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Trade Policy: Countering The Walmart Effect


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A while back Bob posted an article about their being a "structural" problem in America with our economic system. There is obviously alot of talk about income inequality, Wall Street bashing, taxing the rich and all of those things are systematic of the problem with our "structure" and policies. I see (free) trade policies and globablization as being the likely main culprit behind many of these problems and the biggest issue. This is an interesting article on the subject.http://www.huffingtonpost.com/david-coates..._b_1008084.htmlI am interested in everyone's opinions. There are alot of Republicans here who supported these policies, and well, alot of Democrats as well but free trade and open markets seem to be a huge issue with Libertarians so I am interested in their take particularly. Aslo thoughts on the law that appears ready to pass,Bipartisanship in Washington is rare these days, but it does occasionally surface. It did this week, when the Senate passed the "Currency Exchange Rate Oversight Reform Act" (S.1619) -- the one sponsored by Democratic Senator Sherrod Brown and co-sponsored by 22 other Senators, including five Republicans. If ever passed by the House -- the Senate vote in favor was 65 to 35, with 16 Republicans in support -- the Act would allow affected American companies and workers to petition the Department of Commerce for countervailing import duties, to offset injury caused to them by the undervalued currency of a trading partner. It would also ease the criteria that the Treasury Department uses when adjudicating such petitions, with plaintiffs no longer obliged to demonstrate that any currency misalignment was the product of deliberate exchange rate manipulationSome of the main points,-De-industrialization is well and truly underway-The global race to the bottom is steadily eroding average American wages-The case for free trade is systematically over-stated while the case for fair trade is rarely heardand the final synopsis and conclusions of the author,

We are already in a trade war, whether we like it or not. Even the pro-free trade New York Times has recently conceded that "since the financial crisis began in 2008, G-20 countries have imposed 550 measures to restrict or potentially distort trade." If they can, so too can we. Free trade and free currencies are only two of the policy weapons available to us as we struggle to restore American employment and wages, and they are not necessarily two of the best. Because we need policies that bring American jobs home, and bring them home now, we should say "yes" to currency retaliation and to the devaluation of the America dollar; "yes" to the taxing of outsourcing, to the fierce defense of intellectual property rights, and to the policing and implementation of international labor standards; and "yes" to public-private funding of high-tech R&D and to interventionist industrial policy geared to strengthening the U.S. manufacturing base. We should welcome open trading between economies with similar labor rights/costs, and fair trading between economies with dissimilar ones. But to those who would advocate untrammeled free trade with all and sundry, regardless of differences in the internal political and social settlements within which their economies sit, we should say definitely "no." "No," not now; and "no," not ever.
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How do you decide these things? How do you decide if the foreign country currency is undervalued or ours is overvalued? What if the other country is engaging in sound fiscal policy but their currency devalues anyway?In the end, free trade is good for everyone. The history of the advancement of civilization is trade and specialization. When those things can occur without friction, everyone is better off. There may be short term swings, but that's the point -- the people hurt by that then have to find a better way, leading to a new round of advancement. Allowing such short term swings to harm the future of everyone is cutting of your nose to spite your face.The only reason I can see enacting trade sanctions is for countries that refuse to obey standard accepted law (copyrights, etc) or that refuse to deal with negative externalities that are harming us (e.g., dumping mercury into the ocean). Beyond that, the give and take and flux of trade that this bill seems to be trying to prevent is the primary feature of trade, not a drawback.

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In the end, free trade is good for everyone.
But this is clearly not true. It's not good for everyone. In particular, it's bad for the many people who lose their manufacturing jobs because it's cheaper to build things in China.Now, you may counter with, "Yeah, but it brings a net benefit to the economy and their pain is only a transitional effect", but that doesn't mean it doesn't hurt them, and it doesn't mean that it doesn't possibly hurt them for decades, if not for the rest of their working career (it's not as easy for a manufacturer to immediately transition into, say, a tech company).
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But this is clearly not true. It's not good for everyone. In particular, it's bad for the many people who lose their manufacturing jobs because it's cheaper to build things in China.Now, you may counter with, "Yeah, but it brings a net benefit to the economy and their pain is only a transitional effect", but that doesn't mean it doesn't hurt them, and it doesn't mean that it doesn't possibly hurt them for decades, if not for the rest of their working career (it's not as easy for a manufacturer to immediately transition into, say, a tech company).
It's likely they wouldn't have the job in the first place if not for trade, and their chances in the future would be much, much worse.It's like saying we'd all be better off if we had horse carriages and vacuum tubes because getting rid of them cost specific jobs.
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Protectionism is pretty much never a good idea and free trade is pretty much always a good idea.A large part of manufacturing is never coming back to high wage countries, it just isn't so trying to fight that is a horrible idea. Some manufacturing is already moving out of China into places like Viet Nam because wages in China are becoming too high.

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I'm really not a rude person IRL, but I can't hold back the eyeroll/heavy sigh whenever someone tries to tell me we'd get manufacturing back if only we'd return to 19th century regulations. I'd at least understand how the person arrived at that position if they were some wealthy manufacturing tycoon or something, but in the majority of instances, that person would be on the receiving end of that policy shift.I honestly kind of feel the same way about tax discussions when some non-wealthy person is telling me they'd favor a flat tax of some kind that'd clearly result in them personally paying more.

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I'm really not a rude person IRL, but I can't hold back the eyeroll/heavy sigh whenever someone tries to tell me we'd get manufacturing back if only we'd return to 19th century regulations. I'd at least understand how the person arrived at that position if they were some wealthy manufacturing tycoon or something, but in the majority of instances, that person would be on the receiving end of that policy shift.I honestly kind of feel the same way about tax discussions when some non-wealthy person is telling me they'd favor a flat tax of some kind that'd clearly result in them personally paying more.
So I take it you don't think Cain's 9 9 9 tax proposal is brilliant.
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the scientist sides with the luddites. mind blown.
I did? Where?
I'm really not a rude person IRL, but I can't hold back the eyeroll/heavy sigh whenever someone tries to tell me we'd get manufacturing back if only we'd return to 19th century regulations.
This can't be aimed at me, unless you did something silly like not actually read my post.
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So I take it you don't think Cain's 9 9 9 tax proposal is brilliant.
it ultimately leads to a 'fair tax' system that is regressive as fuck or full of exemptions which can be gamed to favor one company over another. like mk said, just have an income tax and get rid of everything else.today, I read bachmann's comment and wanted to kill myself.
Bachmann: When you take the #999 plan and turn it upside down, the devil is in the details.
this woman has a real chance to become president! and, what's worse, there are people who saw this and decided that that was all they needed to hear to know that it is a bad idea!
I did? Where?This can't be aimed at me, unless you did something silly like not actually read my post.
I see the point you're making re: pain, but the conclusion (one which I'll note you didn't make) is that we should look to do something to avoid this pain. that 'something' usually falls within the scope of the luddite fallacy. it was an unfair, tongue in cheek comment.no, I certainly don't think you hold that opinion.
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So I take it you don't think Cain's 9 9 9 tax proposal is brilliant.
Depends on the goal. If you want to decrease overall revenue and shift the tax burden massively to the middle class and poor, then it's brilliant.And I'm sure that if by some miracle this got enacted, most of the heavy hitters would still find a way around the 9% corporate tax.
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the scientist sides with the luddites. mind blown.
hearty chuckle
this woman has a real chance to become president!
No!
and, what's worse, there are people who saw this and decided that that was all they needed to hear to know that it is a bad idea!
ugh, yes.
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Protectionism is pretty much never a good idea and free trade is pretty much always a good idea.A large part of manufacturing is never coming back to high wage countries, it just isn't so trying to fight that is a horrible idea. Some manufacturing is already moving out of China into places like Viet Nam because wages in China are becoming too high.
Is it, though? Is free trade always a good idea and protectionism always a bad idea? We can cite all sorts of historic references that jive in a historic context, but how does that idea hold up in a contemporary context, given modern economic climes? Free trade always *was* a great idea- and perhaps it still is- but how does that notion wash out in a truly global economy, today, now?There's the ideological answer, then there's the answer we see before our very eyes.The three people I hate more than anything in this world are Nancy Grace, Rod Stewart and Rush Limbaugh. If god came down and gave me a choice between ending all sickness, hunger and poverty or getting rid of Nancy Grace, Rod Stewart and Rush Limbaugh, I truly believe humanity would thank me for allowing them to suffer through additional famine and cancer for the sake of ridding the world of those three assholes. Limbaugh gets credit for being a thought-leader, but many of his thoughts lead conservatives to intellectual perdition. To wit: anyone remember the old Rush Limbaugh TV show? Some of you do, some of you are too young, some of you are old enough but are/were too stupid to have watched that sort of thing. When NAFTA was the cause du jour back during the early years of Clinton, I remember that fathead pig addict fuck talking about how wonderful it was- that we were going to lose low level production, but we would make MORE 'nice stuff'. The example he used was something to the effect of "We are making less plastic drink umbrellas, but we are making MORE Macintosh computers!". Remember- this was the early 90's. Now, I was pretty young at this time- my interests were thus far limited to baseball cards and masturbation- but even in my intellectually embryonic state, I instantly recognized the fallacy of this thinking. Extrapolate that one step further- why won't the Chinese eventually be making those Macintosh computers? The answer at that time was infrastructure and knowledge... They said it would be impossible to set up a plant in Mexico and train Mexicans to make televisions- that was something we had to do here because we had a specialized labor force and the infrastructure in place. It was bullshit then, it's bullshit now, but it took some dumbasses 15 fucking years to realize it, while a few teenagers saw that dicktrain coming, back then. So, is protectionism bad now? Is it really bad when we're already existing with gravely off-kilter trade imbalances? When we're already racing to the bottom, allowing the wages of 90% to be defined by what a starving mud hut dweller in the 3rd world is willing to work for? And PS, Canadian. The only reason your country isn't the Bulgaria of the Western Hemisphere is because you claimed a godforsaken landmass that no one else wanted but luckily turned out to contain a shit-ton of natural resources that wound up paying off big in later years. You're the white Saudis, so don't you worry your excessively polite little heads about 'manufacturing'. Just keep mining that gold and pumping that oil felling that timber and giving everyone free health care and praying to god we don't get bored one day and decide to come in and take you over. If I were president, my FIRST order of business would be securing the 51st, 52nd and 53rd states formerly known as Canada (with Quebec reserved for nuclear weapons testing, medical waste dumping and pollution-heavy industries)
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Anyone who thinks protectionism is good has never owned an 84 Ford Escort. That is the direct result of the protection of the car industries, and the problem is that not only do we get really crappy products, but it just delays the day of reckoning for when our industry has to face the truth, only now with bigger costs. It took the auto industry a decade to recover from that round, complete with bailouts.If products flow freely, companies get the signals they need to survive very early, and very clearly. Protectionism dulls those signals until it is way, way too late.

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The three people I hate more than anything in this world are Nancy Grace, Rod Stewart and Rush Limbaugh. If god came down and gave me a choice between ending all sickness, hunger and poverty or getting rid of Nancy Grace, Rod Stewart and Rush Limbaugh, I truly believe humanity would thank me for allowing them to suffer through additional famine and cancer for the sake of ridding the world of those three assholes.
Bono too.
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In reading the article, and others, the obvious point is that we are not simply losing "low wage" jobs. It has evolved into the loss of middle an upper management, R & D, and a host of other jobs and despite the advantage of having some cheaper products, the overall effect is devastating. I think free trade is a noble goal, but the reality is that it isn't working. By implementing some policies to enforce fair trade we could at least attempt to level the playing field. And wholly, not all tariffs have been bad, but that is simply one of the many tools we have at our disposal to combat the loss of jobs and GDP.

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In reading the article, and others, the obvious point is that we are not simply losing "low wage" jobs. It has evolved into the loss of middle an upper management, R & D, and a host of other jobs and despite the advantage of having some cheaper products, the overall effect is devastating. I think free trade is a noble goal, but the reality is that it isn't working. By implementing some policies to enforce fair trade we could at least attempt to level the playing field. And wholly, not all tariffs have been bad, but that is simply one of the many tools we have at our disposal to combat the loss of jobs and GDP.
Losing jobs that other countries can do cheaper is the *goal* of free trade, not a negative side effect. It's called 'comparative advantage' and it's been a staple of economics forever.The classic example is a doctor who can type 100 words per minute. Should the doctor hire a typist who can only type 50 words per minute or do all his own typing? How do you decide? The obvious answer is that he should hire the typist if the typist makes less than half the doctor, because then he can spend more time with patients AND make more money while still getting all the typing done.This is how free trade works. It isn't necessarily about low-wage jobs or high-wage jobs, it's about jobs of all types where certain areas can provide a comparative advantage. It is in everyone's best interest to have an economy in which we find those areas of comparative advantage as quickly as possible, before we get pent up demand and the transition becomes much more painful. This is the 80s American Car example. We spent a decade protecting American cars from competition for fear of loss of jobs. The end result was that foreign manufacturers were forced to become far more efficient and US makers got progressively lazier. Finally, the difference in cost and quality got to be too much to sustain through trade barriers, and the auto industry had a decade long slump. If they would've had to compete all along, we would've had better cars sooner and fewer layoffs; plus the savings from being efficient could've been used to drive innovation in other areas of the economy. When everyone is doing the thing they are best suited for, everyone makes the most possible income.
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When everyone is doing the thing they are best suited for, everyone makes the most possible income.
Cute theory that probably worked in feudal economies, but this global capitalism thing is totally unprecedented in human history. We can't ignore the fact that some countries live much worse off than we do and there's a huge, negative social consequence if we ship our job base over to those places for the sake of cost savings. Here in the midwest, we have a lot of guys who are best suited for blue collar work. What is the libertarian dogma for them? Engineers%20and%20Construction%20Workers%20Discuss%20the%20Project.JPGThat they should go become nurses and home health aides? That their jobs are expendable because some gook is willing to work for slave wages? Our aggregate standard of living is less important than maintaining ideological suicide pacts about free markets? "Hey, everyone! Life sucks, joblessness is sky high, wages are depressed, inflation is raging, but don't worry because we're keeping true to libertarian free market dogma!"19-05-01[1].jpg
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Cute theory that probably worked in feudal economies, but this global capitalism thing is totally unprecedented in human history. We can't ignore the fact that some countries live much worse off than we do and there's a huge, negative social consequence if we ship our job base over to those places for the sake of cost savings. Here in the midwest, we have a lot of guys who are best suited for blue collar work. What is the libertarian dogma for them? Engineers%20and%20Construction%20Workers%20Discuss%20the%20Project.JPGThat they should go become nurses and home health aides? That their jobs are expendable because some gook is willing to work for slave wages? Our aggregate standard of living is less important than maintaining ideological suicide pacts about free markets? "Hey, everyone! Life sucks, joblessness is sky high, wages are depressed, inflation is raging, but don't worry because we're keeping true to libertarian free market dogma!"19-05-01[1].jpg
Another problem is that even if they were willing to change occupation, the timeframe and difficulty for skill retraining into other sectors becomes greater due to the increasing specialisation of each field. Shocks to the technological chain are more disruptive on employment than in the 'old days'
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Here in the midwest, we have a lot of guys who are best suited for blue collar work. What is the libertarian dogma for them?
The libertarian dogma is "You're going to make better decisions than a central planner. Figure it out." I think you're underestimating them.
That their jobs are expendable because some gook is willing to work for slave wages? Our aggregate standard of living is less important than maintaining ideological suicide pacts about free markets?
Once people start talking about a "job" as something that exists outside of economic forces, as a concrete thing to which certain people have a right, we're subject to all manner of stupidity like cash for clunkers. The US government decided that the automakers' right to exchange the making of cars for money should be protected, even if there was no net contribution of cars to society. Likewise, Paying farmers not to farm. Paying diggers to dig and fillers to fill back in. We really are this corrupt and stupid as a government.
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