Hunter has a good record opposing pseudo-free-trade agreements such as NAFTA and the World Trade Organization, but this is mixed with a thorough opposition toward genuine, non-state-regulated free trade. Hunter argues that the United States trade deficit is detrimental, ignoring the economic fact that a trade deficit is also equal to a net inflow of capital into the country that experiences it. That is, foreigners are purchasing American dollars in exchange for assets that they either invest into the U. S. economy or into U. S. treasury bonds, thus preventing a complete collapse of the debt-ridden American federal government.
Furthermore, Hunter has voiced strong opposition to China’s subsidization of its manufacturers and its protective tariffs against American imports. Yet while these policies in restraint of trade can justifiably be opposed, economics shows that they do not hurt American consumers or manufacturers. Indeed, they hurt the Chinese consumers who are taxed to subsidize Chinese manufacturers while having to pay higher prices for American imports. By shielding Chinese manufacturers against competition, such policies actually render them less effective in meeting challenges posed by other non-subsidized firms.
If anything, the Chinese government subsidizes American consumers at the expense of its own citizens, by encouraging Chinese exports to the United States. But Hunter wishes to “put the same charges on foreign goods that [foreigners] put on ours.” This policy of implementing retaliatory tariffs has historically been nothing but the cause of trade wars, which intensify over time to suffocate commerce among nations. This was the effect of the notorious 1930 Smoot-Hawley tariff, which significantly worsened the Great Depression and virtually eliminated international trade; Hunter cannot reasonably expect his suggested policies to produce a different result. Furthermore, placing tariffs on imports will hurt the American consumer in the same way that the Chinese government currently hurts Chinese consumers.
Indeed, what Hunter supports is not true multilateral free trade, but rather the misnamed “fair trade.” He laments in his official platform statement that “unfortunately, foreign workers as well, in the interests of “fair trade.”
Yet the only results such a policy will obtain are diminished prospects for American companies with overseas investments and massive unemployment in Third World countries, many of whose workers do not have the skills or training to earn an American minimum wage.
Economics holds that the marginal productivity of labor, not the regulatory climate, is responsible for the wage rate. Hence, an American worker earns more because he is more productive, not because he is “protected” by government regulations. The regulations only impose a price floor on labor and result in unemployment for all those whose labor is not worth the minimum wage rate.
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Although the writer ignores that Hunter has voted for free trade deals before (see Austrailia free trade agreement), I thought I’d see what you all would think of this particular segment.
Since when is it a good thing that foreigners own our money supply or our debt? Foreigners holding our debt simply means that we are going to be paying taxes for years to come in order to pay the interest to foreigners.
Yet while these policies in restraint of trade can justifiably be opposed, economics shows that they do not hurt American consumers or manufacturers.
Before any American can be a "consumer," he or she must first have a job that provides enough income to buy or "consume" things. If the jobs that most Americans have go overseas and Americans find themselves working lesser jobs for lesser wages and lesser benefits, they will not have the money to "consume" anything. The prices of goods at the stores may be somewhat lower, but the prices of goods are only part of the story. Our income must pay for a place to live, and they can't make cheap real estate for us in some foreign country. Furthermore, if prices are cut in half but a worker's income is cut by 75%, the worker has lost ground.
Yet the only results such a policy will obtain are diminished prospects for American companies with overseas investments and massive unemployment in Third World countries, many of whose workers do not have the skills or training to earn an American minimum wage.
The issue isn't "prospects for American companies." The issue is jobs for American workers. The issue is whether we will be a country with a diversified economy or just a nation of paper pushers and paupers. Undoubtedly, those who are making a good living pushing paper will be happy to see prices drop. Furthermore, the loss of jobs for other people will bring some drop in real estate prices, so the paper pushers can buy more land. This situation will be great for the paper pushers until the Chinese invade and take their money, their stock investments, and their real estate at the point of a gun.
The winner of every major war for the past 150 to 160 years has been the side with the greater manufacturing strength. Admittedly, trade protections end up protecting many "dead wood" workers in American companies. The protection of these people is an unfortunate effect of any measures that we take to protect American manufacturing. Of course, we also have a great deal of "dead wood" at the managment level that is protected regardless of what policies the government enacts.
The economists are today's "chattering class." They produce nothing but words, and they have no concept for the value of real goods that others produce and how those real goods are tied to national security.
Bill
I have to agree with him. I think Hunter may be taking the mercantilist point of view that imports are bad.
Taxing the imports of the Chinese will ultimately hurt the American consumer. Then we also might face taxes from elsewhere. The Europeans may try to tax our goods saying that we aren't doing enough to curb global warming.
New blog targets Sen. Lindsey Graham (About Amnesty!)
http://www.freerepublic.com/focus/f-news/1847357/posts
Writes Mr. Dinan: “Republican Sens. Lindsey Graham of South Carolina and John McCain of Arizona both went to check with Mr. Kennedy before casting their votes to match his. Soon after, (Arizona Republican Sen. Jon) Kyl also switched his vote to match Mr. Kennedy’s.” The amendment was defeated.
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