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On March 02 2009 12:29 cUrsOr wrote:
i think its true the the government (in the last few years especially) but ever since the creation of the central bank in 1913, has more or less been a funnel of money from poor to rich.
This is not entirely true, the economic growth of the post war period up to 1980 was 'high quality growth' meaning it did not come at the cost of increasing income inequality. The growth of this period was maintained and preserved through the economy proper and it created significant tangible increases in standards of living. The deterioration of income inequality after this period is a symptom of serious deficiencies in economic policy including deunionisation which pushes down wages (bad news) and changes in trade policy combined with the terrible miss use of fiscal policy (cut teachers pay, give corporate tax cut)
isnt it true that the econmic problems we are having is the result of an entirely debt based dollar, and the fact that our trade deficit just keeps on swelling? i mean, we dont hardly produce anything except our own food. outsourcing of jobs has weakened our economy, and this "free trade" ideology america forces on the rest of the world has done nothing but weaken the global economy.
It isnt true that our economic problems are caused by an entirely debt based dollar as such (thought its not all that inaccurate to say so), we operated in a similar way in the past without bad consequences but this will become a serious problem (which it is) if combined with deteriorating incomes resulting from bad macro economic policy including the deindustrialisation of the west caused to a large extent by the free trade ideology.
People said for a time don't worry about structural unemployment because jobs will be created else where in the economy and it will work out better in the end but in reality those jobs were not created so at the same time that we were buying more and more imports our capacity to pay for those imports declined. This is an unsustainable position with dangerous consequences.
It will not be helpful to change trade policy today but once the recessionary cycle has been tackled (through fiscal policy) then we absolutely must move away from universal free trade to 'mutually beneficial bilateral trade'.
Was there something wrong with the trade of ancient Athens or ancient Rome or of the great Chinese empire of ages past. Ofcourse not trade brought great prosperity to these people at no cost to themselves. Any trade policy which imposes a cost to a country is bad trade policy. Ideology is once again to blame.
Edit: Did you know that in 1970 the average worker in the United States earned 30% more than they do today and worked 2 weeks less. This is a very important symptom of the economic problems of the United States today. As long as wages are falling there is nowhere your economy can go but backwards.
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On March 02 2009 08:53 shmay wrote:
The government can only take wealth, not create it. And by taking more, it only makes us poorer.
Not true. The government is responsible for investments in infrastructure such as transport networks and education. Both these examples qualify as investments which create wealth rather than government spending that does not create any returns.
In the case of trasnportation networks, we can see why the government is necessary. Building a road is too expensive and time consuming for one person to do. The only way to justify its cost is for a group of people to share the costs and share the benefits. And that's exactly how a government works.
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What I was rallying against was the idea that government can just become bigger without consequences on the private sector -- where are the resources coming from? It's like trying to fill up a pool by taking water from one end and pouring it into the other.
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On March 02 2009 07:49 MoltkeWarding wrote:
In 1933, during which 25% of Americans were unemployed, there was one automobile for every five inhabitants of the USA. In Britain there was one for every twenty-three. In Italy one for every 108, in the USSR, one for every 5 000. The partition is even greater than it seems due to the pyramidal structure of European societies compared to American societies. In America the automobile was a middle-class possession. In Europe it was by and large until the 1960s, not.
There's little doubt that, on balance, Americans fared far better than others during the 20th century. This is especially true of our European counterparts who weathered the full brunt of two devastating wars. It's likely this trend will hold through the current economic crisis, but that's neither here nor there.
John Steinbeck, Dorothea Lang and Woody Guthrie, among others, popularized the myth that the Dust Bowl exodus from Oklahoma to California was a source of immense suffering and hardship. Because of the permanence and power of art, this myth has become a part of our national lore and a dominant theme of the Great Depression.
Yes, the exodus was a difficult and uncertain journey for many, but Steinbeck et al. exaggerated the scope of the tragedy. It was not the white farmer's "Trail of Tears," as I think some have portrayed it. That said, the Great Depression was certainly life-altering for a whole generation of Americans, and, speaking as an Okie, I can attest to the fact that many did, indeed, experience Steinbeck's tragedy. Their suffering was no less painful because some of them owned automobiles -- starvation and hopelessness have a funny way of afflicting everyone, equally.
The victims of the Great Depression who are often overlooked were those most vulnerable to the crisis: farmers, blacks, Mexicans, the vast communities of immigrants from Central, Southern and Eastern Europe (who primarily resided in the cities). Unfortunately, their suffering was very real and I would wager was comparable with what was going on in Europe at the time.
edit: I'll have to tell my grandma she grew up in an "elite" household because they had a truck. LOL. she'll get a kick out of that. to this day, she won't eat cornbread or pinto beans because that's all they had... every day... for three years... when she was a kid.
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On March 02 2009 15:31 shmay wrote:
What I was rallying against was the idea that government can just become bigger without consequences on the private sector -- where are the resources coming from? It's like trying to fill up a pool by taking water from one end and pouring it into the other.
There will definitely be consequences, but it isn't a case of the government sucking up all the jobs the private sector ought to be doing. Like in the case of building roads, the government simply creates a department to hand out contracts to private companies. Of course, the more roads need to be commissioned, the bigger that department needs to be, but that isn't really sucking up money as much as needing more administrators.
I think what you're railing against is more nationalisation, when the government does the building itself instead of outsourcing. I agree that in most cases that is a very bad idea, and should only be done as a drastic, temporary solution.
I think it's more a matter of deciding which areas of government to grow and which to trim, rather than big government = bad private sector.
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On March 02 2009 12:29 cUrsOr wrote:
i think its true the the government (in the last few years especially) but ever since the creation of the central bank in 1913, has more or less been a funnel of money from poor to rich.
isnt it true that the econmic problems we are having is the result of an entirely debt based dollar, and the fact that our trade deficit just keeps on swelling? i mean, we dont hardly produce anything except our own food. outsourcing of jobs has weakened our economy, and this "free trade" ideology america forces on the rest of the world has done nothing but weaken the global economy.
its good to listen to ron paul talk about these issues, i am by no means a republican, but i think he has a 100% realistic assesment of the situation.
I thought Ron Paul was a staunch supporter of free trade. Unilateral free trade even.
On March 02 2009 13:15 Choros wrote:if combined with deteriorating incomes resulting from bad macro economic policy including the deindustrialisation of the west caused to a large extent by the free trade ideology.
You're referring to free trade as an ideology merely for rhetorical reasons.
A great number of economists are supportive of free trade, both on the left and on the right (at least according to Mankiw* and a survey by Klein & Stern). Paul Krugman, who won a Nobel Prize for his work on trade and sits politically on the leftside of the spectrum, is supportive of free trade. This is not an ideology specific to a certain section of the political spectrum.
*http://www.nytimes.com/2008/07/13/business/13view.html?_r=1&ref=business
http://swopec.hhs.se/scripts/redir.pl?u=http://www.sofi.su.se/wp/WP06-6.pdf&f=sofiwp2006_006
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On March 02 2009 13:15 Choros wrote:
This is not entirely true, the economic growth of the post war period up to 1980 was 'high quality growth' meaning it did not come at the cost of increasing income inequality. The growth of this period was maintained and preserved through the economy proper and it created significant tangible increases in standards of living. The deterioration of income inequality after this period is a symptom of serious deficiencies in economic policy including deunionisation...
looks like the trends in income distribution started well before 1980 according to this page.
http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1967-2003.svg
one of the main reasons for the american revolution was the fact that our currency was controlled by a British privately owned bank. since 1913 we have had a central bank in the US, that proffits off of things like inflation and debt. i agree with you about a lot of things, but i think looking at the banking foundation for our money system, and mainly who controls it, is a good place to start.
Free Trade
ron paul has said on many occasions that the "free trade" we have now is set up only to bennifit a few large corporations and international banking institutions.
+ Show Spoiler +http://www.youtube.com/watch?v=prtR-h8oKqU
i hate loudobbs btw
im just going to say something else really quick. a lot of people see outsourcing of jobs as one of the main problems with free trade, and i dont think i would argue with them. i would just like to point out who really bennifits from "free" trade, and its not the citizens of any country. its the companies who get to move wherever they want without restriction, and polute where its easiest, sell where its easiest, exploit where it is easiest... even setting asside the pressures put on leaders of foreign countries too "open themselves" to the WTO's version of free trade. which basically means that large international corporations can come in, and buy your whole country. buy your water, buy your oil and all of your food producing facilities. when other countries subscribe to "free" trade, their local producers cannot compete with the influx of US subsidized foods like corn and rice- which is why many countries like Haiti succomed to the food crisis. the local growers cant compete with huge agri-business, subsidized and even GMO cheaply produced foods. and we all know about what happens in china and many other countries, with sweatshops- also leads me to the idea of "wage slavery"- where you have no say in how the company you work for opperates. you just sell yourself to it.
its funny how america talks about freedom so much, but its only personal freedom. you have that in many dictatorships. the idea of civic freedom is much different. that is the voice in the opperation of your countries primary institutions. just look at the US for example.. is our education system run democratically? how about our Economic infrastructure? is that privately controlled? and the media? is the media privately owned and controlled? the businesses we work for? ALL bureaucracies... as if the idea of Democracy can only be used for elections (which is another debate entirely). top to bottom, our society here isnt exactly wrought with democracy.
EDIT: i never wanted to be one of those people with long "ranty" posts. i hope its an easy read and not too tangent by the end. its nice to have a place to talk longer than a 5 word youtube comment.
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United States22883 Posts
I agree with some of what you say, but I don't think you should treat democracy as a "pure" good. Market driven activity can be disasterous in many areas as well.
Also, people really need to stop referencing Ron Paul. Even if you support Austrian economics, why don't you read an actual Austrian economist rather than the work of a politician who does not do research, and is not trained in economics. He has a M.D., if you have an ailment look to his advice. Believing him is only a few steps above believing Matt Damon when it comes to politics.
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you know hitler was a vegetarian?
i dont think its safe to assume that being a vegetarian is bad because hitler was one.
so, even though Ron Paul isnt a world renound economist, neither is Dennis Kucinich... but I think they are the best informed people we currently have in politics. i really like what both of them had to say about the first "bailout bill", or wave of money appoved for the banks.
edit: btw Matt Damon <3<3<3 omg fanboy
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On March 03 2009 07:43 cUrsOr wrote:
you know hitler was a vegetarian?
i dont think its safe to assume that being a vegetarian is bad because hitler was one.
so, even though Ron Paul isnt a world renound economist, neither is Dennis Kucinich... but I think they are the best informed people we currently have in politics. i really like what both of them had to say about the first "bailout bill", or wave of money appoved for the banks.
edit: btw Matt Damon <3<3<3 omg fanboy
If there's a problem with the American economy, it's the unimaginable quantities of people who have no capacity for recognizing cognitive dissonance even as it surges out of their mouth like so much regurgitated meat loaf. I'll give you the benefit of the doubt and assume you were heavily inebriated from consuming large quantities of hallucinogenic drugs, or maybe you were trolling to see how many people with higher mental functions you could coax out of teamliquid, because I can't imagine how else you might not recognize the logical contradictions inherent in endorsing the policies of both Kucinich and Ron Paul at once.
I'm really not trying to be an ass (not that I haven't been on many occasions in this thread), but how much effort does it really take to think sceptically about some crackpot theory fed to you by politicians with no form of training in economics, however "radical" they may be? I'm not expecting everyone to devote their lives to studying economics, but it doesn't hurt to spend half an hour reading about comparative advantage on wikipedia.
On March 03 2009 00:23 cUrsOr wrote:Show nested quote +On March 02 2009 13:15 Choros wrote:
This is not entirely true, the economic growth of the post war period up to 1980 was 'high quality growth' meaning it did not come at the cost of increasing income inequality. The growth of this period was maintained and preserved through the economy proper and it created significant tangible increases in standards of living. The deterioration of income inequality after this period is a symptom of serious deficiencies in economic policy including deunionisation... looks like the trends in income distribution started well before 1980 according to this page. http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1967-2003.svgone of the main reasons for the american revolution was the fact that our currency was controlled by a British privately owned bank. since 1913 we have had a central bank in the US, that proffits off of things like inflation and debt. i agree with you about a lot of things, but i think looking at the banking foundation for our money system, and mainly who controls it, is a good place to start. Free Traderon paul has said on many occasions that the "free trade" we have now is set up only to bennifit a few large corporations and international banking institutions. + Show Spoiler +http://www.youtube.com/watch?v=prtR-h8oKqU
i hate loudobbs btw im just going to say something else really quick. a lot of people see outsourcing of jobs as one of the main problems with free trade, and i dont think i would argue with them. i would just like to point out who really bennifits from "free" trade, and its not the citizens of any country. its the companies who get to move wherever they want without restriction, and polute where its easiest, sell where its easiest, exploit where it is easiest... even setting asside the pressures put on leaders of foreign countries too "open themselves" to the WTO's version of free trade. which basically means that large international corporations can come in, and buy your whole country. buy your water, buy your oil and all of your food producing facilities. when other countries subscribe to "free" trade, their local producers cannot compete with the influx of US subsidized foods like corn and rice- which is why many countries like Haiti succomed to the food crisis. the local growers cant compete with huge agri-business, subsidized and even GMO cheaply produced foods. and we all know about what happens in china and many other countries, with sweatshops- also leads me to the idea of "wage slavery"- where you have no say in how the company you work for opperates. you just sell yourself to it. its funny how america talks about freedom so much, but its only personal freedom. you have that in many dictatorships. the idea of civic freedom is much different. that is the voice in the opperation of your countries primary institutions. just look at the US for example.. is our education system run democratically? how about our Economic infrastructure? is that privately controlled? and the media? is the media privately owned and controlled? the businesses we work for? ALL bureaucracies... as if the idea of Democracy can only be used for elections (which is another debate entirely). top to bottom, our society here isnt exactly wrought with democracy. EDIT: i never wanted to be one of those people with long "ranty" posts. i hope its an easy read and not too tangent by the end. its nice to have a place to talk longer than a 5 word youtube comment.
Protectionists like to make free-trade out into some kind of boogey monster, a kind of Lord Sauron of global economics whose favorite delight is the unchecked rape and pillage of otherwise content 3rd world citizens who, had they only been left alone by the hegemonic and imperialist pigs of the terrible Mordor of the West, would live self-sustaining lives farming off the land and singing Kum-Bah-Yah.
But that is such bullshit. So much bullshit in fact, not even a lifetime supply of genuine bull manure could compare.
I'm not going to waste your time explaining the theory behind comparative advantage to you, since you can just google it anyway. Suffice it to say, the idea that free trade is anything but essential to economic growth and wealth creation is mathematically flawed.
My time is better spent denying everything you claim through empirics. Far from oppressing the poor, globalization has improved the lives of billions of people in developing economies across the world. Pew Global Research reported last week that, for the first time, more than half the world can now be considered the "middle class", meaning that they have at least a third of their income left for discretionary spending. Two decades ago, before the advent of the GATT and later, the WTO, that number was approximately a third. Significantly, most of that growth has occurred in the 3rd world, the countries protectionists would have you believe are being exploited for their "sweatshop labor" and natural resources. None of this would have been possible without free trade.
Take the Eastern Asia "Tigers" for instance. China's rate of growth expanded several hundred percent after rapproachment with the US, a period during which it began experimenting with free-market reform. After entering the WTO, growth nearly doubled, after having slackened off from the Asian financial crisis. Similar stories abound throughout the region: South Korea experienced double digit growth after switching course to an export oriented strategy after experimenting with protectionism.
To drive the point home, observe the extraordinary growth of wealth and the closure of the income gap in China from 1980-2009:
Three decades is all it took. Three decades after two centuries of colonialism, and free-trade has transformed China into an economic powerhouse.
But what of America you say? Shouldn't we protect our industries at home? But we don't produce anything ourselves! More bullwinkle. I don't want to look up the figures for this exactly, but manufacturing is far from dead in America. Some 60% of private sector GDP is manufacturing still. But that's irrelevant, since there is nothing wrong with service sector growth at all. What happens when manufacturing jobs get outsourced to China is that the money that's being saved is being invested in high profit-margin and high tech industries, most of which are impossible to develop elsewhere because the US has such a competitive edge in technology and skilled labor. Far from hurting US interests, free trade is the only avenue for ensuring continued US competitiveness and growth. For all the talk about China's manufacturing growth, its high tech exports have gradually shrunk in proportion with the rest of the economy over time, largely due to lax intellectual property enforcement and a broken patent system.
Here is the bottom line: There exist zero historical instances of protectionist states that have made any real, sustainable progress in economic development. Commodity exporting countries led by socialist leaders like Venezuela, Iran, or Bolivia are a unique exception, but their success is equivalent to winning the lottery. Unless the immediate gains are consolidated through investment in free-enterprise, such growth is unsustainable. The important point is that no state has ever become a developed economy through protectionism. When states have reverted to protectionism after a prolonged period of open trade, it has only hurt every country involved. The Buy American clause in the stimulus package, for example, is probably going to cost more steel jobs than it protects as nations reciprocate our steel subsidies and international demand falls. But the most infamous case of protectionism gone horribly bad are the Smoot-Hawley tariffs, which increased the average tariff barrier to something like 40-50%. By destroying international demand, it threw the world economy into a cycle into a deflationary cycle: a situation in which cuts in prices discourages spending, which encourages further price cuts, etc. The Smoot-Hawley tariffs are largely credited with turning the recession of the 30's into a depression.
So I don't eat my own words later, I would point out that your diatribe of a post is right about two things -- the wealth that's created from the sale of commodities rarely goes into the development of more sustainable and job-creating industries like it should. Countries like Russia, the Congo, and Sudan has seen little of the growth in standard of living the rest of the world has experienced. Moreover, pollution is a serious concern because it could incur serious costs for both developed and developing economies if left unchecked. But the idea that trade "exploits" the poor is just such a stupid idea.
Ok.
I spent way too much time on this post. But I will not have bad economics in my thread, so help me fucking god.
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United States22883 Posts
Uh... the Asian Tigers are exceptional in every sense of the word, but they also had massive amounts of foreign aid, particularly from the US, and they're not as open as you think. In fact, aside from Singapore, the rest of the Tigers all execute relatively moderate forms of protectionism (moreso than Western countries), with import tariffs, export incentives and loads of other government help for their own industries. In other places, free trade has demolished countries who cannot compete and who basically have to take gambles on where to specialize, and these countries were much more rigorous in enforcing free trade than even the US is today. That is not to say it is or isn't bad in any situation, but there is no iron clad law that dictates the performance of a nation's economy based on the level of free trade it executes. It simply doesn't exist, the geopolitics are too complicated, so different levels are appropriate for different countries. That is why they call it "strategic trade policy" these days, not protectionism.
Off the top of my head, I can think of four countries that did "sort of" well with functioning protectionist legislation - Britain, the United States, Germany and Japan. By the time the British became gung ho about free trade, they were able to do so because they already led the world in technology and industry and it was beneficial for them, but all of these countries were extremely protective of infant industries before their economic revolutions. As they tout the benefits of it now, they do so with massive advantages over countries who are not as far "advanced," and even still they're not in complete compliance.
Economy of scale destroys the comparative advantage (this is actually what Kruger worked on.) There's not a single farmer in Central or South America that can legitimately compete with much larger farmers from the US (even without the huge subsidies they receive) in a free market, so the country's domestic base deteriorates and then socialism seems like a good alternative.
That is not to say the "Buy American" clause is a good idea. For a country this size, and for a number of other factors, it is a terrible idea, but don't paint an overarching picture of protectionism when almost all of the developed world has relied on it at some point.
You've also dangerously (and stupidly) oversimplified the issue of development. Protectionism or not, Sudan and Congo would not see the same growth as the rest of the world. I'm not sure where the environment fits into this, but I think it's naive to think the problem will be solved without regulatory intervention.
And trade DOES exploit the poor. Perhaps not long term but nearly every single country has encountered major problems with economic polarization when they began to industrialize. That is generally standard fare.
For what it's worth, during the Depression while Southern Democrats favored internationalism (the more buyers, the better) they weren't actually against government intervention. Conservatives have characterized themselves as historically having been against federal government expenditure, but that simply isn't true. They were all for social programs (and voted that way) as long as the issues of race and labor unions weren't brought up. Their voting patterns were due to pragmatic cultural influence, not ideology.
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On March 02 2009 13:15 Choros wrote:
Edit: Did you know that in 1970 the average worker in the United States earned 30% more than they do today and worked 2 weeks less. This is a very important symptom of the economic problems of the United States today. As long as wages are falling there is nowhere your economy can go but backwards.
personal income grew 0.4% last month in the US
heck , you can't have hyperinflation without higher personal income and i think that is where the US is heading considering Obummers 2 trillion dollar budget.who does he expect to buy all those bonds?
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"None of this would have been possible without free trade."
thats a bit presumptious dont you think? that free trade is the sole entity driving development? there havent been any other factors that have made this possible?
"China's rate of growth expanded several hundred percent after rapproachment with the US..."
as did its rates of autism. some several hundred percent. (im really glad you mentioned the pollution at the end.) as if a bigger GDP and population (especially in Chinas case >.< ) are the sole indicators that society is now "better off".
"There exist zero historical instances of protectionist states that have made any real, sustainable progress in economic development."
I would say that Venezuela is in stark contrast to this statement, but Im sure I probably shouldnt bring that country up.
Ive been through the sweatshops arent all bad argument. I know youre not saying child labor is good, or that sweatshops are good. believe me im not accusing you of that. do they lead to eventual rise in income? yes. is it proportonate to the rise in income of the wealthy in the country, or the owners of the businesses? and finally, there is no other way? i mean, we have to accept that there will be a 50 year phase of virtual slavery in a country before there can be any sort of standard of living? i say its a horrible way to assume the world has to work.
i would not quallify my post as bad economics. food production has declined in every country that we have "free trade" agreements with. why grow food for X amount when the US can import it for .6X??? im sure you can google it to find that this is the case.
there are better ways to do things. to think that free trade is the model that all countries should accept is not exactly self-determination. any time people try to tell the US what to do, people throw fits around here. the whole concept, like any Agreement or Constitution is concieve, and designed to benifit the authors. these are the ideas of the international corporations that want access to resources with minimal hassle. (edit: yes Labor is a resource) The wto and imf are designed to make these desires attainable for the owners. so business can proffit and benifit- and a few people can make money. these are not democratic institutions. they do not have our best intrests as even a concern... why would they?
when left to "free" markets, everythign will be bought and owned and controlled by the wealthy. and thats not the kind of world i want to live in. while they make billions now, we get to see a 4% increase in income over the next 20 years.
lets not assume, stay with me, that Free-Trade is the idea that has lead to the Growth in the 3rd world. these people would "develop" reguardless. american companies arent there facilitating it. i would say, more properly, that growth has occured despite Free Trade rather than because of it.
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On March 03 2009 11:25 Jibba wrote:
Uh... the Asian Tigers are exceptional in every sense of the word, but they also had massive amounts of foreign aid, particularly from the US, and they're not as open as you think. In fact, aside from Singapore, the rest of the Tigers all execute relatively moderate forms of protectionism, with import tariffs, export incentives and loads of other government help for their own industries. In other places, free trade has demolished countries who cannot compete and who basically have to take gambles on where to specialize. That is not to say it is or isn't bad in any situation, but there is no iron clad law that dictates the performance of a nation's economy based on the level of free trade it executes. It simply doesn't exist, the geopolitics are too complicated, so different levels are appropriate for different countries. That is why they call it "strategic trade policy" these days, not protectionism.
I can't think of a single instance of an industry without geopolitical implications (defense, for example) that can benefit the economy in the long run if it's protected. And you're right that I was wrong about the Tigers. But the important thing, and the point I was making, is that they pursued a strategy based on trade with other nations, and did not rely solely on domestic demand. This contrasts with policies elsewhere that attempted to nurture domestic industries. You also ignore the distortionary impacts of such protective policies -- China's currency manipulation adversely impacts the manufacturing sectors of competing nations. While China is still chugging along at 6% growth, for example, Taiwan's currency has skyrocketed and GDP fell at an annual rate of 2% last year.
Off the top of my head, I can think of four countries that did "sort of" well with functioning protectionist legislation - Britain, the United States, Germany and Japan. By the time the British became gung ho about free trade, they were able to do so because they already led the world in technology and industry and it was beneficial for them to do so, but all of these countries were extremely protective of infant industries before their great revolutions. Even as they tout the benefits of it now, they do so with massive advantages over countries who are not as far "advanced," and even still they're not in complete compliance.
The problem with your examples is that each did not operate in a globalized world. When your competition is not benefiting from free trade, it's meaningless to cite your own protectionist policies as a boon. Britain had the benefit of an empire that allowed it to extract the natural resources it needed for England's industrial machine. Free-trade within its empire, as with all empires, gave it a competitive edge. There's no knowing how much faster growth may have progressed in an 19th century were trade barriers lower between empires. Protective policies intended to nurture domestic industries would be disastrous in today's globalized world, where such industries would never be able to compete, even if you could somehow overcome the political resistence to "unprotecting" any such industry.
Granted, I'm not as well informed on history, but what protectionist tendencies are you talking about in US history that was unique from the rest of the world and was not a consequence of natural trade barriers arising from the oceans? And isn't the fact that the US had large tracts of undeveloped and unexploited land unique?
Economy of scale destroys the comparative advantage (this is actually what Kruger worked on.) There's not a single farmer in Central or South America that can legitimately compete with much larger, heavily subsidized farmers from the US in a free market, so the country's domestic base deteriorates and then socialism seems like a good alternative.
Agreed. Agricultural subsidies are shit. Fuck greedy American farmers. They're a disincentive for agricultural investment across the world and exacerbate the food crisis. But free-trade relieves that problem to an extent by lowering prices and granting access to a global market of food commodities. Nor are US subsidies the unique cause of today's food shortage -- sometimes it is just much more expensive and difficult to develop agriculture in tropic areas, because disease is more common, and yields are less consistent. Free-trade at least creates generates non-sustenance labor and creates incentive for further agricultural development world wide.
As for the economies of scale thing, I'm not sure what you're getting at. It's true developing nations can't compete in a global market, but they retain a comparative advantage because sustenance farming is always less productive, and because wages are cheaper. Say I have a choice between producing a shitty tshirt for $1 or farm .50 cents worth of food. My overseas competitor, in the same period of time, produces the same tshirt for $10 and $50 of food. It is advantageous for me to sell him tshirts and for him to sell me food. Foreign investment also improves technology.
That is not to say the "Buy American" clause is a good idea. For a country this size, and for a number of other factors, it is a terrible idea, but don't paint an overarching picture of protectionism when almost all of the developed world has relied on it at some point.
You've also dangerously (and stupidly) oversimplified the issue of development. Protectionism or not, Sudan and Congo would not see the same growth as the rest of the world. I'm not sure where the environment fits into this, but I think it's naive to think the problem will be solved without regulatory intervention.
I think I was agreeing that free-trade has done little for development in these countries largely due to the political problems caused by dependence on commodities exports. I don't know what the argument is here.
Free-trade to some extent makes it harder to reduce carbon emissions globally. This is a problem, was what I was getting at.
And trade DOES exploit the poor. Perhaps not long term but nearly every single country has encountered major problems with economic polarization when they began to industrialize. That is generally standard fare.
I've never denied there is a cost in the short-run. But the long-run benefits always outweigh because they are perpetual.
At the end of the day I'm not persuaded that a world with free-trade is not a good thing. Fair-trade provisions have only ever distorted the market, and while they may be in the immediate best interests of particular nations, such policies hinder global growth and detract from the cause of human welfare.
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On March 03 2009 10:40 ahrara_ wrote:
If there's a problem with the American economy, it's the unimaginable quantities of people who have no capacity for recognizing cognitive dissonance even as it surges out of their mouth like so much regurgitated meat loaf. I'll give you the benefit of the doubt and assume you were heavily inebriated from consuming large quantities of hallucinogenic drugs, or maybe you were trolling to see how many people with higher mental functions you could coax out of teamliquid, because I can't imagine how else you might not recognize the logical contradictions inherent in endorsing the policies of both Kucinich and Ron Paul at once.
oh. without a bunch of derogetory attacks.
here is a comparison of what Ron Paul and Dennis Kucinich both had to say about the recent Bailout, the first one approved back in October.
Ron Paul:
+ Show Spoiler +http://www.youtube.com/watch?v=u65V6ATo4rM
Ron doesn't start till about 2:40
Dennis Kucinich:
+ Show Spoiler +
ill try to stay sober for the next couple of sentences. they both agreed the bill is WAY too much. the both attack the idea that more debt is the answer to the problem. they agree, and both state, that the federal reserve needs oversight (one of the main themes of my post so far about the central bank) and that its in the intrest of a "few people", the banks.
and most importantly, they both agree that their should have been more time for discussion. and they both agree that the idea of making this the Taxpayers problem, even more than it already is, is a very bad idea.
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On March 03 2009 12:06 cUrsOr wrote:
"None of this would have been possible without free trade."
thats a bit presumptious dont you think? that free trade is the sole entity driving development? there havent been any other factors that have made this possible?
No. Not significantly. Read below, I talk about it at the bottom.
"China's rate of growth expanded several hundred percent after rapproachment with the US..."
as did its rates of autism. some several hundred percent. (im really glad you mentioned the pollution at the end.) as if a bigger GDP and population (especially in Chinas case >.< ) are the sole indicators that society is now "better off".
A few thousand autistic kids is worse than half a billion people out of poverty? What?! These minor factors are negligible in the long run. Moreover, economic growth facilitates cheaper health care, generally improving the quality of life.
"There exist zero historical instances of protectionist states that have made any real, sustainable progress in economic development."
I would say that Venezuela is in stark contrast to this statement, but Im sure I probably shouldnt bring that country up.
Chavez has considerably reduced poverty rates in Venezuela, true, but the money to do that has nearly all been derived from oil exports. This creates a litany of problems that make such growth unsustainable. First, oil reserves will eventually run out, and production is already in decline. Second, it makes the national vulnerable to schizophrenically unstable energy prices. Finally, Chavez's protectionism has discouraged growth in manufacturing (in fact I believe it has shrunk), which is key to sustained growth. Why not follow the more moderate policies of Lula de Silva in Brazil, whose anti-poverty programs have made considerable progress as well?
Ive been through the sweatshops arent all bad argument. I know youre not saying child labor is good, or that sweatshops are good. believe me im not accusing you of that. do they lead to eventual rise in income? yes. is it proportonate to the rise in income of the wealthy in the country, or the owners of the businesses? and finally, there is no other way? i mean, we have to accept that there will be a 50 year phase of virtual slavery in a country before there can be any sort of standard of living? i say its a horrible way to assume the world has to work.
I love child labor when the alternative is child prostitution. It brings tears of joy to my Eustace Tilley monocled eye and touches my blackened heart dearly. Because that is the alternative, provided you're attractive enough, and if you're not, you're going to live miserably and starve. Why are you asking me if there is a better alternative? I don't have one besides free-trade. I've never argued that capitalism is perfect. In fact I've acknowledged that there are serious humanitarian costs to which even my worn sense of compassion is not immune, but it is infinitely better than perpetual poverty.
Now, 50 years is a huge exaggeration, considering the statistics coming out of China, but I will eagerly debate you on that premise. If the long run benefits persist forever, I will happily pay a short term cost of "wage slavery".
i would not quallify my post as bad economics. food production has declined in every country that we have "free trade" agreements with. why grow food for X amount when the US can import it for .6X??? im sure you can google it to find that this is the case.
Why does food have to be grown locally? Depending only on local crops is risky. In small countries especially, a single bad yield could lead to famine. In a global market, such bad years can be covered for by tapping the global market. Now that will increase prices, but it is better than starving to death. Increased prices, moreover, give a signal for the market to invest more in agriculture. (Admittedly, this does not always work as quickly as it ought to. There are serious problems with today's food market, and it may actually be worthwhile to develop strategically protected reserves of agriculture for political reasons, but in the long run, the benefits of free-trade outweigh).
there are better ways to do things.
Like?
to think that free trade is the model that all countries should accept is not exactly self-determination.
I don't care about abstract, intangible moral principles when the lives of billions are at stake. If I know ten people will die unless I shoot another man, I will happily shoot that man whether he likes or not. (Maybe not happily... but you get the point)
any time people try to tell the US what to do, people throw fits around here. the whole concept, like any Agreement or Constitution is concieve, and designed to benifit the authors. these are the ideas of the international corporations that want access to resources with minimal hassle. the wto and imf are designed to make these desires attainable for the owners. so business can proffit and benifit- and a few people can make money.
Did you completely ignore my analysis about how globalization has benefited hundreds of millions in China? Or the point about how more than half of the world has become part of the middle class since the GATT and WTO?
lets not assume, stay with me, that Free-Trade is the idea that has lead to the Growth in the 3rd world. these people would "develop" reguardless. american companies arent their facilitating it. i would say, more properly, that growth has occured despite Free Trade rather than because of it.
This. Is. Factually. Incorrect. The fastest growing sector, and the one that has fueled nearly all its GDP growth in most developing economies is exports. Do you understand? Exports. Exports are not possible without free trade. In a world of high trade barriers, growth is much slower because there is no domestic market to buy those products, because they are all incredibly poor. I really don't want to go into detail about how comparative advantage works (PLEASE read up on it some before debating this again, it makes this entire post moot if you don't understand the basic theory), but maybe a simple example will illustrate the concept.
Say Bob has a tract of land on which he can grow 4 apples or 2 bananas a day. To live, he needs one of each every day. So he splits his time: every day he grows 2 apples and 1 banana.
Say there is another farmer Jim that has land suited for growing 2 apples and 4 bananas a day. To live, he needs one of each every day. So he grows 1 apple and 2 bananas.
In a world without free trade, together Bob and Jim grow 6 pieces of fruit a day. But say they meet up one day and decide to specialize and focus on what they produce best. Bob grows 4 apples a day, Jim grows 4 bananas a day. They trade so that each have enough fruit to live on, but they are now growing 8 fruits total. Instead of 2 leftover fruits, they have 4. They can take the surplus and sell it so they can buy more land or hire employees. This creates wealth twice as fast.
(I know this is absolute advantage but comparative advantage is similar)
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On March 03 2009 12:09 ahrara_ wrote:Show nested quote +On March 03 2009 11:25 Jibba wrote:
Uh... the Asian Tigers are exceptional in every sense of the word, but they also had massive amounts of foreign aid, particularly from the US, and they're not as open as you think. In fact, aside from Singapore, the rest of the Tigers all execute relatively moderate forms of protectionism, with import tariffs, export incentives and loads of other government help for their own industries. In other places, free trade has demolished countries who cannot compete and who basically have to take gambles on where to specialize. That is not to say it is or isn't bad in any situation, but there is no iron clad law that dictates the performance of a nation's economy based on the level of free trade it executes. It simply doesn't exist, the geopolitics are too complicated, so different levels are appropriate for different countries. That is why they call it "strategic trade policy" these days, not protectionism. I can't think of a single instance of an industry without geopolitical implications (defense, for example) that can benefit the economy in the long run if it's protected. And you're right that I was wrong about the Tigers. But the important thing, and the point I was making, is that they pursued a strategy based on trade with other nations, and did not rely solely on domestic demand. This contrasts with policies elsewhere that attempted to nurture domestic industries.
Ohhhh I just realized how stupid this sentence I wrote is. And I'm sure you've noticed it also. Ignore me. The second part about distortion is more important anyway.
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briefly, the problem with food not being grown locally is that, when there is a crisis, only the rich people get to buy food, and imports to the non produing nations will stop. this was the staple of the food crisis in late 2007 that is still going on.
better ways to do things? everything local. every apple that comes from the other side of the planet also carries with it a certain amount of polution and unnecisary labor, etc. its just not efficient.
"Did you completely ignore my analysis about how globalization has benefited hundreds of millions in China? Or the point about how more than half of the world has become part of the middle class since the GATT and WTO?"
no. i think youre confusing industrialization with free trade. the rising standar of living has more to do with proliferation of inustrial farming and manufacturing than it does with Free Trade. again, if economy is kept local rather than global, the benifits of work done in china would all bennifit them, rather then them reaping a very small percentage of the work they actually do, which is now the case.
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On March 03 2009 13:04 cUrsOr wrote:
briefly, the problem with food not being grown locally is that, when there is a crisis, only the rich people get to buy food, and imports to the non produing nations will stop. this was the staple of the food crisis in late 2007 that is still going on.
better ways to do things? everything local. every apple that comes from the other side of the planet also carries with it a certain amount of polution and unnecisary labor, etc. its just not efficient.
"Did you completely ignore my analysis about how globalization has benefited hundreds of millions in China? Or the point about how more than half of the world has become part of the middle class since the GATT and WTO?"
no. i think youre confusing industrialization with free trade. the rising standar of living has more to do with proliferation of inustrial farming and manufacturing than it does with Free Trade. again, if economy is kept local rather than global, the benifits of work done in china would all bennifit them, rather then them reaping a very small percentage of the work they actually do, which is now the case.
Ignorance, how you reek. You have never read a primer on economics. Yes, it is that obvious. Until you have, I will likely make more progress persuading Rekrul to feel shame or an elephant that he has wings and can fly. So I am off to better pursuits. May I recommend "Naked Economics" as an excellent introduction to the dismal science?
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EPT![[image loading]](http://media.economist.com/images/20090214/CSR971.gif)
