Free Trade: Hope Over Fear
Free trade is a child of economic confidence; protectionism is pessimism's progeny. In today's fearful economic climate, policy-makers have again cried "buy American," and embraced interventions that support domestic producers at the expense of our trading partners. Protectionism is bad economics and worse foreign policy, for many of our trading partners have only a tenuous link to peaceful democracy. To avoid the terrible path of the 1930s that led to prolonged depression and global conflict, the United States must maintain its commitment to globalization.
Other countries provide us with clothes, cars, markets for exports, and lending for the government and banks. Shutting our markets will make life more expensive for us and hurt the rest of the world. In the 1930s, legislators embraced high tariffs, but putting America first led to a devastating world war. Today, US lawmakers need to choose hope over fear, and stick with free trade.
~Ed Glaeser, Harvard economics professor, in the Boston Globe
HT: Cafe Hayek
15 Comments:
I am a new NetPlus student and just wanted to say hello, and thank you for this blog entry. It helped me understand an article that was discussed in my global management class today and was glad I found such helpful information. I will definitely check this blog often. Thanks!
Danielle Storrs
Okay students, welcome to this blog. Professor Perry is able to find very interesting articles in the Blogosphere for the reading public. These articles very often make us stop and think BUT we mmust look at this posts with critical thinking. Our trade relationship with China began with the acceptance of China of Most Favored Nation Stautus as far as trade (their over one billion population offered great hope for an eventual "open market" for U.S. goods mand services - eventually).
Over time the promise has not happened. China has allowed pervasive counterfitting of foreign goods and the theft of intellectual property of which U.S. produced software is most notable. The Chinese currency is manipulated by very intelligent Chinese bureaucarts that keep the Yuan (Chinese currency denonination) artifcially low in relation the U.S. Dollar. This makes their goods have probably a forty percent advantage off the top. China gives credits to it's exporters as a reward for bringing in foreign currency. It is very hard to sell foreign goods in China because of increasing tariffs and the individaul inspection of of each good brought into China. How do foreign companies cope with this situation? They are forced to have joint-venture agreements with Chinese "firms" that often are a front to transfer trade secrects and intellectual property to Chinese concerns.
The most recent economic stimulus plans of China have new new export credits and new tariffs are surfacing on industrial machinery such as mining and others.
The net result is a soverign wealth fund called the China Investment Corporation. It has assets of over two trillion U.S. Dollars! This results in a Dead-End for currency that we thought would be used to purchase goods and services in this country. The "Velocity of Money" has come to a screeching halt and is hoarding as an invetment rather then the basis of purchase that we assumed we were getting when we opened trade relations with China.
China is a Managed Export Economy based upon the worst of mercantile tactics. Adam Smith would be laughing at the foolishness of our government. This is not Free Trade economics with an Open Market but rather an arrangement that has exported capital, intellectual property and jobs and it is getting worse.
If you want a future of a better life and not the rapidly detiorating situation we are now in then: Be tough and play for keeps in your class discussions on foreign trade because you might be a victim of naivite at the minimum and probably corruption by the message givers in the form of grants and retainers by foeign lobbyists and public relations firms.
In the 60's we challened the Military-Industrial complex and now you may have to stand-up to the purveyors of the false free trade market that is being portrayed. Best of Luck in your studies and your futures.
Student I should have had my post proof-read by someone else before turning it in. I apologize for the mistakes and should have allowed myself for time and scutiny of my spelling. Thanks for your indulgence.
In the 60's we challened the Military-Industrial complex and now you may have to stand-up to the purveyors of the false free trade market ...
Why doesn't this surpise me? Time to put down the bong, lose the Che t-shirt, get a job and grow up.
When President Obama promised Wednesday to attack defense spending that he considers wasteful and inefficient, he opened a fight with key lawmakers from his own party. . . . The champion was defense appropriations subcommittee Chairman John P. Murtha (D-Pa.), who collected $743,275 of the industry’s money; second place was held by Armed Services Committee Chairman Ike Skelton (D-Mo.), who collected $268,799, according to the center’s tally.
Murtha added more than $100 million in earmarks to the fiscal 2008 defense bill, nearly a fifth of the total inserted by all Democrats, according to the watchdog group Taxpayers for Common Sense. Every earmark reflects a project that the Pentagon did not seek in its budget request, and some of Murtha’s earmarks benefited clients of a lobbying firm called PMA Group, now under FBI investigation for possible violations of federal election law. PMA is run by a former Murtha aide, and some of its clients were donors to Murtha campaigns.
Link
Liberals have been loading up defense bills with pork and payoffs forever. Then they don their tin-foil hats and whine about the "military industrial complex". One thing that you have to give them credit for, they've figured out that their supporters are just too stupid to figure it all out.
"China is a Managed Export Economy based upon the worst of mercantile tactics. Adam Smith would be laughing at the foolishness of our government. This is not Free Trade economics with an Open Market but rather an arrangement that has exported capital, intellectual property and jobs and it is getting worse"...
Oh dear! chicken little says the sky is falling...
Note one small detail, nothing of credible substance is offered to back the rant up...
TO: gettingrational
Excellent critical thinking sir.
Gettingrational
You nailed it. I doubt any other poster has been to China or done business there as I have....
"1" has a comment that my post was a rant and I don't have any credible back-up. My response is thank you to the people in the U.S. military that keep our speech free so "1" is able to express his or her opinion.
As far as credible substance - go to the 2008 Report to Congress by the U.S. China Security Review Commission. The report details numerous illegal and trade treaty violations by the Chinese as well threats and damage already done to the U.S. economy. The link is:http://www.uscc.gov/annual_report/2008/08_annual_report.php
"You nailed it. I doubt any other poster has been to China or done business there as I have"...
LOL! Nice try but no dice...
You are hardly alone...
"My response is thank you to the people in the U.S. military that keep our speech free so "1" is able to express his or her opinion"...
That's right gettingrational, the armed forces even protects people like you so that you can continue rant on foolishly...
BTW your link (from a Congress run by the party of the Seditious & Sleazy no less) came back as thus: Not Found
Harold Meyerson in the Washington Post wants America's trade policy to help Americans. An interesting idea. And how should it do that? Harold wants to save manufacturing jobs, the key to prosperity in his view. He argues that because of foolish free trade policies such as NAFTA and other increases in trade:
...America has gone from being a nation that manufactured things to a nation that manufactures debt. Manufacturing (as Kevin Phillips points out in the forthcoming issue of the American Prospect, which I edit) accounted for 25 percent of America's gross domestic product in the 1970s but just 12 percent in 2006. Finance, which amounted to 12 percent of GDP in the '70s, amounted to 20 percent in 2006.
If you read that quickly, it does sound pretty scary. It looks like our manufacturing output has been cut in half! Actually, manufacturing output since 1970 has roughly tripled. TRIPLED. I feel like writing the word again but I'll refrain. But "TRIPLED" is a good word to remember when you keep hearing that America's manufacturing sector is being hollowed out and we don't make anything anymore and soon we're going to be sitting around doing each other's laundry.
The reason manufacturing has become a smaller proportion of GDP is because other sectors have grown even more. The reason other sectors have grown even more is because we have such high productivity in manufacturing over the last 40 years. That's freed up people and resources to make other stuff.
In Harold's world, that's a bad thing, because that means losing high-paying manufacturing jobs for low-paying service jobs.
Median household income increased 41 percent from 1970 to 2006, though it never returned to its 1999 peak.
America's standard of living has been thriving at the same time that manufacturing is falling as a proportion of GDP.
Link
Despite the high economic growth rates of developing nations, the United States is by far the world's wealthiest nation as measured by GDP -- the broadest measure of economic wealth. And the rest of the world isn't even close. This year, U.S. GDP is projected to be $13.22 trillion. That means that the U.S. economy is as large as the next four-largest economies in the world -- Japan, Germany, China, and the United Kingdom -- combined.
... what about the United States' nearest rivals? Germany and China -- #3 and #4 on the list of the world's largest economies -- are smaller than the economies of Texas and California combined. India's $800 billion economy is on par with Florida. Brazil, as we see on the map, is comparable to New York. Russia's economy is about the size of New Jersey (or Texas).
California and Texas have a combined population of 60 million, while China's population is 1.3 billion. This has huge implications. Let's say China does become the largest economy in the world in 20 years time. Yet, because of its large population, even if it continues growing at its current pace (a huge assumption), by 2050 it will only be as wealthy as former Communist Hungary is in 2007.
Link
Trade with Cuba, but not Columbia
On April 3, 2008, Barack Obama said that trade with capitalist pro-American Colombia was bad:
"I will oppose the Colombia Free Trade Agreement if President Bush insists on sending it to Congress because the violence against unions in Colombia would make a mockery of the very labor protections that we have insisted be included in these kinds of agreements."
Link
But as the WSJ points out:
The latest Democratic objection is that Bogotá isn't doing enough to protect labor activists. But the murders of trade unionists have fallen by almost 80% since 2002, in part because of special protection programs, and Colombian President Álvaro Uribe has reduced other violence by nearly every measure, particularly against narco-traffickers. But any excuse will do.
Link
Now the boy wonder is promising to open trade with Castro's Cuba, one of the worst abusers of human rights on the planet. But, heh, their fellow travelers so, human rights be damned.
Well anon again you've come up with some seriously good nuggets...
Your comment about the, "boy wonder" had me chuckling...
None the less said "boy wonder" is getting better at this stimulus game: Note the improvement in his bank shot ...
Also let's not forget to wish Obama all the same glad tidings that the Dems had for Bush back in 2006...
I bet Rod Blago is even more confused now…..he probably doesn’t understand why HE got in so much trouble but everyone else gets away with it….
http://www.associatedcontent.com/article/1531053/pay_to_play_more_revelations_regarding.html?singlepage=true&cat=75
mB
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