free trade bad?

[dragonstar57]

free trade is damaging the u.s economy and is a failed policy.

but why does no one say that?

[lemur]

free trade is damaging the u.s economy and is a failed policy.

but why does no one say that?

 

I assume you mean free international trade and not free domestic trade or free interstate trade, etc. I think what most people complain about with free trade is that competition from workers/businesses oriented toward a lower cost-of-living are able to offer better bargains on products. So, for example, if rent costs, say, $20/month for a worker in Malaysia or Mexico, US-based workers and businesses feel that they cannot fairly compete. What is confusing to me is why the people who want to protect domestic markets from foreign competition don't advocate devaluation of the US dollar relative to other currencies. Doing this would effectively make US prices more competitive globally. It seems like on the one hand, those who are against free trade want to in-source everything to domestic producers and, on the other hand, they want to keep the US dollar highly valued to maintain cheap imports. Well, if you want to have access to cheap imports, then you're not really in-sourcing to domestic workers/businesses, are you?

[Sisyphus]

free trade is damaging the u.s economy and is a failed policy.

 

That is a statement that requires support.

[dragonstar57]

things can be made cheaper elsewhere

so they are made elsewhere

so there are less jobs in the states

so fewer people buy stuff

companies outsource more to make up profits

so more people have even less money etc

[Sisyphus]

If things are made cheaper elsewhere, then that means I'm getting them for cheaper, meaning I have more money to spend, meaning I buy more things and create more jobs.

 

What is the difference between free trade between countries, and between states? Or between towns? Surely most of the things you buy don't come from your own town. Would the people of your town be better off if they weren't allowed to buy and sell things with people who didn't live there?

[lemur]

The problem is not so much with free trade itself. The problem is with the global division of labor that results. This effectively amounts to hordes of consumers exploiting hordes of workers divided at the ethno-national level. My impression is that as consciousness of this exploitative nature of global capitalism grows, it creates resentment and the desire for freedom/independence among people who feel their lives are dedicated to serving rich westerners. This is not to say that many people don't like the opportunity to produce exports. It's just that when the goal of achieving economic independence doesn't come quickly (or at all), people lose faith in the system. Then ask yourself what possibility there is for everyone on Earth to live like a middle-class westerner when doing so requires that loads of workers accept lower wages?

 

Free trade would be great if it was really free. It would be if the global free market was actually an idyllic type of Adam Smith economy where everyone freely entered and exited markets and jobs at will instead of being manipulated by debt, agreements, contracts, etc. that lead to people ending up in jobs and contracts that they're not really happy with. In a true free market, there's not supposed to be any will to exercise top-down power, but in practice I have the idea that free trade is used for exactly that purpose. Ideally, though, if it was really free it would be great.

[JohnB]

free trade is damaging the u.s economy and is a failed policy.

but why does no one say that?

 

Because you don't actually have "free trade"?

[Mr Skeptic]

Free trade is beneficial to all parties involved (so long as the trades aren't coerced and don't have externalities). By buying products made cheaply elsewhere, we are living a better and cheaper life (in dollars), which is in fact the reason that we want our currency to be worth so much relative to other currencies. On the other hand, we have a deficit -- but overall that is not such a bad thing. As our jobs go elsewhere and are done more cheaply (aka more efficiently) elsewhere, as our trade deficit increases, we are increasing the quality of life and the value of the other countries currencies, and decreasing our own. This then means that foreign products will become more expensive and our own cheaper, both for ourselves and for others, a self-balancing system. Of course it would also mean our position of power and relative comfort would be lowered.

[The Bear's Key]

What is the difference between free trade between countries, and between states? Or between towns? Surely most of the things you buy don't come from your own town. Would the people of your town be better off if they weren't allowed to buy and sell things with people who didn't live there?

1) Constitutional protections exist for workers in the U.S. (it doesn't change between states). 2) All manufactured/farmed goods anywhere carry with them a secondary negative-impact price -- usually raised/accelerated by how much further a good dips below an honest/natural price. For example, a company dumping toxic sludge in rivers or entrapping children as workers lowers the (honest) price for customers, but raises the negative-impact price for that region and/or the world. 3) Quality of life for citizens (negatively affected by various industries' bad habits in manufacturing) is protected by regulation in the U.S. 4) Slave labor's prohibited here. 5) Unions by workers that brought us overtime pay (after 40 hours), federal holidays and weekends off, job safety, etc.

 

Free trade is a loophole -- for industry to avoid dealing with everything listed above.

 

It's strategy.

Edited November 9, 2010 by The Bear's Key

[padren]

To say free trade (or Globalized Trade, or whatever we really mean) is "bad" due to negative impacts is like saying the industrial revolution was bad due to the negative impacts. Whenever new practices become widely practical in a short time (whether the invention of factory manufacturing during the beginning of the industrial revolution, or the capacity to coordinate and manufacture products overseas more cost-effectively than local manufacturing) it takes time for laws to appropriately account for the new shift in checks and balances.

 

Turning a blind eye to local companies dumping toxic sludge next to their third world factories is no different than turning a blind eye to fresh one-armed street urchins hitting the streets of Liverpool and London on a consistent basis. Then people see the problems, complain, some "robber barons" whine while others adjust and everything smooths out in due time. It does require that people actually push to see those problems addressed, and we may morally wish that people pushed their representatives faster (don't we always?) but I don't think free trade is bad, nor that the inequities are inherent or unaddressable.

[The Bear's Key]

The free trade philosophy and controversy isn't new. It's been around since the nation's founding, tarriffs being the hot issue.

 

Don't get hung up on the name, "free trade". What's the larger picture?

 

Go to the supermarket. Read the ingredients on any number of packages, until you notice a curiosity. Sugar, wheat, corn, soy oil, in nearly everything.....usually as the first ingredients -- which tells us (by law) a product has more of the ingredient than others down in the list. Why? Because it's cheap. And why are those specific ingredients so cheap? Because our taxes paid for much of the crop.

 

Except we pay once on the tax bill, and we pay once more at the supermarket. Twice.

 

Huge companies with billions of dollars are getting a welfare check from the public to grow crops, basically, and so to maximize profits, they'll cram into our foods all manners of ingredients from crops that were made super cheap -- and find dozens of creative variations and uses for them so customers aren't the wiser they're really eating the same few crops. You know, faked diversity in what you eat and nutrients.

 

Pick up a loaf of 7-grain bread,* and you'll see wheat at the very top (or near it), and the rest of the grains we find in the "less than 2% of..." -- far below the sugar, and even often below the salt and yeast.

 

But forget all that.

 

Imagine a farmer in Mexico. She's not a big conglomerate, but each year her farm's crop sells to multiple regions. Until the arrival of NAFTA, that is. Once the free trade agreement gets underway, Mexico's flooded with crops paid by our taxes. Its local farms crumble under the onslaught of cheap goods -- with an unfair/artificial competitive edge given (by our tax payments) to the U.S. conglomerate "farms".

 

Unfortunately, that's not all.

 

Chemicals or pesticides banned in the U.S. aren't banned in the free trade nations. So we still eat them. And we used to have tarrifs protect us against the cheapness of destructively made foreign goods undercutting the honestly made products in our nation, but we can kiss that goodbye as well.

 

So think about how everything's supposedly going to work out. Normally that'd be the case, in a nation with a Constitution like ours. But the free trade nations don't have a Constitution like ours.

 

It's about time we started a policy of free trade with only the nations whose principles match ours in both treatment of workers and sufficient oversight/regulation of their industries and products.

 

 

As I mentioned before, it's a strategy.

 

*(Higher grain bread's the same -- in 8, 9, 10, or 12 grain breads, you find a teeny whiff of the other "multi" grains listed under the 2% and below the sugar or yeast)

Edited November 10, 2010 by The Bear's Key

[dragonstar57]

more and more i hear about china basically ending american industries through competition

how can anyone argue that this is economically good for the u.s?

Edited January 18, 2011 by dragonstar57

[lemur]

The free trade philosophy and controversy isn't new. It's been around since the nation's founding, tarriffs being the hot issue.

 

Don't get hung up on the name, "free trade". What's the larger picture?

First, don't get confused in the corporate-governance vs. elected-governance divide. Both are forms of governance that exercise forms of control that makes trade less free. It's easy to argue that corporate-governance in the absence of elected-governance is the same thing as a free market, but it's not. It's just private control instead of public control. In fact, both forms of control play off each other in subjugating individual economic freedom; although they also promote individual freedom in some ways as well.

 

Go to the supermarket. Read the ingredients on any number of packages, until you notice a curiosity. Sugar, wheat, corn, soy oil, in nearly everything.....usually as the first ingredients -- which tells us (by law) a product has more of the ingredient than others down in the list. Why? Because it's cheap. And why are those specific ingredients so cheap? Because our taxes paid for much of the crop.

 

Except we pay once on the tax bill, and we pay once more at the supermarket. Twice.

First you say they are subsidized to make them cheap, then you say we pay double. It sounds like you are arguing IN FAVOR of free trade instead of subsidizing farms. Also, if you want more flax seeds or something other than the ingredients you mention, why not lobby for promotion of those in farm subsidies? What makes you think that cutting subsidies to these other products will suddenly stimulate production of ingredients you want to see more of?

 

Huge companies with billions of dollars are getting a welfare check from the public to grow crops, basically, and so to maximize profits, they'll cram into our foods all manners of ingredients from crops that were made super cheap -- and find dozens of creative variations and uses for them so customers aren't the wiser they're really eating the same few crops. You know, faked diversity in what you eat and nutrients.

I agree with the premise of what you're saying. I just think there are so many people who would get upset if you started subsidizing 'weird' health foods. There are people who eschew whole wheat bread in favor of white bread. Imagine putting sprouted grains or millet and flax on their menu. I'd be interested to analyze the economics of promoting more food diversity, but I think it's unfair to blame it on government and corporations when consumer preferences and culture may be the defining factor.

 

Imagine a farmer in Mexico. She's not a big conglomerate, but each year her farm's crop sells to multiple regions. Until the arrival of NAFTA, that is. Once the free trade agreement gets underway, Mexico's flooded with crops paid by our taxes. Its local farms crumble under the onslaught of cheap goods -- with an unfair/artificial competitive edge given (by our tax payments) to the U.S. conglomerate "farms".

Why is it that free trade doesn't give rise to this farmer's superior crops spreading to US farms, who look to her as an example for innovation? If consumer-spending wasn't such a lucrative source of income, free trade could be a means of increasing diversity instead of reducing it. I think this logic of closing borders to stop cultural homogenization is self-defeating; i.e. once you start using containment-strategy without doing anything about the root cause, you're basically just accepting the thing you're critical of as long as it goes on within a bounded territory.

 

Chemicals or pesticides banned in the U.S. aren't banned in the free trade nations. So we still eat them. And we used to have tarrifs protect us against the cheapness of destructively made foreign goods undercutting the honestly made products in our nation, but we can kiss that goodbye as well.

How can you assume that "products made in our nation" are made honestly and "foreign goods" are not? You are right to be concerned about the ethics of economic practices, but why must you filter these through assumptions based on national identity? Believing that everything 'American' is good and everything 'foreign' is bad is what allowed economic ethics to degenerate as far as they have already.

 

So think about how everything's supposedly going to work out. Normally that'd be the case, in a nation with a Constitution like ours. But the free trade nations don't have a Constitution like ours.

But trade-relations facilitate political leverage to stimulate democratization, if the political will for such is present. It will not be, however, as long as people fear free trade instead of seeing it as a vehicle for progress.

 

 

It's about time we started a policy of free trade with only the nations whose principles match ours in both treatment of workers and sufficient oversight/regulation of their industries and products.

That would be fine, but then the regulations shouldn't be used to control markets in favor of the interests of influential players.

 

more and more i hear about china basically ending american industries through competition

how can anyone argue that this is economically good for the u.s?

Because it pushes US markets to become more efficient. Where efficiency is considered bad for some humanitarian reason, education and specific policies should regulate it. Banning trade with Chinese businesses indiscriminately would just obfuscate the economic details. It would be like seeing that a kid gets bad grades in a class and instead of examining what is causing their shortcomings, insisting that the solution is to change classes or schools. You have to identify specific problems before you can begin to come up with solutions. The biggest problem right now is that too many people treat recession as a general problem instead of focussing on specific goals and overcoming the barriers associated with them.

 

 

 

 

[dragonstar57]

Because it pushes US markets to become more efficient. Where efficiency is considered bad for some humanitarian reason, education and specific policies should regulate it. Banning trade with Chinese businesses indiscriminately would just obfuscate the economic details. It would be like seeing that a kid gets bad grades in a class and instead of examining what is causing their shortcomings, insisting that the solution is to change classes or schools. You have to identify specific problems before you can begin to come up with solutions. The biggest problem right now is that too many people treat recession as a general problem instead of focussing on specific goals and overcoming the barriers associated with them.

there is are several very specific problems posed by trade with china

1.) the Chinese work for less than Americans so what is there to make more efficient? become just like china?

work for peanuts? not care about worker safety?

[Mr Skeptic]

there is are several very specific problems posed by trade with china

1.) the Chinese work for less than Americans so what is there to make more efficient?

 

You can increase efficiency by hiring workers with a lower standard of living. If you don't need to pay your workers enough to buy two cars, TVs, computers, etc., you don't need to pay as much. In addition, workers with a lower standard of living use their more limited resources more efficiently.

[lemur]

there is are several very specific problems posed by trade with china

1.) the Chinese work for less than Americans so what is there to make more efficient? become just like china?

work for peanuts? not care about worker safety?

Assimilation is just one possible strategy for competition. Yes, people could probably stand to benefit from studying Chinese examples and adopting/adapting aspects. Eventually, Chinese may once again be looking to western examples as seems to have been the case in the past.

 

If by "work for peanuts," you mean cutting wages and other compensation paid out at all corporate levels, this is one strategy but it has to be balanced by constructive restructuring of those employees personal budgets or people could lose access to basic necessities because they are trying to avoid foreclosure or cover other costs that haven't adjusted yet. Still, I think you would be surprised how happy people can be with relatively little material wealth. Happiness depends on many other factors than how much you're getting paid and/or spending.

 

I don't think you should view worker safety as a fixed cost. Obviously no one wants to compromise safety until they are paying for it out of their own pocket. But there are ways to increase the efficiency of safety-measures. It's not like safety always has to cost an arm and a leg.

 

 

You can increase efficiency by hiring workers with a lower standard of living. If you don't need to pay your workers enough to buy two cars, TVs, computers, etc., you don't need to pay as much. In addition, workers with a lower standard of living use their more limited resources more efficiently.

Well said. It is also likely that a good deal of economic restructuring would occur if/as wages were deflating. Probably many services, such as certain restaurants etc., would end up unable to maintain business levels if large numbers of people were having to streamline their budgets. Of course what could happen, which would completely defeat the process would be if money saved by cutting some wages and jobs would be spent to increase the wages/spending of others and create other relatively unproductive jobs. In other words, if fiscal stimulus is great (either through public or private channels), the incentive to restructure consumerism would be undermined by consumerism itself. It is very difficult for efficiency to evolve when inefficiency is getting subsidized.

Edited January 18, 2011 by lemur