The Saudis just recently crashed the price of crude oil with the goal of putting American frackers out of business. The attempt failed but only after it almost destroyed the emerging American fracking industry and forced many frackers into bankruptcy.
The Saudis and OPEC countries then tried to buy up as many bankrupt fracking operations as they could - as well as much of the transportation and refining infrastructure, so perhaps the days of predatory trade practices are not as remote as you seem to suggest.
Furthermore, older economic assumptions and models need to adjusted for the rise of communist economic superpower looking to rapidly industrialize it's once non existent economy using aggressive and often predatory export policies.
In China, economic policy is considered war by other means and the Chinese are using their export policies to build up their economies while simultaneously destroying the economies of their competitors.
Additionally, in Communist China there are laws against large foreign transfers of currency and the only way for most Chinese to own private property is own a manufacturing facility. A huge fraction of Chinese manufacturing companies are set up with the primary goal of sheltering income in only available vehicle for sheltering assets as private property.
Like the old pre Reagan tax reform American tax shelter schemes, these companies are actually structured to sell products at acceptable losses and lose money to shelter assets in the only safe harbor.
It is impossible for American companies to compete with Chinese manufacturing companies intentionally structured and chartered to sell products at a loss
Classical text book and academic economic theories simply do not account for the new realities we face. Classical economic analysis also does not take into account massive, crippling budget deficits driven, to a large degree, by welfare and disability payments made to the 14 million or so able bodied American workers driven out of the labor pool by Obama era policies.
Regardless, the problems we face with the destruction of key American industries are strategic in nature and we simply cannot allow out steel and aluminum industries to be wiped out by foreign competition regardless of any stand alone economic analysis that does not factor this into account.
While basic and fundamental economic principles have not changed, the parameters and calculus of the economic analysis has changed radically due to the huge and rapid economic transformations we have seen in the world economy.
>> The Saudis just recently crashed the price of crude oil with the goal of putting American frackers out of business. The attempt failed but only after it almost destroyed the emerging American fracking industry and forced many frackers into bankruptcy <<
It was a foolish Saudi policy, and it failed. So the classic principles of economics win again.
>> perhaps the days of predatory trade practices are not as remote as you seem to suggest <<
Oh, there will always be fools around the world — fools who will believe that “predatory pricing” is a good strategy. But whatever gains they might make will be temporary at best.
>> It is impossible for American companies to compete with Chinese manufacturing companies intentionally structured and chartered to sell products at a loss <<
To the extent that they are doing such, they are hurting themselves, while they are helping the customers who buy the output of the companies you mention.
But in terms of our “trade deficit” with China, it doesn’t necessarily matter. Even if China followed strict free-market policies, with a rational tax system, they’d still produce a gazillion items that we’d want to buy from them rather than from domestic producers. It’s called “compartive advantage.” No theorem in all of economics — or indeed of all social science — has been more rigously analyzed in terms of pure logic, nor has any such theorem been more thouroughly tested with empirical, real-world data.
Anyway, if you don’t understand the principles and logic of comparative advantage, it’s not my job to teach you. But I think you’d benefit from reviewing your textbook from Economics 201-202, plus a rereading of the works of Adam Smith, David Ricardo and Thomas Sowell.
>> While basic and fundamental economic principles have not changed, the parameters and calculus of the economic analysis has changed radically due to the huge and rapid economic transformations we have seen in the world economy <<
Nice words. Pat Buchanan could not have phrased this erroneous declaration more eloquently.
But I’ll take my economics lessons from the likes of Alfred Marshall, Milton Friedman, Tom Sowell and Walter Williams, rather than from Friedric Engles, Ross Perot, the DNC and the AFL-CIO