What to Expect When You’re Free Trading

New York Times ^ | January 16, 2008 | STEVEN E. LANDSBURG

[LowCountryJoe]

Rochester

IN the days before Tuesday’s Republican presidential primary in Michigan, Mitt Romney and John McCain battled over what the government owes to workers who lose their jobs because of the foreign competition unleashed by free trade. Their rhetoric differed — Mr. Romney said he would “fight for every single job,” while Mr. McCain said some jobs “are not coming back” — but their proposed policies were remarkably similar: educate and retrain the workers for new jobs.

All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices. In other words, the winners can more than afford to compensate the losers. Does that mean they ought to? Does it create a moral mandate for the taxpayer-subsidized retraining programs proposed by Mr. McCain and Mr. Romney?

Um, no. Even if you’ve just lost your job, there’s something fundamentally churlish about blaming the very phenomenon that’s elevated you above the subsistence level since the day you were born. If the world owes you compensation for enduring the downside of trade, what do you owe the world for enjoying the upside?

[Snip]

One way to think about that is to ask what your moral instincts tell you in analogous situations. Suppose, after years of buying shampoo at your local pharmacy, you discover you can order the same shampoo for less money on the Web. Do you have an obligation to compensate your pharmacist? If you move to a cheaper apartment, should you compensate your landlord? When you eat at McDonald’s, should you compensate the owners of the diner next door? Public policy should not be designed to advance moral instincts that we all reject every day of our lives.

[LowCountryJoe]

ping

[fortheDeclaration]

The question is, is the trade really free or is it managed?

Americans can compete with anyone, but they are being betrayed by these international trade agreements that are nothing but mercantalism under the guise of 'free trade'

[Bushwacker777]

“All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices.”

Bet this guy would have a different tone if the major newspapers started outsourcing their writer’s jobs to India. Wish they would; highly educated Indians are just as good with English as these snobbish journalism school grads are and with the avalability of computers we could send this guy to the local community college to be trained as a greeter in a yuppie resteraunt.

[raybbr]

“All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices.”

So, Americans can stay stagnant? Isn't "free trade" great?

Where have those lower prices been lately re: Food and energy. Economists must think humans can live off of big screen tv's and computers.

[ALPAPilot]

All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices

He is exactly correct. Ever wonder why productivity, wages and standards of living keep increasing? Those jobs that we export are less efficient and pay less than those that are subsequently created. Even a superficial look at the economic data bears this out.

[Man50D]

Duncan Hunter is the only GOP candidate who understands and is willing to address the dangers of the so called "free trade". To quote from his website:

“American workers are the most productive and innovative labor force in the world. Unfortunately, they are asked to compete in an unfair environment against other workers who make only a fraction of a living wage and are employed by companies that face few, if any, responsibilities to the environment or the long-term prospects of their employees. Our domestic manufacturers are forced to compete against foreign companies that benefit from their country’s currency and regulatory regimes. Ominously, China is cheating on trade and using billions of American trade dollars to build ships, planes and missiles at an alarming rate while, at the same time, taking millions of American jobs. I will reverse this “one-way street” with a new policy of fair trade for the American worker.

Further, America’s one-way-street trade relationship with China and other nations has reduced manufacturing jobs severely in the U.S. I would change the one-way-street into a two-way-street by putting the same charges on foreign goods that they put on ours.

[hellbender]

Yup, and what happens when all our newspaper writers, or people of real value, like machinists, get replaced? All their skills are gone, the shops they worked in are torn down, etc. Then war or other events cuts off the supply of imports. The free trade zealots never seem to think of that. None of them have ever lived through war or other crisis. They think our present prosperity is all inevitably and magically created by trade.

[Louis Foxwell]

mercantalism under the guise of ‘free trade’

************************
A distinction without a difference. Merchantilism always pressures for free trade as its most efficacious environment.
Freeburg raises an important standard for moral discernment. His analysis holds fast. If the worker demands protection from WalMart he should not buy there.

[tdscpa]

You want savings? Just outsource congress to India.

[jiggyboy]

Just as a matter of logic, his shampoo analogy doesn’t hold up. You’d have to be the pharmacist’s only customer.

[Louis Foxwell]

Economists must think humans can live off of big screen tv’s and computers.
*****************
What about $15 toasters and $40 vacuums? The real cost of nearly everything has dropped by more than half in the last 10 years. Where’s the beef?
To be consistent the anti-free trade crowd should be demanding and paying double and triple for their goods and services. They are willing to reap the benefit but not suffer the dislocation of crossing the street to learn to work smarter.
Clearly we need to insure a level playing field with trading partners. Bargaining has always been a vital part of any good trade relationship. Our government has unquestionably failed to stand up for trade that is fair and balanced.
The cry for protectionism, however, is nothing more than dumbing down the electorate by the political class in order to hand out Christmas goodies. Poor babies.

[Louis Foxwell]

Just as a matter of logic, his shampoo analogy doesn’t hold up. You’d have to be the pharmacist’s only customer.
*************
Wrong. Merchants depend upon a customer base. When this is threatened by better, cheaper and more convenient goods and services from a competitor the losing merchant must either change or go out of business.
We need to stand on our feet in this economy. We are the largest and most powerful economy in the world by a factor of at least 10. Deriding other nations for growing out of their poverty is sick.

[fortheDeclaration]

A distinction without a difference. Merchantilism always pressures for free trade as its most efficacious environment. Freeburg raises an important standard for moral discernment. His analysis holds fast. If the worker demands protection from WalMart he should not buy there.

Mercantalism and free trade are antithetical.(Adam Smith, Bastiat)

Mercantalism is based on the false view that exports are good and imports are bad (balance of trade).

It sees trade as a type of warfare between nations.

Free trade sees international trade as being no different then trade within nations, between individuals.

Thus, imports are not 'bad' and exports 'good' they balance each other out.

Recent trade agreements have not been free trade agreements, they are managed trade, controlled by government agencies.

[Halgr]

According to Department of Labor Stats here

http://www.bls.gov/webapps/legacy/cesbtab1.htm

Over 2 million manufacturing jobs have been lost in America since 2000.

I rest my case.

[mysterio]

What we lose through lower wages is more than offset by what we gain through lower prices.

Cool. Maybe by the time we get paid 34 cents an hour like the Chinese, everything will be free!

[Surtur]

Wonder what the good professor would think if his university decided to do away with the tenure system.

[Sender]

All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices.

Good morning, I'm too sleepy to be responding to globalization yet but I'll bite.

If you're speaking strictly as to what is the bottom line in an individual's wallet, the above may be true. When we buy something for $1.00 from China that used to cost $5.00 when it was American-made, assuming that we have found another job to buy things with (I haven't yet), our net expenditure is less. If we assume the quality of the item is the same (not to mention pride of ownership, etc), then we "win".

There are less-tangible aspects though. This great country used to be proud of its strengths in manufacturing, productivity and quality. We used to be relatively secure in our jobs. Does it benefit me individually if I can buy that item from China for $1.00, yet my job is gone, and whole towns are turning into for sale signs? No, it doesn't. Does it benefit me personally when I buy that $1.00 item from China and I have no pride of ownership of it? No pleasure in using it or showing it to others? No feeling that I have purchased a great piece of my history? No, even though these are intangible "feelings", I don't benefit at all.

Now to be fair, America hasn't gone to hell in a handbasket just yet. But when I hear statements such as "ALL economists know that when American jobs are outsourced, Americans as a group are net winners", I have to believe that we are seeing the roadsigns to hell.

[raybbr]

Over 2 million manufacturing jobs have been lost in America since 2000.

Don't forget:

But making things was the "old economy." The "new economy" provides services. Last year, 1,428,000 private sector service jobs were created.

Are the "free trade" propagandists correct that these service jobs, which are our future, are high-end jobs in research and development, innovation, venture capitalism, information technology, high finance, and science and engineering, where the U.S. allegedly has such a shortage of scientists and engineers that it must import them from abroad on work visas?

Not according to the official job statistics.

What occupations provided the 1.4 million service jobs in 2007?

Waitresses and bartenders accounted for 304,200, or 21 percent of the new service jobs last year and 29 percent of the net new jobs.

Health care and social assistance accounted for 478,400, or 33 percent of the new service jobs and 45 percent of the net new jobs. Ambulatory health care and hospitals accounted for the lion's share of these jobs.

Professional and business services accounted for 314,000, or 22 percent of the new service jobs and 30 percent of the net new jobs. Are these professional and business service jobs the high-end jobs of which "free traders" speak? Decide for yourself. Services to buildings and dwellings account for 53,600 of the jobs. Accounting and bookkeeping services account for 60,500 of the jobs. Architectural and engineering services account for 54,700 of the jobs. Computer systems design and related services account for 70,400 of the jobs. Management consultants account for 88,400 of the jobs. From here.

Bartenders and waitresses came in a close third in the new jobs created in 2007. The benefactors of these agreements need more places to buy booze and get fat.

[Halgr]

A hat tip to you FRiend

An excellent Post

;-)