Yes, there are losers, but we all gain from free trade

Indianapolis Star ^ | 14 January 2004 | Peter Z. Grossman

[Viva Le Dissention]

There is one subject that truly separates professional economists from everyone else. Nearly all economists -- conservatives and liberals alike -- agree that free international trade is good, and the freer you make trade the better. But polls often show the public at large supports trade barriers.

[looscnnn]

See http://www.freerepublic.com/focus/f-news/1057797/posts for a view on jobs relating to this.

[Pylot]

These "free trade are good for everyone statements" ignore the fact that communications has reduced or eliminated the effect of national borders and the previously contained movement of capitol and labor and now Americans and their standard of living must compete with third world countries and their standard of living.

It is absolutely wrong to say this is good for everyone.

These "good for everyone" statements remind me of press reports of a bus running off a cliff where the reporter states that only four people were killed and the rest suffered minor injuries.

Ask the dead people (and their families) how they feel about being in the minority of those so affected. Ask the injured people what their injuries mean to them and how their lives will be permanently affected.

Suddenly the "onlys" and those suffering minor injuries take on a different meaning.

[SolutionsOnly]

All I ever here is month after month of huge trade deficits
being reported. Are there any countries with which we have a trade surplus with anymore?

Common sense tells me that such a huge outflow of wealth will catch up to us one day. it also tells me that if labor markets are completely opened up, the American workers wages can only drop, given the wage disparities we have with the third world. We're exporting skilled jobs and importing unskilled jobs. Perhaps I stopped short in my education and must pursue a PhD to completely divorce myself from common sense.

[RLK]

Yes, there are losers, but we all gain from free trade

--------------------

That's a lie.

[looscnnn]

"It is true that most new jobs are in services, but service jobs include construction, nursing, transportation, finance and even brain surgery. There are low-paying service jobs and high-paying ones."

First; how many construction, transportation and finance jobs are there going to be if most people loose high paying jobs and work lower paying ones? They won't be able to afford to have a new house built or an addition put on. They won't be able to buy a lot of non-essentials so that will cut the need for transportation and finance workers.

Second; what about the illegals, they can and do work these jobs keeping those wages down.

Third; for anyone to become a nurse or doctor, they need to go to school. You can't just go from having lost a job working on computers and get a job as a nurse, let alone a brain surgeon. Most of these jobs are being filled by foreigners that immigrated here for schooling. Also, the cost of insurance and all the lawsuits are driving doctors out of business.

[Viva Le Dissention]

I don't think he's saying that every single person in the US wins in free trade (although everyone truly does reap the benefits), but in the aggregate, we all come out ahead.

If you lower barriers to trade, you have a bigger market from which to purchase, more competitors, and generally lower costs.

Like the author says, "Yes, there are losers," but they are a small minority. Do you hold up the progress for the rest of the United States because a select few will be harmed by the policy? Of course not.

[looscnnn]

That small minority is getting bigger and bigger as more jobs are moved overseas and more illegals come into the country. See the article linked in post 2 for more info.

[JOAT]

What utter palaver.

So here again is the argument for free trade in a world of more than 100 nations, 6 billion consumers and millions of different goods:

The standard Globalist perspective. WE are a single nation of around 260 million people. ‘Free Trade’ to a globalist is like ‘bipartisan’ to a Democrat. ‘Bipartisanship’ is GOOD if it means the conservative lets the liberal win. Free Trade is GOOD if the USA lets everyone siphon off our wealth in terms of technology advantages and real traditional wealth.

Who gains from free trade? Everyone. (Multinational Corporations) Every consumer is better off because of international trade. We get more goods at lower prices than we could possibly get in a world of high barriers to trade. As a result, the standard of living of every consumer is higher
OMG what lies!
since each dollar, euro, peso and pound buys more.

This is not about raising everyone else around the worlds standard of living to that of a Mexican laborer and conversely all of us down to that level…or is it? The preposterous assertion that 'we are all better off' is taken from an aggregate family of man BS perspective. Fools accept such notions, sold to them by people who quite obviously don't believe it. It is communalism/communism sold to people who fancy themselves as conservative capitalists.

[KantianBurke]

You may fire when ready ping :>

[Viva Le Dissention]

What I think people fail to appreciate is that Capitalism is not stagnant. Capitalism forces change, like it or not. In a free capital market, the capital flows to the areas, ceteris paribus, to the areas in which the highest rate of return is offered.

That means, that in Capitalism, there are winners and there are losers. When capital flows out of one industry into another, people lose their jobs, investments, etc. That's the nature of the beast. We all operate on the principle, though, that capitalism is the "fairest" system and that, on the whole, it benefits everyone.

If you want an economy in which no one loses their jobs, we can have a planned economy with stagnant growth. Everyone could be a farmer for himself and everyone would be employed. People would barter for goods or services, and it would ensure, for the most part, that people remained employed.

For a whole host of reasons, that's a bad idea. We don't want stagnation. Barriers to trade, however, prevent capital from flowing in the most efficient manner, and encourage a stagnant economy. Are there losers in free trade? Yes. Welcome to capitalism. Are we all better off from lower prices for goods and a larger market to which we have the opportunity to sell? Yes.

[WilliamofCarmichael]

Who gains from free trade? Everyone.

When Ricardo, et al. 'splained this almost two hundred years ago they had in mind a precise meaning of "free."

It did not mean socialist governments like India's permitting capitalism to function in areas of their economy. It did not mean a dictatorship like the chicoms permitting "capitalism" to function in a few areas of their country.

So if it's "free" trade why does India need to do business in Washington with $$$$$$$. Ditto China.

To wit,

http://www.usindiafriendship.net/

http://www.usinpac.com/

but wages rose in the U.S. in the 1990s

Others cite the millions and millions of ILLEGAL aliens saying wages for a large segment of workers declined. Who is right? I wish the employee of Butler had provided sources.

[Viva Le Dissention]

Again, it doesn't matter whether the minority is getting bigger or it's not.

This misses the entire point of capitalism.

I never thought that I would have to say this on a "conservative" forum, but no one has the right to work. Let me say it again: you do not have the right to a job.

If US workers cannot match the productive efficiency of those with whom he wishes to compete, then he will fail. Most people on this forum, and rightly so, would view a government subsidy of an industry with disdain, but tariffs are a subsidy by a different name--it allows an uncompetitive company to survive by manipulation of the market by government.

Tell me why I should buy inferior products at higher prices in order so that a less efficient company should remain in business?

[RiflemanSharpe]

Free trade is killing the American middle class. With that happening, there a a lot of looser in this.

[Last Dakotan]

Grossman holds the Efroymson Chair in Economics at Butler University.

I'm getting bids from overseas on my children's college educations. These smug thinkers need foreign competition more than anybody.

[hedgetrimmer]

The biggest lie is the thing they call 'free trade' isn't.

So while people accept the concept of free trade, what the business interests and government are doing to the American economic system is _not_ implementing free trade.

It is managed trade, managed by the WTO and now more and more by the Summit of the Americas and the Organization of American States, for the United States. We no longer have autonomy in our trade decisions, we are vilified if we act 'unilaterally' in a trade decision, even though it might be the best for us, and we are required as part of the many trade pacts the WTO and th OAS are arranging for us, to participate in wealth redistribution schemes to third world countries. Top that off with the very fact that Congress is no longer negotiating trade deals (GATT) but an unelected 'minister' named Robert Zoelick is, and he is only negotiating through the rules of the WTO a global socialist organization, you have a usurpation of our Constitution and our sovereignty. And the American people should move to release us from any obligations that the WTO, the OAS and the Summit of the Americas places on us to retain our soveriegnty and our form of government.

[hedgetrimmer]

Welcome to capitalism

This is not capitalism this incarnation of 'free trade' is socialism on a global scale.

[Viva Le Dissention]

We no longer have autonomy in our trade decisions

This isn't right. We could lower all of our tariffs to zero, tomorrow, acting unilaterally, and it would not be a violation of the WTO. All the WTO prevents is the raising of tariffs in certain situations.

I think you're a little confused on a few things, too. The WTO is GATT. GATT has been around since the 40s, and during the Uruguay round in the 90s, all the countries agreed to new, liberalized trade rules which created the WTO, which basically swallowed GATT.

Furthermore, the WTO has no enforcement power. The dispute resolution process of the WTO is not binding. In fact, if you ever read an opinion, you'll see that the last line is always something like "We recommend that you remove this tariff," or something along those lines. Any country is free to obey or disobey this decision if it so chooses--however, if it disobeys, other countries can withdraw concessions (that is, slap punitive tariffs on US exports).

So this rigmarole about the US no longer being a sovereign country is just hooey.

[hedgetrimmer]

If US workers cannot match the productive efficiency of those with whom he wishes to compete

The american worker is much more productive that his chinese counterpart. However, his chinese counterpart gets paid 27 cents a day, works 7 days a week and lives in a dormitory.

The American worker can't even buy a cup of coffee for 27 cents, lives in a house on the average costing $90,000 and won't get paid to work 7 days a week because most employers don't want to pay overtime as required by law. We had a better world, now the so-called capitalists are telling Americans that communism is better because its the only way to compete on the global market.

Ok everybody, dump your homes and families and go live in a dormitory. Its the only way to make the "capitalists" invest in our country!

[William Terrell]

There are probably a number of reasons why economists have failed to persuade the general public.

Could one be that they turn out to be so consistently wrong?