Posted on 11/08/2015 3:39:07 PM PST by 1rudeboy
Abstract
The impact of free trade on America is regularly the subject of contentious debate both on Capitol Hill and in the media. Questions and uncertainties abound: What is free trade? What is fair trade? What is protectionism? Do imports kill American jobs? The fact is, the freedom to trade is the foundation of America's modern economic system. It provides historically unprecedented opportunities for individuals to achieve prosperity and made the U.S. the envy of the world.
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The impact of free trade on America is regularly the subject of contentious debate both on Capitol Hill and in the media. In general, the free trade argument plays out on two very distinct levels: On one level are the efforts by individual industries or firms to obtain special protection against foreign competition through tariffs or quotas, or occasionally through "safeguards" or other retaliatory actions permitted in trade agreements. Such protectionism can be quite lucrative for the industry or firms in question, which often lobby extravagantly to gain the benefit. Unfortunately, the cost is borne by the American public overall, which must pay higher prices and choose from a narrowed range of product options.
The second level at which trade is debated is much broader, involving issues such as exchange rates, environmental issues, and labor standards in foreign countries. At this level, those seeking "protection" are generally not seeking special favors in order to boost profits, but are seeking relief from the cost disadvantage imposed on them by burdensome regulations in the U.S. or differences in monetary policy between the U.S. and foreign governments. Broad groups, such as unions or environmental nongovernmental organizations, may join the battle to preserve and extend what they see as regulatory gains. While these motives may seem somewhat more “pure†than the rent-seeking lobbying of industries or firms, the end result of such government protectionist action is the same: narrow benefits for a special interest, higher prices and less consumer choice for all Americans, and a loss of overall economic efficiency.
Fundamentally, free trade is about rejecting favoritism and expanding economic opportunity for all. It is essential that policymakers and presidential hopefuls separate hype from fact and assess upcoming trade initiatives objectively. Armed with the facts, they can then help to promote dynamic economic growth and lasting prosperity in the U.S.
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What About Critics Who Claim the U.S. Has Lost Millions of Jobs Due to the North American Free Trade Agreement (NAFTA) and Chinese Imports?
The United States has gained millions of new jobs since NAFTA was created and since China joined the World Trade Organization (WTO) in December 2001. (See Chart)
What Does a Trade Deficit Mean?
The misleading phrase "trade deficit" implies that dollars are being drained from the U.S. economy. However, once all financial transactions, including foreign investment, are accounted for, the deficit vanishes. In 2014, for instance, Americans sent $4.4 trillion abroad by purchasing imports, investing in companies abroad, repaying foreign investors, or otherwise transferring dollars. In 2014, Americans also received $4.4 trillion from people and companies abroad that bought U.S. exports, invested in the U.S., paid U.S. investors, or otherwise transferred money. This is not just a fluke; it is an accounting identity that many people overlook.
Does a Growing Trade Deficit Mean More Unemployment?
The trade deficit does not cause unemployment. For example, while imports to the United States and the U.S. trade deficit both decreased significantly from 2008 to 2009, the unemployment rate increased from 5.8 percent to 9.3 percent. From 2009 to 2014, imports to the United States and the trade deficit increased significantly, but the U.S. unemployment rate decreased from 9.3 percent to 6.2 percent. This is exactly the opposite of what would happen if bigger trade deficits caused more unemployment.
What Should the Government Do About Unfair Foreign Trade Practices? Some politicians suggest that if other countries subsidize their exports or restrict imports, the United States should do the same thing. President Ronald Reagan understood that the U.S. government should do what is best for the United States--not copy bad policies from other countries: "If one partner shoots a hole in the boat, does it make sense for the other one to shoot another hole in the boat? Some say, yes, and call that getting tough. Well, I call it stupid."
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The fact is that we can not only not trust the BLS numbers we can not even trust their approach to getting the numbers. Telephone polls what is this 1980?
Probably not.
Most assuredly so, seeing that I took a pay cut to do what I’m doing now.
As long as your happy.
Yeah, I’m good. No complaints.
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