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.

[William Terrell]

Human beings need certain things to survive and prosper in a body on the Earth. To survive and prosper comfortably, human beings need a certain range of choices available in each category of those needs.

In America, we can provide not only each category of need, but a proper range of choices to fit the individual wants in each category of need by making the items here with American workers and trading amongst ourselves. We became a world power doing that very thing; we've become a debtor nation by abandoning that very thing.

What is the sense of becoming dependent on other countries that bear us no love, couldn't care less about us beyond our wealth and would destroy us at the first opportunity? Why, by the living God, deliberately develop those nations so they can defeat us?

It is madness, but it is globalism, and engineered, not for the good of our people, but by those who desire the extreme power dependence bestows on the granter.

From my view point, anyone who argues for this idiocy, works toward it and throws their hearts and minds behind it is, at best, stupid, and, at worse, a traitor to our nation and its people.

[scarface367]

From my view point, anyone who argues for this idiocy, works toward it and throws their hearts and minds behind it is, at best, stupid, and, at worse, a traitor to our nation and its people.

Or how about actually we understand economics and don't buy into the protectionist psychobabble of people that think that everything would be great if we made everything in the United States or imported very little.

[fortheDeclaration]

The Merchantile class is sales based, not manufactiuring based. It relies on low duty importation of desirable goods for resale to its clientele. Similarly it relies on exportation of locally produced goods in trade for foreign goods. N’est-ce pas?

I think you are confusing Mercantilism vs Free Trade, with the type of goods being traded.

Mercantilism is an economic theory that holds the prosperity of a nation depends upon its supply of capital, and that the global volume of trade is "unchangeable." Economic assets, or capital, are represented by bullion (gold, silver, and trade value) held by the state, which is best increased through a positive balance of trade with other nations (exports minus imports). Mercantilism suggests that the ruling government should advance these goals by playing a protectionist role in the economy, by encouraging exports and discouraging imports, especially through the use of tariffs. The economic policy based upon these ideas is often called the mercantile system. http://en.wikipedia.org/wiki/Mercantilism

[nicmarlo]

Economic Policy Institute
http://www.epi.org

_____________________________

Snapshot for June 27, 2007.
Wal-Mart’s reliance on Chinese imports costs U.S. jobs
http://www.epi.org/content.cfm?id=2749
_____________________________

October 9, 2007 (revised) (originally released May 2, 2007) EPI Briefing Paper #188

Costly Trade With China
Millions of U.S. jobs displaced with net job loss in every state
http://www.epi.org/content.cfm?id=2674
_____________________________

No Cheers For CAFTA
THIS PIECE WAS ORIGINALLY PUBLISHED BY TOMPAINE.COM ON OCTOBER 19, 2007

by Ottón Solís
October 19, 2007

The Wall Street Journal may say “Bravo, Costa Rica” on its Opinion page October 9, but almost half of the people who voted in the Central American Free Trade Agreement referendum October 7 are not celebrating.

We are proud that our health and environmental policies are, by far, the best in the region, that our democracy is founded on an extensive system of family farming, that our telecommunications services are lower priced and more efficient than those of our neighbors, that we abolished all military forces 60 years ago, and that our laws forbid the trade and production of weapons and their parts. All these sources of national pride are threatened by CAFTA. That is why we tried to stop it through a popular referendum.

http://www.epi.org/content.cfm?id=2813

[Vigilanteman]

I'm a trained economist also with a master's degree.

This guy makes a very eloquent argument on the surface, but that's all the deeper he goes.

He fails to address the costs of Kool-Aid Drinking Free Trade as opposed to economic free trade such as:

1. Societal costs of treating diseases such as TB which were once eradicated in this country by open borders, which is part of the Kool-Aid Drinking Free Trade mantra.

2. Costs of dealing with losses caused by dangerous products, such as the poison toothpastes from China, because the costs can be spread out over a much larger portion of society just like medical care for illegal aliens per the previous example.

3. Increased costs in national defense to counter Kool-Aid Drinking Free Trader sales of high tech equipment to countries hostile to the United States. Remember China, which couldn't launch a military satellite of its own until Loral was allowed to sell their technology to the ChiComs thanks to a large donation to the Clintons?

4. Remember the e-coli deaths traced to ka-ka in the spinach because Mexico refuses to enforce and migrant workers refused to abide by similar food safety standards which we require of American farmers?

The list could go on, but I think you get the idea. Until we figure out a way to fully internalize the costs of Kool-Aid Drinking Free Trade on its advocates, I suggest we promote Free Trade between countries with comparable standards of safety, sanitation and respect for human rights instead-- with a little bit of slack cut for third world countries which are aspiring and actively working toward meeting those standards such as Turkey or India.

Kool-Aid Drinking Free Traders are really no different than the industrial revolution era sweat-shop owners who polluted the air and rivers at will and argued it was an entitlement they were owed by society in return for all the jobs they created.

[ex-snook]

"All economists know that when American jobs are outsourced, Americans job exporters as a group are net winners."

Fixed it.

[scarface367]

I find it interesting that you post information from a liberal think tank to back up your assertions.

[pierrem15]

Yeah, what we get is a "servant" economy, not a "service economy".

What the author calls "free trade" is really a race to the bottom where American companies lay-off or reduce pay and benefits for their employees, hoping some other company is still paying enough to its workers to sell its goods or services to. Any manufacturer that hasn't moved offshore is being played for a chump by those who have or by the middlemen importing cheap goods.

When this game of musical chairs is over, what you get is a trans-national rich elite that doesn't give a rat's ass for the USA and has nothing but contempt for the values of the lumpenproletariat they created, all the while decrying the "shrinking middle class" and pushing more taxes and regulation to "help the poor" and screw the middle class taxpayer or small business owner even more.

[nicmarlo]

Oh, I've posted from both CONSERVATIVE and LIBERAL sources to back up my assertions, you mean.

[scarface367]

Your post there was from the EPI, a liberal think tank.

[nicmarlo]

And post yonder was from a CONSERVATIVE site.

And your problem with my posting from both CONSERVATIVE and LIBERALS sites to back up my claims is............?????

[Halgr]

You can stick YOUR “case” Toddster....I don’t give a damn about anything here but jobs....dollars, tons, number of widgets are meaningless to me....and to other Americans who give a damn.

Hey, and don’t provide graphs and charts without a LINK.

I still think you work for the darkside Todd....the REAL DARKSIDE

[scarface367]

I was referring simply to your using EPI. Though I would hardly consider the Eagle Forum to be credible on economics based on the examples you posted as they buy into the whole “economic globalism is evil” and “exports good, imports bad” nonsense.

[nicmarlo]

I've posted information from Eagle Forum, because I respect Schlafly's ability to obtain and understand documents of various kinds. Contrary to your statements, Schlafly doesn't think trade is evil. She does think, as most sensible people do, however, that trade that gives advantages to foreign countries, can hardly be called "free" trade. It is managed trade. American companies cannot FREELY or FAIRLY compete against companies which are allowed to: pay ~.30 cents per hour wages, not adhere to US patent laws, not provide insurance to employees, pay similar taxation on profits, and a host of other things. Those things make "competition" inherently unFAIR and anything but "free trade."

I also quoted from Lou Dobbs, who has been a champion on showing just how badly the insourcing of illegals has lowered/suppressed American wages.

I’ve posted from a liberal think tank to back up my claims that globalism and outsourcing costs American jobs, as Schlafly has also said. I see absolutely no problem that I’m posting links to both conservative (Eagle Forum/Lou Dobbs) and liberal sites to back up my claims. I guess it just makes conservative claims look more legitimate than globalist free traders.

[petercooper]

right click, properties....

http://www.economagic.com/chartg/cenm3/amtmvs.gif

and ever hear of the concept of “productivity”?

[William Terrell]

How about we ignore intricate and self contradicting tangles of economic justification, which eventually works out to a divide by zero, and simply look at the observable results.

When we made what we needed and traded with ourselves, we became a world power. As we are abandoning that we are becoming a world debtor, and dependent on those that wish us ill. It's not complicated.

When mud forms around your feet and your clothes are getting wet, it is raining. You can say you're just sweating, or water is rising from an underground stream, but all you have to do is look up.

Cheap blue jeans and sneakers are not worth having your potential enemy manufacture critical units for your war machines.

Capiche?

[scarface367]

American companies cannot FREELY or FAIRLY compete against companies which are allowed to: pay ~.30 cents per hour wages, not adhere to US patent laws, not provide insurance to employees, pay similar taxation on profits, and a host of other things. Those things make "competition" inherently unFAIR and anything but "free trade."

So as a result you want the government to intervene in the economy, forcing me and all other Americans to have to pay higher prices in order to protect a smaller number of jobs? Sorry, if I don't buy into that.

[calcowgirl]

When China, for example, has to pay benefits for all their workers and match their 501K withholdings, and strict pollution controls hobble their factories, and GOSHA dictates that all workers must have expensive safety equipment and can only work an 8-hour shift, and all those workers can no longer ...

Could ya add some more things to that list? What about them paying for the required upgrades to the ports to accommodate the imports instead of State and local government using our tax dollars (or borrowing into oblivion) to pay for it. And how about the same for upgrading the highways to accommodate the surge in traffic that have made the transportation corridors a living nightmare. And the increased cost to government agencies to enforce safety (FDA, customs, etc). And what is the cost to national security of allowing our borders to be open to terrorists and criminals, all in the name of "trade"? (the list goes on...) All of these "cheap" products appear much less desireable when the total cost is considered.

[calcowgirl]

Designed on the German system, it is a plan to train children in specific jobs to serve the workforce and the global economy instead of educate them so they can make their own life choices.

Didn't you get the memo? The Germans know best. /s

[nicmarlo]

lol

I would like the government, and the free traders, to at the very least stop calling it FREE TRADE....call it what it is: MANAGED trade which benefits foreign companies and countries, but not America or Americans.

That would be the first step in the right direction.

Tell the truth.