Posted on 10/16/2017 12:07:04 PM PDT by TBP
The economic argument for free international trade is basically that people produce in order to consume, not the other way around, so the economic system should be geared to the benefit of the consumer, not the producer. In the economic sense, producers include workers and owners of capital or land, who often join in associations called "firms." There are more consumers than producers, as everybody is a consumer but not everybody is a producer; some live off the production of parents, donors, or taxpayers. So there are more consumers than producers; but this is not the important point.
Free Trade Helps More Than Hinders
The important point is that free trade benefits consumers more than its competitive pressure harms producers. Economic theory provides a nice geometric demonstration of the proposition that the total cost of protectionism for consumers is higher than its total benefits to producers. The demonstration can be (imperfectly) rendered in plain English: if free trade harmed producers more than it benefits consumers, the former could outcompete their foreign competitors by bribing domestic consumers with better prices and still gain compared to ceding the market to foreign producers - and protectionism would not be necessary. When domestic producers are unable to compensate consumers for not patronizing foreign suppliers, it means that free trade benefits consumers more than it harms producers.
That free trade would have net benefits is not surprising in light of the theory of comparative advantage, due to 19th-century economist David Ricardo. If two countries - that is, all producers in the two countries - produce what they are most efficient at, the total volume of goods available for exchange and consumption will be larger.
A popular objection to these economic arguments is that a consumer cannot benefit from lower prices if he does not have a job. Since free trade destroys jobs, it cannot be said to help consumers in general. You can't consume if you lose your job - or you have to consume less by getting a lower paying job or relying on transfers, public (unemployment insurance, social welfare, and such) or private (help from family or charity). Let me call this the "populist" objection to free trade.
A first reply is that availability of jobs is a symptom, not the cause, of prosperity. If jobs were the cause of prosperity, banning agricultural technology would generate much prosperity by dramatically increasing employment in that sector. Nearly 12 million Americans worked in agriculture in 1910 (the year when agricultural employment reached its peak) while they number less than 2.5 million today (for a population three times as large). In the meantime, the total number of jobs in the American economy increased from 37 to 151 million. We should beware of the obsession of job creation, especially by government edict.
Even assuming that the number of jobs is a good indication of welfare, the populist objection is not valid. Although some workers can, like other producers, be harmed by competition, free trade does not destroy net jobs. At least as many new jobs appear as old ones disappear.
Job Creation and Job Destruction
Consider the example of manufacturing. The number of jobs in American manufacturing dropped from its peak of 19 million in 1979 to 12 million today. Most recent job losses in manufacturing come more from the impact of technological progress than from import competition; economists Michael J. Hicks and Srikant Devaraj estimate that international trade accounts for only 13% of these losses. And - this is the important point - while manufacturing employment was decreasing, total employment in the economy increased from 99 to 151 million between 1979 and today, for a net creation of 52 million jobs. In the meantime, and this is the really important point, GDP per capita (the most comprehensive measure of the standard of living) increased by 79%.
Another way to approach the populist objection that free trade destroys jobs is to observe that the main factor in employment is population growth. Employment naturally grows in line with population. Every new worker who arrives on the labor market creates his own job in the very real sense that he spends as much as he earns (or the rest is invested, creating jobs too); indeed, it is precisely in order to spend an equivalent amount that he starts working and earning an income (a reflection of Say's law, recently featured in The Economist). The new worker creates his own job by creating another one elsewhere in the economy through his own consumption.
The figure below illustrates the general point by showing the level of civilian employment in relation to the American working-age population (15 to 64 years of age) over the past half-century. Each dot on the chart represents one year. Observe how closely employment growth tracks population growth. A simple regression analysis confirms the visual impression: the coefficient of correlation is 0.992 and is highly statistically significant (at a level of significance much lower than 1%). Because the working population increases with time, the horizontal axis nearly coincides with the chronological order. The drop in the employment towards the end of the curve corresponds to the 2008-2009 recession and the slow recovery that followed.
We thus have both a straightforward economic argument and empirical evidence to the effect that economic freedom in general and foreign trade, in particular, do not destroy net jobs in the economy. The number of jobs moves with the number of people who want to work, barring regulatory obstacles created by government.
“You’e simply wrong on that point, and the facts do not support you.”
Yes, they do support me, so there! Phhhht!
“We haven’t had free trades in office for a while.”
Well, since our economy has tanked for many years you just made my point. We haven’t had free trade and we are hurting, so how the hell can you traitors claim it helps??
Um. So if we put a complete embargo on all trade US citizen aren’t creative enough to build flat screen on their own?
We’ve never had more than one-way free trade. It’s a myth.
Before traitorous free-trade, we made the steel and sold it to China and Japan. Now we import from China and Japan.
Before free-trade, we have the computer programmers, no India does.
Before free-trade, we made plastics. Now we import from China and Mexico.
Before free-trade, we had 70 million of our people working salaried exempt professional jobs. Now that number is 24 million.
I could go on and on, but nowhere can you point to more high salaries and professional jobs after free-trade.
The big destroyer of jobs and salary levels is the massive invasion of low-skill illegal immigrants.
That is more the issue than trade. As far as trade goes, my three concerns are 1) unconstitutional multiparty trade deals that are forming a web of world government, 2) rival/enemies such as China taking advantage in our unbalanced deals, and 3) being nonstrategic in allowing critical industries to leave our country while we import things such as bugged electronics and unsafe food.
Kick out the illegals and deal with those three things and our economy and trade will be fine.
Free trade is also the reason they’re filling our country with Mexicans and Chinese and Africans. They were they were tired of having to move the factories to the workforce now they’re moving the cheap foreign workforce to the factory....here.
Free trade is a slave working on an Indonesian fishing boat for a dollar a day maybe and someone at Whole Foods being offered that fish for sale for $28 a pound
“US citizen aren’t creative enough to build flat screen on their own?”
The traitors claim that, absolutely. They claim we “don’t want to”. They claim we want a good wage but paying Chinese children is better somehow.
“Free traders in a mercantilist world are suckers. We call their countries colonies, eventually.”
And we call Free-Traders, Traitors.
It’s like going to war with nothing but a white flag. You will be raided and dismantled by the other countries of the world.
The problem with you is that you aren’t a good world citizen. /sarc. Now go eat your cup of rice and fish head.
What happens when the U.S. plant churns out so many $32.50 toasters that everyone who wants one has three of them? That’s a bigger problem here than most people realize.
What happens when the U.S. plant churns out so many $32.50 toasters that everyone who wants one has three of them? That’s a bigger problem here than most people realize.
Free Trade had a thirty-year test drive in this country.
Last November the voters took the keys out, handed them back to the salesman and said “no sale!”
If you ask them if the voted for Trump THEY NEVER ANSWER.
Free trade is in moral and illegitimate when the country being used as the workforce has slavery or a near condition, abject poverty and no environmental rules.
Free Traders would not agree that it’s wrong to sell lampshades made in a Nazi death camp as long as the Jews were paid $0.50 a day. Nothing in the free Trader philosophy would prevent that. They sell Us North Korean made products today.
The largest market in the world, BY FAR, is the US.
We have a long ways to go before it’s saturated with US goods.
We did. Our economy is now seven times larger than it was when Jimmy Carter left office. And we manufacture more products now than ever in our past.
I suspect we’d still have 45 million people out of work even if the U.S. conducted no trade of any kind with any foreign countries.
So punish the practitioners of slave labor. Don’t abandon what works because of one case. Free trade helps build everyone’s economy.
Slave labor isn’t free trade. You impose sanctions to force the violator back into compliance with the norms of trade.
IF we hadn’t off shored so many industries( to many to list) how much large would the economy be? It would be huge.
The only reason for trade is to get bananas that we can’t grow here, are Japanese car because that’s what I want or maybe that I want to enjoy Irish butter.
But societies and economies can easily exist within themselves. The proof of this is that eventually planet. So obviously if free trade won’t work for a nation, it wouldn’t work for planet either, the free Traders merely want to substitute one group of people for a bigger group of people and pretend that somehow it’s different. If a planet can sustain an economy so can a nation.
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