Things Fall Apart: The Coming End of the Free Trade Coalition

The American Conservative ^ | September 27, 2004 | Ian Fletcher, VP, American Engineering Association

[OXM_1962]

Your arguments about markets have a mechanistic quality to it that reminds me of the old Marxist contention regarding the “inevitability of communism.” Human beings – as they are, not how they might fit into some intellectual scheme – can not be subtracted from any economic calculus, and this is why globalization as it is currently practiced will not survive.

Unless things change “creative destruction” you will have; destroyed communities and nations. Do you really think people will accept an economic system in which they will have to relocate and reeducation themselves three, four or even five times in the course of a single lifetime just to maintain a “middle class” standard of living? Do you think people will accept an economic system that moves economic and political control further and further away from where they actually live?

The Libertarian conception of markets and government is quite anarchistic. Americans fought a revolution so that they could have greater control over their own lives; conservative call for a return to the American Constitution and federalism so that we can have greater control over our lives. Ordered Liberty is our creed.

Radical change usually gives you radical results; just look at Iran.

[OXM_1962]

I am not for a command economy in anyway, shape or form! Markets are fantastic but must be understood and evaluated in context. Economics is economics, the costs of choices; it isn't the freak'in 10 Commandments!

The "free traders" here seem to think that the choice is between free trade/prosperity and protecionsim/poverty; what non-sense!

[ovrtaxt]

My understanding was that Jefferson championed the cause of the free individual over all else. The structure of government, therefore, should support the goal of individual liberty regardless of the consequences.

Perhaps his views did change later, I honestly don't know. But those earlier views are the ones which I admire.

I could go on about Hamilton, but I won't.

[justshutupandtakeit]

Yes and his reputation (that thing he valued most) has been continuously besmirched for 200 yrs by the Jefferson-loving Leftists who have dominated Universities throughout the land. Any one who believes him not 100% patriot is a fool with an agenda in almost every case.

Hamilton was the pivot around which political life in America turned from 1785 to 1800. His influence during that period was only paralleled by Washington who was actually implementing the Hamilton program during his administration.

He is one of history's most amazing men and NO ONE every came from less auspicious circumstances. Well except Jesus.

[justshutupandtakeit]

They reduce income in the rest of the world which cannot import as much from America as before. When we buy less from abroad they can only buy less from us.

If we redirect our industry through tariff policy to make more trivial crap that reduces our overall productivity since the optimal allocation of resources is being moved away from.

Economic policy cannot be determined by Spite or False Sentimentality.

[justshutupandtakeit]

The costs of the Jihadist are low enough they do not need petro dollars nor or they even dependent upon them now. They have many ways legal and illegal of raising money.

Their concern with us is not oil but that we stand in the way of world conquest by their demented co-religionists.

And it is false that the Saudi government supports terrorism. Don't fall for Michael MOOer's foolishness.

[justshutupandtakeit]

You believe Boeing should move its headquarters out of this country? That is the end result of your train of thinking.

US companies should not invest abroad because those investments might be nationalized and this could produce forces to harm national security? This is cutting off your nose to spite your face and surrendering in advance.

No the transfer of technology was not Free Trade. Free Trade does not break the law, Clinton did. For Chinese bribes.

[Zack Nguyen]

Whether this is “efficient,” as academic economists understand this term, or not is irrelevant to the politics.

This is as far as I've gotten thus far. What a thoughtful statement. It's true - the numbers often have nothing to do with how people experience economic hardship.

[justshutupandtakeit]

Competition is one of the driving forces in a capitalist economy. Without sufficient competitive forces productivity lags and income declines. Just as when a football team which plays lesser competition meets one which plays greater competion it generally loses.

Attempting to protect arbitrarily a poor football team from competion is no more ludicrous than trying to protect a sector in the economy.

Just more obvious.

[snowsislander]

No, no one does that. But if we follow your plans to make their steel more expensive, they might shut down the plants they have.

Not relevent to your point since it was just a short-term problem, but an amusing anecdote (treat it as apocryphal, if you like, since I no longer have the newspaper with the article and this is just from memory): during the shutdown of the west coast ports, Toyota actually flew in steel (specialty steel, if memory serves) from Japan for its American plants.

As has been noted by many observers over the years, Japanese companies often care more about good quality than good profits, and almost always care more about their long-term market share than almost anything except quality.

[justshutupandtakeit]

Sure the economies can be destroyed by Luddanite tendencies and darkness and ignorance rule but I don't think that is our future. An capitalist Economy is the furtherist thing from an "intellectual scheme" you can get. It is the decisions of million or billions of humans and outside the control of them or any other manmade forces. Just as the processes within the earth are outside our control. That fact may make you mad, sad or glad but there is not a damn thing you can do about it. As Adam Smith said there is much about it which is the functioning of an Invisible Hand.

You seem to labor under the delusion that the economy CAN be adjusted harmoniously to the intellectual schemes of those who do not like a World Economy. It cannot in any positive way. There will be no disintegration of the World Economy that will help anyone. Nostalgic wishes are not a good guide for making economic policy only chaos.

Praising Liberty is fine and dandy but to call for less of it wrt the economy seems to indicative a less than comprehesive understanding of both Liberty and the economy.
Perhaps even an emotional response to something.

[The Old Hoosier]

You describe a nation so badly off that there must be millions of former industrial workers out there starving to death, begging for food on the streets. Somehow it hasn't happened.

Aside, if management loots a company, that is the business of the shareholders, who should forbid large bonuses of that kind. It's not my problem unless I own their stock, and it's certainly not the government's problem.

The bottom line is that it's not the government's job to make sure that the economy works or that standards of living increase--although they definitely have, at least by material standards. It's the government's job to create conditions where people can do business without violence.

In reality, anything you do to benefit one industry artificially will harm another--just witness the effect of the steel tariffs on the auto industry. Everything has unintended consequences. You would have the government pick winners and losers in the economy--a planned socialist economy.

[radicalamericannationalist]

No, I think Boeing should have its headquarters and manufacturing here. I think that by using the depressed labor prices of a totalitarian state, they are no better than latter day Simon Legrees. Secondly, U.S. companies could invest abroad, not just in totalitarian states who share few, if any, values with us. Trading with Britain or other Westernized, democratic nations is fundamentally different than dictatorships that can be at best seen as competitors if not outright enemies. Finally, under true free trade theories, why should there be laws against exporting to China? We are outsourcing various aspects of border security technology. Why not export everything else. After all, the competition that drives down the prices of consumer goods and supposedly allows us to enjoy freed up labor for R&D should apply to national security, right? Oh, that's crazy right? Yes, free trade must understand limits. National security is one. The deleterious effects of creating an equilibrium that draws the US standard of living to that of the Third World is another.

[OXM_1962]

Rebuttals:

“A capitalist Economy is the furthest thing from an "intellectual scheme" you can get.”

If you don’t believe global free trade arguments is not an intellectual scheme, then what is?


“You seem to labor under the delusion that the economy CAN be adjusted harmoniously to the intellectual schemes of those who do not like a World Economy. It cannot in any positive way.”

Economies are and have always been subject to governmental policies. One can argue the efficacy of economic policy but can not argue against the existence of such policies.

“There will be no disintegration of the World Economy that will help anyone. Nostalgic wishes are not a good guide for making economic policy only chaos.”

Who is calling for the disintegration of the world economy? Who is calling for the re-instatement of the Smoot-Harley Tariff Act? No one is arguing for an economic Maginot Line.

What is being challenged is the idea that the MAXIMUM possible economic efficiencies generated by a global economy with no (or little) barriers on the movement of goods and capital will create a good life for the great majority of people.


“Praising Liberty is fine and dandy but to call for less of it with the economy seems to indicate a less than comprehesive understanding of both Liberty and the economy.
Perhaps even an emotional response to something.”

I’ve seen what happens to towns and cities whose economic hearts have been gutted, and it’s awful. I don’t argue for protectionism but have no illusions that our competitors, whether they be European, Chinese or Japanese, are looking after their best interest. Who is looking after ours?

[William Terrell]

They reduce income in the rest of the world which cannot import as much from America as before.

But if the rest of the world makes less than Americans do, there will be very few things they can buy from America. In fact, they don't buy much from America now. Adding up American imports and exports the former vastly outstrips the latter.

The annual trade deficit is nearing $600 billion with a cumulative balance of 3.1 trillion.

The market glut of workers has driven the price of wages down, especially among higher wage jobs, those that haven't been outsourced. Remember, there are certain things we need to survive that can't be imported at dirt prices. Few can afford medical care now.

When we buy less from abroad they can only buy less from us.

Why should we care what they buy from us, little as it is now, when we buy from each other just fine?

The wages paid to workers don't seem to be generated by foreign trade, per the deficit above. They seem to be generated by buying and selling from and to one another right here in America.

We can afford more expensive American made items. The workers' wages will shrink relative price of needs and luxuries, when the industries and production remain here in America.

The only things we need foreign trade for is what we can't produce here. The way we are doing it is not the traditional way of foreign trade in America. It is a dangerous new experiment that only resembles the traditional American way.

I'd like to point out here that the Traditional way of American trade, both foreign and domestic, made America the nation that became a world power.

You think we can keep our world power status when we are reduced to third world wages and standard of living? Do you want America to be a third world power?

If we redirect our industry through tariff policy to make more trivial crap that reduces our overall productivity since the optimal allocation of resources is being moved away from.

I'm sorry. I can't make any sense of the sentence above.

Economic policy cannot be determined by Spite or False Sentimentality.

Of course not. Economic policy is determined by mathematical logic, and the numbers of "free trade", as it is being practiced right now, don't add up.

[justshutupandtakeit]

United States exports are over 1 trillion dollars a yr and you sneer at this? How many million jobs does this create?

What percentage of US imports is petroleum?

If there is a "glut" of workers as you claim how is it possible to maintain higher wages here than what the market would produce? You realize this is an impossibility I hope.

Medical costs have escalated because of governmental involvement and because of trial lawyers looting the system.

We care because millions of jobs and trillions of dollars of exports are bought by the rest of the world and because we CANNOT provide all the oil we need which makes up the bulk of our imports. I have no idea what fantasy you indulge in to escape that reality.

The rest of your solution is just gobbledy gook from an unaware theorist and is not worth the time to refute. You clearly know nothing about economics and I don't have the time to start the training.

Third world economies do PRECISELY what you want us to do, impose high tariffs and trade barriers and restrict their citizens' freedoms. Why do YOU want us to become a third world nation?

Apparently you are totally unaware that the US ran trade deficits until well after the Civil War. And this was under a fixed exchange rate mechanism when deficits actually meant something. They are essentially meaningless now that we have floating exchange rates. But I would expect these concepts are much too abstruse for those without economic knowledge.

[justshutupandtakeit]

Free trade is what occurs naturally when governments don't get involved it is not the result of an intellectual scheme. It is the natural result of economic life.

I never implied that gov policies do not affect economic life rather clearly stated that they are almost always ineffectual or negative in their impact.

There has been no basis presented for attacking Free Trade merely a bunch of unsubtantiated fears and outright errors wrt economic theory and practice.

Those towns you have observed are the result of economic life passing them by when tastes change or needs change. Towns which cannot adapt will die government policies or no government policies. How much do you want to divert from other citizens to try and keep dying burgs afloat for a couple of more years?

If you are not arguing for protectionism why the attacks on Free Trade? You can only have it one way.

[justshutupandtakeit]

Obviously you are just out of the mainstream. Probably comes from all those afternoons diving into your swimming pool filled with money like your buddy, Scrooge McDuck.

[justshutupandtakeit]

It is extremely difficult to discuss these issues when one side has no knowledge of them other than ancedotal RATmedia propaganda put out to destroy the President.

Why don't you start by reading the Wealth of Nations which was written to try and explain just these sorts of issues? While it is a bit out dated most of the analysis and discussion is very helpful still.

Your comments reveal that you do not understand what free trade is. Nor do you understand its impact or role within our economy. Your prescriptions would devastate the lower classes within this country since their basics would become much more costly. Energy, clothing, food, transportation would be much more costly.

[radicalamericannationalist]

Your comments reveal that you do not understand that national security is more important than saving a couple of cents on a gallon of gas. AS to the lower classes, they are devastated by their wages reaching equilibrium with the Third World.