Posted on 05/08/2015 6:42:20 PM PDT by rey
What was impressive about this sentiment is that it doesn’t even focus on a trade deficit. No, just the brute fact of buying imports per se is (apparently) enough to doom our children.
Before unpacking the specific problems with it, let’s warm up by listing some equally plausible questions:
==> If we continue to buy groceries, where will our children garden?
==> If we continue to buy oranges from Florida, where will New Yorkers work?
==> If we continue to buy from people outside the family, where will our cousins work?
==> If we continue to buy from stores where our children don’t work, where will our children work?
For the complete newcomer to arguments over international trade, I strongly recommend Lesson 19 in my (free online) textbook. But for our purposes in this blog post, let me briefly explain why the above sticker is so misguided.
In the grand scheme, trade patterns don’t affect the level of domestic employment. So long as wages are flexible, everybody who wants to get a job can get one. Even in the “worst case” scenario where American (or Canadian, etc.) consumers decided to send half of their money overseas by buying imports–and not a single penny of that money came back when foreigners purchased U.S. (or Canadian) exports in return–that wouldn’t throw half the U.S. labor force out of work. No, what would happen is that U.S. prices would fall, and as long as U.S. wages fell proportionately, workers would continue as before. They wouldn’t be adversely impacted by the change, because their smaller paychecks would go farther at the local shops with the now-cheaper U.S. goods.
So even in this “worst case” scenario, what actually would happen–relative to a situation where every American spends money only on American-made goods–is that U.S. workers would still produce the same amount of stuff as before, and still get to consume just as much, but on top of that Americans would consume all of the foreign goodies that they imported by sending some of their cash abroad. Therefore, it turns out that this isn’t a “worst case” scenario at all–it represents a strange world where Americans print up green pieces of paper, and send them to foreigners in exchange for computers, cars, and sweaters. Sweet deal if you can get it.
In the real world, a country ultimately pays for its imports through its exports. Although foreigners do hold large balances of U.S. dollar denominated assets, even so there is a connection between U.S. imports and U.S. exports. In short, if foreigners are going to buy, say, U.S.-produced wheat or computer software, they need U.S. dollars to do so. And how do they get the dollars? Well, one major mechanism is by shipping goods into the United States.
What this means, then, is that if more Americans started following the advice on the sticker, it’s true that some U.S. workers might see their industries expand. However, at the same time other U.S. workers would see their industries contract. For example, if all Americans decided to boycott foreign-made cars, and only “buy American,” this would obviously raise employment in the U.S. auto sector. But with the big drop in imports, intuitively there would be fewer dollars flowing abroad into the hands of foreigners, so that they could no longer buy as much wheat from U.S. farmers. So U.S. farmers (and other exporters) would be hurt, offsetting the gain to U.S. auto workers.
As the ironic questions I listed above were meant to illustrate, the “logic” of protectionism is absurd when put into any other context. An individual household, for example, could guarantee itself “full employment” by refraining from trade altogether, and producing everything internally. It would also hover on the edge of starvation.
The people who created that sticker in the photo understand that it helps Americans when we buy goods from each other. The division of labor allows for specialization and higher productivity, enriching everybody in the process. There’s nothing magical about that principle only working domestically. On the contrary, just as it makes Americans richer to trade internally, it makes the world richer–including Americans–when the whole world is opened to free trade.
Lucky us.
We get the goods, services, and a rampaging horde crossing the border.
This won’t sit well with the “bring back American jobs” crowd.
Free trade is one thing. trade with Ogliarchal communist governments that game the system and manipulate the pricing and subsidize the dumping of goods and the marketing of counterfeit and unsafe goods are another. Also trade compacts that allow the one world order to dictate immigration policies and firearm regulations are blatantly unconstitutional and treasonous. Anyone in the Federal government that has a hand in this “fast track” agreement is committing an act against this nation.
Free trade helps overall, but it definitely does create job losses.
America has done horribly in transitioning the workforce into new sectors of the economy.
My daughter’s class had to compare the proposed border wall with the Berlin Wall, and all they knew was it was unfair.
I explained that the Berlin Wall was to keep people IN that risked their lives to leave that country, while we argue about building a border wall to keep people OUT who risk their lives to come in.
The kids she was doing homework with were stunned - no one had ever put it this way. They’ve read how bad we are, how horrible we treat immigrants, how unfair society is.
I iterated that this was proof we were still a good country, that so many people would risk their lives to come here. And that those people are voting with their feet for our way of life, which is clearly better than their homes since millions are coming here.
Undoubtedly true. But in a free economy, the capital freed up by eliminating inefficient production here would be used to produce other more profitable goods.
We no longer have a free economy (it's sort of free-ish).
America is alone in the entire globe, in practising “free trade”.
Nobody else is practising it, so we are basically selling off America.
Bring back American jobs right here. We have been seeing this damage for over one entire generation.
Bring back American jobs. To America.
Because a free country is one that tells you what you may or may not buy.
I’m just saying.
China now exports more than America.
Do you think China is free? China has millions of former American jobs.
They are working, we are increasingly not. Bring back American jobs to the states.
Of course China is not free. But China having all our money does not do them any good either.
If someone does something more efficiently than you, you use their goods or service. I can bake bread but the baker does it more easily and for less than I can. I can replace my clutch but the mechanic does it for less and more easily than I can. Because they do it for less I patronize their goods and services.
Likewise, if another community, county, state, region, country does it more efficiently you patronize them. Nearly every state grew wheat for local bread but areas like east Washington and Kansas can do it way more efficiently. SHould the former residents of Asti, California be preventing the sale of Kansas wheat in their area?
Yes, there are problems, like when labor and production are limited by regulation or compliance here in the US causing production costs to be higher than elsewhere. It isn’t a level playing field, but then it never really is.
I thought Murphy made some good points, however.
“Of course China is not free. But China having all our money does not do them any good either.”
—
Well that is where we disagree. Strongly in fact.
China having all of our money means China replaces us on the world stage.
That is not good. Not good at all.
We are being sold out, by people who are pretending to be our friends.
America needs (badly) to rebuild. We need to bring back American manufacturing, and stop sending American jobs everywhere but America.
We need to return businesses right here to America.
Thanks for the cordiality of your responses. Sadly, a rare quality online.
If I were selling goods to Canada and was paid in Canadian dollars, those dollars in and of themselves would not do much for me. I have to sell them to someone else (usually at a loss) who wants to buys Canadian goods and services and needs Canadian dollars. If I spend directly, I do not have a loss. China must sell their dollars or buy goods and services or invest those dollars, they cannot sock them away in their mattress.
By your way of reasoning, California, or any other state or community, could improve its economy by preventing any goods from outside, both foreign and US goods from entering its borders (Assuming of course such a thing were legal, which of course it isn’t). ONly cars, steel, lumber, ag goods, clothing, etc produced in CA could be sold in CA, no matter the cost. Would this cause greater employment and production in CA? Perhaps. If it did, it would be in very limited areas. Certain items would be unavailable, many items would be ridiculously expensive. Such costs would cause people to reallocate their resources/funds resulting in certain markets drying up completely as certain life necessities became very expensive. Quality of life and freedom would be drastically curtailed.
The Soviet Union and Red China tried closed economies to achieve 100% employment. They weren’t nice places. Not the best analogy, but...
Part of the problem is technological changes would have made much of said jobs obsolete anyway. Robotics displaced a lot of unskilled labor jobs, especially the ones rather entrenched with unions demanding a lot of benefits.
America’s industrial output never dropped, it’s at an all-time high. We just don’t need people to work on assembly lines like we used to.
I think of it as the same problem America had when agriculture was mechanized, plenty of people who were formerly subsistence farmers now were no longer needed and ultimately went into Industry.
However, what sector will replace the Industrial sector is not known to me. That’s the solution needed.
Yep, how do we get jobs for the “dumb” people? Idle hands are the Devil’s Playground, and we are going to have even more ferals on our hands to have to deal with. I don’t know if there are any easy ways out.
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