Posted on 10/09/2007 7:06:42 AM PDT by SirLinksalot
The case for free trade rests on a simple principle: people should be free to buy from whomever they choose, even if the supplier is a foreigner.
The opponents of free trade believe that there are legitimate exceptions to this principle. When foreign businesses have an allegedly "unfair" advantage, Americans competing against them want Uncle Sam to rescue them by adopting protectionist policies, such as import quotas and tariffs.
They want the government to "level the playing field." They fear losing their jobs, and/or they are afraid that free trade will result in the economic decline of our country. The first concern is valid; the second is not.
It is an economic fact of life that, in a competitive marketplace, less efficient (i.e., higher-cost) producers are replaced by more efficient (lower-cost) producers. To the economist, it is irrelevant whether the lower-cost producer is domestic or foreign — the American standard of living is inevitably benefited when Americans can buy more for less.
However, the domestic businesses threatened by foreign competition aren't so sanguine about this point. When the competitors underselling them are foreigners, they appeal to nationalistic sentiments and lobby for government protection from this allegedly unfair competition.
It is important to understand that a domestic company's competitive disadvantage may be self-inflicted. For example, from 1975 through 1982, employment costs in the domestic steel industry rose from $9 per hour to $24 per hour. During this time, the number of steel workers decreased from 500,000 to 300,000.
In 1982, Japanese steel workers were paid only half what their American counterparts received, yet had greater productivity. This suggests that many American steel workers priced themselves out of their jobs rather than losing them to unfair competition.
Nevertheless, there are times when foreign companies receive subsidies from their governments, enabling them to undersell American producers. The economist readily concedes that subsidies are unfair, but maintains that domestic protectionist policies aren't fair either, nor do they make economic sense. Two wrongs don't make a right.
Just because a foreign government has imposed an unfair burden on its own people by taxing them to lower the prices of favored products doesn't mean that our government should respond by imposing an unfair burden on Americans. Why should Uncle Sam deny Americans access to the cheaper prices that are available to everyone else? What is fair about that? Do higher prices increase the prosperity of a people?
If foreign governments wish to export wealth in the form of lower prices to U.S. citizens, we should accept such generosity.
Here is where the protectionists play their trump card. "Look, Hendrickson, the key point is this: if we don't adopt protectionist policies, American jobs will be lost." This is true; however, it is equally true that protectionist policies themselves will cause Americans to lose jobs.
Using the steel industry as an example again, every time Uncle Sam has restricted the importation of cheaper steel, the many American businesses that use steel as an input have been placed at a competitive disadvantage. Their foreign competitors can purchase this important input for less, and thus charge lower prices for their finished products.
Indeed, the evidence shows that every time protectionist measures have been granted to domestic steel companies, more American jobs are lost in steel-using industries than are saved in steel-producing firms. Thus, protectionism, in practice, doesn't save American jobs on a net basis, but merely sacrifices some jobs to protect others. Clearly, protectionist policies don't produce the "level playing field" that protectionists claim to favor.
Here is an analogy: a ship is about to sink; the only lifeboat is filled with 12 small passengers; then, eight large passengers persuade the ship's officers to remove the twelve small passengers from the lifeboat — dooming them — so that the eight large passengers may have their places. That is the reality of protectionism.
Look, I'm not knocking the survival instinct, but let's drop the pretense that such actions restore "justice" or "fairness."
To the economist, one job has no more an inherent right to government protection than any other job; however, the most important job in the world to most people is the one they hold, and if they think they can convince the national government to protect their jobs, they will try. However, this same government stands idly by when millions of other American jobs come to an end.
Why should politicians deem certain jobs "special" and worthy of government support that isn't available to most Americans? There is no ethical principle underlying such arbitrary and inconsistent intervention; rather, it is the exercise of raw political power.
Protectionism, unlike free trade, confers a privileged political status on a minority of workers, thereby violating the first principle of justice: equality before the law.
In sum, protectionism makes our country poorer, while free trade makes us richer; protectionism's inefficiencies reduce employment, while free trade's efficiencies increase employment; protectionism curtails individual liberty, while free trade is an expression of liberty; protectionism corrupts justice, while free trade enshrines equality before the law.
Free trade is no panacea, but I'll take it over protectionism any day.
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Dr. Mark W. Hendrickson is a faculty member, economist and contributing scholar with the Center for Vision and Values at Grove City College in Pennsylvania.
Protectionism ruins economies. Take a good, long look at the economy of Argentina before running into the alluring arms of protectionism. You'll see into the future of America if we go down that path. It's not a pretty sight.
However, this same government stands idly by when millions of other American jobs come to an end.
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And how many jobs have come to an end in America, and gone overseas, offshore??? This was not due to ‘protectionism” — it was caused by excessive taxation, copious volumes of government regulations and the cost thereof, financial burden placed on employers for more “employment” taxes, and the list goes on. This aspect of “job retention” should not be overlooked, but it is. Goverment will never admit to its onerous load and burden upon businesses and the people.
I agree except in the case of defense expenditures. Maybe minor components can come from overseas but I want my military carry American made equipment so our supply lines are not cut when we least expect it.
I can see us getting dependent on another country supplying our goods and we get in a conflict and half way into it they decide they do not like us doing what we are and scale back deliveries.
The same can be said for food sources to a point.
Actually, when you look at government’s interference in the agro business is it any wonder why we have inefficiencies?
Fair ain’t got nothing to do with it. Unions and regulation have made manufacturing more expensive and inefficient but no one wants to talk about that. Telling Americans that they have to pay more for something for government largess is taxation in another form.
“Dr. Mark W. Hendrickson is a faculty member, economist and contributing scholar with the Center for Vision and Values at Grove City College in Pennsylvania.”
Another economist, and I’m sure one who abhors protectionism as he does would never accept the protection of a tenured position at a university. All economics professors and other professors who preach free trade and free markets always refuse the tenure protectionism that benefits them personally. Right?
Tell us how and where he is incorrect in his analysis. Attacking the messenger negates nothing.
I say we start outsourcing economists. Then we will see if they change their tune vis a vis free trade when we have economists from india and China writing these macro-economic reports for a fraction of the price
If you can’t argue the message, attack the messenger.
If anything, one would think he’d be celebrated by the usual suspects for having a protected job . . . if he has tenure, that is.
“This was not due to ‘protectionism” — it was caused by excessive taxation, copious volumes of government regulations and the cost thereof, financial burden placed on employers for more “employment” taxes, and the list goes on.”
And the list begins with cheap labor, the simple math that $1.00 total labor cost per hour is far less than $10.00, $15.00, or $20.00 per hour or more.
All the other factors some prefer to discuss don’t even scratch in comparison to the enormous saving achieved when a “US” corporation can have the world’s cheapest labor and practically untariffed access back to the US market.
Yes, I was moving toward expanding my few cows in to a full livelihood a few years back and wisely reconsidered. I do fear what will happen in a few years when the last generation of farmers/ranchers retire or pass on and the corporations take over. Watch prices go up.
BTW, I like you tag line, spouse and I will be cheering for the Pat’s from the 10 yard line next week in Dallas. Cowboys proved last night it is better to be lucky than good. Bills lack of an offense killed them.
“This was not due to ‘protectionism” — it was caused by excessive taxation, copious volumes of government regulations and the cost thereof, financial burden placed on employers for more “employment” taxes, and the list goes on.”
And the list begins with cheap labor, the simple math that $1.00 total labor cost per hour is far less than $10.00, $15.00, or $20.00 per hour or more.
All the other factors some prefer to discuss don’t even scratch in comparison to the enormous saving achieved when a “US” corporation can have the world’s cheapest labor and practically untariffed access back to the US market.
Some of these savings might even be passed on to the US consumer until all remaining domestic (US) competitors have been driven out of business. Then the really big profits begin.
We should outsource more jobs to slave labor markets and borrow some more money from China.
Yes, I support child labor 100%
I love it when little 12 year old girls work their asses off 16 hours a day so I can buy t-shirts at Walmart for $1.99 each.
I say work the little useless eaters until they collapse...then we can grind em up and use em for fertilizer.
“This was not due to ‘protectionism” — it was caused by excessive taxation, copious volumes of government regulations and the cost thereof, financial burden placed on employers for more “employment” taxes, and the list goes on.”
Messengers who clearly practice what they preach are much more effective messengers. Those who don’t discredit their message. Is this news to either of you?
Since its founding in 1876, Grove City College, committed to Christian principles, has striven to be equal in academic quality to the finest four year colleges. It seeks to provide liberal and professional education of the highest quality that is within the reach of families with modest means who desire a college that will strengthen their children's spiritual and moral character.
Much like the intentions of an opponent can be determined by who or what draws his fire.
Maybe our govt might do well to help ALL people not just women and minorities start their own businesses.
There are TOO many programs out there that are only available to women and minorities.
No, we need fair trade and trade reciprocity.
I love it when little 12 year old girls work their asses off 16 hours a day so I can buy t-shirts at Walmart for $1.99 each.
I say work the little useless eaters until they collapse...then we can grind em up and use em for fertilizer.
You really need to drop the whole guilt-by-association crap. It's false, and that sort of "thinking" leads to other foolishness, like slavery reparations and alleged Native-American "genocide".
Do you imagine that child labor would cease in these countries if the USA didn't buy their goods? Do you really think that?
Because it wouldn't. They were using child labor before we came along, and they'd use it after we left. It's part of their culture and we didn't create it!
The only difference if America didn't buy from them would be that the children would make even less money than they do.
The vast majority of American families require two incomes to live middle class lifestyles because wages are not rising at the same rate .
The affordability of education, health care, etc. is a true measure of American wealth because its a service that cannot be off-shored or imported.
“Much like the intentions of an opponent can be determined by who or what draws his fire.”
All 100% irrelevant to the message coming from an economics professor. So, you think those who preach economics to us should hide behind the Christian origins of the school they work for? Have you established that this professor is even a Christian?
So why did you attack him personally?
So government should intervene in the market to make their lives more expensive?
It’s always great for the economy when the other guy’s job gets outsourced...LOL.
“Why should politicians deem certain jobs “special” and worthy of government support that isn’t available to most Americans? There is no ethical principle underlying such arbitrary and inconsistent intervention; rather, it is the exercise of raw political power.
Protectionism, unlike free trade, confers a privileged political status on a minority of workers, thereby violating the first principle of justice: equality before the law.”
Couldn’t agree more when it comes to tenured professorships at US universities. I know the professor is devoting much of his time to end this protectionist nationwide practice that - “confers a privileged political status on a minority of workers, thereby violating the first principle of justice: equality before the law.” - Go get ‘em professor.
I know the professor came out in his article strongly opposed to the specific protectionism of tenured professorships. I know he did, but I guess I’m overlooking it. Could some of you free trade ideologues point it out to me?
Everyone please write your state legislators and governors, and university boards of trustees, insisting that they end this form of protectionism immediately.
‘
I want to buy a television set from the United States, made by Americans. Author says I should be free to do so.
I want to buy a camcorder from the United States made by Americans. Author says I should be free to do so.
I want to buy an MP3 recorder/player from the United States made by Americans. Author says I should be free to do so.
The author wants us to believe that “nationalistic sentiment” is somehow sinful. Are there any America First-ers left here beside me?
1) Does not give their professors tenure.
2) Does not accept Federal aid.”
All irrelevant since the practice is alive and well in practically all institutions of higher learning. What’s the professor’s position on this rampant protectionist policy? Does he say in his article?
“The economist readily concedes that subsidies are unfair, but maintains that domestic protectionist policies aren’t fair either, nor do they make economic sense. Two wrongs don’t make a right.”
And the economist can be so casual about this because it’s not his livelihood at stake. Let’s eliminate tenure, and then let India subsidize education of economists. When we can import much better trained economists for less, what will the economist say then?
“Using the steel industry as an example again, every time Uncle Sam has restricted the importation of cheaper steel, the many American businesses that use steel as an input have been placed at a competitive disadvantage. Their foreign competitors can purchase this important input for less, and thus charge lower prices for their finished products. “
Raw materials versus finished products manufacturing and assembly. It actually is possible to differntiate.
The economist looks at the system on a limited scale. There is little or no allowance for politics, safety, or national impact.
That is to say: If China produces goods that kill people, the market will adjust. That’s true. The dead people will still be dead, and there’s no guarantee how fast the market will react, but it will react. If China uses it’s new found wealth to increase it’s military might, and to influence the world in ways that benefit China, and are to the detriment of the United States, that’s not a factor. The economist is following dollars, not politics. If China builds her economy in such a way that there is a gain at the cost of American jobs, the economist doesn’t care. Yes, it may not be a zero sum game, but China can gain at America’s loss. America may not lose exactly what China gains, but if you shift your manufacturing base to China, you will lose. You’ll lose jobs, you’ll lose tax base, you’ll lose infrastructure, you’ll lose local market. But the economist doesn’t care. If it’s the Chinese buying goods instead of Americans, it’s ok, someone is buying the goods.
Neither extreme is good. It is important for world stability for the Chinese to improve their economy, for the Chinese to feel they can grow without attacking other economic powers. But this doesn’t have to happen overnight. And there is no denying that Chinese manipulations, (near slave labor, unsafe working conditions, fixed currency), cost American jobs, and do drive down the standard of living for Americans.
Trade with China, welcome them into the 21st century, but don’t sacrifice Americans to do it.
“So why did you attack him personally?”
Not attacking him personally at all. Just questioning his philosophical consistency since he doesn’t seen to address this obvious form of protectionism that specifically relates to his profession.
Yeah, like the government hasn't had their sticky fingers all over this free trade, NAFTA, WTO, IMF, wheeling and dealing.
If the average prevailing wage was to rise with or faster than the average inflation rate things wouldn't be more expensive.
I believe you are confusing “free” with “entitled.”
But it is. The only ones who don't believe so are the Democrats, who massage the number to their liking.
I see. All because in an article about trade, he neglects to discuss education.
“Do you imagine that child labor would cease in these countries if the USA didn’t buy their goods? Do you really think that?
Because it wouldn’t. They were using child labor before we came along, and they’d use it after we left. It’s part of their culture and we didn’t create it!
The only difference if America didn’t buy from them would be that the children would make even less money than they do.”
And America could influence that, but won’t because people like you can rationalize the heck out of it.
Good luck with that line of reasoning on your Final Accounting.
“Americans need free trade, not protectionism: Public should be free to buy from any country”
And: American universities need free hiring and firing of faculty, not protectionism. Universities should be able to hire whomever they choose.
“You really need to drop the whole guilt-by-association crap.”
Ok, so you mean to tell me that you’ve never bought an article of clothing in your life that was not produced in some sweat shop that uses child labor?
Yes_________________ No________________________
And if you answer yes, your rational is that “It’s false, and that sort of “thinking” leads to other foolishness,”
“Do you imagine that child labor would cease in these countries if the USA didn’t buy their goods?”
Well, let’s see, if there are no buyers........
“The only difference if America didn’t buy from them would be that the children would make even less money than they do.”
Ummmmmmmmmmmmmmmm....ok. that’s a pretty sick outlook considering the US has the monetary muscle to change things for the better. But hey... if it makes you sleep better at night...go for it.
....there.... I cleaned it up a bit.
“. . . Public should be free to buy from any country.”
It occurs to me that in a small way, the free traders are to economics as the liberals are to religion.
That is:
Free traders want us to see all trading partners as equals. Ignore political systems, ignore agendas, ignore subsidies, we’re all the same.
Liberals think all religion is the same, and there is no difference we are all equal. Ignore that Christian churches are outlawed in many muslim countries, ignore that one can be killed for converting from islam to Christianity in a muslim country, ignore that merely owning a Bible in some muslim countries will get you jailed, or stoned.
I guess when you have an agenda, it’s easy to ignore “details”.
Thanks. That wasn’t hard, was it?
So what does this little sentence imply to the American worker?
What nonsense. Free traders want their products to be treated equally, i.e., "you cut your tariff to x% and I'll do the same."
Let's see, maybe "if you get paid handsomely to sit on your ass, make plans for the future?"
The author is probably aware that protectionism will wreck a country's economy.
If you want to start and American-made television manufacturing company, feel free. The problem is, Americans won't work for wages low enough to make such an enterprise successful. If the wages were high enough that Americans would work for them, televisions would be so much more expensive that fewer Americans could afford to own one.
The fact that another country makes televisions means that Americans can get jobs doing something else--the overwhelming majority of Americans are employed--and can afford a television--most homes have more than one. It's a win-win.
We should impose exact or matching tariffs adn restriction on any country that imposes restrictions on us.
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