Clarifications on the Case for Free Trade

Ludwig von Mises Institute ^ | 4/12/04 | Paul Craig Roberts

[XBob]

119 - "Another phony stat, posted this time from you. For the record."

Go soak your head,

It was on a US Dept of labor productivity chart, posted in 1999 dollars - on another thread about 2 days ago.

If I remember correctly, average US wages were $13.69 in 1999 dollars, pretty constantly since the 1970's, and had actually come down.

Go research it yourself, if you wish to verify, rather than accuse.

[XBob]

Times have changed - figure it out.

[XBob]

127 - "Over time, the Indians and the Chinese getting shoes and out of the kitchen will benefit not only US, but even more the planet, not only economically, but otherwise."

Yes, in about 200 years, after we here in the Corporate States of China revolt again.

[johnboy]

In reply to yours:

"1. The supply of cheap labor is for all intent unlimited for the foreseeable future. There are hundreds of millions if not billions of people in SE Asia waiting to enter the low skill labor market and work for $.50/day. 2. The short term benefits to the US consumer are enormous. Our standard of living is very high. It is unlikely we will be willing to pay $100 for a pair of jeans or $5,000 for a home PC."

This is the same silly argument that results in illegals working in our agriculture industry. Recently, that hotbed of conservatism (UCLA) performed a study on the effect/relationship of farm wages to cost of commodity at the market.

In short, farm wages account for 15% of the price of, e.g., a head of lettuce. In other words, only thirteen cents of that 89 cent head of lettuce is attributable to farm wages.

So, if you doubled farm wages, that head would cost $1.02. Big deal.

In fact, they calculated that the proverbial five dollar a head lettuce would support a farm wage of $300 per hour, which, it seems to me, would create some of the jobs Americans are willing to do.

Guess what, bub?!? Even in China, AMD and Intel don't assemble CPUs by hand (all done by sophisticated automated machinery), and doing it here ain't gonna bump the prices of PCs back to $5,000.

Pennies on the dollar only. And that's a small price to pay to preserve this once great nation.

[XBob]

ah, the bars have closed, and the rats have arrived (not you, the others ToddsNoPatriot and TexasBoring)

Yes, your point about devaluation is well taken:

"The Fed is printing money and we are now in a currency war with much of the world, especially the Asian countries. The dollar will be devalued to solve the problem. Greenspan thinks that this will all happen benignly; I think that he's wrong."

It's already happening. The overseas markets for metals and certain other commodities began a dramatic change late last summer - in August/September time frame and the dollar is plunging while prices have increased by about 40% already.

It's been going on for sometime now, and is just really starting to get rolling as the industrial production chart I just posted shows - a leveling off since about 1998 now.

[Colorado Buckeye]

It's already happening. The overseas markets for metals and certain other commodities began a dramatic change late last summer - in August/September time frame and the dollar is plunging while prices have increased by about 40% already.

The CRB has been rising for some time and the dollar has been falling for two years. The prices of oil and gasoline are up and we haven't even made a dent yet with the Chinese. The 8.3 Yuans still buys 1 dollar. It's going to be interesting moving forward.

[Asclepius]

This gonna get real ugly.

Indeed. Union people always get ugly for irrational reasons. It's what they do. Your job is to convince them that free trade benefits us all or switch to the Democrat party. So get to work already you slacker.

Sheesh. Why are people who oppose free minds and free markets always such whiners?

[XBob]

136 - You made some good points, and you have an advantage being a Canadian (your dollar is worth less right now - but the US dollar is going down so fast I haven't checked the values lately).

However, a few points -

1. Microsoft is now sending its programming to India - so the Indians there will learn, fast, to make good code. And there are nearly a billion of them to compete against, so even the culling the top .0001% will give them far more programmers.

2. Almost no one knows how to program today. The skills are gone, pretty much. Now people learn how to run computer programs which do the programing. And those programs (programmed by the few real programmers left) are getting smarter and smarter and easier and easier to use. Which means dumber people with lower standards can take your job. As the error trapping/checking gets better, the great need for great programmers is disappearing. And the people who wrote the code initially are getting dead, so many of these compiled programs, no one on earth any longer knows how to debug. They just work. Particularly some of the small utilites, which make the basics of so many programs.

3. A friend of mine designs off shore oil rigs for a living, and business is way down, even in this high priced market, as more and more of his work is offshored. In fact, he told me, as of the first of the year, his company's (one of the top in its field in the world) remaining clients are now asking for bids if they do the job, or if they just 'supervise' the job while getting the Indians to do most of the actual work. So, they must now submit two bids. And this means generally about 50 americans on a job to about 5.

While this isn't computer programming, it is an indication of the competition all these free-traitors are entering you into.

4. You are entering a never ending race to stay ahead of more and more competition, most of it which has nothing to lose, where you have to study endlessly just to keep up with the changes, learning new languages, and finally competing against computer programs rather than people. And as you get a bit older, with wife, kids, house, mortgage, and other expenses, your race to remain with your head above water will get harder and harder.

So, think about it. And think about how you will pay for that house if you lose your job. These free-traitors seem to think that people should know better than to take on any debt they cant pay for with no money, is being a real spendthrift. But without a job to pay your mortgage, you can lose your house in a few months.

I found out from my own work, building petro-chem plants and manufacturing plants, more and more automated each year, that what the real story is, is that with what we build now, we can pay a guy 10cents an hour to push a button to process chemicals on the other side of the world or we can pay an american 20 dollars an hour to press the same button, and they both turn out equal quality product, except, generally, the one on the otherside of the world can make a better product, because that's where we built the newer better plant.

Just some points to think about, and good luck.

[XBob]

144 - "Pennies on the dollar only. And that's a small price to pay to preserve this once great nation."

But that is too great a price for these free-TRAITORS.

[XBob]

146 - "and we haven't even made a dent yet with the Chinese. The 8.3 Yuans still buys 1 dollar. It's going to be interesting moving forward."

The Chinese have pulled a fast one and hard linked the value of the yuan to the dollar, so that as the dollar falls, so does the yuan, making their pricing even cheaper for the world, without impacting their US market prices.

[Cronos]

We shaped it as "coupons." Country X gets a dollar coupon for every US manufactured good they import (dollar value.) THEY can ship goods here in the amount of coupons they have

So, countries like the Bahamas etc. that don't really export anything but exist as tourist spots will gain a big surplus of coupons they can never utilise?

[Cronos]

Your points are very good. Just to add to some of them:
There are hundreds of millions if not billions of people in SE Asia waiting to enter the low skill labor market and work for $.50/day.

The two big labour sources are India and China with about a billion people in the workforce. Even if you do combine Indonesia, the Phillipines etc. that number doesn't increase much.

The impact caused by these two giant ntions re-integrating themselves into the world economy WILL cause disruptions and these disruptions will last for the better part of this decade and well until 2020. Markets should stabilise by 2010 and be prety stable in 2020 unless a world war breaks out, but the possibility of that decreases each day as the major nations are more integarted economically with each other. E.g. France and Germany could never go to war with each other again, their economis are too interlinked, neither would England and France or Austria and Italy

The other good point:
Litigation, regulation, etc must be brought under control while still maintaining the necessary protections.
true.

[XBob]

152 - good points.

[Colorado Buckeye]

These free-traitors seem to think that people should know better than to take on any debt they cant pay for with no money, is being a real spendthrift.

To the extent that this is true, it is quite ironic. Under the system of "free" trade which they defend, we are running a massive trade deficit which is the key indicator of of our trading problems. This massive deficit means that we are spending more than we earn, consuming more than we produce, and trying to build a sound future for our country by borrowing money and selling assets.

[Colorado Buckeye]

The Chinese have pulled a fast one and hard linked the value of the yuan to the dollar, so that as the dollar falls, so does the yuan, making their pricing even cheaper for the world, without impacting their US market prices.

Indeed. So, either the American people stage a political revolution or the Chinese peasants start a shooting war. I think I know which will happen first.

[underbyte]

perfectly relevant to the topic. Your claim was we had a fantastic economy because of free trade.

My point was it is not really a good economy. The Us economy is deeply flawed and free trade was partly to blame.

[NoControllingLegalAuthority]

We do NOT want to start a trade war with compatible countries.

China is already at war with us. Their destruction of our manufacturing base is part of the strategy.

[meadsjn]

...make companies who do tech transfer to china WAIVE thier US patents...

Brilliant! And have companies that outsource development to India waive their copyrights in the US.

The foreign consumer market can pick up the slack in their sales.

[Cronos]

we give their jobs to African pygmies at 52 cents a day

REally? Are we doing that? Sending jobs to African pygmies?

[underbyte]

" No you don't actually, even including FICA payments, which to some extent you get back, unless you pay very high property taxes on an expensive house"

Well, being self employed I pay the full vig on FICA 15% & 35%

Federal + state sales tax, property tax, $ .60 a gallom gas tax, state income tax. yes it adds up to about %55.