Posted on 10/25/2006 5:56:53 AM PDT by from occupied ga
There are only a handful of products that Americans import that cannot be produced at home and therefore create jobs for Americans. Let's look at a few of them.
We import cocoa from Ghana and coffee from African and Latin American countries. We import saffron from Spain and India and cinnamon from Sri Lanka. In fact, India produces 86 percent of the world tonnage of spices. There's absolutely no reason these products cannot be produced by Americans, and we could be cocoa, coffee and spices independent.
You say, "Williams, that's crazy! We don't have the climate and soil conditions to produce those products. Many spices, for example, require a moist tropical environment." No problem. We have the technology whereby we can simulate both the soil and weather conditions. We could build greenhouses in which to grow cinnamon trees and get our scientists to create the same soil conditions that exist in Sri Lanka. Greenhouses could also be built to simulate the climate conditions in Africa and Latin America to grow cocoa and coffee. In the case of cocoa, the greenhouses would have to be Superdome size to accommodate trees as high as 50 feet.
You say, "Williams, that's still crazy! Imagine the high costs and the higher product prices of your crazy scheme." I say, "Aha, you're getting the picture."
There are several nearly self-evident factors about our being cocoa, coffee and spices independent. Without a doubt, there would be job creation in our cocoa, coffee and spices industries, but consumers would pay a much higher price than they currently do. Therefore, nearly 300 million American consumers would be worse off, having to pay those higher prices or doing without, but those with the new jobs would be better off.
So let's be honest with ourselves. Why do we choose to import cocoa, coffee and spices rather than produce them ourselves? The answer is that it is cheaper to do so. That means we enjoy a higher standard of living than if we tried to produce them ourselves. If we can enjoy, say, coffee, at a cheaper price than producing it ourselves, we have more money left over to buy other goods. That principle not only applies to cocoa, coffee and spices. It's a general principle: If a good can be purchased more cheaply abroad, we enjoy a higher standard of living by trading than we would by producing it ourselves.
No one denies that international trade has unpleasant consequences for some workers. They have to find other jobs that might not pay as much, but should we protect those jobs through trade restrictions? The Washington-based Institute for International Economics has assembled data that might help with the answer. Tariffs and quotas on imported sugar saved 2,261 jobs during the 1990s. As a result of those restrictions, the average household pays $21 more per year for sugar. The total cost, nationally, sums to $826,000 for each job saved. Trade restrictions on luggage saved 226 jobs and cost consumers $1.2 million in higher prices for each job saved. Restrictions on apparel and textiles saved 168,786 jobs at a cost of nearly $200,000 for each job saved.
You might wonder how it is possible for, say, the sugar industry to rip off consumers. After all, consumers are far more numerous than sugar workers and sugar bosses. It's easy. A lot is at stake for those in the sugar industry, workers and bosses. They dedicate huge resources to pressure Congress into enacting trade restrictions. But how many of us consumers will devote the same resources to unseat a congressman who voted for sugar restrictions that forced us to pay $21 more for the sugar our family uses? It's the problem of visible beneficiaries of trade restrictions, sugar workers and bosses, gaining at the expense of invisible victims -- sugar consumers. We might think of it as congressional price-gouging.
Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of More Liberty Means Less Government: Our Founders Knew This Well.
Amen
It was commonly thought in Europe (circa early 1900's) that there would never be another war on the Continent; "Why the businessmen would never allow it, they have too much invested!"
If we tried to make everything here that we needed we wouldn't have as much stuff because of the inefficiencies illustrated by the article. Perhaps we wouldn't have been able to develop the technologies in the first place if we tried to do it all ourselves.
I'm big on self reliance, but stopped changing my own oil years ago since I figured out it only saves me about 5 bucks to do it myself. My time is worth 10 times that at least doing other work.
You recognize in your point that specialization and division of labor are good things. Technology, transportation and increasingly free trade between nations has turned your small town example into the global reality.
"No, the rest of the world was still rebuilding from the Second World War during that time."
And rebuilding with modernized manufacturing plants, roads and rail systems, and economic models tempered by wartime experience, mostly at American expense.
In the meantime, American corporations, which enjoyed a 30 year run of unprecedented profitabiliy with hardly any foreign comeptetion whatsoever, stagnated, because, unfortunately, "it costs money to make money", or even worse, " it takes just as much money to continue to make money".
We made the investment in Europe and Japan and ignored investment here.
So, while it was quite painless to provide increasing levels of pay and benefits to American workers when things were good, it became increasingly painful to continue to provide them when the rest of the world began to catch up or offer cheaper alternatives. The only solution that most American businesses have found to this problem, thus far, is to shaft the American worker. Innovation and new techniques are hard to implement here because of a vast array of obstacles (no one wants to make the investment, enviornmental and safety restrictions, mandated minimum wages and benefits, etc), while other nations can often dispense with those concepts (because, let's face it, if you make 20 cents an hour in Indonesia, that's almost twice the normal wage and in pure econmic terms, you are living the "good life" --- if only because you have no reasonable means of true economic comparison).
You can produce everything here. But you can buy a lot of things cheaper overseas. Why produce bananas that will cost about $2 apiece in Florida if you can buy them at 20 cents a pound from Costa Rica?
It's a question of whether you want a high standard of living or a low one. Personally, I want a high one. I think we're doing a pretty good job of accomplishing that with our current trade policy. If we ban imports, you can expect your standard of living to go down.
I don't intend to ,,,AND,,,it's none of your business what I buy and what I intend to do with it.
It's a trade off. We are not trading like and like here.
People trade when they value the things they are buying more than the money they are paying for it. It's called freedom.
If you don't like the quality of the goods offered by producers in other countries, don't buy it. You have no gun to your head.
How is that any different than the United States today (except with regard to the very salient fact that the British Empire doesn't exist anymore)?
"You have no gun to your head."
But do you have an alternative?
That's the point. You can buy CHinese furniture, if you wish, but what happens when Chinese furniture does not suit your needs or purposes and there is no other suppply available elsewhere?
--If you don't like the quality of the goods offered by producers in other countries, don't buy it. You have no gun to your head.--
Great. Where do I find a dvd player, VCR, radio or TV not made in "other countries"? I'd have an easier time finding hen's teeth or the holy grail.
My original point specifically included the term trading partners, and you suggested that "Japan puts the lie to this theory" because it has a lower standard of living than its neighbors.
Considering that Japan's baseline living standard (and you can draw that baseline at 1900 or 1945) was far lower than America's was at that time, they've done a darn good job of catching up.
Well I hold the diametric opposite position.
" When I was growing up it was a given that every year a family bought a new car and could easily afford a yearly vacation. "
Good gawd. Candide lives.
The British Empire no longer exists because the expense of maintaining it (to the Government, not to the investor class) became too great and because the very foundation of the Empire (economic exploitation) ran counter to the very tenets upon which Western Civilization is founded. IN effect, the Empire fell because it was the direct opposite of what it claimed to be.
How is that fundamentally different from what America has become? Well, superficially, the United tates never had an empire to exploit, for one. But on a more serious note, the majority of American debt is not held by Americans themselves -- it is held by foreigners. Europe, Japan, Canada, the Middle Eastern oil kingdoms, all buy American "debt" (i.e. long-term, guarenteed loans), or physical property (especially real estate) because it is a "safe" investment (i.e. revolutions don't occur here every other week, the transfer of political power is stable, and at last resort, the Congress can always raise taxes without totally destroying the economy in order to pay that debt off, and unless there is a major, world-wide economic downturn, these investments will continue to grow in value), and they have a more-than-reasonable expectation of pay-off when the marker is due, or an asset that is more than attractive to another buyer.
No, it couldn't. One of the sobering realities of the human condition is that the price we are willing to pay for a product or service is far less than what we ourselves insist on charging when we do things ourselves.
That's why a lawyer who charges $300/hour for his time will b!tch and complain about paying an accountant $50/hour to prepare his financial statements and tax returns.
The United States couldn't possibly maintain its current standard of living if everything we consumed was produced here. That's Walter Williams' point, isn't it?
--Well, superficially, the United [S]tates never had an empire to exploit--
That depends on what your meaning of "empire" is.
They've made a good start on it.
Big thing with the Chinese furniture. It's the Wal-martification of everything. You have a town that can support a furniture store barely. But Wal-Mart gets the "value" folks to buy crap there instead. The furniture store in unviable. Now, nobody can buy good furniture in town.
It happened with groceries in the town I just moved from. Wal-mart killed off Win-Dixie, Albertson's, the Supersaver, and the Bi-Lo. Now you have to go 20 miles to get some fresh vegetables because Wal-Mart don't carry them. If you want to get yourself say a double cut pork chop, ummm good luck. You used to be able to do that at the Albertson's but Wal-Mart killed enough of their business off that everybody now suffers.
The crappy meat they sell at Wal-Mart is cheaper though. Free market and stuff.
--The United States couldn't possibly maintain its current standard of living if everything we consumed was produced here. --
But that's precisely what we did 40-50 years ago, and it was "fat city" back then.
Sure -- and in the process of doing so, they've been forced to "outsource" a lot of their jobs, too (for the same reason the U.S. did). So what?
"That depends on what your meaning of "empire" is."
We'll put it down as the classical example of holding vast, foreign territories with the direct intention of economic or political exploitation for the benefit of a select class of landed gentry, or a gvernment made up of same.
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