. Many Americans have real demands that the well-being of workers be safeguarded in developing countries and that the environment be protected. Whether these demands can be best served by linking them to trade agreements is controversial. Arguably, there are better ways to resolve many of these issues. The inclusion of labor and environmental issues in trade negotiations, as well as other issues, may or may not increase domestic political support. However, even if the inclusion of these other issues generated additional domestic support for free trade, it would not necessarily ensure success in negotiations to reduce trade barriers: foreign opposition to the inclusion of these issues, especially in developing countries, might negate any newly gained domestic support.​

• Bilateralism, Multilateralism, and Trade Rules
  
• Embracing the Challenge of Free Trade: Competing and Prospering in a Global Economy
  
• Trade and Jobs
  
• The Fruits of Free Trade
  
• A Perspective on U.S. International Trade (excerpt from the essay's conclusion is below; the supporting argument is the "meat" of the essay)

Free trade is a policy that increases economic well being for a country as a whole. Specialization and exchange are the routes that generate the benefits. Specialization allows for increased productivity and higher wages, while open markets are more competitive and yield lower prices for consumers.

I’ve suggested three themes as to why free-trade policy continues to be a matter of controversy: first, that many trade issues are poorly understood; second, the concentrated nature of adverse trade effects combined with the diffuse nature of trade gains creates a political dynamic favoring protection in some cases; and, third, in some cases voters may prefer to pay the costs of protection for the purpose of sheltering vulnerable groups from the full rigors of open international markets. The challenge for educators, economists, and policymakers is to find ways to increase political support for free trade. It is clear that there is much work left to be done.​

Before all the offshoring of jobs to low wage countries, Americans seemed to afford made in America. Trump says that Nabisco is going to be sending jobs from Chicago to Mexico. Let's keep on eye on Nabisco products now and notice if those product prices crash after the move to Mexico. A box of Oreos should go from $2.49 to at least $1.50 considering that Mexican wages are way less than half our wages.

 

[OldLady]

To all of us going about our lives, occasionally sh*t happens. It happened to me last week when at a breakfast meeting I ended up "wearing" part of the meal. It was hardly the "end of the world," but it did mean I had to get a new suit on short notice. Nearby there happened to be a clothier with which I'm familiar (literally familiar, but it's not where I usually buy clothing although I have done before), so after breakfast, I went to get a suit. As the clerk showed me the options, he pointed out that several of them were made in America. Among the suits the guy showed me were:

• ~$700 on sale for ~$420 -- made in China (40% discount)
• ~$2500 on sale for ~1500 -- made in Italy (40% discount)
• ~$1500 on sale for ~$500 -- made in China (66% discount)
• ~$1300 on sale for ~$775 -- made in America (40% discount)
  
  It's worth noting that the seller carries only one brand of goods, it's own brand. That it does, however, merely eliminates the even greater complexity of pricing strategy factors (see the first side note below) across multiple brands of the same good. It doesn't alter the actual economics of the situation.

After making my purchase and realizing the experience can be used to illustrate a concept that a lot of folks rightly don't well understand, I looked to see what other popular sellers (non-bespoke) might offer American made suits. (I didn't look for more Chinese made ones because they are abundant and the range of substantive quality variance is much greater than for American suits.) I found a some (List prices shown below):

• $425 -- American Suit Store Wool Suit
  
• ~$500 -- In Review: The Men’s Wearhouse Made in the USA Abboud Suit
• ~$700 -- Joseph Abboud Navy Modern Fit Suit - Modern Fit | Men's Wearhouse (this is the same suit as the one above. This link is just provided to show how the price has changed in two years)
• ~$1500 - $1700 -- Suits at Hickey Freeman

In looking to find American made suits for this post, I came across some other makers of widely distributed American apparel and textile goods. All of them are pricey in comparison to similar quality goods made abroad.​

I've worn a lot of tailored clothing since I've had to wear a suit or sport jacket nearly every day since high school (except in college/grad school), including bespoke garments, so I think I know a few things about suits men's apparel, although not as much as my tailor and cobbler. Upon looking at the options, the Italian suit definitely stood apart as being nicer. What struck me was how similar the other three were. Sure, there were some minor differences, but nothing that accounts for the wide difference in list prices among the three, although at the sale prices, the delta made a little bit more sense.

What I'm saying is that in substance, the three lower priced suits were suits I saw as comparable enough that among them, I'd have been content with any one of them. Therefore, if I were to buy any of them, I'd choose the least expensive one based on the discernable differences in substance found among the three and on the absolute sum I had to pay for each of them. Duh.

What then struck me is that right there I was seeing an "everyday" example of the impact of free trade. From my retail consulting experience, I knew that list (original) prices are what they are based upon a retailer's/maker's pricing strategies and what they think they can get for the item; however, sale prices much more nearly reflect what a seller will accept as the forces of supply and demand drive prices down and closer to the minimum acceptable economic profit (not accounting profit) (see here for a graphical presentation of the same ideas) as a result of engaging in the business activity of selling a specific good.

Side note:

Pricing strategy for non-essential goods is essentially a psychological game sellers play with buyers whereby monopolistically competitive sellers use a combination of minor differences in substance and production cost to justify large differences in selling price.

It's active even at sales prices, but an in depth discussion of it is outside the scope of this post as it is a marketing tactic sellers use to control economic principles, and this post is primarily an economics discussion not a marketing discussion. It's also worth noting that not every pricing strategy, or even every "flavor" of a given pricing strategy, is applicable to every good or seller, or even every good a given seller offers.

I mention pricing strategy, however, because it's a consumer distraction (ancillary and complicating factor) that does, unfortunately, burden the layman's analysis of the economics of free trade at the very microeconomic level found in this post. Unlike scholarly researchers, I can't for the purpose of this post make pricing strategy go away, so I have to at least mention it so the audience can attempt to make some sense of it's role in the price variability observed above.​

End of side note.

The quick thinking folks will, after reading the content at the preceding two economics links (not the links in the side note), immediately begin considering the ideas found there to specific makers and/or sellers of various goods. In looking at the suits I was considering, they will immediately noticed the impact of free trade the seller, a monopolistic competitor or profit maximizer, gained from being able source suits from both China and the U.S. The Chinese made suits allow the seller to engage in price discrimination, thereby allowing the seller to maximize its profits by selling essentially the same item at a wider range of prices.

​

Side note:

The site from which that video came is an excellent one; it explains theory in a very approachable way. Click on the "subject" link found in the upper left of the page for a list of the various topics -- economics, history, math and more. Its economics discussions are pretty much all a lay person needs to know to accurately discern when their political leaders are saying something that doesn't jibe with well understood principles, thus meriting further investigation to determine whether the pol is speaking (1) based on proven principles or (2) based on whatever they've decided using a PUTA/PUMA/PUYA principle, that is, one that is PUlled-outta Their Ass; or as befits grammar, My Ass or Your Ass...LOL​

End of side note.

Also, quite obviously, the seller is able to offer suits that can be purchased by a larger group of consumers. Indeed, but for the Chinese made suits, the seller could only sell suits to consumers willing to spend at least $775 for a suit. Astute observers will also notice the opportunities for advanced pricing strategy implementation. The presence of the "66% off" Chinese suit is a clear illustration of that opportunity's presence. What else does the "66% off" tell us? It tells us that in all likelihood, the other suits can also be sold profitably at 66% off, and that if/when they don't sell at 40% off, they quite likely will be sold at an even greater discount.

Hopefully the above examples and discussion give the reader some perspective on just how free trade actually benefits them. Obviously, the question of whether the price benefits of free trade outweigh the unavoidable job losses that accompany free trade due to makers seeking greater leeway in attempting to use the mix of actual goods quality and profit maximizing (both economic and accounting profit) pricing and branding approaches is a question that needs to be answered. The thing is that it has been answered. There again, folks who are willing to critically and objectively look for the answer to that question will find it because economists have asked exactly that question. In the links below, one will find the answer found by the writers as well as references to other economists who've also considered that question.

(I've provided links to other economists' research that also answers that question. You'll find those links in the middle of the post here.)


As with all things economic, there are multiple scales at which the principles apply. The discussion above is a very specific illustration of one aspect of free trade that is play for one good that one seller offers. In other words, it's among the lowest levels of microeconomic scales at which the topic can be viewed, the only lower levels being in smaller industries and with smaller sellers. It's important to understand that not every dimension of free trade (or any other economic behavior) will be in play for every seller, all sellers, or even a given seller. Also, critical is that it's the overall impact of free trade across whole markets, industries and nations that one must also consider free trade. To do so is to examine it at macro economic levels, which include states, nations and multinational areas of the world.

It's harder to find macroeconomic illustrations that will be familiar to a broad and lay (to economics) audience. That said, numerous economists have attempted to present the macro-level picture in approachable terms and language. All the same, one must consider the matter, at least cognitively, at the macro-levels because that's where economics and politics most often intersect.

Here are some of the better and more accessible macroeconomic discussions of free trade I've come by:

• The Controversy Over Free Trade: The Gap Between Economists and the General Public (excerpt from the essay's conclusion is below; the supporting argument is the "meat" of the essay)

Free trade policies enable free market forces to allocate resources to their most productive activities. This allows a nation to maximize the value of the goods and services produced within its borders. Free trade also allows consumers to allocate their incomes to maximize the value of the goods and services that they purchase and consume. Numerous models also suggest that the growth prospects of a nation are improved by using free trade policies. Moreover, the findings of empirical studies reinforce economic theory.

Despite these economic benefits, free trade policies are opposed by a large percentage of the U.S. public. The opposition consists of various groups, such as protectionists, labor unions, environmentalists, human rights activists, and economic nationalists. Clearly, the implementation of trade policies creates winners and losers. Not surprisingly, potential losers oppose free trade policies. Moreover, some oppose free trade because of their recognition that others will lose. This clash suggests that many in the general public differ from economists in how they weigh the costs and benefits of free trade policies. Others oppose free trade because of concerns that free trade contributes to the abuse of workers throughout the world, as well as to environmental degradation. Thus, these individuals will oppose reductions in trade barriers until these issues are addressed.

In view of the potential gains of free trade, an important question is how to reduce the opposition to free trade. A first step would be increased education concerning the benefits of free trade. Such a step is not controversial; however, to date, economists have been only moderately successful in spreading this good news to a large audience. Illustrating the gains from free trade using concrete and personal examples, as opposed to theoretical arguments, is one suggestion for convincing a larger audience.

A second step involves reducing the cost to the losers from free trade. A standard view is that the costs of liberalizing trade fall disproportionately upon less-skilled workers. Trade adjustment assistance is one policy option that has generated much political support. A more controversial policy is wage insurance. Questions about the cost-effectiveness of both policies, especially the latter, have been raised.

The most controversial step is to attempt to increase political support for free trade by expanding the issues covered in trade negotiations. Many Americans have real demands that the well-being of workers be safeguarded in developing countries and that the environment be protected. Whether these demands can be best served by linking them to trade agreements is controversial. Arguably, there are better ways to resolve many of these issues. The inclusion of labor and environmental issues in trade negotiations, as well as other issues, may or may not increase domestic political support. However, even if the inclusion of these other issues generated additional domestic support for free trade, it would not necessarily ensure success in negotiations to reduce trade barriers: foreign opposition to the inclusion of these issues, especially in developing countries, might negate any newly gained domestic support.​

• Bilateralism, Multilateralism, and Trade Rules
  
• Embracing the Challenge of Free Trade: Competing and Prospering in a Global Economy
  
• Trade and Jobs
  
• The Fruits of Free Trade
  
• A Perspective on U.S. International Trade (excerpt from the essay's conclusion is below; the supporting argument is the "meat" of the essay)

Free trade is a policy that increases economic well being for a country as a whole. Specialization and exchange are the routes that generate the benefits. Specialization allows for increased productivity and higher wages, while open markets are more competitive and yield lower prices for consumers.

I’ve suggested three themes as to why free-trade policy continues to be a matter of controversy: first, that many trade issues are poorly understood; second, the concentrated nature of adverse trade effects combined with the diffuse nature of trade gains creates a political dynamic favoring protection in some cases; and, third, in some cases voters may prefer to pay the costs of protection for the purpose of sheltering vulnerable groups from the full rigors of open international markets. The challenge for educators, economists, and policymakers is to find ways to increase political support for free trade. It is clear that there is much work left to be done.​

Before all the offshoring of jobs to low wage countries, Americans seemed to afford made in America. Trump says that Nabisco is going to be sending jobs from Chicago to Mexico. Let's keep on eye on Nabisco products now and notice if those product prices crash after the move to Mexico. A box of Oreos should go from $2.49 to at least $1.50 considering that Mexican wages are way less than half our wages.

Yeah, the same way the price of groceries went down when the price of gasoline dropped $2 per gallon. Never happen.

 

[320 Years of History]

Nabisco is going to be sending jobs from Chicago to Mexico. Let's keep on eye on Nabisco products now and notice if those product prices crash after the move to Mexico. A box of Oreos should go from $2.49 to at least $1.50 considering that Mexican wages are way less than half our wages.

Wow. That's an impressive display of hubristic intransigence, temerity and cognitive indolence. Did you even bother to read any one of the the essay's found at the end of the OP? The one with the pretty pictures addresses precisely the point you've raised, and I'd have thought you or anyone else give more consideration to at least that one than GW Bush does to books in general.

One of the great things about books is sometimes there are some fantastic pictures.
― George W. Bush
​

To illustrate only a few factors your overly simplistic remark fails to address:

• Has it dawned on you that one of the things free trade accomplishes is keeping prices lower than they would be absent free trade? Has it dawned on you that may be the thing involved with Nabisco? (this is addressed in the content of the macroecon links I provided in the OP)
• Have you considered whether the role of technology in baked goods production is such that those jobs won't exist no matter where the food is produced? See also:
  • U.S. Department of Commerce Industry Report Food Manufacturing
    
  • Automation is the Primary Trend in the Food and Beverage Industry
    
  • Automation of Food Processing
  • Automation of Industry
• Did you consider that Nabisco recognizes that its use of labor rather than capital to produce its food products is compromising its competitiveness by keeping its production processes less efficient than that of other cookie makers, and that to remain competitive they need to replace human workers with machines? Does it register for you that once Nabisco implements even more machinery in its production process, it will be irrelevant whether the cookies are made and the drivers to the cookies' price will be things other than the cost of labor?
  • Just how much human labor will there be in the implementation of "four state-of-the-art manufacturing lines as part of the Nabisco's efforts to "transform [its] global manufacturing processes to accelerate growth, reduce costs and improve productivity?"
    
    Nabisco's production line
    
    
    
    "State of the Art" production line
    
    
    
• Did it, before penning your post, cross your mind to find out if any of those things might be so or in play?

Your post highlights one of the quintessential rational failings of the anti-free trade crowd: obdurately relying on anecdotal observations made in isolation to form conclusions about wide ranging matters of infinitely greater scope than exists in the observations to which they point.

 

[jasonnfree]

Nabisco is going to be sending jobs from Chicago to Mexico. Let's keep on eye on Nabisco products now and notice if those product prices crash after the move to Mexico. A box of Oreos should go from $2.49 to at least $1.50 considering that Mexican wages are way less than half our wages.

Wow. That's an impressive display of hubristic intransigence, temerity and cognitive indolence. Did you even bother to read any one of the the essay's found at the end of the OP? The one with the pretty pictures addresses precisely the point you've raised, and I'd have thought you or anyone else give more consideration to at least that one than GW Bush does to books in general.

One of the great things about books is sometimes there are some fantastic pictures.
― George W. Bush
​

To illustrate only a few factors your overly simplistic remark fails to address:

• Has it dawned on you that one of the things free trade accomplishes is keeping prices lower than they would be absent free trade? Has it dawned on you that may be the thing involved with Nabisco? (this is addressed in the content of the macroecon links I provided in the OP)
• Have you considered whether the role of technology in baked goods production is such that those jobs won't exist no matter where the food is produced? See also:
  • U.S. Department of Commerce Industry Report Food Manufacturing
    
  • Automation is the Primary Trend in the Food and Beverage Industry
    
  • Automation of Food Processing
  • Automation of Industry
• Did you consider that Nabisco recognizes that its use of labor rather than capital to produce its food products is compromising its competitiveness by keeping its production processes less efficient than that of other cookie makers, and that to remain competitive they need to replace human workers with machines? Does it register for you that once Nabisco implements even more machinery in its production process, it will be irrelevant whether the cookies are made and the drivers to the cookies' price will be things other than the cost of labor?
  • Just how much human labor will there be in the implementation of "four state-of-the-art manufacturing lines as part of the Nabisco's efforts to "transform [its] global manufacturing processes to accelerate growth, reduce costs and improve productivity?"
    
    Nabisco's production line
    
    
    
    "State of the Art" production line
    
    
• Did it, before penning the servile cross your mind to find out if any of those things might be so or in play?

Your post highlights one of the quintessential rational failings of the anti-free trade crowd: obdurately relying on anecdotal observations made in isolation to form conclusions about wide ranging matters of infinitely greater scope than exists in the observations to which they point.

When are we going to see the huge price drops considering a Mexican or Chinaman makes only a fraction of what we make? Globalism - the ability of companies moving production or manpower to where they get the most profit and the ordinary guy can go to hell. Notice where the stock market went to after these crappy for worker trade pacts kicked in? It's at several time what it was before Nafta. Maybe you're at a level of income where you don't have to hustle to work a couple jobs and cut back on luxuries when things go south like they did for people I've know at the average income level. Brother in Law of mine for example. Had a good job with a company that went to Mexico after Nafta. By then he had a bad back and was hard of hearing at around age 45. He got some money for retraining after the clinton nafta sellout. I think it was 10k. He tried computers but could never make it in that industry at his age. A little too old, plus hard of hearing. He ended up at jobs like Target. After he got a 25 cent pay raise Target cut his hours. Luckily he had a house which he used as his cash cow for a few years. One of many stories I could tell, but by the way, what is a younger generation going to do? They probably won't even have home ownership to help them out. It's supposed to be what's good for America, not just what's good for the few at the top.

 

[OldLady]

Nabisco is going to be sending jobs from Chicago to Mexico. Let's keep on eye on Nabisco products now and notice if those product prices crash after the move to Mexico. A box of Oreos should go from $2.49 to at least $1.50 considering that Mexican wages are way less than half our wages.

Wow. That's an impressive display of hubristic intransigence, temerity and cognitive indolence. Did you even bother to read any one of the the essay's found at the end of the OP? The one with the pretty pictures addresses precisely the point you've raised, and I'd have thought you or anyone else give more consideration to at least that one than GW Bush does to books in general.

One of the great things about books is sometimes there are some fantastic pictures.
― George W. Bush
​

To illustrate only a few factors your overly simplistic remark fails to address:

• Has it dawned on you that one of the things free trade accomplishes is keeping prices lower than they would be absent free trade? Has it dawned on you that may be the thing involved with Nabisco? (this is addressed in the content of the macroecon links I provided in the OP)
• Have you considered whether the role of technology in baked goods production is such that those jobs won't exist no matter where the food is produced? See also:
  • U.S. Department of Commerce Industry Report Food Manufacturing
    
  • Automation is the Primary Trend in the Food and Beverage Industry
    
  • Automation of Food Processing
  • Automation of Industry
• Did you consider that Nabisco recognizes that its use of labor rather than capital to produce its food products is compromising its competitiveness by keeping its production processes less efficient than that of other cookie makers, and that to remain competitive they need to replace human workers with machines? Does it register for you that once Nabisco implements even more machinery in its production process, it will be irrelevant whether the cookies are made and the drivers to the cookies' price will be things other than the cost of labor?
  • Just how much human labor will there be in the implementation of "four state-of-the-art manufacturing lines as part of the Nabisco's efforts to "transform [its] global manufacturing processes to accelerate growth, reduce costs and improve productivity?"
    
    Nabisco's production line
    
    
    
    "State of the Art" production line
    
    
• Did it, before penning the servile cross your mind to find out if any of those things might be so or in play?

Your post highlights one of the quintessential rational failings of the anti-free trade crowd: obdurately relying on anecdotal observations made in isolation to form conclusions about wide ranging matters of infinitely greater scope than exists in the observations to which they point.

When are we going to see the huge price drops considering a Mexican or Chinaman makes only a fraction of what we make? Globalism - the ability of companies moving production or manpower to where they get the most profit and the ordinary guy can go to hell. Notice where the stock market went to after these crappy for worker trade pacts kicked in? It's at several time what it was before Nafta. Maybe you're at a level of income where you don't have to hustle to work a couple jobs and cut back on luxuries when things go south like they did for people I've know at the average income level. Brother in Law of mine for example. Had a good job with a company that went to Mexico after Nafta. By then he had a bad back and was hard of hearing at around age 45. He got some money for retraining after the clinton nafta sellout. I think it was 10k. He tried computers but could never make it in that industry at his age. A little too old, plus hard of hearing. He ended up at jobs like Target. After he got a 25 cent pay raise Target cut his hours. Luckily he had a house which he used as his cash cow for a few years. One of many stories I could tell, but by the way, what is a younger generation going to do? They probably won't even have home ownership to help them out. It's supposed to be what's good for America, not just what's good for the few at the top.

It isn't just globalism but technology that is changing the American workers' landscape so suddenly and drastically. In a capitalist society, no one is going to stop businesses from making the biggest buck it can, whether by using cheaper labor or better robots. For Americans to compete, workers need to agree to work for less or learn to do different jobs; the world won't turn backwards to accomodate those who are left behind. If we had universal healthcare, business and labor would have a huge financial load off its shoulders and could do more negotiating.
I'm sorry to hear what happened to your brother-in-law. I'm not saying he did anything wrong. To make things right, though, WE need to make the changes, not businessmen.

 

[320 Years of History]

Before I respond to the posts below, I have to say I clearly underestimated, grossly so, folks' here willingness and/or inclination to hone in on the non-economics factors of the discussion in my OP. I'm not criticizing folks for having done so, I'm merely observing the dichotomy between the expressed interest (as shown by the nature of remarks provided) in economics principles and that shown for marketing and management concepts.

That observation suggests to me a question: have businesses been so successful with their messages that folks not formally trained in both business and economics are truly confused about the role of each discipline -- econ and business -- in the marketplace? (Marketplace = the place were is found the confluence of buyers, sellers, infrastructure, culture, systems, and processes, some mental and some physical, all interacting concurrently to conduct and/or facilitate, using money as the measurement medium, the exchange of goods, services and ideas.) This instant, I don't know the answer. I'm so accustomed to engaging on both topics with others who have a strong understanding of one, the other, or both. Perhaps this observation is instructive as goes why economists have, as noted at the end of the OP, have had such a challenging time communicating the merits of free trade for what's clear is that various individuals have partial understanding of isolated aspects of one or the other discipline. (See the link for imperfect information below.)

At any rate, as I said, I'm not making a judgment one way or another in this post. Just noticing that the behaviors I've in earlier posts may indeed issue not as much from a penchant for political partisanship, but rather from folks simply not understanding enough as it does from understanding some of what one needs to understand to fully "get" the ideas presented in the essays in the OP. I've got enough "dots" that I am beginning to now be able to connect them and in turn posit and extrapolate solutions for building a complete picture of the drivers to the anti-free trade feedback I see and hear so often expressed in the U.S. today.

While sending a strong signal that the upper wage earners support American producers of quality goods.

What would have been wrong with that?

???

I don't know what you you aim to communicate with the first "statement; it's a stand alone "paragraph" that also is neither a complete sentence nor a sentence fragment that "computes" for me. Please clarify.

What would have been wrong with what "that?"

Perhaps the sentence fragment and question are related?? As they are in separate "paragraphs," I cannot tell whether they are.

I gather that China is making stuff cheap.
Probably because they pay slave wages.

Red:
That's an invalidly inferred generalization you've made. Some of the stuff Chinese factories produce is "cheap;" some of it is not. Whether the items produced for given U.S. sellers is or not depends on the specifications the seller provides to the factory, not on whether the people who actually make the items are Chinese or located in China.

Blue:
Whether the wages in China are "slave wages" depends on the context in which they are measured. If Chinese wages were paid to U.S. workers performing the same task (something that's not even legally permitted re: some worker wages), they would indeed be so-called "slave wages." (A critical distinction between slaves and volunteers and workers who are neither of those things is that slaves and volunteers aren't actually paid a wage.) Within the Chinese economy, however, factory worker wages are not slave wages. Rather they often are "good wage jobs" much as factory jobs in the U.S. are.

To illustrate....For ~$4 one can get a nice American portion size meal for two people and have leftovers.

• Two grilled chicken legs and thighs (four pieces)
• Two handfuls of grilled green beans
• Two handfuls of grilled enoki mushrooms
• Two ears of corn
• Two bowls of freshly made pasta with assorted veggies and one's choice of sliced beef, lamb, pork or chicken (food quantity per bowl is about the same as what one would get from one package of Knorr Pasta Sides)

It's one of the few meals I have in the PRC that I can directly compare with things I eat in the U.S. and that folks who've never eaten indigenous Chinese food can relate to. I know this because it's what I tend to opt for when I don't go out to a "proper" restaurant for dinner and choose instead go to the "take out" places in the neighborhood behind my hotel in the heart of Shenzhen.

That same meal is even less expensive and equally available in rural areas. Interestingly, for the purpose of economic (not financial) comparison, in the expat oriented part of Shenzhen (not at all near the city center but just as nice/posh/chic; it's just chic in a somewhat more familiarly Western way instead of an Asian way), the same thing is also available, but it costs about three times as much. It's equally delicious there, but as one would expect, "what the market will bear" is a huge factor in what one pays and what sellers charge.

The same things occur with hotels. The Ritz is no different that the several Chinese high end hotels, but the rack rate is triple that of the comparable Chinese hotels and the in-hotel dining options have more offerings familiar to Western palates. Ditto restaurants. For the price of a KFC meal one can buy a mid-range meal at a Chinese restaurant. (by "mid-range" I mean food and service one can expect at a bistro or grill.)

Keeping up with the Joneses has become obscene, and companies are aware of the ridiculous price people will pay to impress.

Yes, that is something that is in play. It's one aspect of the emotional marketing associated with some pricing strategies. It's things like consumers' desire to "keep up with the Jones" and sellers' willingness and keen ability to exploit that emotion that confounds the general public's ability to accurately isolate the "pure" economics of cost and profit in consumer goods from the accounting and business operations factors that pervade that industry. The "wine" video in the OP alludes to that very idea.

At least two astrologers would come up with the same basic reading from the position of the stars. I gave up trying to understanding economics...two people can take the same situation and give completely different prognostications. Completely different. And both are "right," but which is going to happen? No one apparently knows.

...Well, don't give up. Economics isn't astrology. The dilemma that frustrates you rightfully does so with regard to some aspects of economics; however, free trade isn't among them. The superior merit of free trade over the alternative is something that pretty much every economist agrees upon.

Two people who don't understand economics can and most likely will have vastly different views. It's not at all surprising that occurs among the "economically unwashed" and the manipulatively selfish "washed." I realize that most people in the U.S. fit the former classification, and that is exactly why I provide the links I do rather than emotionally and politically biased opinion pieces and references.

I don't think there's something wrong about having an opinion about the outcome of various economic principles, but I know there is something very wrong about denying the verity of how the principles work regardless of whether one likes how they work and regardless of where one stands among the "winners and losers" in their being played out, most especially the principles of free trade, for which there's not one shred of credible evidence indicating it doesn't do exactly what it's intended to do.

The retailer has to move the inventory in order to realize some cash, and to make room for something that can be sold more profitably.

There is no question that operationally, so-called "open to buy" aka "floorplan financing" aka "inventory financing" is a key business factor that figures into the behavior just as do the marketing factors such as pricing strategies and emotional promotion/advertising/marking.

The key thing to keep in mind is that the various management and marketing tactics businesses employ exist to control the way the economic principles that describe consumers' behavior in the face of scarcity and choice affect a specific business or industry. The reverse -- economic principles existing to control marketing and management tactics and outcomes -- is not at all what's going on. The way the tactic control the behavior is by shaping the message, the information, consumers/buyers receive about the goods they consider prior to buying one or some. In other words, sellers control economic/consumer behavior (not economic principles) on a large scale by providing imperfect information and they can do so very effectively.

(If you click on the "imperfect information" link, be sure to click through to "complete information, "imperfect information" and "asymmetric information" to get a full understanding of how marketing and finance tactics affect the quality and risk of buyers' economic (not financial) decision making. Sorry to say that, but that's econ; it's a bunch of proven principles that have to be thought of and considered collectively and simultaneously to get a full picture of how markets/market participants behave and the consequences of that behavior.)

. Retail clothing operations frequently sell clothing for less than it originally cost them.

It does happen. It happens frequently in that it's not hard for consumers to find such "deals," but it happens infrequently as a proportion of a seller's gross revenue. Were it to happen frequently as a share of a business' operations, the company would go "belly up."

This again is a factor that is in play, but it's role in the manifestation of economic principles is irrelevant. It's irrelevant because from an economic perspective, what you're describing is a maker's actions taken to exit a given market, namely the microeconmic market of buying and selling that single item. From an accounting perspective, there's no question the seller is taking a loss on those items. The price discrimination video in the OP provides, using wine as the sample good, an excellent narrative and graphic illustration of the economic principle (supplier and consumer surplus) that makes it possible for the seller to absorb the accounting loss associated with the specific items to which you refer.

You can't figure out the retailer's cost of the item by looking at final sale prices.

No, one cannot. There doesn't really exist a need to do for folks other than (1) a business' owners and (2) researchers who want to isolate and study the various factors in play. As goes the latter, well, that was done ages ago and the veracity and credibility of the findings are the stuff of today's economic textbooks; there's no need to repeat those studies, and that has a lot, I think, to do with why so many essays about economics don't discuss that "stuff." The primary audience for the papers consists of folks who already know that information and who have, through their formal economics education, examined it and found it to be valid as presented in modern academic texts.

When are we going to see the huge price drops considering a Mexican or Chinaman makes only a fraction of what we make?

First, let me thank you for posting notably more mature thoughts than those in your earlier post to which I replied. When I read that first one, I thought to myself, "JFC. The man didn't bother to actually read and pay attention to much if anything of substance in the OP. All he's done is share whatever the hell crossed his mind without regard to whether it made any sense in the context at hand." It was a disheartening post to read.

This one that you've followed with, and to which I now reply, is a far better one for though it issues in part from emotion -- something not entirely inappropriate, particularly as you've given some context to the emotion and its drivers -- it contains remarks that can be addressed rationally, thereby facilitating a mature atmosphere in which we can have an adult conversation rather than "talk at" one another. So again, TY.


The business cycle and marketplace are more dynamic than your question implies. Most likely we won't see price drops. We could if companies (their managers) could shift to new locales instantly and at very low or no cost. They can't. What they can and do do is quantify and measure the cost over various time periods of continuing to use labor instead of capital vs. buying new capital and ceasing to use some or all of the same quantity of labor and determine which option has the best effect on the bottom line. That's what business managers are supposed to do for their primary task is to make the company as profitable as possible. Thus, what we are far more likely to see is less rapidly increasing prices.

Here again, your question is a fair one to ask, but it's answers come from business disciplines -- quantitative management analysis, accounting, and finance -- that are based upon economic principles, but that measure business/financial operations and outcomes not economic behavior and their effectiveness or efficiency. I cannot stress enough the importance -- practical as well as analytical -- of keeping aware of the distinction between the two disciplines and the comparative primacy of place the two have in economics discussions, even though in "the real world" they operate jointly.

Brother in Law of mine for example.

You've poignantly described the dilemma your brother in law and others face. He's not alone either. By all accounts he's one of about four or five million folks who've lost "good jobs" as a result of producers acting to avail themselves of the supply side benefits of free trade. That government leaders must make decisions based on the "big picture" certainly doesn't ameliorate things for adversely affected workers; however, the "big picture" shows clearly that although five million folks is a lot of folks, as a population segment that must be considered by macroeconomic policy, it's a very small minority of a workforce comprised of ~250M individuals.

It seems as though he may indeed be among the "losers" in the transition from constricted trade to free trade. I'm sorry that the transition has had a direct and palpable impact on him. That said, I know too that in shifting from one market structure to the other, or even going back to a former paradigm, there will be "winners and losers" at the individual, business, industry and higher levels. Nobody ever said there would not be and everyone who was party to effecting the change knew there would be. What happened is that the pols didn't (for obvious reasons) identify to the general "economically unwashed" public precisely who would be the relative winners and losers and what actions the foreseeable "losers" should take in advance of the transition's initiation.

Having said all that, there remains the question of what be the solution for folks like your brother in law (BiL), folks who are older and quite close to retiring, but who yet lost their "good jobs" at a career/life stage when their willingness or ability to quickly learn the new concepts required in the modern economy had passed its zenith. I cannot pretend to have the solution for those folks. All I have to offer, and I know it's no comfort to you, him or others like him, is what I intend to do in a few years when I retire, but as I know that won't help him/them either, it's still not an actionable idea.

Make no mistake, I know folks like your BiL are desperate for a solution. There may not actually be one. For example, if we were to constrict trade as we did in the 20th century, one has to wonder whether your BiL would benefit form that. His age may mean he cannot. But let's say he does get a returned "good job" wrought by protectionism. Well, that just means that the folks who were "winners" under free trade become "losers." Now thinking about the brutal reality of the scale of U.S. economic "winners" in free trade becoming losers, it becomes painfully obvious that the nation as a whole suffers far more, even though your BiL may not be among them, that is until the company he works at begins to suffer insurmountable losses due to its inefficient presence in a marketplace that remains global even though the U.S. implements certain trade restrictions (tariffs or quotas). That's the thing, the big shifters of supply and demand are not going away merely because the U.S. restricts trade.

but by the way, what is a younger generation going to do?

Well, that depends on who becomes President. If it's Trump, God only knows given what will happen in the wake of trade restrictions he'd implement. On the other hand, if we get enough folks in office (Executive and Congressional) who see the merit of free (or nearly so) retraining, they'll avail themselves of the training and find "good jobs" in field where the U.S. has comparative advantage. Other young people, the exceptional ones, will become innovative capitalists who create new industries (or sub-industries) and products that are needed whereas before there was no need for them.

It's supposed to be what's good for America, not just what's good for the few at the top.

It is that way. What's different now is that the folks who've been caught at the bottom are numerous enough that many folks who've not been "caught" or "left out" know them. Like always before, "birds of a feather flock together," but in the past, the economically disaffected folks, though they numbered in the millions, they weren't the folks who previously were among the successful cohort. Instead, they were folks who were economically "down trodden" from the moment they came to live in the U.S., and nobody listened to them and folks who heard them didn't pay them any mind. In this social media era, folks like your BiL are much more able to be seen and heard.

 

[320 Years of History]

It isn't just globalism but technology that is changing the American workers' landscape so suddenly and drastically.

Spot on. Indeed in examining the things that shift supply and demand, globalism does not appear because it doesn't have that effect.

Some folks may by "globalism" mean "more competitors and consumers in the marketplace," that is, increased competition -- of course, everyone understands that more competition = better products at comparatively lower prices, and who doesn't like that, and that folks don't goes directly to the irony of "regular" folks decrying free trade -- and to the extent that is what they mean (nothing more and nothing less), sure so-called globalism does shift supply and demand.

• 6 Supply Shifter Factors - Economics Unit 2 Project Wrap-up
  
• 5 Demand Shifter Factors - Economics Unit 2 Project Wrap-up

At the risk of seeming pedantically symantec, globalism and globalization are different things and globalism isn't new at all, dating back to Roman times.

For Americans to compete, workers need to agree to work for less or learn to do different jobs

Absolutely.

All the same, the onus remains for leaders to figure out how to maintain the folks who, like jasonnfree's relative, don't have any good solution options.

Aside:
IMO, if we didn't spend so much of our money bailing the whole world (including ourselves) out of financial calamities, taking positions that deliberately piss off huge segments of the planet's population and fighting specious wars, we'd have no difficulty in countenancing even the most "sledgehammer" of simple solutions for folks like his BiL.

the world won't turn backwards to accommodate those who are left behind.

No, it most definitely will not.

 

[Indeependent]

What does this have to do with sending White Collar jobs to India and bringing in millions of Business Visas from India to replace anybody with an advanced degree?

 

[320 Years of History]

What does this have to do with sending White Collar jobs to India and bringing in millions of Business Visas from India to replace anybody with an advanced degree?

Nothing because that is neither the thread topic nor the aim of free trade.

Read the OP. Read the content at the links contained in it. Watch the video. Look at the pictures. then maybe you'll understand what is being discussed.

Take the time to do so. A quality response, if you are inclined to respond, is far more useful than a rapid one.

 

[Indeependent]

Let's see how off-shoring has saved me money...
2 years ago, my New Balance sneakers that received 5 stars cost me $65.00.
Now, the SAME New Balance sneakers that receive 5 stars cost me $120.00.

Lower prices? Not after they sucker you in.

 

[Indeependent]

What does this have to do with sending White Collar jobs to India and bringing in millions of Business Visas from India to replace anybody with an advanced degree?

Nothing because that is neither the thread topic nor the aim of free trade.

Your problem is that you keep focusing on Blue Collar jobs.
The cost of goods HAS increased along with corporate profits because of greed.

 

[Indeependent]

What does this have to do with sending White Collar jobs to India and bringing in millions of Business Visas from India to replace anybody with an advanced degree?

Nothing because that is neither the thread topic nor the aim of free trade.

Read the OP. Read the content at the links contained in it. Watch the video. Look at the pictures. then maybe you'll understand what is being discussed.

Take the time to do so. A quality response, if you are inclined to respond, is far more useful than a rapid one.

I fully understand your position...you're POV is rather one dimensional and has already been quite deflated by those who postings preceded my own (because I DID take the time to read them).

As someone who only buys products that receive TOP reviews, I have only seen prices go UP on top rated items.

 

[320 Years of History]

What does this have to do with sending White Collar jobs to India and bringing in millions of Business Visas from India to replace anybody with an advanced degree?

Nothing because that is neither the thread topic nor the aim of free trade.

Read the OP. Read the content at the links contained in it. Watch the video. Look at the pictures. then maybe you'll understand what is being discussed.

Take the time to do so. A quality response, if you are inclined to respond, is far more useful than a rapid one.

I fully understand your position...you're POV is rather one dimensional and has already been quite deflated by those who postings preceded my own (because I DID take the time to read them).

As someone who only buys products that receive TOP reviews, I have only seen prices go UP on top rated items.

Blue:
Okay, if you say so, but I know immediately from your "red" comment along with your prior comments about a single pair of shoes (LOL...yet I'm the one dimensional one according to you...yeah, right...) that you haven't read the one post you need to have read, or understand very well before you read the OP, which is the OP and the content found at the links in it. Were you to have read the OP and it's related links, you'd have realized:

• The point you are making has to do with emotional marketing and pricing strategy and not economics.
• There's a unique "thing" going on in the sneaker segment of the shoe industry, which itself is also in a "boom" period as go prices.
• That exactly the things you are wont to denounce about manufacturers has begun to happen to Chinese factory workers.

But of course you don't realize those things because you neither read carefully the content found in and via the OP, nor did you do your own research into the sneaker industry (U.S. or elsewhere, elsewhere would help too for "elsewhere" is where most U.S. bought shoes are made and the trade in shoes has buyers and sellers/producers, both sides of "the story" need to be understood) to find out whether what's going on there is consistent with what I wrote and what the authors of the content that linked in my OP wrote.

Red:
One dimensional is what it is to talk about one specific shoe bought over the course of two years. One dimensional is looking only at the change in price of one model of shoe over two years.

Do you know why that's one dimensional? I'll tell you why. It's one dimensional because it compares precisely one attribute: the price. Moreover it draws conclusions about an entire market and industry based on that one attribute, which, moreover, you don't even endeavor to compare with anything else; thus you are evaluating and concluding about a monopolistically competitive seller's differentiated product as though it's a commodity.

Blessed is the man who, having nothing to say, abstains from giving us wordy evidence of the fact.
― George Eliot, Impressions of Theophrastus Such​