Why Protectionism is bad

The Conscise Encyclopedia of Economics ^ ^ | Jagdish Bhagwati

[Willie Green]

But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.

~Karl Marx, "On the Question of Free Trade" - January 9, 1848

[hedgetrimmer]

So you think protectionism is bad. How about telling the truth: free-tradism is global socialism.

[freebacon]

Actually its global capitalism.

[hedgetrimmer]

Actually no it isn't. You must read the WTO charter, NAFTA, GATT and the FTAA. They clearly posit socialist policies withing their trade agreements.

[freebacon]

This is Communist rhetoric, Marx's economic theory was outdated the day he wrote it. He wrote it over 150 years ago, and the social revolution already happened in Russia and various other countries. And it was a miserable failure. Not to mention the fact that it killed over 100 million people.

[freebacon]

Do you have a link?

[luckydevi]

"free-tradism is global socialism."

Orwell would be proud

[hedgetrimmer]

In order for Brazil to sign the FTAA, they are demanding that the US create a program to end global hunger, and also to give free US taxpayer dollars to that country for "infrastructure development". That is not "free trade".

In order for Venezuela to sign the FTAA they are demanding tht the US create a program of redistribution of US taxpayer dollars called "structural convergence". Than is not "free trade" but our salivating little trade minister will give any concession in order to make the FTAA happen.

In order for Mexico to sign the FTAA the US must allow open migration of Mexican nationals, social security for illegal immigrants and lower fees for sending remittances outside of the country. The president just met with Vicente Fox this weekend and agreed to all their "conditions" on "free trade".

The idea of "infrastructure development" evolved directly from the WTO who says "rich" countries must pay to bring teh standard of living of "poor" countries, or "least developed countries" like china, up. That is not "free trade".

In fact, there is no "free trade" only managed trade by the global socialists who run the WTO and the UN.

[luckydevi]

Willie

As with pretty much everything, Marx anaylsis of free trade was wrong

Do you actually agree with that quote?

[Willie Green]

This is Communist rhetoric, Marx's economic theory was outdated the day he wrote it.

Marx was in agreement with Adam Smith on the consequences of free trade.
He was patheticly wrong in his theory of constructing a communist utopian alternative.

Excerpted and condensed from:

Adam Smith: The Wealth of Nations, Book 4, Chapter 2

Of Restraints upon the Importation from Foreign Countries
of such Goods as can be produced at Home

"There seem, however, to be two cases in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry...

• The first is, when some particular sort of industry is necessary for the defence of the country....

• The second case, in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry is, when some tax is imposed at home upon the produce of the latter. In this case, it seems reasonable that an equal tax should be imposed upon the like produce of the former....

As there are two cases in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry, so there are two others in which it may sometimes be a matter of deliberation; in the one, how far it is proper to continue the free importation of certain foreign goods; and in the other, how far, or in what manner, it may be proper to restore that free importation after it has been for some time interrupted....

• The case in which it may sometimes be a matter of deliberation how far it is proper to continue the free importation of certain foreign goods is, when some foreign nation restrains by high duties or prohibitions the importation of some of our manufactures into their country. Revenge in this case naturally dictates retaliation, and that we should impose the like duties and prohibitions upon the importation of some or all of their manufactures into ours....

• The case in which it may sometimes be a matter of deliberation, how far, or in what manner, it is proper to restore the free importation of foreign goods, after it has been for some time interrupted, is, when particular manufactures, by means of high duties or prohibitions upon all foreign goods which can come into competition with them, have been so far extended as to employ a great multitude of hands. Humanity may in this case require that the freedom of trade should be restored only by slow gradations, and with a good deal of reserve and circumspection. Were those high duties and prohibitions taken away all at once, cheaper foreign goods of the same kind might be poured so fast into the home market as to deprive all at once many thousands of our people of their ordinary employment and means of subsistence. The disorder which this would occasion might no doubt be very considerable....

[Willie Green]

As with pretty much everything, Marx anaylsis of free trade was wrong
Do you actually agree with that quote?

As I just posted, Adam Smith agreed with it.
Marx's proposed alternative may have been an abomination,
But that doesn't discredit his analysis of the consequences of unrestricted free trade.
Even David Ricardo asserted that such policies would drive labor to the subsistance level.

[Gunslingr3]

In fact, there is no "free trade" only managed trade by the global socialists who run the WTO and the UN.

Who is arguing in favor of welfare payments, abroad or otherwise? Free trade is about removing barriers to trade, and not imposing new ones. It's wrong to argue against free trade because politicians tie socialism to it in treaties. Don't toss out the baby with the bathwater.

[hedgetrimmer]

President Bush promoted these policies during the international conference on development finance in Monterrey, Mexico, during the week of March 18th, and subsequent visits to Peru and El Salvador, where Bush met with various Latin American heads of state. With few concrete initiatives to offer Latin Americans, the brief visit was intended to shore up support for free trade initiatives (FTAA, CAFTA, Andean Trade Preference Act), security programs (Expansion of Plan Colombia, Plan Sur in Mexico). Plan Sur has dramatically increased military presence in southern Mexico, especially in the narrowest part of the Isthmus of Tehuantepec, to curtail Central American immigration to the U.S.. Coincidentally, the isthmus is the heart of Plan Puebla Panama, a development plan that would potentially displace hundreds of indigenous communities for the construction of transportation corridors and maquila factories. In return, regional presidents hope to win amnesty for undocumented workers and a plan that will allow for orderly immigration of workers, but Mexican President Fox would settle for a modest guest worker program.

President Bush announced that the United States would contribute $5 billion over the next three budget years to a Millennium Challenge Account to help developing nations improve their economies and standards of living. He said the new funds–which are over and above the current U.S. foreign assistance budget–would be directed toward countries that demonstrate a strong commitment to good governance, the health and education of their people, and economic policies that foster enterprise and entrepreneurship.

In an unusual correction to the President’s remarks, the White House later clarified that the U.S. is in fact offering an amount that is double what the President initially referred to in his speech. The US Treasury confirmed that last week'snews of a $5bn fund over three years from 2004 had been increased to a three-year total of nearly $10bn, followed by a permanent increase of $5bn a year thereafter. Paul O'Neill, the US Treasury secretary, promised on Wednesday to consult international partners on the way the US would spend its new aid budget, which he confirmed was twice as big as previously announced.

"Greater contributions from developed nations must be linked to greater responsibility from developing nations," Bush said. To that end, his administration is advocating the use of concrete indicators of the effectiveness of assistance programs, so that aid can be directed to countries that show positive results.

President Bush also proposed changes in multilateral development aid. "I challenge the development banks to provide up to half of the funds devoted to poor nations in the form of grants, rather than loans," he said. "All the development banks should adopt a growth agenda, increasing their support for private sector enterprises and focusing more on education, as the Inter-American Development Bank has done," he added.

NGOs meeting in Monterrey as well as other delegates welcomed the U.S. pledge as a first step toward meeting the estimated $50 billion per year in grants to poor countries estimated as necessary to meet the Millennium Goals.

The United States is one of the founding member countries of the IDB, and it holds 30 percent of the institution’s shares. The U.S. is also a member of the Inter-American Investment Corporation–an IDB affiliate that invests small and medium-sized private companies, and of the Multilateral Investment Fund, which was created as part of the Enterprise of the Americas initiative under the administration of President George Herbert Walker Bush in 1990.

http://www.interaction.org/development/idb/enewsmar2002.html

The Millennium Challenge Account taxpayer money giveaway.

President Bush called for “a new compact for global development, defined by new accountability for both rich and poor nations alike. Greater contributions from developed nations must be linked to greater responsibility from developing nations.” The President pledged that the United States would lead by example and increase its core development assistance by 50 percent over the next three years, resulting in an annual increase of $5 billion by FY 2006.

[hedgetrimmer]

Politicians, especially on the international scene,will never allow "free trade" to exist because they are making out like bandits with all the tax dollar giveaways to coerce them into signing "free trade' agreements. So arguing for "free trade" is an exercise in futility.

[Willie Green]

Horse puckey. The only actual restriction on free trade besides sheer stupidity or mendacity is the general tax structure of the government.

I'm not sure why you're saying "horse puckey" when, based on the rest of your reply, I suspect we'd generally be in agreement on this issue. For instance, while you've neglected the economic impact of our bloated regulatory bureaucracy, I do agree that a shift in our tax policy is in order. The federal government should implement a relatively low, flat-rate "revenue tariff" on ALL imported goods while simultaneously reducing the corporate income tax to promote domestic industries and production.

but we also raise barriers all across the board on trade by maintaining high personal tax rates.

The personal income tax isn't a "barrier" to trade, but it is a shackle placed on our own domestic work force.

[Gunslingr3]

Politicians, especially on the international scene,will never allow "free trade" to exist because they are making out like bandits with all the tax dollar giveaways to coerce them into signing "free trade' agreements. So arguing for "free trade" is an exercise in futility

Is arguing for an end to welfare an exercise in futility?

[Shermy]

The only actual restriction on free trade besides sheer stupidity or mendacity is the general tax structure of the government.

What about the barriers of other nations, like India and China?

[hedgetrimmer]

So arguing for "free trade" is an exercise in futility

It is as long as there is a UN, a WTO, OAS and all the "free trade" areas like ASEAN, EU, FTAA etc etc etc