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]

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

Okay. I'll concede, trade is managed...and I am not in favor of that. But, the agreements seek to make trade more free and less managed. And they do that! 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'

I could care less whether or not other countries' governments practice mercantalism. If they want to export to us their low priced quality goods while importing nothing, the I am in favor of unilaterally accepting that deal. And you'll only seek to anger me if you try to prevent me from trading lawful goods through the use of government prohibitions. Individuals/businesses do business with one another in this country, not governments. If these individuals and businesses like the terms of the deals they get, who are you to tell them that they are wrong?

[LowCountryJoe]

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.

Yeah, okay! The writer is a Professor of Economics. But if you did your homework before knee-jerking your way to that reply, you would have known that the author would be far more likely teaching at the local community college...if he wasn't already teaching at a university.

[LowCountryJoe]

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:

Duncan Hunter is a protectionist and pandering politician who has very little support in the presidential GOP candidacy and a shameful record on voting for anti-pork/anti-earmark legislation and amendments.

Next!

[LowCountryJoe]

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

Elaborate on that one because for me because his analogy make sense to me and your refutation of it does not.

[LowCountryJoe]

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

I rest my case.

And what case would that be, my fellow Teufel Hunden? How many non-manufacturing jobs were created during the same time span. Were the people's jobs replaced by machines? Were the new jobs created higher paying? Is unemployment low? Is median incomes plus total compensation on the rise? Is net real wealth per capita greater? is our standard of living better than at any other time in history?

Where's your case now?

[LowCountryJoe]

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

Pretty big maybe, doncha think? You see evidence of this thirty-four cents an hour? Me neither...so put that crap and your hyperbole back in your pie-hole and write something with less emotion and scaremongering but with more substance and reality.

[LowCountryJoe]

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

Ask him. But in the mean time, can you stay on script and deal with the issue at hand?

[mysterio]

Pretty big maybe, doncha think?

You're right, some of them only get paid 26 cents. I suppose I was being too optimistic.

[LowCountryJoe]

Your post was the first sensible reply to me that I’ve seen on this thread. At least you have the common sense [I think, until you possible prove otherwise] to not ask for the government for to fix a problem that you, as an individual, have to solve yourself.

[LowCountryJoe]

My bad, I meant to say y25/day wages. What was I thinking?

I don't know. But it appears like you're never thinking all that hard. All you're spouting is stuff collectivist democrats do when they cannot rub two nickles together.

[fortheDeclaration]

Okay. I'll concede, trade is managed...and I am not in favor of that. But, the agreements seek to make trade more free and less managed. And they do that!

No, they give the appearance of doing that, but they trade U.S. sovereignty for a 'mess of pottage'.

U.S. companies now have to compete with foreign companies that are not subject to the same government regulations regarding environment and worker protection that they are.

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' I could care less whether or not other countries' governments practice mercantalism. If they want to export to us their low priced quality goods while importing nothing, the I am in favor of unilaterally accepting that deal. And you'll only seek to anger me if you try to prevent me from trading lawful goods through the use of government prohibitions. Individuals/businesses do business with one another in this country, not governments. If these individuals and businesses like the terms of the deals they get, who are you to tell them that they are wrong?

Well, that is the problem, it isn't individuals trading it is Governments that are still pulling the strings and calling the shots.

So, U.S. business is under a handicap of competing with nations that do not have the same restrictions we do.

Moreover, these trade agreements have organizations which punish nations with trade sanctions if they do not comply with their rules, violating that nations sovereignty.

Free trade is simple, remove all international hindrances for individual to do business, including the import-export bank.

NAFTA and GATT are nothing but mercantalism being sold as free trade.

[scarface367]

So, U.S. business is under a handicap of competing with nations that do not have the same restrictions we do.

Then why not lobby to get government out of the marketplace by reducing taxes and regulations on businesses instead of trying to have the government step into the economy to restrict trade?

NAFTA and GATT are nothing but mercantalism being sold as free trade.

You'll have to explain that one.

[1rudeboy]

And, in other news:

Trade tariffs end, marking a NAFTA milestone.

[Sender]

You have your (ahem) opinions; I have mine. Your side will probably win out, given the lack of understanding. Pity.

[fortheDeclaration]

As this perverse hope underscores, there’s an unbridgeable gap between authentic free trade and the global superstate of the socialist pipe dream. But the dissembling of government officials, Keynesian economists, and phony free traders has done much to blur the lines. The job of honest free traders, then, is to clarify the terms of debate, and resist every trade treaty and trade interference, no matter how it is advertised.

As Mises said, free trade means nothing more than laissez-faire economics applied across borders. The role of government is entirely negative: do not stop goods from coming across borders; do not prevent them from leaving. Neither regionalism nor multilateralism is consistent with this ideal. Only a “passive unilateralism,” meaning active free enterprise, avoids the twin dangers of compromising sovereignty and illicitly projecting power on the rest of the world.

http://www.mises.org/freemarket_detail.aspx?control=163

[fortheDeclaration]

[So, U.S. business is under a handicap of competing with nations that do not have the same restrictions we do.]

Then why not lobby to get government out of the marketplace by reducing taxes and regulations on businesses instead of trying to have the government step into the economy to restrict trade?

That should happen as well, but these are not 'free trade' agreements since they come with strings attached that undermine U.S. sovereiginity.

[ NAFTA and GATT are nothing but mercantalism being sold as free trade. ]

You'll have to explain that one.

The treaty was as much about protection as trade. In the imaginations of Nafta's Washington theorists, this would give "us" (the U.S., Canada, and Mexico) a boost of market power over "them" (Asia and Europe), which would allow "us" to compete and win in the global competition for resources and markets. The point of Nafta was to allow "us" (which really means the government and its most closely connected banks and corporations) to throw "our" weight around the rest of the world.

The Clinton administration and its Republican allies adopted this rhetoric in the closing days of the debate. Even while denouncing protectionists, they made an openly protectionist appeal that presented the international trading arena as a battlefield, not a setting for mutual economic advantage.

Indeed, the spirit and the letter of Nafta represented an egregious violation of free trade. In real free trade, the government does not establish "regional content" rules or browbeat foreign governments into deals with approved U.S. corporations, for example. The government's only role is to allow business and consumers to trade with whom they choose.

The treaty imposed a restrictive legal superstructure on top of already increasing trade flows between the three countries. It was made worse by its overt attempt to "plan" the economies of Mexico and Canada, determining continent-wide environmental and labor laws, funneling foreign aid to Mexico, and implicitly guaranteeing to prop up the peso through monetary manipulation.

http://www.mises.org/freemarket_detail.aspx?control=163

[Mase]

NAFTA and GATT are nothing but mercantalism being sold as free trade.

So, U.S. business is under a handicap of competing with nations that do not have the same restrictions we do.

I suppose you'd have to condemn CAFTA too.

The U.S. trade balance in manufactured goods with the CAFTA members is showing a $2 billion trade surplus. This is a sharp reversal from the pre-CAFTA situation, where in the years before the passage of the CAFTA agreement we averaged an annual manufactured goods trade deficit of about -$1.5 billion.

Is this a good thing for American businesses or bad? Do you think this fact has created jobs here or lost them?

[fortheDeclaration]

The fact that you would use the term 'trade surplus' shows the mercantile nature of your question.

We have true free trade within the 50 states, do you have any idea which states have a 'trade surplus' with the other states and which states are running a 'trade deficit'?

People trade with people and there is no such thing as trade surpluses or deficits as such,since no trade would have happened if each person did not think they were gaining from the transaction.

[fortheDeclaration]

[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']

Not a true statement.

Yes, it is, these agreements are not true free trade, they are managed trade pretending to be free trade.

[jiggyboy]

Elaborate on that one because for me because his analogy make sense to me and your refutation of it does not.

If you walk into your job on Monday and they tell you you're sacked, most of the time you have immediately lost 100% of your income. Maybe you get some severance pay, maybe some Unemployment benefits, maybe some vacation pay, but maybe you don't. I know plenty of times I never did. And you don't just walk into another job the next day. In the good old days you could expect to be out of work for a month or two.

But if you decide not to buy shampoo from the guy down the street, ok maybe that's five bucks a month of revenue he doesn't get. But he still has plenty of customers buying plenty of other things plenty of other times. He doesn't shuffle home to his wife in shock and tell her, "honey, it's gonna be a little rough for a while, it's the first of the month and that guy didn't buy shampoo."