Should we trade at all

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.

Buying steel, electronics, high tech items from abroad is much different.

If I save $2,000 buying a car made with cheaper steel imported from South Korea vs. more expensive steel made in the US, why is that bad for me? I can now take that $2,000 I saved and invest it in an education IRA so my kids can afford to go to college someday. Do you want the government to force me to pay more for the car so I don't have the money to invest in my kids college fund?

If a family saves $100.00 buying an imported DVD player rather than a more expensive one made domestically and they use that money to buy their kids more clothes or books or a trip to the dentist that wouldn't otherwise happen, why is that bad for them or bad for the country?

If a working class family saves $100 a month buying their food, clothes and other necessities from Wal-Mart and invests that money so they can someday buy a house, how and why is that bad for them or the country?

If the trade deficit is bad maybe you can show us where in our economy it's causing bad things to happen. We've had a trade deficit since 1975 and our economy keeps growing, our employment keeps growing, our incomes keep growing and our household wealth keeps growing. Don't you think it's amazing the rest of the world is jealous of our economy even though we have such a large trade deficit?

Sowell, unlike Williams, probably doesn't see the need to keep repeating the obvious.

"So maybe everything isn't just based on dollars and cents?"

You must be a college student, because you keep missing the point.

If you knew anything about what goes on inside the typical office building (and I'm not talking about the water-cooler gossip or the gaggle of middle-managers who congregate for 11 meetings a day to discuss the same issue repeatedly), you would know this: there has been an entire generation of managers who have been raised on whatI personally call the "MacNamara" principle: that is, that every detail of every activity of every last employye or process can be broken down into some form of "scientific" formula, which is then applied across the board, whether it actually makes any sense to do so or not.

When you begin to be consumed by numbers, you eveentually canot see anything else. And as we know, the most obvious numbers appear on the balance sheet.

Which is a mistake. The balance sheet can tell you an awful lot, but it never tells you everything for the simple fact that some concepts simply do not translate into numbers. It is the fixation of the balance sheet, to the exclusion of all else which drives the majority of what I've been bit*hing about. I have painted with a very broad brush, certainly, but until you've been where I have and seen what I have with your own eyes, you have no idea just what animals human beings can become when it comes to money.

"that those Street guys are the nicest people I can remember ever having done business with."

I'll guarantee they were...until you left the room (/sarc).
I have painted with a rather broad brush, I admit.

Citigroup tried the same "dirty trick" with me, but it was always made clear that the quid came with a pro quo: you will tow the company line. Since the company line was dictated by the aforementioned "slimy bastards" that eventually became too much for me. I freely admit to having been a rah-rah company guy, until I reached a position from where I could actually see what that truly meant. Eventually, the price (self-respect) became too high and no amount of cash was going to buy it back.

I just couldn't go to my hard-working, harried, overworked, underpaid-but-saddled-with-kids-and-a-mortgage-so-I-need-this-job staff and tell them repeatedly that while the company did in fact report record earnings the last 20-odd quarters, you can't get paid what you're really worth because Argentina defaulted on a loan. Or Russia did. Or because the tech bubble burst. Or it was August and 'we all know' sales are notoriously slow this time of year. Or the sky was purple that day.

And yet, my bonus check was never at risk, and my raises were always double-digits. Although I'm pretty positive I never offered to give any of it back. It gets difficult to accept more money when the guy who actually did the bulk of the work, with three kids and bills to pay and all that, has to make due on a 3% raise this year. Just like he did LAST year. And I'll bet he remembers the "good 'ol days" when he might, perchance!, expect 4 or possibly 5% without having to make a novena or sell a kidney.

perhaps that's my blue-collar upbringing speaking, or perhaps conscience.

Your post refers to family household economics so how about this -- You are a bullshitter until you show me that you and your family are deep in debt. I want to know if you have a problem with debt in your own life since you have proclaimed our trade deficits are actually a positive factor because they mean more foreign investments here.

So how deep in debt are you? In debt you plan to never pay back. Unlike a house for example. Just about everyone plans to pay back their mortgage loan

BTW I have no debt. So what's the deal for you?. `

"Absolutely, you're correct, business hires cheap foreign workers for half the money even though they're only 25% as productive, because it's all about dollars and cents."

Nice try.

American business hires foreign workers because, unlike Americans, they don't demand benefits (if they even know what those are. That's 2/3 the cost of an American employee, btw, a huge savings for your company if it does business in a country which has government-supplied health care and pensions, for example), will work like sled dogs for pennies on the dollar (which often represents real wealth in a country with a GDP measured in pebbles, conch shells and non-metallic, shiny objects), don't mind working 80 hour weeks without vacations or sick days because the alternative is begging and slow starvation(usually in a Third-world sh*thole where there's often no one to beg FROM), and where they often don't have any RIGHTS whatsoever, and especially no legal protections for workers, safety regulations, child-labor laws, building codes or enviornmental laws that need to be complied with.

Oh, and their governments are often so friggin' grateful for any investment at all that they can be bribed (i.e. campaign contribution, check to a certain "Charity" or "Foundation" sponsored by the politician)and bought just as easily as any American politician, and often, for far less. Even the bribery is a matter of cash.

And even if they are 75% less productive (meaning you need more of them to do the same job) they're still 75% CHEAPER than an American worker; meaning that particular formula, at least, is a wash. And because you don't need to pay for benefits, pensions, social security taxes, and lost productivity due to sickness, national holidays, vacations, medical or maternity leave, and a whole host of other perqs, it's still an attractive bottom-line option.

Really, you should try to learn something before you continue to post such nonsense. It really is all about cash, Dude.

"If I save $2,000 buying a car made with cheaper steel imported from South Korea vs. more expensive steel made in the US, why is that bad for me?

First of all, the majority of the cost of an automobile is not the materials; it is the labor, marketing, transport, and reseacrh and development costs. Not to mention the taxes and the built-in cost of the warranty you will inevitibly demand, and which GM or Ford is almost-required to provide. The profit margin on an automobile is not as high as you seem to think it is.

Secondly, why is bad for you? Simple: your next-door neighbor, the steel-mill worker, didn't get a piece of the price of your automobile, so he lost his job. Since he can't pay his bills, he has now lost his house. Now thatthe bank has a house that it expected to get a mortgage on for the next 20 years is now not getting it, it now owns a piece of property that it has to pay someone else to sell for it. Of course, the bank alos made an investment someplace basedon the assumption that you would always pay your mortgage, since you no longer can't, the bank has to make fewer investments in order to meet it's daily operating expenses. In order to do that, a teller has to be laid off. Now that the teller is out of work, she can't afford her car payment. SInce GM won't be getting the payment, an automworker now has to be laid off, and so on, and so on.

"I can now take that $2,000 I saved and invest it in an education IRA so my kids can afford to go to college someday. "

Nothing wrong with this at all. It's probably the best investment you can ever make, because education (once it's been received) can never be taken away, taxed or lost and never, ever loses it's intrinsic value. It's a better investment than gold, if you ask me. However, since colleges are saddled with the same sorts of expense that force business to ship jobs overseas, bear in mind that the cost of that education will also continue to spiral upwards. Just today I've read that the City of New York runs an online-tutoring program for students...with the tutors in India. Wanna know what a NYC school teacher make sin tehir first year? $39,000, beofe you add in the cost of benefits (supplied by the tax payers) ad the fact that it's impossible to fire an incompetent teacher. It's easier to split atoms with common, household utensils and baking soda. Perhaps, when your kids are ready for college, their education will be provided by foreigners living on the other side of the planet making less per week than your paperboy.

" If a family saves $100.00 buying an imported DVD player rather than a more expensive one made domestically and they use that money to buy their kids more clothes or books or a trip to the dentist that wouldn't otherwise happen, why is that bad for them or bad for the country?"

Well, it's your choice to buy a DVD player. It is not a necessity. Enjoy it. However, because you didn't buy American (assuming an American DVD player was on the market), they guy who makes American DVD players just lost out on his paycheck (see above).

"If a working class family saves $100 a month buying their food, clothes and other necessities from Wal-Mart and invests that money so they can someday buy a house, how and why is that bad for them or the country?"

Because the money you did spend at Wal-Mart went to purchase goods made in a foreign country, at a fraction of the production and labor cost or a similar product made domestically, and furthermore, went to a country (China) which has nuclear missiles pointed at you, finances it's arms industry with your dollars, frustrates your country politically, diplomatically and economically, disregards just about every treaty related to fair trade as it sees fit, and which will eventually compete with you for jobs, energy and natural resources.

I hope you can parlay $100 a month into a house, but there probably won't be anyplace to build it or anything to build it with, and if there were, the workers who put it up will more than likely speak Spanish, outvote you and live off the sweat of your brow thanks to a vast array of American welfare programs.

"If the trade deficit is bad maybe you can show us where in our economy it's causing bad things to happen. We've had a trade deficit since 1975 and our economy keeps growing, our employment keeps growing, our incomes keep growing and our household wealth keeps growing. Don't you think it's amazing the rest of the world is jealous of our economy even though we have such a large trade deficit?"

As of this moment, approximately 80% if US debt is held by about 15 or so nations. Amongst these are Saudi Arabia, China, and the various states of the European Union. These are the future economic rivals of the United States with the potential to bury us (except the Saudis, who merely hold us by the pubic arch becaue they control the energy our economy runs on). When that debt comes due, we must pay up. Failure ot do so undermines faith in the American dollar and American economic system, a loss of faith that will destroy wealth like logic destroys a democrat.

Currently, these countries are more than happy to continue to finance this debt because it makes them money. In the future, should their attitudes change, it is a noose around our necks (as Lenin once said, "The Capitalists will sell us the rope we will hang them with"); they stop buying debt, we have to start paying it off ourselves, taking money OUT of the economy. We are, since 1975, playing with house money. Someday, that marker is going to come due and with 50% of your tax money going to finance social security and the rest is funding Viagra for the 60's set, "Hunchback Latina Dwarfs in American Literature" museums, or bridges to nowhere, you have to wonder just from what source that potential shortfall is going to be made up.

When those bills come due, I wouldn't expect to retire at all, if I were you.

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