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.

[underbyte]

"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!"

I think you missed the point. These Indians are indivduals and would not "be" leading designers on their own in India. It is the transfer of technology to the country not to indivduals aliens. Although at some point that does not prevent them from going home and transferring tech. that way

[Captain Beyond]

Bump.

Good Rant. You made some great points on how we need to re-think our economy to re-position ourselves to continue to lead the world. Hope you, I, or someone can come up with something that can stem the tide. It's been awhile since econ101. Thanks for giving me something to ponder.

I hope you find work soon.

[Cacophonous]

Companies that have their losses subsidized will do better because they won't go under. Completely private companies can and will go under as part of business. Subsidized companies have no incentives to practice proper business procedures and no incentive to even profit. Hell, it's a disincentive. But as long as someone is willing to keep propping them up, they will outlast private companies that don't have that luxury. They become monopolies.

As an example, consider Amtrak. It is, in theory, a private company, but its losses are continually picked up by Congress; it should have died long ago. No private company could practice the business the way Amtrak does, runnning unprofitable routes, etc. Only in the northeast, where demand outstrips what Amtrak can provide, are other regional rail systems in existence, and Amtrask would not be there were it not for the federal subsidies.

Now if Congress were to suddenly stop funding Amtrak, would that be a subsidy to the rail industry? Of course not; it would be terrific. Other carriers would fill any voids left, and would turn a profit, and yes, some places won't get service. Or a truly private Amtrak might surprise us all and be a truly efficient and profitable rail system. Doubtful, but stranger things have happened.

In other words, weaning Amtrak from the Federal teat is not a subsidy to the rail industry. It opens competition.

Economically, there is no difference between Amtrak on the US tax doles, and Airbus on the doles of European taxpayers. None whatsoever.

Congress cannot defund Airbus, however, but it level the playing field. So having Congress enact a tariff on a foreign competitor that is not allowed to fail (i.e., Airbus) only promotes competition. (Tariffs have to be coupled with corporate tax cuts, of course, and an easing of the burden of federal regulations). If Airbus has a truly superior product, let them play by our rules and prove it. If they get beat by American competition, so be it.

[Cronos]

Interesting...

[Alberta's Child]

Actually, Boeing is probably just as heavily-subsidized as Airbus, though the subsidies are indirect. Just about all of Boeing's R&D costs for new technology are financed by contracts for military aircraft. Someone who knows more about this than me might be able to quantify this, but I would venture to guess that alomst all of the technology used in civilian aircraft was first used in military aircraft.

[RaceBannon]

You listen back, you nitwit, India wasnt the only country involved, and just because a singular few group of people worked on the IBM system does not measure up to entire industries going over to India!!

Besides, you show me that even EARLIER than suspected, we outsourced technology to India!!

[RaceBannon]

We didn't develope some of the world's largest sea ports in the 1700 and 1800 hundreds because we needed them to protect us from trade. Those sea ports were crammed with merchant ships...doing what?

Gunner, we used Tariffs then to protect us!! You chose the wrong time period to defend on this issue!!! :)

[harpseal]

If anything you understated the damage the current trade envirornment is inflicting on the USA.

[harpseal]

Ping.

Sorry about any duplicate pings to this thread. if anyone wants on or off my ping list let me know

[harpseal]

That's a lot to read. The current appeal of free trade has to do with the Great Depression. When we could produce millions of Model T's and radios and couldn't find anyone at home to buy them, free trade started to look very good. We may eventually face another crisis because of free trade, but for the time being, it's hard to get over the lesson of that time. A country that produces a lot, or that owns factories elsewhere that produce a lot, is usually going to favor free trade so that more of those goods can be sold.

Since the Great Depression started before Smoot Hawley tariffs were intoduced and the Stock Market Crash happened long before the bill that eventually became law had its details ironed out the lesson is a false lesson.

[dennisw]

Thanks for the ping.... I may not ping back but value all your info, leads and links.

I try to read as much as I can in this area.

[harpseal]

I mean, whats Intel going to do when China "nationalizes" their fabs?

Collect on the US government's political risk insurance so the loss goes directly to teh American taxpayers.

[Wolfie]

Really, what's the point. Until people find themselves up against foreign workers who will work for 1/10th the price, they just won't get it (but they will, and I'm gonna get quite a chuckle out of it when they do).

[Lazamataz]

I also have come to the conclusion that "free" trade is suicide. Our country became a superpower behind tariff walls. We should return to that model.

[harpseal]

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!

That is a false statement as anyone who has been to IBM knows. Were there some Indian immigrants who worked on those projects? yes. They became American citizens. Many of what you describe as Indians were actually second generation Americans.

[Lazamataz]

Attorneys won't feel the effects of "free" trade, but trust me, they will. Any job you can do behind a computer or at a desk is vulnerable.

I used to scoff at the "free" trade opponents. It made sense that "free" trade meant more trade, better trade.

Reality is, however, that you then compete with your labor with a fellow who lives in a mud daub house in a field of pig sh*t, who can live on 2 pringys a year -- where a pringy is 1/200 of a dollar.

At that point the playing field is no longer level.

You scoff now, just as I did once. But all professional fields are at risk.

[Lazamataz]

People against free trade are now quoting Marx?! This is too rich..

The Marx quote shows that the desire of Karl Marx, a man who wanted worldwide communism, was to have free trade to hasten the onset of communism.

You cannot be missing that point accidently. You must be doing so on purpose.

[Lazamataz]

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

Because every single industry in the world is an industry where slaves and children can do our jobs.

[Lazamataz]

And yes Buchanan was damaged.

Unfortunately, the champions of opposition to "free" trade have been complete freaks. Buchanan and Perot are not exactly 'user friendly'.

[Lazamataz]

foreign labor won't stay cheap for long!!

Actually, if foreign labor got expensive, I would no longer oppose "free" trade.

But it won't, because they don't have to follow all those pesky (and costly) American laws.