“Other than that, we need to understand that nobody is forced to enter the market place to trade value. “
Let’s say it is the days before NAFTA and you own a leather goods manufacturing business in the New York garment district. Yours is one of the few remaining manufacturers, which got its start when immigrants came over and worked for next to nothing in sweat shops. Because of your operating costs you are at the high end of the market with jackets over $500. Your top end coats go for $900. You pay your labor NY rates.
You have been protected up to this point because there are tariffs on imported leather goods. NAFTA comes along and allows Mexican manufacturers to import their knock-offs of your products. Your cost averages $250-350. Their costs average $80-110. They undercut your prices by 50% and make a whopping big profit. If you match their prices you are out of business.
The consumer benefits. The American manufacturer must close his business or relocate it to a cheaper labor market. The employees, all skilled craftsmen, now are skilled in crafts that nobody in NY can use.
As nathanbeford pointed out, this is a complicated issue with many different interests that are affected. The consumer won. The American workers lost. The tax base in NY got smaller. So, NY lost. America loses as cash gets removed from our economy and goes instead to the Mexican economy. Mexico won across the board, jobs, cash inflow, improved living standard, new tax base...
Now, did Mexico give up anything? Perhaps they agreed to remove the import tariffs from American electronics or cars. Since the Mexican market is much poorer than the American market it is unlikely that the marginal increase in car sales, most of which will be low end models, and electronics, which we import anyway, will make up for the losses suffered on the US side of the deal.
So, trade issue is complicated and filled to the brim with crony capitalism. If the American coat manufacturer lobbies hard enough (pays bribes) he may get a better deal and stay in business here. But, most likely, for him, the end is in sight.
Now, I love getting fruit and vegetables year ‘round. But a friend has a pecan grove and his harvest costs are below the sales price of imported pecans. His investment in a retirement job bombed and he was hurt financially. As Nathanbeford points out, it’s not win/win for everybody. Somebody loses.
It was not a win for the consumer. It was an opportunity to consume the fabric of our ecomomy. A short term windfall that caused damage by weakening the economy resulting in much more pain down the road than the $ saved buying cheaper goods. An analogy would be a draw down mortgage painlessly consuming the equity in your home, and leaving you in a vulnerable position at the conclusion. In the case of mortgages, a draw down mortgage can be an estate plan, in countries not so much, since we are trustees for the generations that follow.
The consumer doesn’t look down the road and sacrifice immediate savings to protect our factory and skilled labor base but the Government needs to or risk presiding over a hollowed out & weak Nation.