Posted on 03/06/2004 11:37:55 AM PST by neutrino
The originator of the free trade argument is David Ricardo, who lived from 1772 to 1823. You can read a brief biography at the link:
Here's an excerpt:
At age twenty-seven, after reading Adam Smith's The Wealth of Nations, Ricardo got excited about economics. He wrote his first economics article at age thirty-seven and then spent only fourteen years—his last ones—as a professional economist.
The world has changed considerably since 1823. We have new technologies, new political and social paradigms, and entire new fields of science. Nevertheless, we ignore all of that and continue to use economic ideas from 1823.
Is this wise? Can an economist who lived during the era of King George IV - predecessor of Queen Victoria - tell us how to conduct trade in an era of quantum physics, instant global communications, and robotic factories?
Many financial instruments were unknown then. The NYSE was conducting trades under a buttonwood tree in 1792. Yet we direct the course of our nation according to such out-dated concepts based on a single man’s intuition?
It's time to take a long, hard look at the underlying assumptions that are directing us to national economic disaster. Antique economics are not the solution to modern problems. Free trade, as promulgated by Ricardo, may not be the panacea presently claimed.
It is unnecessary to give an example of a nation with no tariffs at all. It is only necessary to show that in general, the more free the trade, the faster the economic growth.
So here we go. First up, the WTO:
The money quote here is this:
The study finds that, in general, living standards in developing countries are not catching up with those in developed countries. But some developing countries are catching up. What distinguishes them is their openness to trade. The countries that are catching up with rich ones are those that are open to trade; and the more open they are, the faster they are converging..
In case you think this just applies to developing countries, you can get the WTO take on effects of free trade on the USA here. An extract:
The argument that trade liberalization through the WTO has made Americans poorer contradicts the most obvious facts about the U.S. economy in the year 2000. During the last five years, living standards have been rising for low- and high-income workers alike. More than 80 percent of the jobs created since 1993 are in occupations that pay above the median wage. Figures on the alleged decline of real wages are misleading because they overstate inflation and do not include the growth of nonwage benefits..
There's a nice PDF available at that link with the details.
And you might try this article and the data that it refers to. An extract:
Another lesson from the study is this: When debating trade policy, governments and legislatures — especially in the developed countries, such as the United States or Europe — cannot ignore the broader foreign-policy implications of trade.
By opening markets at home and encouraging freer trade abroad, they not only promote economic growth — but also a more humane and democratic world.
Or you can consult the basic reference on free trade by the Economist Magazine. It is here. It says:
Measured by the volume of IMPORTS and EXPORTS, world trade has become increasingly free in the years since the second world war. A fall in barriers to trade, as a result of the GENERAL AGREEMENT ON TARIFFS AND TRADE and its successor, the WORLD TRADE ORGANISATION, has helped stimulate this GROWTH. The volume of world merchandise trade at the start of the 21st century was about 17 times what it was in 1950, and the world's total OUTPUT was not even six times as big. The ratio of world exports to GDP had more than doubled since 1950. Of this, trade in manufactured goods was worth three times the value of trade in SERVICES, although the share of services trade was growing fast.
There are plenty more where those came from. I turned these up with one quick Google search.
Now, there are some studies that show harm from free trade. All the ones I've seen are by leftist academics. If you would rather place your faith in leftist academics than mainstream economists, be my guest.
Economist/WTO etc sources are shills for the globalist free trade ideology. Try to give some examples of the countries, since time of Ricardo, which were successful over prolonged time with tariffless/free trade. You cannot.
Flattery will get you everywhere!
They should run everything. The economy, every aspect of our lives - everything.
Good thinking.
There are several problems with historical measurements of that. First, it does not usually take trade in services into account, just trade in goods. The US is the world's biggest exporter of services. So that accounts for quite a bit of the gap.
Then there's the fact that if you add everyone's trade surplus/deficit in the world up, you should end up with zero (after all, there's no trade with the moon). You don't because governments fudge the numbers toward the deficit side to scare gullible people into believing that government should "take action" because the "private sector has had market failure" or some such nonsense.
Finally, if trade surpluses are so great, then Japan ought to be the healthiest economy on the planet. They ran large trade surpluses for a couple of decades, starting in the seventies, due to their protectionism. What did it get them? One of the poorest performing economies on the planet in the last fifteen years. (Note that I brought up Japan earlier, and you conveniently ignored it. I presume you'll probably do so again, because it is the most glaring example of the defects in your argument.)
So trade surplus/deficit, in and of itself, doesn't tell us anything. The questions that matter are: What is the growth rate? What is the unemployment rate? On both those scores, we are doing fine.
The second graph documents that fact that we get lots and lots of foreign investment. This is great news! It means we are the best place in the world to invest your money. We get the benefit of investment from all over the world, which helps our growth rate (because investment fuels growth - Econ 101).
The fact that we pay that interest on that investment is inconsequential to the overall economic picture for a couple of reasons. First, the increased growth from the investment means that we ahead on net, even after paying the interest (consider the interest a dividend of sorts on the investment). Second, that money has to come back to us somehow. Else, we have sent computer bits or pieces of paper to foreigners for absolutely nothing.
So you prefer the leftist academics?
Fine. They publish numbers to back up their claims. So do you have contradictory data? Otherwise, perhaps they are shills for free trade ideology because it's correct.
Try to give some examples of the countries, since time of Ricardo, which were successful over prolonged time with tariffless/free trade. You cannot.
I throw a ton of data demonstrating that free trade is correlated with economic growth, and you petulantly insist on an example of a tariffless society that prospered over a long time. Well, it's asking a lot, since governments simply cannot seem to keep their hands off of stuff they shouldn't touch (you as a conservative, which I guess you are, should know that). But just to please you...
Hong Kong has had a virtually tariffless system since the middle of the twentieth century. It had the most open market on the planet from roughly 1950 to the Chinese takeover in 1997. The result? Let me quote Milton Friedman:
Nobel Prize-winning economist Milton Friedman notes how close Hong Kong has come to equaling the U.S. in gross domestic product per capita. In 1950, he reports, the U.S. had a per capita GDP nearly six times that of Hong Kong. Last year, ours was only 7 percent higher.
If growth continues in both countries at present rates, Hong Kong will surpass us in GDP per capita in less than five years.
That was penned in 1997. Of course, the Chinese takeover has thrown a crimp in things since then, but I presume a fifty year record of unbroken success by a free trade Hong Kong answers your objection?
So now I've done your research for you - twice. It's time to put up or shut up. If you have information or data, bring it out. Otherwise, quit harping about how you don't like something about the data I have brought to the discussion. It's not a very credible style of argument to keep making up objections to data that's presented, but never take the trouble to find any that supports your position.
Submit evidence, not more assertions.
You can see Colombia as another example of free trade.
There you go again. You asked for an example of a free-trade society that did well over a long term, and I gave it. Then, instead of saying, "Well, you got me there", you just find some reason to carp about it. No doubt how many I came up with (and it's true there aren't many because governments have this itch to interfere with everything), you would no doubt find something to carp about with all of them.
You anti-free-trade types are not interested in honest argument. You only wish to muddy up the waters to try and defend your ill-supported pre-conceptions.
So I asked once again for any data you might have to support your position, and you again fail to give any (your only link is an irrelevant one about opium in Hong Kong). As far as I'm concerned, it's game, set, and match for me. Thanks for playing.
I had not previously commented on this thread and usually stay in "read-only" mode on economic and out-sourcing threads.
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