THE CASE FOR FREE TRADE (Milton Friedman)

Hoover Digest ^ | Fall 1997 | Milton and Rose Friedman

[ETERNAL WARMING]

We also need to cut out the taxpayer funded subsidies that help American corporations move overseas.

[Remember_Salamis]

I'm not questioning you, but name one.

[maui_hawaii]

I checked in on occassion to FR for about a little more than a month or two... but didn't do much posting.

I am still waiting for someone to give me a brief run down of what exactly they mean by Free Trade. As soon as any one of the guys arguing the 'for' side of it does that, this discussion is on its way to being over. Which IMO is over due.

I know how I define it, but I want to hear someone else say something.

BTW I am for Free Trade. FOR FOR FOR. How more can I say that?

What I am asking is for someone, anyone, to tell me what in their mind Free Trade actually means.

I particularly posed that question to anyone who argues the 'for' side in this never ending debate of name calling.

[maui_hawaii]

I'm not questioning you, but name one.

I AM question you. Please respond to post #4.

[Moonman62]

As usual, Karl Marx was wrong.

[Moonman62]

BTW I am for Free Trade. FOR FOR FOR. How more can I say that?

Since you are for it, why don't you tell us what it means to you? Then we can get on to the meaning of "is."

[ETERNAL WARMING]

I'm not ignoring you, RS. I have such a vast archive on Trade Issues that it's like looking for a needle in a haystack. :0) I'll post it when I find it.

[maui_hawaii]

I think maybe the cat has their tongues. They are unable (or unwilling) to tell me what they are trying to defend. That is all I am asking for.

Me: Tell me what Free Trade is supposed to mean.

Them: Its, well Free Trade.

Me: Define that.

Them: Its well, Free Trade.

Me: Which means?

Them: ***Silence***

Me: Well? I am waiting. Since it is a tangible thing signed into law it has to have some kind of definition. It could even have some sort of philosophical idea behind it. All I am asking for is a brief defintion...

Them: ***Silence***

I cannot figure this out. No one is taking up the challenge. They cannot, or refuse to attach any meaning to those two words. Maybe they can't? Maybe they won't? Who knows.

It seems simple enough seeing how they are defending it and arguing for it.

Anyone? Anyone?

[Remember_Salamis]

From your previous posts, I know you're a China hawk, and so am I. Economically (among other things), we've gotten ourselves into a pickle with China. Simply put, China is helping to finance our deficits, buying hundreds of billions of dollars worth of treasury bills every year. If we do not accommodate their mercantilist policies, THEY will not, and cannot, buy as many T-bills. If that were to happen, interest rates would go up as we would have to go out and find other buyers to fill their $100B/yr. appetite for Treasury bonds. Of course, this is nothing new; they are simply following the lead of Japan, the largest owner of US debt. Japan has been financing US deficits for years. Why do you think there was no trade war during Papa Bush's administration? Japan couldn't have bought as many T-bills, and the recovery would have been dampened with higher interest rates.

There's also the "Economic Weapon" theory, flouted by biggest of China hawks, most notably Aaron L. Friedberg from Commentary Magazine. Under this scenario, China is building up treasury bills as LEVERAGE. Say 10 years from now China owns $500B in US debt. A month before the PRC decides to reclaim Taiwan by force, they sell ALL of their T-bills. Panic ensues among other bondholders, and a stampede out of US securities occurs. Interest rates skyrocket, and the US is too concerned with domestic issues to intervene. Or, they could slowly bleed off holdings over a couple of years, causing interest rates to slowly rise and giving themselves a bit of deniability. However, even Mr. Friedberg doesn't think it will happen, as he compares the damage of economic weapons to nuclear weapons, and it could let a genie out of a bottle.

So, what do we do? Drastically cut spending to reduce our deficits while eliminating corporate taxes to revitalize our industrial manufacturing base.

[maui_hawaii]

OK. I will take my own question.

Free Trade has two basic meanings, but both have the same implication and ultimately mean the same thing.

1. Free Trade is the idea that there will be a free flow of goods and services with standard sets of rules on both ends, both to and from the respective parties. There has to be at least two parties involved.

2. Free Trade is actually ratifying that into law on both ends.

[maui_hawaii]

Interesting post...but thats not what I was asking.

Not that I agree with the post that you put up...IMO there are many things that I find bogus for a variety of reasons.

China might be threatening, and causing problems, but owning notes isn't one of them. In that area China's effect is minimal.

[maui_hawaii]

Your turn.

[hedgetrimmer]

What law made it ok for foreign countries to by US T-bills? I am really curious, because it used to be they weren't for sale to foreign countries for the precise reason you mentioned in your post.

[dread78645]

Let's see you protectionist PaleoCons dispute this one.

Name three (and ping 'em).

[Remember_Salamis]

Well, I guess my definition of free trade falls into the Milton Friedman Definition of the term. True "Free Trade" is the unrestricted movement of capital, goods, and even labor between sovereignties. Rarely in global history has there been true free trade; we only get degrees of it. Now, there's more to free trade than just tariffs and regulations; free trade must also be on a level playing field. As an example, US tax law is currently skewed to favor foreign imports over domestic producers (and foreign domestic markets over American exporters) through a grotesque corporate tax system, which is actually higher than most of Western Europe. We then give billions in subsidies to a few selected companies, making them soft and ripe to get pummeled by the competition.

An interesting paradox is that the closer we get to true free trade, the greater the risk to sovereignty. If there were totally unrestricted flow of capital, labor, and goods between the US and Canada, what's the real difference between the two?

[playball0]

Bttt

[Remember_Salamis]

Foreigners have been buying US debt for centuries; the French owned US debt after our nation's founding. I don't think there's ever been any law.

[maui_hawaii]

You have just summed up what Lou Dobbs and many of the others here have been talking about for 6 months or more.

Thats all I want out of this is to have a discussion, not another flame war thread over this topic.

As far as risk to sovereignty, I don't think its that big of an issue. The sovereign is there (or should be there) to ensure the other party abides by the rules.

Sticking to mutually beneficial rules doesn't mean one has given ones sovereignty away.

If the Free Trade Agreeement turns out to be a dud, we CAN get out of it. But we respect what we have done because it can be in our best interests to do so. Limiting government is a pretty damn good way of operating things.

Trade rules are a gentleman's game to ensure fairness and equality.

What I and many others here, including Lou Dobbs, complain about is when we abide by one set of rules and the others don't. Free importing isn't Free Trade.

[maui_hawaii]

If the Free Trade Agreeement turns out to be a dud, we CAN get out of it. But we respect what we have done because it can be in our best interests to do so. Limiting government is a pretty damn good way of operating things.

FTA agreements is our government literally imposing self inflicted limits on how it operates. Its not a foreign government doing that. Its our own government doing it to itself.

It is done on a basis of reciprocity though. Which that reciprocity isn't very easy in the coming sometimes.

When the reciprocity goes out of whack for one reason or another, political or otherwise, that is what is in question.

[maui_hawaii]

What I and many others here, including Lou Dobbs, complain about is when we abide by one set of rules and the others don't.

Its our whole concept of equality and fairness under the law. In places like China that stuff is a foreign idea. They don't live by the life, liberty, and pursuit of happiness idea. All men are NOT created equally.

What we want to know is why they have often times been given the exception.