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To: Pining_4_TX
The problem is a lot of people confuse the basic argument for trade (comparative advantage) with free trade between nations.

Total wealth usually goes up when you trade due to comparative advantange, but there is no guarantee that both nations benefit from the trade. That's especially true when one nation is a high wage nation and another is a low wage nation.

It's doubly true, when you have a nation like Communist China. China doesn't allow the dollars to come back to purchase trade goods from the U.S., so that shoots the comparative advantage model out the window.

China raises taxes equal to 90% of it's GNP. Basically the Communist government soaks up most of the profits from Chinese firms and then directs those funds not to the purchase of U.S. goods but to the purchase of either U.S. debt or worse the purchase of manufacturing ability and know how, so they they can further compete against us.

We should immediately do the following:


44 posted on 07/12/2013 6:07:55 AM PDT by DannyTN (h)
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To: DannyTN

I disagree. The laws of economics are like the laws of gravity - the longer you ignore them, the harder the landing will be at the end.

Holding back foreign goods only works for so long, and then the distortions in the market that creates overwhelms the attempted protectionism.

Unions in the US did everything they could to keep Americans from buying foreign cars, particularly Japanese made cars. The result was that unions got fat and happy, and the lack of competition led to a more expensive but increasingly inferior product. Why should Americans be forced to pay more for less to protect the jobs of people who are overpaid compared to the actual value and difficulty of their jobs?

In the long run, these attempts to prohibit competition hurt the workers and companies they were intended to help.

Subsidies Hurt Recipients, Too
http://www.fee.org/files/docLib/1007Folsom.pdf

What we are seeing an interesting uprising of workers and ordinary citizens in China demanding better pay and working conditions and better living conditions. At some point, the world economy will eventually level the playing field. If it weren’t for government interference in markets, this would have happened gradually and without such a shock to American workers who had gotten used to the status quo. Changes are almost always painful, but they lead to better conditions for everyone in the end.

We will disagree, I’m sure, but I still think free trade is the only thing that creates wealth and progress for everyone.


46 posted on 07/12/2013 9:51:42 AM PDT by Pining_4_TX (All those who were appointed to eternal life believed. Acts 13:48)
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