Why FREE TRADE was never the answer.

self | 7/28/03 | RaceBannon

[RaceBannon]

There has been a few threads on here where Free Trader enthusiasts have defended their view, and have been responded to by those who feel that Free Trade is not helping the American Economy, in fact, is part of the reason we are NOT going to see a great recovery any time soon.

I am one of the latter. The following is a cut and paste job, taken from my own comments on these threads, which I feel tell my side of the story.

Some of the points are repeatd, 3 and 4 times. That is because I feel they are the forgotten reasons and ideas why we are in what I believe are dire economic straits.

Feel free to comment.

[Cacophonous]

I agree with you.

[RockyMtnMan]

The simple answer is for the fed to collect a tariff on AirBus sales here in the US and lower Boeing's corporate taxes. Then when Boeing competes with AirBus elsewhere in the world the fed funds the gap to match AirBus from the tariffs they collected on previous US sales. After the sale is won the fed collects a tax on the overall deal as compensation for helping them get the sale they would have otherwise lost, effectively lowering the overall "subsidy". This also encourages them to make a better cheaper product for future deals and not rely on the fed.

Also remember these planes can be in use for 20yrs, think of the profits that are made on parts and repair. The fed could forgo the "deal tax" and collect incrementally over the life of the aircraft instead.

The idea is to allow Boeing the ability to compete dollar for euro and win the contract based on product quailty. The other option is to walk away simply walk away from the sale and let the Europeans pick up the tab.

[Missouri]

I never said that. Europe and Japan have about the same standard of living as we do. There are alot of worker protection and enviormental laws that exist in the 1st world that doesn't exist in the 3rd world. All I'm saying that these cost need to be considered.

[dogbyte12]

When we do trade with Germany, we tend to actually be trading with Germany. When we trade with China, we are competing against ourselves.

Yes, it is cheaper to buy an american flag made in China, but that irony sums up the situation well I believe.

There are two american companies. They both make american flags. One pays $7 an hour. Not a fortune, but a decent starting wage, is what the workers can expect.

The other is paying $7 as well. They go to China, and offsource everything. They pay the communists a finder fee, and the commies chain workers to their work areas. The flags are sold to Wal-Mart for a cheap ass price, and they can sell it for $4.99, putting the other company out of business.

How exactly is this trade? There is no "company" or even "country" we are competing with here. A company just decided to skip labor laws, taxes, worker safety, worker rights, etc to undercut their competitor.

If a German company decided that they had a revolutionary new process to make flags that was efficient, and would require less worker hours to do so, and that they could compete in our market, and they raised the capital, and bought the facility, trained the workers on the new machinery, and was able to undercut us, I would not begrudge them like I do the opposite situation.

We are americans as well as capitalists. It's plenty enough that we compete against people throughout the world, but to compete against each other to see who can screw their workforce the fastest is well wrong.

I wouldn't even mind competing against China per se as much as it pisses me the hell off that it is our people doing it.

If the Chinese government wants to start businesses and start selling stuff here, that is a different animal than american companies firing their work forces and seeding the commies with plant, equipment, material. It's crappy, it's unethical, and it's the love of the dollar before the nation.

I am not a protectionist. I think that any product made fairly overseas should have the right to compete with ours. Prison labor is wrong. We should be ashamed of our fellow americans who decide that a summer home in the hamptons, as well as the cottage in Vail, is more important than their workforce here that they dumped, or their mistreated new workers overseas.

[CWOJackson]

So far the assumptions I'm seeing on this thread are that the federal government would cut corporate taxes if they could impose tariffs, and we could trust American business executives and Congress to not artificially raise tariffs to increase profit margin because a new aircraft manufacturer is going to pop up in someone's garage next week.

[CWOJackson]

So you are in favor of free trade except for China?

[Cacophonous]

Rocky also mentioned a key component to tariffs: lowering domestic taxes. Crucial part.

[LibertyAndJusticeForAll]

The problem is that the borders are not being protected by our government. The problem is that the laws against hiring illegals are not being enforced.
If the government would do its part, then the unemployment rate for less skilled Americans would drop immediately.
Furthermore, it has been well documented that there is a huge financial TAX burden associated with the presence of a large illegal population. Our schools, hospitals, police, jails, etc. are all negatively impacted, and it is the American taxpayer who must pay for this burden.
Every AMERICAN pays taxes because it is the Law. If you want the law changed then try to elect someone who will represent that viewpoint. But don't say that illegal behavior is justified because you don't like taxes.

The point of the Nike example was to answer your disbelief that corporations do not pass on their increase in profits to the consumer. It is all about "what the maket will bear", not the actual cost of making a pair of shoes plus a reasonable profit. The corporate execs are very happy KEEPING the enormous profits made from using near slave wages.

The point of bringing up antebellum economics was to point out that tariffs have been used historically and to good purpose. Over 500,000 Americans died and many hundreds of thousands wounded in the Civil War. The abolitionists were deeply religious people who believed slavery to be evil. Like the average soldier, they were not economists or terrible hypocrits.
I must defer with you about the coal miner being little better than a slave. But, that would take a lot more time and is off topic.

It may or may not be of interest to you that protective tariffs are also an historical part of the Republican Party. The 1892 and 1904 party platforms have been posted on these threads as evidence.

[USMMA_83]

You wrote: What India sees is an opportunity that comes once a millennia, that the technology that rules the world will be handed to them on a silver platter by the west, all they need do is provide the labor to make it run for a few years, gather capital and knowledge, and then use it and make it themselves, prop up their economy as they grow while we wither down to serfdom due to the economic bubble being burst on us. And we GAVE them the technology to do this, they didn’t earn it, they didn’t discover it, they didn’t develop it, they didn’t design it, they didn’t make it, WE GAVE IT TO THEM!!!

Listen you nitwad, who do you think worked on those early IBM mainframes, who was one of the lead design engineers on the Saturn rocket, who is one of the leading chip designers at Intel, who worked on the Shuttle's on board navigation system :- All Indian's!

[CWOJackson]

"Rocky also mentioned a key component to tariffs: lowering domestic taxes. Crucial part."

Yes, the government has a great track record in that area. Just like we've never had corporate executives buy Congressional votes.

[Missouri]

I worked for Boeing from 1997 to 2000. I know that they have other problems besides Airbus and I would not want to give the Boeing CEO's one penny of taxpayers money. But they are at a disadvantage. I have an article out of the Washington Times that is about this subject but its at work. I'll post it tommorrow. I have to sign off.

[FITZ]

Immigration, welfare, and trade are all connected. NAFTA is what has completely devastated so many Mexicans that had employment of some kind previously.

The Impact of U.S. Trade Policies on Immigration

An analysis of the impact by Professor Calva (3) indicated that a total population of 10 million small grain farmers would be at risk of being forced off the land due to NAFTA. Indeed the grain imports from the U.S. and Canada had by 1995 already captured over one third of the Mexican grain market. The impact of the invasion of U.S. businesses on other domestic Mexican businesses was also severe. After NAFTA, retailers like Walmart expanded rapidly in Mexico to much U.S. publicity. This expansion was fueled by their ability to sell goods at prices significantly lower than their Mexican competitors.

[RockyMtnMan]

How is it NOT being passed to you now? you don't think everyone else puts a tariff on our products?

When a company wants to penetrate a market that has high foreign tariffs they lower the price of their widget. How do you think they make up the difference? They raise their prices in higher income markets that already have a demand for the widget. In effect you pay higher prices because of the tariffs other country's impose on our products.

[CWOJackson]

Boeing is often it's own worst enemy, having worked for it I'm sure you know this. Take care.

[dogbyte12]

I am in favor of free trade with the 1st world. I am in favor of less restricted trade with the third world. I am opposed to american companies using third world labor. I would tax the begeezus out of them for doing so.

If China wants to compete, let them raise capital and do so. Americans bought a ton of Nike sneakers, and gave capital to Phil Knight. He in turn took that money, fired his work staff, and moved his company's production overseas, to reship his shoes, designed by americans, back to americans.

If the Vietnam shoe company wants to sell us shoes, I have no problem with that. Phil Knight though, needs to have an attitude re-adjustment.

If he wants to move his company to Vietnam entirely, I have no problem with that. It is this crap of coming off as an american company, when they could give a rip about the people in this country that ticks me off.

Yes, I know my views are not exactly "rational", but I feel strongly that on a patriotic issue alone, we should not be doing this crap.

I am sure that the workers are genuinely thrilled by the 25 cents they make an hour. I am not.

[Cacophonous]

You're being intentionally obtuse. You know how the markets work: remove barriers to trade, and it flourishes. Artificially subsidized businesses like Airbus are barriers; it is essentially a monopoly because its losses are subsidized.

Tariffs remove that barrier to American industries; and let's not forget, we are concerned about American industries, not international industries. If we cannot agree on that, we have nothing more to say. American businesses should be American first, last and always.

Barring corruption, tariffs are not set up in favor of a specific business, they are intended to aid the entire industry.

Barriers gone; competition exists. Maybe a dude starts a business in his garage, maybe he doesn't. The point is, there is currently no way he can.

[CWOJackson]

Yes, imposing tariffs on all goods from Mexico would fix that in a heart beat.

[FITZ]

The problem is that the borders are not being protected by our government. The problem is that the laws against hiring illegals are not being enforced. If the government would do its part, then the unemployment rate for less skilled Americans would drop immediately.

The minute we control immigration is when the Mexicans will revolt against NAFTA and there are some people getting quite wealthy from it and they don't want that to happen. There have been some successes by the Mexican people in stopping parts of NAFTA from being implemented ---- but things would blow up fast if they couldn't come here ---at least we have a giant welfare system which isn't true for Mexico.

[USMMA_83]

Why are you working in an industry where slaves and children can do your jobs?

[Cacophonous]

I'm getting tired and incoherent. I am to bed. Night all.