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.

[scarface367]

Years ago, we had mostly a trade deficit, but occassionally a trade surplus. With the trade we are doing today there is no way we will ever see a trade surplus. A trade surplus is what is good for us, not a trade deficit.

Is our standard of living and national wealth higher or lower than it was in years past? Use facts to back up your answer.

[scarface367]

Great plan if you like inflation many times greater than this country has ever experienced.

Printing money does not equate to earning money.

But if the money that leaves this nation never comes back, as you seem to think, then wouldn't be simply be giving other countries worthless pieces of paper while they give us goods? If that were indeed how the economy worked why would that be bad?

[mjaneangels@aolcom]

“That’s why you grow your own food, make your own clothing and build your own electronics? Because spending money to buy these goods from more efficient producers would lower your standard of living?”

I have been known to do similar things. When I did them, I did them because I could do it cheaper. Yes I did them to increase my standard of living.

[William Terrell]

We're not talking about beer. We're talking about the importation of foreign made products of all kinds that are sold at a price that crowds out similar American made products.

The domestic production of which,

• Keeps American industries healthy
• Keeps people in this country employed
• Keeps the wealth of our labor in this country, instead of a great potion going out of it.
• Keeps the product, especially essentials, unthreatened by the caprice of setups alien to ours

What happens when products manufactured in an entirely different economy,

• One that is driven by an organizational principle of subservient labor,where little of the national wealth goes not to the people laboring, but to the ruling and decision making bodies, directly and indirectly

Hits the market of an economy created by free laborers, men who, in a free country, are

• Able to keep themselves and their families at a high standard of living

• By that expectation of higher standards of living, and liking it, are motivated to continue it.

• Produce children raised with that ideal and the motivation to continue it,

The free nation slowly looses industries to that foreign economy because people will inevitably buy products at a lower price. And they don't realize they are binding themselves to the fate of a foreign entity. An entity where the ruler-ship thereof is unaffected by the will of the American people, a people who have lost the infrastructure of that particular industry and are now dependent on the product produced by the foreign entity.

What products that the American people need (not just like) can't be produced by this cheap labor setup? And shipped here by container ship?

The sewing industry had virtually disappeared in this country. The people that can fix sewing machines are are dying of old age and none is replacing them.

The fabric suppliers are going to foreign produced materials by an economy like the one above.

What happens when our fabric mills go out of business and the industrial knowhow seeps away?

Do you realize the extend that fabric and sewn products are essential to our lives?

The loss of that industry, alone, can cripple our way of life if we piss off the foreign source of its products, which source is in possession of the machines, trained people, manufacturing and distribution infrastructure, industry knowhow and experience, and a bloody whip.

Others are threatened and succumbing to this same condition.

Doom and gloom? More like the cynicism essential to the survival as a nation of people.

[scarface367]

A trade surplus is what is good for us, not a trade deficit.

If that were the case, then would you say a situation where we exported many things and imported nothing be a good situation? As that would give us the highest trade surplus. Why or why not.

[1rudeboy]

If you want to know what a trade deficit is, try spending more every month (spending, not investing) than what you bring in.

[1rudeboy shakes his head in astonishment]

[mjaneangels@aolcom]

“Of course you do. Every major corporation is a pyramid organization. The work force at the bottom, management in the middle, ownership at the top. If it is a publicly held stock company the Bd of Dir’s is at the top. Same with government, bureaucracy is classic pyramid organization with elected officials functioning as bothersome gnats.”

I was referring to the illegal fraud schemes, not simply an organizational chart structure.

So you think we should pay those that risk more less money and those that risk less more money?

[Toddsterpatriot]

“We can print billions of dollars very cheaply, exchange them for cars, TVs, oil etc and the silly foreigners never return them to buy our stuff.”

Great plan if you like inflation many times greater than this country has ever experienced.

Do you know what inflation is? Did you ever hear the phrase, "Too much money chasing too few goods"?

If the silly foreigners never spend their money back here in America, how will we experience inflation?

[1rudeboy]

I'm glad you brought up textiles, because it is an industry that is heavily dependent on exports. It is also an industry that is capital-intensive. Meaning that, a modern textile mill can produce an immensely greater amount of product with a fraction of the employees it once needed.

That's why it's no coincidence that people desperate to demagogue the issue point to the job losses. Well, those jobs aren't coming back, and there's nothing the government can do about it (unless it prohibits the use of machinery).

And you are dangerously close to confusing the textile and apparel industries. Please don't.

[1rudeboy]

Say, can you link me to that export page that you find so easily? I’m looking for textile/yarn/fabric exports.

[Toddsterpatriot]

“There are 2 sides to trade, the dollars you spend and the goods you receive. LOL!”

That is one.

No, that is two sides. Wealth is not just the dollars you spend but also the luxury car you get for those dollars. Not just the mortgage you pay, but also the house you get for it.

What is the other? Do you know? I do.

Great, explain it to me. I could use a laugh.

[Toddsterpatriot]

U.S. Exports to World (Total)

[1rudeboy]

Thanks. For some reason, I always end up at USITC, and always forget about Census.

[Toddsterpatriot]

“That’s why you grow your own food, make your own clothing and build your own electronics? Because spending money to buy these goods from more efficient producers would lower your standard of living?”

I have been known to do similar things. When I did them, I did them because I could do it cheaper.

Excellent! So, you decided that your free time was worth (let's say) $10 an hour but you could make something that would cost you $20 cash in that hour. That's great!

Now, if the product you could make in that hour could be bought at the store for $5, you might be more likely to enjoy your free time, or work another hour at your job to earn an additional $20. What if you could grow all your own food, or work at your job and earn enough money to buy all that food and save $20,000 to buy other goods?

Economically, growing that food, instead of buying it with your earnings, doesn't make sense.

Yes I did them to increase my standard of living.

Great, if you're more efficient than available producers. Personally, I'd prefer not to work 60 hours a week growing the food that I could purchase with 6 hours worth of income. That's how I increase my standard of living.

[mjaneangels@aolcom]

“Learn the difference between a budget deficit and a trade deficit.”

The rules that apply are the same.

[mjaneangels@aolcom]

“But if the money that leaves this nation never comes back, as you seem to think,”

I have argued the exact opposite. The money does not come back because there is not exports to bring it back.

[mjaneangels@aolcom]

“If that were the case, then would you say a situation where we exported many things and imported nothing be a good situation? As that would give us the highest trade surplus. Why or why not.”

That is what every country on the face of the earth wants. The only problem in this country is that too many people think there is something good about spending more than they are earning.

[William Terrell]

"Conservative" Marxist position, maybe.

Do you have any idea what "conservative" is? It is the preserving of ways that have worked consistently over the decades and centuries. The dependency of a nation on the wellbeing of another is not it, never has been it.

There is a tension between labor and capital. What planet are you living on? The tension is historically kept loose in this nation by a high standard of living for both, with plenty of demand, plenty of industry. and plenty of wealth to pay labor so they can live that standard.

Higher prices? Hell yeah. But the same level of pay to labor, too, so it's a wash. With that wash comes self sufficiency and with self sufficiency comes a position of strength with which to bargain for our way of life in the world.

That was our solution, and it worked, and it produced a world power. Now you want to turn the whole shebang over to the caprice and greed of unelected powers with resources to deeply influence those who make our law and policy.

Well, this has been going one for years, even decades now, and I see a waning world power, one which is beginning to have to bargain humbly where it used to bargain with self confidence and strength, demanding gain for its people, and not "gain" to buy $350 laptops.

The gain is safety and security for the way of the American people and their HIGH way of life as opposed to a THIRD WORLD way of life.

[Toddsterpatriot]

The money does not come back because there is not exports to bring it back.

Balance of Payments. Learn it, Live it, Love it.

[1rudeboy]

Now you want to turn the whole shebang over to the caprice and greed of unelected powers with resources to deeply influence those who make our law and policy.

In that case, the only difference between my position and your position is that "unelected and elected" should be added to yours. And no, that is not a "conservative" position, just as your Bolshevik rhetoric about rich industrialists and human cattle (or whatever) is not, either.