Free Trade vs. Protectionism

[GRH]

I must admit that I'm pretty uneducated about the merits of each. I've heard the author of a book called "Free Trade Doesn't Work" give a speech on C-Span2 before. I must admit, I think that I fall into the protectionist camp. We are one of the few nations in the world that employs true free trade. Most of our trade partners smack tariffs on our incoming goods, including China.

Not only does China put duties on American goods, they also manipulate their currency by de facto pegging its value to the dollar. This has led to the Chinese yaun being undervalued. Some economists suggest that the yaun maybe undervalued by as much as 25%. These economists suggest that if the yaun were allowed to appreciate to where market forces would place it, that it would slice the American trade deficit and could create as many as 1 million jobs in America.

Seeing as China is a currency manipulator, I think we should employ some good old-fashioned protectionist policy against them. We could start with 3-7% tariffs on all incoming Chinese goods. Or we could start with a low tariff and raise it a bit more in subsequent years, giving the market time to absorb the price increases. Either way, this would raise revenue and would protect American manufacturing.

[transjen]

When you ask the question "Where are all the jobs?" the answer is eight years of free trading W sending all our job overseas, Free trade in theroy sounds grand but in reality only benfits big bussiness by cutting cost for them and seeing jobs leave here and pop up in India and China and South America
NAFTA, CAFTA and all of W's free trading only gave us a royal :coupling:
Jerseygirl Jen

[DeaconBlues]

When I was younger, I was pathetically naieve about things, stupidly optimistic. I believed in "globalism," I thought the North American Free Trade Agreement was a good thing and a small step in the right direction.

UNlike most people, I am able to see when my opinions were wrong, and on the whole "globalism" and "global economy" idiocy, I WAS VERY VERY WRONG! I, like most Americans, was fooled, tricked, lured in by the idealistic image of a world-wide economic prosperity. For a multitude of reasons, it will NEVER work. The biggest reason being the horribly corrupt governments everywhere.

NOW, after I have come to a better understanding of things, I see that what other people would label "protectionist" or even "isolationist" ideology is NOT a bad thing.

I sincerely doubt that the U.S. is out of the mega-depression that the previous administrations (BOTH Democrat and Republican) put us into, I sincerely doubt that the U.S. citizens will see any real improvments for the next ten years. Hell, I doubt the average U.S. citizen has the resolve and determination to pull us out of the nose dive we are in.

But IF, IF we are to pull out of this mess... It will be through a process of restoring the economic middle class, honestly, I just don't think it will happen. I honestly do believe that the U.S. is inexorably being pulled down, we ARE going to become a "third world country" sort of economy.

But, for those of you who just cannot accept the reality of that grim prediction, I suggest you try to rebuild the U.S. economy. That will be difficult if not impossible given that most of our own government is working to destroy the middle class. (In 1970, the average CEO was paid a staggering 20 to 30 times what the average entry level worker was getting th the U.S., now it is 300 to 500 times the average worker's pay in the U.S.)

You can start by buying ONLY U.S. made things, U.S. produce, and spending as little money as possible outside the U.S. Keep in mind, many "American" things are not made in America (many Ford, Jeep, Chevrolet, etc. automobiles are assembled here, made elsewhere, yet some Subarus, Nissans and Toyotas are made in the U.S.) I truly believe it is a lost cause, but YOU can try to fix the U.S., as for me, I am seriously looking into immigrating to somewhere even worse that the U.S. where the little money I have left will actually pay for something (e.g. Philippines, Thailand).

[franalexes]

NAFTA and sending jobs overseas started long before "W".
Take a look at Clinton's first term.

[transjen]

NAFTA was in the works during Pappy Bush's term and was his brain child all designed on Reagans war to destory the middle class in the US
:eek: Jerseygirl Jen

[The Conquistador]

When you ask the question "Where are all the jobs?" the answer is eight years of free trading W sending all our job overseas, Free trade in theroy sounds grand but in reality only benfits big bussiness by cutting cost for them and seeing jobs leave here and pop up in India and China and South America
NAFTA, CAFTA and all of W's free trading only gave us a royal :coupling:
Jerseygirl Jen

Protectionism rarely works and tends to hurt the very people it tries to help. The best example is Great Depression. It should have only been a market bubble but when the Smoot-Hawley Tariff Act was passed, it just drove the economy deeper into the ground and made it that much harder to recover from. Also, look at the amount of progress the Auto Workers Union has brought to Detroit and all the wonderful things protectionism have done for them. :frown:

"Comparative Advantage" is the word of the day.

With that said, free trade only works if the countries you are dealing with also have a free trade policy and if your country actually has something to offer to other countries. Consumption and production are two entirely different things.

[The Conquistador]

I must admit that I'm pretty uneducated about the merits of each. I've heard the author of a book called "Free Trade Doesn't Work" give a speech on C-Span2 before.

That's the problem. Read some Van Mises's works or Milton Friedman's work before you go any further.

[GRH]

I'm familiar with comparative advantage to some extent. Like how advantageous it is for companies to outsource all their labor to China, where things can be produced for slave wages. Sure, it gives us the advantage of cheap goods...But no manufacturing jobs. So we get a "service economy." And of course our "free trade" with China isn't really free, as China has tariffs on American goods.

I'd rather China let their yaun appreciate 15% than have tariffs. But outside of China taking action, I think we should.

[The Conquistador]

China is the least part of our problem. Sure, they may put tariffs on our goods but alot of the problem stems from us. Americans need to level the playing field with foreign labor. You can't do that when your government mandates that businesses pay a worker 10 times the market value for unskilled labor.

Labor regulations, unions, minimum wage and business taxes are what's fucking us over right now and if you get rid of those, we'd have most of the battle won. Most of these regulations are just influenced by larger businesses to stifle competition anyways.

If this was truly about jobs, there would be a massive cutback on labor saving machinery so that there would be more manual labor jobs. But that is not what it is about. The so called "lack of jobs" that Americans are quite simply(and justifiably) unwilling about working a shitty paying job.

The real reason the US is losing out is because of domestic policies that have little to do with international trade. Think ADA, over regulation of all industries, Equal Opportunity employment, subsidies, unions, OSHA, etc. Labor costs are just one small fraction of the whole equation. Try opening a paint factory in the US right now, and see what you are up against. Taxes, licensing, and zoning restrictions would bury you before the first gallon of waste is poured into the river.