Posted on 03/17/2016 1:15:58 AM PDT by Cincinatus' Wife
Donald Trump and his fellow liberals Hillary Clinton and Bernie Sanders are lambasting free trade as the scourge of the American working man. How odd it is that an economic activity so beneficial to almost every American, indeed to the vast majority of the human race, suffers such attacks with only half-hearted defenses raised by politicians who should know better and economists who do know better.
I stipulate: in trade, as in any economic endeavor, there are losers in the short run. Capitalism is, after all, fundamentally a system of creative destruction. But if there is any area of agreement among economists of all political stripes — a group among whom finding agreement is exceptionally difficult given their unique decision-making anatomy — it is that free trade provides large net benefits to the societies that engage in it, even if other nations do not lower trade barriers to the same degree.
Furthermore, the benefits of trade accrue in large measure to the lower economic echelons of society in an extension of Schumpeter’s profound observation that “the capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.”
Allow me to offer a few quotes (emphasis added) from one prominent economist, at the time a professor at an elite university, who was lamenting the poor understanding of international trade in the United States:
(Excerpt) Read more at spectator.org ...
Yes Free Trade would be nice, we don’t have it. We have Managed Trade
Read about Bretton Woods. The theory was we would use the strength of the US Economy to manage trade relationships to further US Foreign Policy Goals.
That maybe made sense post WW2 and during the Cold War. It is anachronistic now.
Mostly union? that is BS. Manufacturing in 90% non union. So you would only be 10% correct.
Trumps necessity to donate to various political entities lies in is need to be able to build projects in the USA. He donated so if needed he could more easily change zoning or location.
The pukes your lumping him in with are carting jobs over seas in mass. I get it you hate Trump. But it’s very disingenuous to lie by omission when attacking him or his supporters. Your acting like a lib.
BTTT!
“If the agreement is no more than 2 pages long, it is FREE trade. If the deal is 20,000 pages long plus addendum, appendix and side agreements then what is it?”
Exactly. All of these modern free trade deals require thousands of pages. Then the bureaucracies to administer the agreements create tens of thousands of pages of rules. They also issue edicts governing transactions and relationships which violate the sovereignty of nations who are party to the agreements.
The founding fathers were both advocates of free trade and high tariffs. They resented the restrictions Great Britain put on commerce, particularly prohibitions on colonial ships visiting specified countries, requirements the colonies trade through government dictated British agents or companies (such as the infamous East India Company) and restrictions on enterprises permitted in the colonies.
To the founders, tariff policy had nothing to do with free trade. Tariffs were simply taxes levied on goods imported in the US. Tariffs did not restrict trade, the US market was open. If the importer paid the tariff, the importer was “free” to bring as much into the US as the importer desired.
Likewise, under the 18th and 19th century concept of free trade, US merchants were “free” to trade with any country under whatever terms the merchant (not the US government) could negotiate with merchants in the foreign country. It is noteworthy that despite very high tariffs in the US on imported goods in the 19th century, Yankee clippers plied the seven seas and US merchants were extremely successful buying, selling, and transporting goods around the globe. It is also noteworthy that the precipitous decline of the US merchant marine has coincided with the focus of the US government on eliminated tariffs since World War II.
In reviewing US economic history it is a fact that the most rapid periods of economic growth occurred during the 19th century when tariffs on imports were at their highest levels. From 1865 to 1900 the federal government imposed extremely high tariffs. During that period the domestic economy expanded rapidly and the United States became the strongest and largest industrial economy on the planet. The US government deliberately employed high tariffs to protect a developing US manufacturing base from dumping by European manufacturers in countries whose objective was to keep the US from developing a strong and diverse manufacturing base. Had the current “no tariffs” trade philosophy been in effect from 1865 to 1900 the US would not have developed into the economic powerhouse of the 20th century and we would not have developed a strong middle class.
In the 1990’s I worked in an industry targeted by the Chinese government. US trade “negotiators” agreed to eliminate quotas and tariffs on imports from China. At the time the Chinese had about a 15% cost advantage over US manufacturers in that industry when transportation costs were considered and tariffs were eliminated. With major capital upgrades to the aging 1960’s US manufacturing plants it would have been possible for the US manufacturers to reach parity with the cost of the Chinese products.
Instead of making the capital investments required to become competitive with import costs once tariffs were raised, US manufacturers made the decision to offshore manufacturing. Why?
The Chinese government did two things. First it made 20 year loans available at zero interest for construction of new manufacturing facilities in this industry if the output of the new facilities was exported. Second, it gave a 15% “rebate” to the new factories on the value of goods exported. These subsidies tilted the table in favor of making capital investments in China instead of the United States. These subsidies were permitted under the thousands of pages of rules and regulations negotiated between China and the US. When some companies in the industry complained to the US administration (Clinton and GW Bush) the complainers were told to get on board with “free trade”.
The results were predictable. Other than a few small volume specialty niche manufacturers, an entire industry that once employed hundreds of thousands of US workers is gone. The small towns in which the factories were located are decimated economically. The underlying supply chains supporting the industry have also disappeared, resulting in tens of thousands of lost jobs. The shopkeepers, equipment salespeople, equipment repair people, and other businesses that provided goods and services to the factories are also gone. Many of those who lost jobs were unable to find new employment. Opportunities for young people to enter the workforce disappeared. The demand for, and cost of, social services skyrocketed in the affected communities. American workers shifted from being productive contributors to the economy to wards of the state.
There are very few comprehensive studies of the impact of the zero tariffs free trade movement of the modern era. Likely because any honest evaluation of the impact would tell similar stories in many industries.
The proposed TPP agreement is 5544 pages. Any agreement requiring 5544 pages to document has nothing to do with freedom or free trade. It has everything to do with defining exemptions, special privileges, and benefits to individuals, companies, and countries. Pass the TPP and you will see Korea, Japan, and other signatories target remaining American manufacturing businesses for destruction.
My challenge to the zero tariff free traders. Name one free trade agreement signed in the past 30 years where 5 years after enactment US exports to the signatories exceeds imports. Ultimately if if a country doesn’t export as much or more than it imports, its economy will decline.
Is it better to tax foreign factories that enjoy access to one of the world’s largest markets and who are subsidized by foreign governments or is it better to tax American citizens to support displaced middle class workers who cannot find new full time employment paying a living wage? In the 19th and early 20th century we chose option #1 and prospered. Since 1990 we’ve chosen option #2. TPP is more of option #2.
“Free Trade” requires a willing buyer and a willing seller in a competitive market on a level level playing field aka fair trade. What we have now is Cronyism aka Anti-trust aka Restraint of trade.
If the global players were inside the US their trade agreements would violate almost every anti-trust laws we have and the mega corps would be broken up like Shell Oil Ma Bell etc for the same reasons.
This is not a free market trade issue. Its addressing anti-free-trade cronyism.
Because it’s so much more beneficial to have half a trillion dollars imbalance with China and to have us pay even more on top because most of our deals favor others and make the American people the biggest faucet of welfare funds the world has ever seen. We are paying for those cheap products even though most don’t realize it because it comes out in taxes rather than on the price tag.
Perry notes Trump has imported clothing from China and Mexico produced for his brand. “For Trump to operate, outsource and invest globally while criticizing companies like Ford for doing the same is the ultimate hypocrisy. To be fair to Ford, Trump should either agree to impose a 35% tax on Trump Collection clothing and agree to stop investing overseas, or he should stop his threats against Ford for operating as a global carmaker.”
As economists such as Don Boudreaux and Mark Perry point out, there is no real difference between a U.S. car company investing in a foreign country and a real estate company building a hotel or office building in a foreign country.
Under “Our Hotels” on the Trump Hotel Collection website, it lists six domestic hotels and six international hotels. Is the problem Ford is building something in Latin America? Well, there are Trump hotels in Panama and Rio de Janeiro. The other hotels abroad are in Toronto, Doonbeg, Ireland, Vancouver, and Baku, Azerbaijan. (Toronto and Vancouver also have a Trump Tower.)
On the website for the Trump Real Estate Collection, nine international properties are listed, including two Trump Towers in India and one in Istanbul, another in Uruguay and another in the Philippines, as well as a Trump World in South Korea, among others."............. More
That was a really good post, especially that last paragraph. I can remember back to 10th grade (1970) being taught that we were becoming less and less a producer of goods and transitioning to a service economy even then. With few exceptions (restaurant and retail),I spent nearly all of my career in manufacturing. It paid better and there were entry level jobs everywhere.
I also watched, for over 30 years, the decline of those capabilities, as the conglomerates pushed towards globalization in the 80’s in search of faster, better, cheaper. Employees hated it but stockholders loved it. No, I don’t have data in front of me. I would like to see/read some.
But I have lived it. I saw how increasing automation helped, especially with some of the more tedious tasks and then grow to replace a lot of skilled labor. (a book in itself)
I would like to read data pre-Nafta and would be interested in learning more about how trade deals were struck prior to multi-nation, “comprehensive”, regional deals. I would prefer to see trade deals negotiated with individual countries, if that is even possible any more.
Trump has always stood for Trump, as he should have when all he did was make money. He bought politicians and I bought judges.
He knows how the system is fixed in favor of anyone with money and how to change it.
Cruz is a lawyer that has spent his life taking money from both wall street and the tax payers because he's never had a job that created anything, never made a payroll, never earned an honest dime.
No lawyer on the planet has ever earned an honest dime. PERIOD. I even hated my own lawyers, crooks that allowed me to buy them and their judges.
I have honor. S/OFF
Economic Libertarians Will Have a Friend in Ted Cruz
"..economic libertarians and others who place a high value on property rights, the right to earn a living, and the right to open a business will find no better friend than Texas senator Ted Cruz...his work at the FTC established a foundation on which the cause of economic liberty progresses still today. Leading a team of senior FTC lawyers, Cruz...relentlessly [fought] against state laws conferring privilege on politically and economically powerful interest groups. Many of these laws do little more than protect entrenched incumbents from small entrepreneurs seeking to open a business and earn a living. Cruz and his team vigorously opposed unjustified state government privilege in such diverse occupations as attorneys, funeral directors, opticians, and mortgage brokers.The goal was always to open up markets to entry by anyone with the talent and desire to compete on a level playing field."....
Another great post in this thread. Trade agreements with individual countries I can support. But these ‘comprehensive’ trade packages are like any other piece of ‘comprehensive’ legislation. There’s simply too much...and the U.S. is put at a disadvantage every time.
This is something that hasn't been discussed-either by design or by getting lost in the fog of an election year. Trump has been on the receiving side of kleptocrats with their hands out to get anything done I'm sure. It's a shame businesses have to operate that way in the US. Not as bad as other countries (See: China) but we're on our way. Now imagine for a moment that Trump sees this as a problem, knows where a lot of bodies are buried, and the kleptocrats know this. If you were among that latter group, wouldn't you be concerned about such a person becoming President who instructs his AG to zealously go after the guilty parties?
Under these so-called free trade agreements, two harmful conditions have entwined themselves into America:
1. Increased regulations.
2. More alien invaders.
The deceitful libertarian free trader will tell you that free trade is about the movement of goods, services and capital across borders without hindrance or let. He tries to hide the fourth leg of free trade chair which is labor. The correct and truthful statement on free trade is this:
The movement of goods, services, capital and LABOR across borders without hindrance or let.
I happen to work for a company, one of the few, who exports half of its products to China. With the Trump promised 45% import tariff on imported goods from China, and, of course, the Chinese reciprocal duty on imported goods form the US, I, along with many others in our company, would be out of a job. The Chinese would buy from our German competitor rather than pay 45% more for our products, even though ours have proven superior performance.
I also happen to own two "sawzalls". One is US made and cost $120, the other Chinese and cost $20. They are located at two different sites, and I chose to own two, rather than carry one back and forth. For twenty bucks, it wasn't worth the trouble. They both perform equally well, for me, since I rarely use either. If I needed one regularly for my job, I would likely own a much more costly commercial version. If there were a 45% import tariff, the price of the Chinese one would probably double and I likely wouldn't have bought it.
So the Trump tariff would put me out of a job, a Chinese laborer out of a job, and there would be no increase in US jobs. There's a historical precedence for this, as well. The Smoot Hawley tariffs caused exactly the same situation in the '30s helping create the Great Depression. I didn't experience it, but I know it well. My mother, as a child, went to bed hungry many nights because her widowed mother couldn't find enough work to feed her children.
So the Trump tariff would put me out of a job, a Chinese laborer out of a job, and there would be no increase in US jobs. There’s a historical precedence for this, as well. The Smoot Hawley tariffs caused exactly the same situation in the ‘30s helping create the Great Depression. I didn’t experience it, but I know it well. My mother, as a child, went to bed hungry many nights because her widowed mother couldn’t find enough work to feed her children.
The Chicoms are building militarized islands in the South China Sea. There is historical precedent for that too. It was called World War 2. Transferring our national wealth to China will not end well.
I hope Kaminsky enjoys the next ten months, because “free trade” is a dead duck after that.
WWII was not caused by tariffs.
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