The New Protectionists

opinionjournal ^ | March 10, 2006 | WSJ

[unseen]

I agree. However, the more Free trade we engage in the less sovereignty we have because the more we become entangled in other countries economies and the power groups like the WTO, UN, etc gain power to settle dispute and the peoples voice (Congress) losses power to effect trade matters.

[expat_panama]

The rebounding phenomenon could be explained by an acceleration of housing inflation...

You're absolutely correct!  I could be, but only if the explaining was done to someone who preferred conjecture to actual numbers from places like table B.100 in this report.  Come on Paul, are you really that married to this goofy doom'n'gloom schtick?

[Paul Ross]

No. I'm just being realistic. My own most recent house has tripled in value in 8 years. That's just nuts.

[Paul Ross]

I like the George Washington Farewell Address, still absolutely pertinent and vital reading for every citizen...and particularly should be read by the current administration which apparently instead are all busy reading Thomas Friedman's globalist-liberal-screed "The World Is Flat"

Washington On avoiding corruption of our own rulers by trade and alliances:

So likewise, a passionate attachment of one Nation for another produces a variety of evils. Sympathy for the favorite Nation, facilitating the illusion of an imaginary common interest, in cases where no real common interest exists, and infusing into one the enmities of the other, betrays the former into a participation in the quarrels and wars of the latter, without adequate inducement or justification. It leads also to concessions to the favorite Nation of privileges denied to others, which is apt doubly to injure the Nation making the concessions; by unnecessarily parting with what ought to have been retained; and by exciting jealousy, ill-will, and a disposition to retaliate, in the parties from whom equal privileges are withheld. And it gives to ambitious, corrupted, or deluded citizens, (who devote themselves to the favorite nation,) facility to betray or sacrifice the interests of their own country, without odium, sometimes even with popularity; gilding, with the appearances of a virtuous sense of obligation, a commendable deference for public opinion, or a laudable zeal for public good, the base or foolish compliances of ambition, corruption, or infatuation. 34 As avenues to foreign influence in innumerable ways, such attachments are particularly alarming to the truly enlightened and independent Patriot. How many opportunities do they afford to tamper with domestic factions, to practise the arts of seduction, to mislead public opinion, to influence or awe the Public Councils! Such an attachment of a small or weak, towards a great and powerful nation, dooms the former to be the satellite of the latter. 35 Against the insidious wiles of foreign influence (I conjure you to believe me, fellow-citizens,) the jealousy of a free people ought to be constantly awake; since history and experience prove, that foreign influence is one of the most baneful foes of Republican Government. But that jealousy, to be useful, must be impartial; else it becomes the instrument of the very influence to be avoided, instead of a defence against it. Excessive partiality for one foreign nation, and excessive dislike of another, cause those whom they actuate to see danger only on one side, and serve to veil and even second the arts of influence on the other. Real patriots, who may resist the intrigues of the favorite, are liable to become suspected and odious; while its tools and dupes usurp the applause and confidence of the people, to surrender their interests. 36 The great rule of conduct for us, in regard to foreign nations, is, in extending our commercial relations, to have with them as little political connexion as possible. So far as we have already formed engagements, let them be fulfilled with perfect good faith. Here let us stop.

All of the faux free trade agreements represent a "political connection". A bridge too far.

[expat_panama]

explained by an acceleration of housing inflation...  ... to someone who preferred conjecture to actual numbers...   ... just being realistic. My own most recent house has tripled in value in 8 years. That's just nuts.

No it isn't   That's a 15% rate of return.  

Don't get me wrong, 15% is good, but even stodgy stocks (s&p, dow) have done that lots ('82-'90, '91-'99) and the Amex stocks have tripled in just the past three years.  But before we get into arguments about your mortgage tax breaks and I compare stock commissions to real estate commissions, lets get back to this thread.  You offered knowledge about some general widespread 'housing inflation', and now you're basing it on the increase in value of one house?

Deja vu all over again.

[jonrick46]

I know that the concept of Free Trade is only as good as the humans that work it. I am not sure it is a good idea to throw it overboard because of a few rotting apples. The following from Vox Day gives the impression that working for Free Trade is like:

"that of the public-school teachers who insist that merely spending more money on teachers will lead to better public schools, and socialists who argue that despite dozens of failed historical examples, the One True Method of communism has not yet been applied. At some point, even the most lovely theory has to pass the more prosaic test of practice or else be relegated to the children's nursery of daydreams and wishful thinking."

There are things that are unseen in the dynamics of human commerce that hinder Free Trade. They operate like viruses below the surface which cause the best efforts to go wrong. Mr. Vox Day was not very specific as to what went wrong with NAFTA and the European Union concept. I am sure they would make an interesting study.

I am curious. Did you read Stephen Spruiell's article?

http://www.aworldconnected.org/article.php/489.html

[Paul Ross]

No. But I have now. It is essentially regurgitating the arguments of the hyper-liberal Thomas Friedman. And also the arguments on the select case of the Steel Industry made by Daniel Griswold of the CATO lobby. His arguments were entirely dependent on grotesque numbers made by the steel import lobbyists, who exaggerated the price increases dramatically, and also the claims of 'dependant industry' job losses. It turns out that the U.S. was in fact suffering from foreign countries...not companies...dumping practices which unchecked would have totally destroyed the U.S. integrated steel operations...which are vital for national security. The hand-waving of the author on the issue is not only not persuasive, it tends to destroy any credibility he had.

For example, even after the tariffs were in place...it turns out that the U.S. steel market was still the cheapest, most competitive in the world! The jobs lost weren't from suddenly excessive steel prices, but turn out to in fact have been lost more to a recessionary contraction. The steel import lobby issued numbers which were biassed by counting in jobs lost from almost 6 months prior to the President announcement of the temporary tariffs, which were tailored only to the offender in reciprocal fashion.

The opponents claimed that the industries couldn't be saved. They were wrong. They were. And then, prior to the EU issuing sanctions pursuant the WTO declaring our soveriegn actions "illegal" (which completely ignored the endangered industry ruling of our ITC, and the reams of data supporting it...all valid pursuant to the WTO Charter)...the temporary tariffs were lifted.

And today our steel industry, having had a breather remains competitive. And U.S. steel market prices are still the cheapest on the planet. Not those 6 other countries which a Heritage scholar misleadingly ranked as "freer" than the U.S.

And the dependancy argument is real. It is a serious issue. It represents the core of national argument over this issue.

[jonrick46]

Is there an possibly that Stephen Spruiell's article gave arguments that were independent of Thomas Friedman? I know he cited Friedman's book, "The Lexus and the Olive Tree: Understanding Globalization." As a reviewer of the book, Lou Shuler for Amazon writes, "No one knows how all this will shake out, but The Lexus and the Olive Tree is as good an overview of this sometimes brave, sometimes fearful new world as you'll find."

I did not realize the influence on other economists that Friedman has on the Globalist School of thinking. Is Friedman all that bad?

You have made some valid points. The effect on countries using dumping tactics to artificially drive down steel prices can catch our nation off guard with a policy that leaves us open to those who will exploit the situation. As I said in an earlier post, "Market forces will determine who is playing fair and punish those who fail to play fair." What I mean by that is those who have are known to not play fair will suffer from those who cease to trust them. I should have also added that government needs to come to the aid of those who are being cheated and punish the cheaters.

Finally, could you elaborate on the "dependency argument?"

[unseen]

I agree but as with the Supreme Court, modern America thinks that the founding fathers and the lessons learned in 1700 Europe are no longer relevant. However, human nature does not change. Humans for all of our "civilization" still engage in war, murder, rape etc and still succumb to greed, thirst for power, lust etc. Since humans have not changed in 300 years the lessons learned from our founding fathers are just as relevant today as they were then.

[unseen]

Market forces will determine who is playing fair and punish those who fail to play fair


Here you are wrong. The market does not play fair. It plays unfair and goes to the lowest cost. Period. The market has no idea what a nation is, what an ideal is, what human rights are, or morals, or ethics. All of these things are imposed on the market to try to level the playing field by people. In a total "free" market non of these things exist. The only thing that matters to the "free" market is profit and loss. So the same with free trade.

[jonrick46]

The market punishes those who do not play fair in the sense that if one, in order to undercut the competition, sold a defective product, they would lose their market which would avoid their product. This loss of market is the "punishment" I am writing about. I am also saying that loss of market can occur when practices hurt other players. This in effect causes a cost to those who trade with them. When this happens, they will be seen as bringing an additional cost which as a consequence, causes them to loose their marketplace. They are "punished" for behavior that causes increased costs. The market has its own mechanism for judgment.

[LowCountryJoe]

I am at a complete loss trying to follow your tortured logic and error riddled arguments but I'll tackle just one item.

If two or more components of GDP rise together but one rises with more magnitude than the others, you're going to have different rates of change...so why is this of any relevance? Never mind, do not answer.

Say, did you know that American capital that flows out of the United States and into other countries (purchasing things like production facilities and the subsequent outsourcing of some production that used to be done domestically) actually helps to balance our trade deficit? This must make you a closet supporter of outsourcing and of the principle that Americans should be buying up foreign assets a.k.a. Foreign Direct Investment.

[unseen]

Well if you can't understand why the decrease in Industrial spending as a percent of the GDP is a cause for concern there really is no reason to continue the discussion. If you do not understand how the reduction of are industrial base is a major problem for national security again it's a lost cause.

And yes I understand the exporting of our industrial base gives a false number in the trade deficit. The more of are industrial base we export the more of a negative our trade will be in the future because the exports will decrease over time and imports will increase as the new forgien industrial base comes online. Thus to keep our GDP growing the consumer and government will have to pick up the slack. This signals a long term decline in standards of living as the government shoulders more and more of the societal costs while the previous industrial base that use to pay for these benefits flee the country for cheaper labor and easier governmental oversight. I understand that these are very difficult concepts to grasp and you may not be able to follow along. Free traders do have difficultly following any logic that requires a person to give up short term profits for long term gains.

[Paul Ross]

Say, did you know that American capital that flows out of the United States and into other countries (purchasing things like production facilities and the subsequent outsourcing of some production that used to be done domestically) actually helps to balance our trade deficit?

I'm sure an outsourcer...and their import-lobby apologists... would glibly claim that.

Let's see your empirical data.

And then explain how we really don't have a trade deficit.

[LowCountryJoe]

Let's see your empirical data.

Net exports are equal to net capital outflows and, conversely, net imports are equal to net capital inflows. I have stated, many times to you, in fact, the last portion of that sentence. You have never disagreed with it before and now all of a sudden when I state the first portion of the sentence, you just now call B.S.?

Okay then, here, give yourself a proper education on the subject! This goes for you, too, unseen

[LowCountryJoe]

...there really is no reason to continue the discussion.

Whew! Thank you, thank you, thank you. It is quite frustrating discussing something with someone who is uneducated on a topic just to have them turn right around and regurgitate information back to you - innacurately - while claiming that they're the ones who really know what in the heck they're talking about. It's enough to make me want to chew off your leg just to get away...I guess I'm just too undisciplined to ignore your stupidy-filled replies/posts.

[unseen]

Yes, I know it has been frustrating trying to educate you. But don't be so hard on yourself you can still stop mouthing the party line when ever you wish and start looking at the real data. I understand for some people it's hard to educate one's self but you should try. I know you could do it if you wanted too. I'm sure once your job is outsourced you will understand perfectly. Or maybe after your job is outsourced and the government (i.e taxpayers) must pay for your retraining/reeducation you will see the light. Just think that taxpayer funded retraining adds to the GDP. There's always hope.

[LowCountryJoe]

Or maybe after your job is outsourced and the government (i.e taxpayers) must pay for your retraining/reeducation you will see the light. Just think that taxpayer funded retraining adds to the GDP. There's always hope.

There's a bit of unintended humor here. I did have the taxpayer pay for my higher education but not because my job was outsourced. I qualified under Chapter 30 of the Montgomery GI Bill and used all but one month of 36 months worth of benefits earning an Associates degree in Liberal Arts and then a Bachelor's of Science in Business Administration with a minor in Economics.

Now, properly understood, the government expense to educate me should have been a net wash on GDP as many others had their C (or maybe I) lowered by the same amount the G was increased. But the truth is is that the taxes put in place to raise G created a dead weight loss that lowered C (or maybe I) more than G was raised. However, if my lifetime production is increased more than it would have been if I had not pursued the degrees, then the investment in my human capital would have increased GDP through time and would have been with worth the investment. You can argue whether or not the GI Bill is a good program but it does not change the fact that it was a promised entitlement to me - as long as I chose to use it - for electing to serve this country and in an honorable fashion.

[unseen]

Well lucky for us so far the globalists have not figured out a way to outsource the jobs within the army, however, if the current trend continues that may not be true in say 10 years . Blue helmets anyone?

[1rudeboy]

One could probably also say that we're lucky the protectionists have not figured out a way to re-institute the draft.