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Mad About Free Trade
Daniel Griswold on why Main Street should embrace globalization and reject the protectionist swindle.
Daniel Griswold is not shy about sharing the high aspirations he harbors for his superlative new book Mad About Trade: Why Main Street America Should Embrace Globalization. The Cato Institute scholar seeks nothing less than to marshal whatever evidence necessary to induce Americans to fall “crazy in love with the opportunities that our new and more open world is creating before our eyes, not only for ourselves but, more importantly, for our children.” Such an ebullient, Friedmanesque happy warrior attitude has hardly been a hallmark of conservative-libertarian economics writing of late, and, as a result, Griswold has managed to compose a volume as accessible and persuasive as it is indispensable, as fresh and uplifting as it is firmly grounded in accumulated wisdom — a rare bird, indeed.
“This is a scholarly book with attitude,” Griswold explains. “Advocates of free markets need to close the deal by appealing not only to the head but to the heart as well. We are the ones who can talk about opportunity and hope. The other side has no positive vision to offer, only fear.”
Griswold was kind enough to recently expand on some of the ideas in Mad About Trade for TAS.
John Mackey of Whole Foods has been very vocal about his belief that there is a real need to “re-brand” capitalism if proponents hope to prevent its virtues from being completely lost on the average person. Mad About Trade seems to suggest something similar, especially when you argue free traders have failed to connect unequivocal data to “our deepest American values of fairness, compassion, competition, freedom, progress, peace, and the rule of law.”
DG: John Mackey is right. Free trade has been wrongly branded as something for the benefit of big business at the expense of average Americans. Most Fortune 500 companies benefit from globalization, and that is fine. They employ a lot of Americans and sell a lot of U.S.-brand products around the world. But trade is also about benefiting tens of millions of low- and middle-income American families by insuring competition for their consumer dollars. Free trade is about creating better, more sustainable jobs for our children, building relationships with people in other countries, lifting hundreds of millions of people out of poverty, and sending young girls in developing countries off to school rather than to the field. Our task shouldn’t be that difficult. Evidence and economic logic are on the side of free trade. We just need to tell the story in a way that connects with people in their everyday lives.
Has the current economic crisis and the protectionist rumblings it has inspired made the message of Mad About Trade any more pressing?
DG: I originally planned to have the book out by early 2009, but I’m glad I procrastinated long enough to factor the Great Recession into my narrative. The current economic climate doesn’t really affect the argument. The opponents of free trade will argue that it is destroying jobs and impoverishing us even when the unemployment rate is low and the economy is humming. But a recession does deepen worries about losing jobs to imports and outsourcing. With the economy in a slump, and Democratic leaders eager to indulge such anti-trade constituencies as the AFL-CIO, the message of Mad About Trade is timelier than ever. I spend several pages recounting the history of the Smoot-Hawley tariff of 1930, and how our national leaders wisely reversed course after the war and embraced the liberalization of trade. It would be a tragedy if we had to relearn that lesson.
“The growth of trade and other measures of globalization has stirred more anxiety than gratitude among Americans,” you write, even as it increases choices and lowers prices for consumers — “a more immediate and effective lifeline to families struggling to stay afloat during tough economic times than any lumbering government stimulus package.” What do you believe is the most common — or pernicious — misconception the average American has about free trade?
DG: A leading contender is one of the “big lies” of the trade debate: that we have been trading away high paying manufacturing jobs and replacing them with low paying service jobs such as flipping hamburgers and cashiering at big-box retailers. The truth is a lot of the manufacturing jobs we’ve lost didn’t pay all that well. And most of the service sector jobs that have been added in the past two decades are solidly middle class. Citing data from the Bureau of Labor Statistics, I found that two-thirds of the net new jobs added between 1991 and 2008 were in sectors where average wages were actually higher than in manufacturing. We remain among the world’s leading manufacturing nations, but the American middle class today earns its keep in the service sector.
Why should a unionized worker support free trade when their union vehemently opposes it?
DG: Not everybody wins from adopting free trade, and some unionized workers in some industries have benefited — unjustly, I would add — from existing trade barriers. But for most unionized workers trade is more friend than threat. Unionized dockworkers obviously benefit when trade expands. Unionized government workers and teachers benefit as consumers while facing no foreign — or any other — competition. Unionized Boeing workers would be out of their jobs without access to global markets. Unfortunately, organized labor leaders in this country have taken a hostile stand against trade, and they now have the ear of people in power. The large majority of American workers who do not belong to a labor union will pay the price in lost opportunities.
This relates to the problem you note in Mad About Trade of “what is seen and what is unseen.”
DG: This is the cross we carry in the debate. The short-term losses from transitioning to free trade are visible and localized. An apparel factory closes in North Carolina, a call center is outsourced. Sugar growers lobby furiously to keep import quotas in place because their livelihoods depend on a protected domestic market. But the benefits of free trade, while far greater in total dollars, are diffused: A single mother saves $20 shopping on Saturday at a supercenter, you find just the right car or blouse because of import competition, a small start-up creates ten jobs writing specialized software for a global market. You could say one of my goals in writing the book was to make the benefits of trade visible to my fellow Americans.
Similarly obscured, ill-advised government regulation has been essentially given a pass in the current downturn by a Fourth Estate fixated on individual consumption. When you write, “production divorced from consumption is akin to slavery,” it has the feel of a revolutionary statement. Why is it important to defend consumption?
DG: The trade debate in Washington is all about producers. They have the trade groups and lobbyists. We impose tariffs on steel, socks, or tires, in a misguided attempt to protect “our” producers at the expense of “their” producers. Lost in the political equation are consumers, who are always the front-line casualties in any trade war. Consumption is not a dirty word. Without it, we would all be starving, naked, homeless, and quickly dead. Our paychecks do us no good if we cannot translate money into tangible goods and services. Protectionism is really about working harder for less.
About the Author
Shawn Macomber is a contributing editor to The American Spectator.
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Pingback| 10.27.09 @ 7:03AM
The American Spectator : Mad About Free Trade | Free credit check up date today links to this page. Here’s an excerpt:
Melvin| 10.27.09 @ 7:23AM
Anyone please correct me if I am wrong. This whole scheme works if everyone is playing by the same set of rules correct.
Producing a widget here cost a heck of a lot more here than it does if the same widget was manufactured in China.
China doesn't have the same labor costs, no health care to worry about, environmental/pollution issues are thrown out the window and many times the Chinese dump products that drive the cost of the widget down to where US manufactures cannot even begin to compete.
Our corporate income tax is the 3rd highest in the world.
Free Trade is great, but with all the stumbling blocks that are put before our manufacturers by our own government how can we effectively compete?
S.L. Toddard| 10.27.09 @ 7:41AM
All one need do is look at what has happened to our economy. We make nothing anymore. And to buy what we need, we borrow. That is the result of "Free Trade" - to send nearly the totality of our industry overseas. Where we were one the world's provider, we are now the world's greatest debtor. We must borrow from the Chinese to afford to buy goods at Chinese-goods outlet stores, like Wal Mart.
Libertarians and other free-trade fanatics talk a wonderful game. Don't buy it. One need only look at what "free trade" has wrought to realize how corrupt it is.
Amor de Cosmos| 10.27.09 @ 10:05AM
We make a hell of a lot of things in this country. We just don't make a lot of low value products.
We borrow from the Chinese to pay for our own profligate government spending. That has nothing to do with trade. It has everything to do with our lack of restraint in keeping government expenditures in line with tax receipts.
Free trade is a godsend. It has allowed the American consumer to have more for less. It also disciplines industry. Have not American cars improved almost exponentionally since the Japanese entered the marketplace here? Caterpillar, John Deere and many others sell a lot overseas and their equipment is made in the good old USA.
You sir, are talking out of your hat.
DJF| 10.27.09 @ 1:50PM
Speaking of talking out your hat, have you bothered to look at our trade deficit with our “free trade” partners. We are deep in the red so its not just government borrowing.
Amor de Cosmos| 10.27.09 @ 4:52PM
We do not have "free trade" with China, we have open trade. Second, the imbalance in our trade deficit is due mostly to our purchase of foreign energy.
People grouse about China's imbalance but a great deal of it is related to the fact that China is fundamentally still a poor country and there is not a lot of penetration in that developing marketplace. In fact, it is a curse that the Chinese hoard our dollars and buy our government debt. That policy gives liberty and cover to wastrels.
DJF| 10.28.09 @ 10:45AM
The trade deficit is not mostly energy, its around half energy. So even if we imported no energy there still would be a massive trade deficit
And even if the Chinese start buying things besides our debt why would they buy from the US since they already have the factories in China? So the hope that someday the Chinese will start buying US products is a false hope since they can just buy their own products especially since they make so little money that they can’t afford US products.
The “free traders” have been selling that snake oil for years that the Chinese will start buying large quantities of US products, its not going to happen, they will just buy from their own factories. Just like the snake oil that trade will set the Chinese free when all it has done is save the Chinese communist party control in China since they got access to Western tech and money which saved their economy and there for saved the Communist Party
Amor de Cosmos| 10.28.09 @ 3:55PM
In 2008 the overall figures are:
$2.5 trillion imports
$1.8 trillion exports
Components
Energy -$386billion
Consumer Products -$320billion
Automtive -$112billion
Food +$20billion
Services +144billion
The overall US/China trade deficit was $268billion.
You are correct that if we imported no energy we would still have a trade deficit. I did not say we would not.
However, I do say that China with a GNP that is less than one third of our own does buy a heck of a lot from us and as it becomes wealthier and its internal market develops will buy more. One thing that must always be borne in mind is that shipping is the great equalizer because shipping rates are market driven by cost of energy. The Chinese cannot manipulate freight rates like they manipulate currency rates. Moreover, on the productivity scale, we blow them (and most of the world) away. It is just that the Chinese decided to grow their economy based on low value manufacturing in which skill and productivity do not play a part.
Paul Streitz| 10.27.09 @ 4:08PM
Free Trade is the swindle. It is the libertarian world where everything thing just gets better and better. Nations are dissolved, immigration is unlimited and buying goods made abroad by slave-like labor is wonderful for everyone.
There are a few rules here: capital flows to low wage markets (when permitted) and labor flows to high wage markets. The result is that the value of labor goes down in a high wage country, while the value of capital goes up. That has what has happened in the last forty years under the doctrines of unlimited immigration and free trade.
The result is the catastrophe that we have right now. The working man's salary has been stagnant for thirty years; it takes two workers (man and wife) to keep the income level of a male-breadwinner prior to free trade.
Despite the catastrophe of closed and more closed factories, massive unemployment and under employment, the Free Trade Advocates continue to pedal their nonsense, and the Big Lie: "Smoot-Hawley tariffs cause the Great Depression."
The tariffs were introduced long after the Depression was under way and had zero impact. Friedman does not mention S-H in his book on monetary policy, but then when on to be the high priest of Free Trade.
Free Trade was well supported by Karl Marx who commented that Free Trade destroys capitalist societies and hastens the Revolution.
He was right. Blue collar workers know it, while libertarian egg heads continue to spout a philosphy that has no relation to reality, and denies the observable facts.
Paul Streitz
America First: Why Americans Must End Free Trade, Stop Outsourcing and Close Our Open Borders.
Amor de Cosmos| 10.27.09 @ 5:05PM
Smoot-Hawley did not cause the Great Depression but it sure as heck did not aid recovery. America is and always shall be a trading nation and no barriers to our products and services is the best policy. To have that you must have reciprocity.
Capital flows where it is rewarded best. High wages must be sustained by high producivity or else every business looks like GM.
What has happened to make take home pay stagnate? Government expenditures.
I think Cobden would laugh that his ideas would hasten a communist revoltion. It certainly does hasten a revolution from the perspective of those who advocate merchantilist policies, oligarchy and monopoly, but not a communist one.
The policies you advocate (except controlled immigration) are a prescription for national impoverishment.
S.L. Toddard| 10.27.09 @ 7:45AM
"benefiting tens of millions of low- and middle-income American families by insuring competition for their consumer dollars. Free trade is about creating better, more sustainable jobs for our children, building relationships with people in other countries, lifting hundreds of millions of people out of poverty, and sending young girls in developing countries off to school rather than to the field"
Look at that for a second. The only benefit to Americans mentioned is cheaper goods. He says it is about "creating better, more sustainable jobs for our children", but we know that for the farce it is - it creates "better more sustainable jobs" for foreign children, not American ones.
He speaks the truth, though, when he says free trade is about "building relationships with people in other countries, lifting hundreds of millions of people out of poverty, and sending young girls in developing countries off to school rather than to the field." This is all correct - Free Trade benefits poor, foreign countries immensely, and I'm sure it improves our relationship with them. Who wouldn't appreciate our allowing them to gobble up our industry, our ability to produce, and all the money we earn?
What a ridiculous farce. "Free Trade is great - it benefits everyone but us!"
Ryan| 10.27.09 @ 8:39AM
Way to cherry-pick out of the article. It's like you're not even taking the rest of it into account.
Did you not see how globalization has been a rising tide that lifted all? What is your response to that?
It is a WASTE of resources to produce something that someone else - even foreign - can produce for far cheaper. It's false nationalism. It is NOT the government's job to protect American jobs and manufacturing. It's the government's job to remove barriers for Americans.
You know WHY we're a service economy? Because WE CAN AFFORD TO BE. There is MORE money in an information and innovation market than there ever was in manufacturing. There always has been.
Protectionism stifles both, and holds the true money-maker - innovation - back.
Honestly, fixing the issue means education, not protectionism. The smarter we are, the more innovative we will be.
S.L. Toddard| 10.27.09 @ 9:00AM
"Did you not see how globalization has been a rising tide that lifted all? What is your response to that?"
That we are in debt $10 Trillion and our economy is in shambles. "Rising?" Hardly. It is self-destructive to implement a trade policy that seeks to "lift all". Our trade policy should be that which benefits Americans most.
Ryan| 10.27.09 @ 9:29AM
The deficit is due to government spending, NOT trade issues...unless you can somehow draw a correlation.
What benefits Americans more - protecting old industries or freeing up capital and resources for new ones?
S.L. Toddard| 10.27.09 @ 9:38AM
"The deficit is due to government spending, NOT trade issues...unless you can somehow draw a correlation."
You can't draw a correlation between America having less money to spend and America losing millions of jobs?
"What benefits Americans more - protecting old industries or freeing up capital and resources for new ones?"
Freeing up capital - by sending it overseas, to foreigners? I suppose that's one way of "freeing" it up. I would wager it benefits Americans more to retain millions of jobs than it does to send those jobs away.
Free Trade is in some respects a "rising tide", but it benefits third world nations far more than developed ones. And it doesn't benefit those third world nations enough that they're capable of affording/importing more American Made goods. The free market is a good thing domestically, but horribly misguided for the United States vis a vis foreign trade. To argue in favor of Free Trade is to argue against everything common sense tells you. It is closely akin to the arguments made that the best way out of our economic crisis is to spend more money we don't have. Of course there are plenty of economists who can dazzle you with arguments along those lines, but that still cannot make them jibe with common sense.
Ryan| 10.27.09 @ 9:51AM
You're equating free trade with deficit spending. They're unrelated. We SHOULD have balanced budgets (or ideally, have a slight deficit).
The national deficit - a government issue - is mostly unrelated to the private issue of buying and selling. Corporations typically seek to make money. Using government influence to drive out competition (protectionism) creates a false security.
If a company's products cannot stand on their own merits due to quality or price, there should be no reason to protect those products and jobs. Period. That company SHOULD fail. Those jobs are useless to everyone but those who hold them, and are relatively unproductive.
We should NOT be wasting resources on wasteful products and jobs - it's almost as bad as wasteful government spending. It stifles innovation and TRUE productivity.
S.L. Toddard| 10.27.09 @ 10:01AM
"If a company's products cannot stand on their own merits due to quality or price, there should be no reason to protect those products and jobs. Period. That company SHOULD fail."
Indeed - when one is speaking of the domestic free market. Otherwise, you are talking about penalizing American prosperity - putting American companies out of business because they do not use slave labor, and provide adequate working conditions for their employees.
A free market benefits that market as a whole. That is why it works well domestically - we should *care* about the American economy as a whole. But our trade policy with other nations should *also* put the American economy first, ahead of the world economy - ahead of the economies of third world, slave-labor nations. Their prosperity is *not* our prosperity.
S.L. Toddard| 10.27.09 @ 10:04AM
I will say this, though - a good argument for Free Trade is that an America First trade policy will create an prosperous economy that will last only so long as it is maintained, which is to say that it will create an economy that will not stand if a Free Trader is elected to office.
Ryan| 10.27.09 @ 11:22AM
You're throwing the slave-labor moniker around far too freely. Many countries with lower standards of living - where we call poverty here - are close to, if not above, living wages. Yes, there are sweatshop issues; however, that's no reason to promote a protectionist policy, and is actually an argument against it.
What to do with SLT?| 10.27.09 @ 12:22PM
It looks like SLT would prefer we still had 99% of our population engaged in hand farming (aka "peasants") and the few manufacturers that existed continue to produce only buggy whips.
We are entering the long-desired era where very few people in wealthy nations really have to WORK (in the sense of back-breaking physical labor) to make a GREAT living...not to mention, the formerly-STARVING multitudes around the world, finally becoming engaged as productive "citizens of the world" and reaping their own share of the good life...and the SLTs of the world can only p*ss and moan about it!!
S.L. Toddard| 10.27.09 @ 6:31PM
Yes, things are looking just great for the economies of the first world and our service-based one especially.
Melvin| 10.27.09 @ 8:08AM
Why is it I can go to a third world Asian county and have the choice in a super market of buying butter from either New Zealand, Australia, EU Countries as well as the Asian domestic butter, but we can't do that here?
Protectionism limits my choices, as a consumer.
The reason that we don't produce anything here anymore is that first you need to look where it started. Our own government advocated moving our companies overseas and even gave them tax to do it.
As noted earlier we have the third highest corporate income tax in the world and that isn't even including our the state and local taxes that are included.
Government run education is producing idiots that have the work ethic of a sloth, and want to start in management right off the bat.
If I want to start a factory that produces widgets, I have to go through thirty yeas of environmental crap because of some red headed cockaided pecker-wood might live where I want to put the
factory.
I have traveled around the world twice and my last trip was two years ago and coming back to this Country was like coming back to the economic dark ages.
Yea, protectionism really works, who the hell is going to want to come here anymore because this country used to be the country of new ideas and innovation, now it is the country of, "NO".
Hell, the Indians don't even want to come here anymore their going to other countries and creating brain trusts.
But look on the bright side, at least the red headed pecker-woods are happy.
Melvin| 10.27.09 @ 8:10AM
I meant to say earlier is, "that our government gave companies tax breaks to move overseas."
S.L. Toddard| 10.27.09 @ 8:57AM
Your choices as a consumer. Good lord. That is part of the problem - Americans consider themselves "consumers" first, and citizens last.
Our economy is in the shambles it is in large part due to free trade - period. We experienced our greatest economic growth under America First trade policies, and our decline under Free Trade. We became the greatest producer in history under America First trade policies, and the most bankrupt debtor nation in history under Free Trade. We make nothing and must borrow from the Chinese to purchase the goods they produce and that we no longer make. The consumer saves some, allegedly, but the jobs and the wages go to foreigners instead of to our fellow citizens.
Ryan| 10.27.09 @ 9:31AM
Bull.
Look at the auto industry - protectionism killed it, by helping promote poorly-made American autos up through the '80s and stifling the innovation that we needed to remain competetive. We're actually getting more AMERICAN jobs here in auto because OTHER countries are finding it cheaper to make them here.
How does protectionist trade promote freedom?
S.L. Toddard| 10.27.09 @ 9:40AM
"Promote freedom" where? I couldn't possibly care less about "promoting freedom" anywhere outside our borders.
Ryan| 10.27.09 @ 9:44AM
At which point, you don't promote freedom for Americans. I want the freedom to be able to choose the best price I pay for something.
I can't get that with protectionist trade policies.
And, by the way, I don't buy on debt. I save and then spend.
S.L. Toddard| 10.27.09 @ 9:47AM
"At which point, you don't promote freedom for Americans. I want the freedom to be able to choose the best price I pay for something."
That's fine. You're under no obligation to care about the welfare of your fellow citizens... sorry - "consumers".
Ryan| 10.27.09 @ 9:54AM
Actually, I am. I am concerned that Americans be able to compete in a worldwide marketplace doing the best possible job in the best possible market.
We cannot do that when we protect out-of-date and expensive American jobs that are better spent in other fields. We are an innovative and informative country; protectionism inhibits that.
S.L. Toddard| 10.27.09 @ 9:57AM
"I am concerned that Americans be able to compete in a worldwide marketplace"
Yeah? How's that working out? Oh right - $800 billion trade deficit and no manufacturing base. Woops.
Alan Brooks| 10.27.09 @ 10:00AM
"Government run education is producing idiots that have the work ethic of a sloth, and want to start in management right off the bat."
Toddard never mentions skools-- maybe his family are teachers? or in unions? politics? we'll never know.
S.L. Toddard| 10.27.09 @ 10:10AM
My brother is a teacher. I was, for a while. Nevertheless, I am in favor of absolute local autonomy of public schools - no federal interference whatsoever, and school vouchers to eventually phase out public schools entirely in favor of private ones.
Pingback| 10.27.09 @ 8:17AM
All In One Information » The American Spectator : Mad About Free Trade links to this page. Here’s an excerpt:
Ryan| 10.27.09 @ 8:41AM
As anti-protectionism as I am, I have one thing to add.
Tom Clancy, for all his blathering and repetetiveness, has one good idea that he probably got from someone else.
Reciprocative trade agreements. Whatever your policy for trade is, it will be ours toward your country. Worth thinking about.
Rmm| 10.27.09 @ 9:18AM
My only comment about free trade is that it has ushered in a tsunami of poor quality, crappy product that doesn't work as it should. The Chinese do not know what quality-control is about. I have been burned so many times, that I refuse to waste money on anything made there, unless of course, it is disposable, junk. Buy American Made.
Ryan| 10.27.09 @ 9:27AM
Which is how the market SHOULD work. Restricting access isn't the answer.
S.L. Toddard| 10.27.09 @ 9:44AM
It is not "restricting access", it is levelling the cost difference due to the expense accrued by our not using slave labor and providing humane working conditions etc.
S.L. Toddard| 10.27.09 @ 9:20AM
"It's better that foreign nations have these millions of jobs instead of us - now we can buy slightly cheaper crap at Wal Mart"
- Free Trade Fanatic
Witness the wonders of Free Trade:
http://en.wikipedia.org/wiki/F.....1-2005.png
Not exactly "free", is it.
Ryan| 10.27.09 @ 9:35AM
Your argument might make sense if we had a high poverty and unemployment level through most of it.
We didn't.
DJF| 10.27.09 @ 2:33PM
But we had bigger and bigger trade deficits during that period and someday soon the IOU called the dollar will no longer be accepted. We have been living on borrowed money and that can’t last forever and then the consequences of free trade will really become apparent.
S.L. Toddard| 10.27.09 @ 9:23AM
Here is a list of the world's countries arranged according to their account balance - going from the country with the highest trade surplus down to the country with the highest trade deficit. Witness what Free Trade has wrought, and try not to sprain your scrolling-finger on the long trek down to the United States:
http://en.wikipedia.org/wiki/L.....nt_balance
Amor de Cosmos| 10.27.09 @ 5:11PM
We do not have free trade with much of the world, we have open trade. We account for roughly one quarter of the world's production with 3% of its population. Accordingly, the vast majority of our imbalance is energy.
I know of several policy initiatives that could correct that issue but they involve drilling into American soil and building nuclear reactors.
Pingback| 10.27.09 @ 9:24AM
FlipHomes.US - Realty Flipping Guide and Blog » Blog Archive » Mad About Free Trade - links to this page. Here’s an excerpt:
Alan Brooks| 10.27.09 @ 9:49AM
Okat but do we need Noam Chomskys and Ravi Batras to tell us with $24.95 books?
$195.00 seminars.
Act now and you get the book and the seminar together for $119.99
(this advertisement was printed in China)
Alan Brooks| 10.27.09 @ 9:53AM
neoliberalism is fine if you have, say, schools that aren't substandard and overpriced.
neoliberalism in new wineskins, yeah. Right on, libertarians, Right on. Sho' nuff.
Pingback| 10.27.09 @ 11:24AM
American Spectator readers “Mad about Trade” « Mad About Trade links to this page. Here’s an excerpt:
Lu Dumak| 10.27.09 @ 11:36AM
Try reading Milton Freidman, Thomas Sowell and Walter Williams for starters. Free to Chose. Our jobs go overseas because we have the second highest Coporate taxes. People pay taxes not Coporations. The environmentalists add more costs Lobbiests, like the sugar lobby add costs and drive candy companies out of the county is jusy one example. Democrats hate business so they will not be happy until all business are gone.
Benjamin Paul| 10.27.09 @ 11:52AM
Ye gods America---what a mess we have made of ourselves by being so ignorant,complacent, and indifferent as individuals. Could it be from our past indulgence of our First trade policies or---of our complacency in today's Free Market System??? Geeez---how is one to know without having first been "brain washed" by our leading college professors'-oral socialized academics???---courtesy of the prominent "FOUNDATIONS "of The One World Gov't. living in the good ole,U S A !!! the ole' man
Paul from SA| 10.27.09 @ 12:00PM
Free Trade starts with freedom -- the freedom and liberty to buy whatever I want from whomever I want (excluding narcotics, explosives, etc.). The gov’t should not interfere with my economic transactions.
The effects of Free trade, like many other economic concepts, is counter-intuitive. Liberals often fall for the most simplistic beliefs when it comes to economics, without really analyzing the consequences.
A trade deficit is a [good] sign of wealth. The larger, the better. Check the stats: there is a positive correlation between a trade deficit and economic activity and increasing wealth. I have a 100% trade deficit with my grocery store. I have a zero% trade deficit with Ferrari.
Liberals believe raising the minimum wage helps minimum-wage workers and helps the economy; in fact the opposite is true. It artificially raises the price of low-end labor, harming businesses, resulting in less low-end labor.
Liberals believe high income taxes are good for the economy. In fact, it results in less income being earned and is a powerful method of control. (A better source of revenue would be a wealth and property tax on pompous Democrats.)
The same is true about free trade. Liberals believe gov't should control what citizens are allowed to purchase (and sell) with their own money. It is usually disguised to help workers (Dem. unions), and liberals’ insatiable need to control citizens. Liberals often look only at short-term benefits and disregard the long-term consequences.
Trade cannot ever be fair or even. That is the ultimate fantasy for liberals, for trade and for life in general. Wages, cost of living, cost of business will never be equal. This is often used by liberals and simpletons to oppose free trade. But what about all the dollars they end up with? Well, what you do if you had billions in Mexican Pesos?
If I want to benefit an American business to help the owner(s), the employers, suppliers, etc, I will gladly buy American. But it should be my choice, not some liberal politician in Washington D.C.
This is a political issue, not an economic issue.
Ken (Old Texican)| 10.27.09 @ 12:15PM
Toddard
.....is still a lying twisted fool. Don't waste time on his stupid blah blah blah.
Having CEOed two very very large international trading companies, and having "camped out" with my teams and done huge projects in some forty countries, I have a good perspective.
(I no longer have an axe to grind in that regard. My business has been domestic for over ten years.)
I am going to now briefly summarize. ( I will write an entire essay and prove beyond a shadow of doubt the points I shall now make, but I shall do so on WORD, so I can save it for a Team America essay).
1. As mentioned above by a perceptive commenter, reciprocating "level field" trade is crucial.
2. Americans are by far the most productive ...producers of goods and services in the entire world by such a huge margin as makes no difference. Fact!
3. American innovation with free "non-myopic entreprenuer/interprenuer " producers should be the leaders...not the grunts.
4. Americans are wasted manufacturing and delivering "buggy-whips". Let the countries pulling themselves up make the darned buggy-whips...until they can make, (and afford), horseless carriages.
5. Chop income taxes to ZERO on ex-patriot "producers" (note I never use the communist term "workers".) They will bring most of their money home, (America), and buy stuff.
6. MOST IMPORTANT...figure out how to get 50% of would-be producing taxpayers here at home.....OFF THE DAMNED DOLE/WELFARE!
Help the poor knotheads do something productive
.....or eat thin soup. Not only will that save us one dollar in welfare payments...it will allow them to proudly pay a dollar of taxes!
DAMN...we have just DOUBLED OUR GROSS DOMESTIC PRODUCT LIKE MAGIC! A PIE TWICE AS BIG TO ENJOY...BY ALL OF US!
(except the people here who are unable to produce.) We can be generous and give them a darned good subsistence.
S.L. Toddard| 10.27.09 @ 6:33PM
Ken, I've perused the T.E.A.M. America site and still not seen your theme song linked there. Why is that?
Here it is - nice work, btw:
http://www.youtube.com/watch?v=YZdJRDpLHbw
Ken (Old Texican)| 10.28.09 @ 3:20PM
Hello Toddard.
Nasty, slutty, aren't you?
Three pointer into the punchbowl...again.
You know what is really funny though? In a society where dueling is permitted...there is a certain degree of civility.
In Texas...millions of signs exhorting "drive friendly".
Know why that is? Virtually every vehicle is "armed".
Nasty twisted little worms like you would last about .....three months... if you left mama's basement and got on the roads here.
Advice: stay where you are hiding behind a keyboard. You make me laugh out loud....wimp.
Dai Alanye | 10.27.09 @ 1:01PM
Bilge is still bilge when uttered by a right-wing employee of Cato, and Griswold utters a lot of it.
The most basic problem with unrestricted free trade is that it infinitely expands the numbers of "jobs Americans won't do." Our present system of high welfare (I use the word in its broad sense) is that it has taught many Americans the value of not working for a competitive wage.
Immigration supplies workers for most of these "jobs Americans won't do" within the US, and cheap imports effectively supply more willing hands. So add manufacturing apparel and molding plastics to "jobs Americans won't do," as we earlier added making steel and machine tools.
The typical defense by free traders is that Americans will retain "high-paying" service jobs and high-tech industry. Right, because we're so naturally intelligent in this nation that furriners will never be able to invent leading technologies or figure out ways to replace service jobs with automatic equipment and robotic mechanisms.
I can foresee a day when we'll be limited to farming, merchandizing and "service" jobs in America, and where all the income we get from foreign investment will be eaten up in welfare to support the vast numbers of unemployed and under-employed. But not to worry—by then our new name might be something like the Socialist Republic of North American, or perhaps the Islamic Theocracy of America, I suppose.
However valuable free-er trade once was, Free Trade is no panacea for American financial difficulties, and we'd best find a way of moderating its deleterious effects.
I'll suggest three possible ways of alleviating its problems. First, a universal but modest tariff set at a level high enough to supply a significant portion of the Federal budget. Second, completely elimination of taxes on business profits. These are in any case ultimately paid by the consumer. Third, reduce all welfare, thereby making it more attractive to labor for a living.
To these, of course, we can always add the phantasmagoric universal hope for a reduction in government expenditures, with a consequent reduction and/or elimination of present taxes.
Ryan| 10.27.09 @ 1:58PM
You're replacing one supposed panacea with another. You're still limiting the freedom of the American consumer. You're still not leaving room for innovation and working toward more modern and forward-looking forms of business and entrepeneurship.
I agree with you about the corporate tax structure, but tariffs hurt everyone and still establish a false security, and push resources to where they are unneeded.
Dai Alanye| 10.28.09 @ 12:57AM
No panaceas, simply choose your poison—income tax or tariff. Tell us which one is more detrimental to American economic health.
Ryan| 10.28.09 @ 8:26AM
You're presenting an either-or proposition without a possible third option and other items that may reduce the need for either.
Jim R| 10.28.09 @ 11:36AM
There are more options than those provided. Expand your horizons, think outside the box, in fact burn the box. Try brainstorming. Throw out wild ideas and discuss them rationally.
Assume that my previous post is correct - that it is not free trade but continuous unbalanced trade which is unsustainable.
Add in our wretched employment figures (almost 1 in 5 people un/underemployed per U-6) and, I could also argue separately, unlikely to go below that for years and likely decades.
Assume also that we have this set of highly innovative entrepreneurs and executives who can solve any problem if they can benefit from the solution.
Now, make every US business report its growth in full-time US-citizen US-based employment each quarter. Include it in SEC reporting so it falls under SARBOX and make it a jail-able offense for private company executives to misreport.
Any company or company whose parent company that does not show a rolling 3-quarter average of increase of x% such employment will have all existing gov't contracts reviewed for cancellation or modification, not be eligible for new gov't contracts, and all special tax breaks will be repealed. For all Industries that do not show aggregate employment increases, any special industry-wide tax breaks will be repealed.
How does management increase such employment? By figuring out how to create and build, in the US, products and services for export. Management has for too long been rewarded for cutting costs by shipping jobs offshore. Any idiot can do that. Start rewarding management for creating jobs here and exporting. Supposedly these people, some of them paid tens and hundreds of millions per year, are smart enough to do this if incented to do so.
I admit I just thought of this, and it likely has all kinds of problems and issues and necessary exemptions. But it might become part of my kit of economic arguments. It's actually based on what happened in 1995-2000, when for the only sustained time since 1947 (all the BOLS has data for) unemployment decreased and productivity increased. Businesses invested in American workers, became permanently more productive and we all remember how well our economy did in that timeframe. But again, that's a whole separate discussion.
Any thoughtful responses would be appreciated.
Ken (Old Texican)| 10.27.09 @ 1:51PM
Dai
good PARTIAL THOUGHTS! SEE ABOVE.
Ken
DJF| 10.27.09 @ 1:57PM
“”””Most Fortune 500 companies benefit from globalization, and that is fine. They employ a lot of Americans and sell a lot of U.S.-brand products around the world.””
I notice that Daniel Griswold does not say “U.S made products” he only says “US brand products” which allows him to include all the products made in Communist China sweatshops for so-called US corporations.
Even the US corporation part is a lie since if you ask most of these corporations they will claim that they are “global corporations” except the banks which now have suddenly declared themselves US banks again in order to get US tax dollar bailouts
Jim R| 10.27.09 @ 2:00PM
Free trade is good. Balanced trade is mandatory. The United States has 33 continuous years of trade deficits, resulting in a cumulative trade deficit of $10T, roughly the market cap of all publicly traded US companies and roughly equal to GDP. Note: this is the Trade deficit, not the Federal deficit. Whole separate set of books. We borrow or sell assets equal to $400B per year to service this deficit, with no end in sight, that number just keeps growing. We either pay interest on the money borrowed, or we are experiencing opportunity costs from selling assets. Add in that once the manufacturing goes offshore, so does the intellectual capital. For instance, while the US invented cell phones, Nokia in Finland is now the worlds largest designer and manufacturer of cell phones. The US cannot innovate fast enough to offset both the tangible and intangible cost of unbalanced trade.
Lastly, the benefits of free trade to be achieved through Comparative Advantage only works if both trading counties are at full employment. Google "Ricardian Full Employment" if you don't believe that. The US is several years, if ever, away from full employment. China and India are decades if not centuries away from full employment. So Comparative Advantage does not work. The countries with Absolute Advantage (not the US in everything except education-which is improving overseas) wins. We pay a low "sticker" price, but the total costs of items purchased offshore are likely higher than if we had manufactured them in the US to begin with, considering invoice price, borrowing costs, opportunity costs and lost innovation capability. People who think that unfettered free trade is sustainable and that we benefit from lower cost items don't consider all of the costs.
ken (Old Texican)| 10.27.09 @ 4:29PM
Jim R.
Excellent comment!
Please keep up the good work and your additions to the Spectator.
Best regards
Ivo Vegter | 10.27.09 @ 2:10PM
To Toddard et al: Funny that third world countries (where I live) use the very same arguments to defend protectionism. They can't both be right. Either first world protectionists are wrong, or third world protectionists are wrong, or both are. Logic says both are.
DJF| 10.27.09 @ 2:28PM
You leave out the choice that they are both right. And since every major economic power(USA, Britain, Germany, Japan, South Korea, etc) got that way by engaging in protectionism, it looks like protectionism has a good case for it.
Melvin| 10.27.09 @ 3:41PM
In short, I guess of this issue could be summed up, it would be, that the government is bleeding our hard work and sweat dry through more spending than what we are producing.
Maybe the only way that we could get governments attention is to stop producing. National Strike if you will. There is only two ways to kill vermin, one way is to cut it's head off, or the other way starve it to death.
Ken (Old Texican)| 10.27.09 @ 4:39PM
Melvin
Pretty good conclusions. Thank you.
You know what is really insane?
With all the luggage the American taxpayer is forced to carry.....
STILL...if we simply choose to develop our own fossil fuels and quit importing, we cold darned near balance our trade numbers.
Interesting huh?
Tim| 10.27.09 @ 4:53PM
Some things we do export to China : air, water and soil pollution; exploitive economics and cancer cases.
You'd think the Chinese would catch on, but hell no, they just keep mining brown coal to power all those factories filled with desperately poor slobs.
Ken (Old Texican)| 10.27.09 @ 6:53PM
Tim,
Do you read fiction? If so, a new paperback out:
"The Last Centurion" by Ringo. A must read! A novel written around our present day realities. A great adventure story to boot.
Your "greenie" stupidity sometimes gets you in trouble, Tim, blocking good sense.
A working guy in China is OLD at forty. Always has been..... since antiquity.
Brown coal lets him have a little better life than any of his ancestors eating dirty water for supper.
They only recently discovered capitalism, but have not quite gotten around to civic freedom yet.
Our greatest export to China is "hope" and Christianity which is spreading like wildfire.
Duh..."Love one another as I have loved you."
It is not the "number of days" but the "quality of days" that makes a wonderful life.
Pingback| 10.27.09 @ 8:30PM
The American Spectator : Mad About Free Trade | Product Review links to this page. Here’s an excerpt:
Kate| 10.27.09 @ 9:20PM
Free trade - if confined just to trade - might be beneficial, but the trade agreements the US has become embroiled in are neither free nor fair, and are in fact destructive to US sovereignty.
Take NAFTA. This agreement laid the foundation for economic and POLITICAL integration of the US with Mexico and Canada, replete with the "free" flow of goods and labor and open borders. NAFTA also includes a tribunal that settles disputes, the decisions of which take precedence over the US Supreme Court. A case was brought just last year in fact. The integration process started by NAFTA is continuing under Obama, despite his promise to renegotiate this agreement. Then there's the Free Trade Agreement of the Americas (FTAA), the extension of NAFTA right down to the tip of S America.
There's a great deal of evidence to support the idea that "free" trade has been an insidious mechanism used to undermine American sovereignty.
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Andrew Lale| 10.28.09 @ 5:36AM
If you had just arrived on earth, and only had Mr Toddards words of wisdom to go by, you would probably imagine that the United States was a poverty-stricken wasteland, populated by ignorant, greedy wastrels, living at the mercy of China and India. Rather than the country with a GDP twice its nearest rival, and where even poor people have TV's and central air. You need to get out more, Mr Toddard. Have you been to Angola? Have you seen what it is like to live in a country that prevents its citizens from trading freely or starting businesses except under the most constrained circumstances?
Amor de Cosmos| 10.28.09 @ 4:01PM
North Korea follows the Toddard prescription. Should it not be held up as an example of universally acknowledged success?
It must always be rembered that the words "laissez faire" were uttered by a French merchant when asked by the king's intendant about what "more" the government could do to stimulate trade. That was in the 17th century, but the Toddards of the world have no idea how to function when "left alone". If they did, they would not support more government intervention.
Jim R| 10.28.09 @ 5:47PM
Amor - can you provide a source for the statement "the imbalance in our trade deficit is due mostly to our purchase of foreign energy. " I couldn't easily find a link, but the last time someone made this claim I seem to remember that I was able to show that net energy imports/exports are actually a comparatively small portion of total import/exports. Any credible source would be appreciated.
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Uniquindividual| 11.9.09 @ 9:17PM
Why has the middle class shrunk over the last 30 years? Why does the average american have to work more than 100 hours more a year then they did 30 years ago?
Why do all europeans get five week vactions?
Why is the distribution of wealth now similar to what it was in the 1920s? (And it is recognised that the lack of purchasing power in the lower classes contributed to the depression)
Why do americans have to compete with slave labor that is not bound to environmental laws?
Why doesn't the aristocracy recognise that in the long run they make more money with a strong middle class?
Pingback| 12.11.09 @ 12:48AM
The American Spectator : Mad About Free Trade Victoria University VU China links to this page. Here’s an excerpt:
Nasdaq7| 1.22.10 @ 5:48AM
Ryan you are brain-washed - ever hear of software piracy? Trade isn't fair. Free trade isn't fair. Trade never is free and never is fair. So while you may be promoting free trade - you are promoting something that isn't fair towards US businesses and consumers. Just because someone else can manufacture something better doesn't mean that you have to hand your monopoly control to them. They surely won't be merciful when setting prices once they control the market.
Nasdaq7| 1.22.10 @ 6:42AM
And I might add: why promote free trade with China? Did you know that you can produce products much cheaper in Africa than in China? China is importing a load of natural resources from African countries and the labor costs in Africa is much cheaper than in China. Africa just hasn't developed its infrastructure and ports and financial markets as China has - its ability to mass produce and export. So there is no fairness in terms of trade. The best producer doesn't get the best deal. US consumers are short changed in terms of trade - trade is favoring China at the expense of the US and other countries: trade isn't fair. It is a myth that unfair trade will benefit US consumers. And you can see it in the numbers.
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I’ll have a Poptropica full written walkthrough very soon, but in the meantime, here are some answers to some of the frequently asked questions about Mythology Island. Having trouble? Post a question in the comments and I’ll try to answer it!
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You can see how to do this in the videos, but basically you need to jump up when the Hydra is about to strike. He will rear one of his heads back to attack and his eyes will bulge out. poptropica
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I’ll have a full written walkthrough very soon, but in the meantime, here are some answers to some of the frequently asked questions about Mythology Island. Having trouble? Post a question in the comments and I’ll try to answer it!poptropica
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