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It seems like this ultra-Free Trade-ism we hear about is just some Libertarian fantasy. Remember, Libertarians are hyper-anti-government. Hence, in the end, they object to "any" form of control. So, you can never convince a Libertarian that they should submit to any form of government control.
Hence, in the end, they object to "any" form of control. So, you can never convince a Libertarian that they should submit to any form of government control.
Sigh....actually learn something about Libertarianism before you critique it. Free markets revolve around property rights, which requires a degree of protection and enforcement by governments. Once property rights are properly defined, then polluters cannot pollute with impunity.
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Free-market environmentalism is a position that argues that the free market, property rights, and tort law provide the best tools to preserve the health and sustainability of the environment. This is in contrast to the most common modern approach of proactive environmental legislation.
Perhaps you disagree with that better property rights would lead to a decrease in pollution, but enforcement would require a degree of government which many libertarians would not be against.
There is some concern about air pollution. Some regulations may be needed since it may not be feasible to distinguish every air particle from where it came from and how much damage it actually caused. And there is a strong argument about protecting the global commons from global warming, which would jeopardize life and property--which are pillars in libertarian philosophy that need to be protected. Unfortunately global warming has become politicized, but according to libertarian philosophy we have the right to protect our life, liberty, and property. Instead of looking towards the government for solutions and regulations, we look towards the free-market and better established property rights.
Another thing about protectionism worth mentioning is the very idea that countries would be better of practicing autarky is ludicrous, for the very reason that nobody on a personal level ever practices it.
When you go to the store to buy toilet paper, which everybody does, and just about every store offers the same brands. If you are aware of two stores fairly equidistant to your home, but store A sells the brand for 75 cents more than store B. Do you purchase from a or b?
The vast majority of people opt for store b. Why? This is because we economize, because by saving money on the purchase of toilet paper, it allows us to save a bit of cash that we would spend on other wants.
But wait goes the objection if you don't buy from store or country A, they will go out of business or cut jobs, hence protectionism is required. the answer is already above a priori.
No, so what if store A goes under, people are not going to just sit around with their thumb up their arse, while they starve to death. When foreigners make toilet paper more cheaply than we can, they free us from having to make toilet paper ourselves, and give us the opportunity to produce other things to satisfy other wants.
Where previously we had to use our finite pool of human labour to produce toilet paper, free trade allows us to not only have toilet paper, but the savings allow us to invest in other industries, so that we can have cell phones, cars, etc.
This is basically what Bastiat proved back in 1845, with his economic sophisms, which if ever there was a need for a mandatory economic read it would be this. Bastiat: Economic Sophisms | Library of Economics and Liberty
If anything once a person has read Bastiat they will realize that unemployment is a government created obstacle by red-taping and over regulating our ability to re-employ factors of production. Which the government does through licensing and land zoning, and taxation.
At the very least a person can see by my example above that protectionism by forcing people to buy domestic, increases poverty by making you pay more for items, and allowing you to save less.
Lest anyone still doubts this, this is why countries will use naval blockades such as with Cuba because it has the effect of crippling the economy.
Last edited by mcmastersteve; 05-02-2009 at 02:04 AM..
Free Trade Fanaticism is ruining America's Manufacturing Base and has already blighted to the extreme, many large and previously super towns. It isn't all about saving money; it's about jobs too
free trade is certainly not a good idea for the countries who do not manufacture goods. all you have to do is look at the united states with all of their so-called free trade treaties. we went from being the largest creditor nation to the largest debtor nation. if something does not work, don't keep going down that same path.
There are two problems with free trade. First, free trade doesn't exist. All of these red states that believe in so-called free trade are living with the benefits of agricultural protectionism by the Federal Government. Southern Republicans complain about Detroit, but just watch them shovel federal bailouts to farmers, tax or bar imported foods. Like, if it wasn't for all of these "free trade" Republicans, we would have real sugar in our soda, imported from Cuba and Brazil, and not this crappy high fructose corn syrup.
Also, the canard that protectionism doesn't work is simply not true. The North was protectionist leading up the civil war, and the South was free trading, with the ultimate in low cost wages - slavery. When the two societies came into conflict, the North crushed the south because by protecting its manufacturing, it gave itself the option of manufacturing weapons that the South simply did not have.
But see..this is the confusion where even intelligent non-economists screw up.
The point is it is UNILATERALLY inefficient for a country to engage in protectionism. That is - Country Y and Z could be subsidizing all their domestic industries a boatload, and it is still unilaterally irrational for country X to "retaliate" and subsidize its industries. E.g., country X is even more worse off by subsidizing its industries in response. Yet all countries do this because of special interests.
The math is actually quite simple, I just can't plot functions on here
And yet there is China who does all the No No's you list.
I am all for passing trade laws that reflect those of our tradeing partners and what they impose upon us. Level playing field.
I am all for sanctions against countries that violate our patents. er uhm China for example.
I have a few questions for the protectionist crowd.
1) If protectionism is so good for a domestic economy, why do countries in dispute practice trade embargoes?
2) Is the U.S embargoing Iranian goods in an effort to help Ahmadinejad's domestic economy?
3) If creating walls to prevent goods from leaving a country can cripple a nation like Japan during World War 2, how does a wall preventing goods from entering a country, (just as 2+2=4 and 4-2=2) not have the same effect?
4) Why does protectionism which while increaseing domestic employment in the short term, also have the effect of reducing the GDP and devalue the dollar?
Now I know the answer to this and understand the economic proof that supports my assertions, what I'm curious about is how this is not simply understood, insofar as it's a priori in this thread alone!
Last edited by mcmastersteve; 05-18-2009 at 03:49 PM..
I have a few questions for the protectionist crowd.
1) If protectionism is so good for a domestic economy, why do countries in dispute practice trade embargoes?
2) Is the U.S embargoing Iranian goods in an effort to help Ahmadinejad's domestic economy?
3) If creating walls to prevent goods from leaving a country can cripple a nation like Japan during World War 2, how does a wall preventing goods from entering a country, (just as 2+2=4 and 4-2=2) not have the same effect?
4) Why does protectionism which while increases domestic employment in the short term, also have the effect of reducing the GDP and devalue the dollar?
Now I know the answer to this and understand the economic proof that supports my assertions, what I'm curious about is how this is not simply understood, insofar as it's a priori in this thread alone!
What are you talking about?
1) Protectionism cannot be technically imposed in our times. These are just paranoiac talks parallel to "if Obama wants to help ease unemployment, he is a communist. Communism is his next step, to be implemented in 2010...". We live in the age of communications and no leader of any democratic country can close it.
2) Actually, during the last decade, we went to the opposite extreme, opening the flood gates, inundating the US with uncontrolled goods and foreigners. The resulting changes are beyond economics and influence the very fabric of the American society.
3) Between the 2 extremes, there is a wide spectrum that can be explored for the benefit of the American people.
4) Iran is subject to sanctions. The goal was to prevent it from importing nuclear fuels and technologies as well as goods that this country cannot produce. In our case nobody suggest to stop importing anything not produced in USA. Actually nobody suggests stopping any imports, but when they violate our safety , medical or environmental laws. Also in cases when unfair competition is evident, import taxes should level the field. For example if China doesn't balance the trade deficit, etc.
Protectionism, theoretically, is irrational from a domestic point of view. That is it is unilaterally irrational for any country to engage in protectionism of domestic industry. It is just a transfer of wealth from consumers to producers, with a net loss to the social surplus as a whole. This is beyond all doubt since Ricardo's theory of comparative advantage. So this is the starting point.
The only possible argument is based on factors of production being mobile, externalities, etc.
The problem is that when you actually look at the data, it is VERY rare that any of this plays out. Paul Krugman, who is very liberal, agrees. Also, one leading scholar on international econ once told me that only one case of justified protectionism happened - the so-called "nascent or troubled" industry argument that pro-protectionists always spout off but in reality rarely happens. The actual instance was where we gave *temporary* assistance to Harley-Davidson so they could survive an economic crisis.
In reality, protectionism is not about economic rationality. It is about special interest groups (namely industries) who have disproportionate power in government because of their relative small size and unified interests. Anyone who knows about public choice theory in econ knows exactly what I'm talking about.
In sum, protectionism is rational only for narrow interests, and overall almost always harmful to the country as a whole.
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In reality, Classical Economics is, and has always been, a failure.
Lot's of people have ideas that simply do not work, and History shows that econoweenies fall right in the bullseye on that criteria.
That is most do.
For there is an entire group of economists one never sees in the corporate media. Why is that? Well, they are the inverse of the one's you do see:
Their predictions come true, and they say stuff the corporations do not like to hear.
A small sample:
Barry Bluestone of Harvard, who along with Bennett Harrison wrote "The Great U-Turn".
Dr Wallace Peterson of Nebraska, who foresaw the future we now enjoy, as we had arrived at it in the 1980's, in "The Silent Depression":
FYI, we we're a protectionist nation 1790-1973; China, Japan and India are still in that classsification, as is Korea, and most of our other competetors.
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