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Why Protectionism is bad
The Conscise Encyclopedia of Economics ^ ^ | Jagdish Bhagwati

Posted on 03/09/2004 8:07:50 PM PST by freebacon

See also http://www.freerepublic.com/focus/f-news/1094371/posts - why Free Trade is Good and http://www.freerepublic.com/focus/f-news/1094309/posts Free Market, Outsourcing, Socialism flaws

The fact that trade protection hurts the economy of the country that imposes it is one of the oldest but still most startling insights economics has to offer. The idea dates back to the origin of economic science itself. Adam Smith's The Wealth of Nations, which gave birth to economics, already contained the argument for free trade: by specializing in production instead of producing everything, each nation would profit from free trade. In international economics it is the direct counterpart to the proposition that people within a national economy will all be better off if all people specialize at what they do best instead of trying to be self-sufficient.

It is important to distinguish between the case for free trade for oneself and the case for free trade for all. The former is an argument for free trade to improve one nation's own welfare (the so-called "national-efficiency" argument). The latter is an argument for free trade to improve every trading country's welfare (the so-called "cosmopolitan-efficiency" argument). Underlying both cases is the assumption that prices are determined by free markets. But government may distort market prices by, for example, subsidizing production, as European governments have done in aerospace, electronics, and steel in recent years, and as all industrial countries do in agriculture. Or governments may protect intellectual property inadequately, causing underproduction of new knowledge. In such cases production and trade, guided by distorted prices, will not be efficient.

The cosmopolitan-efficiency case for free trade is relevant to questions such as the design of international trade regimes. For example, the General Agreement on Tariffs and Trade oversees world trade among member nations, just as the International Monetary Fund oversees international macroeconomics and exchange rates. The national-efficiency case for free trade concerns national trade policies; it is, in fact, Adam Smith's case for free trade. Economists typically have the national-efficiency case in mind when they talk of the advantage of free trade and of the folly of protectionism.

This case, as refined greatly by economists in the postwar period, admits two theoretical possibilities in which protection could improve a nation's economic wellbeing. First, as Adam Smith himself noted, a country might be able to use the threat of protection to get other countries to reduce their protection against its exports. Thus, threatened protection could be a tool to pry open foreign markets, like oysters, with "a strong clasp knife," as Lord Randolph Churchill put it in the late nineteenth century. If the protectionist threat worked, then the country using it would gain doubly: from its own free trade and from its trading partners' free trade as well. However, both Smith and later economists in Britain feared that such threats would not work. They feared that the protection imposed as a threat would be permanent and that the threat would not lower the other countries' trade barriers.

The trade policy of the United States today is premised on a different assessment: that indeed U.S. markets can, and should, be closed as a means of opening new markets abroad. This premise underlies sections 301 through 310 of the 1988 Omnibus Trade and Competitiveness Act. These provisions permit, and sometimes even require, the U.S. government to force other countries into accepting new trade obligations by threatening tariff retaliation if they do not. But those "trade obligations" do not always entail freer trade. They can, for instance, take the form of voluntary quotas on exports of certain goods to the United States. Thus, they may simply force weak nations to redirect their trade in ways that strong nations desire, cutting away at the principle that trade should be guided by market prices.

The second exception in which protection could improve a nation's economic well-being is when a country has monopoly power over a good. Since the time of John Stuart Mill, economists have argued that a country that produces a large percentage of the world's output of a good can use an "optimum" tariff to take advantage of its latent monopoly power and, thus, gain more from trade. This is, of course, the same as saying that a monopolist will maximize his profits by raising his price and reducing his output.

Two objections to this second argument immediately come to mind. First, with rare exceptions such as OPEC, few countries seem to have significant monopoly power in enough goods to make this an important, practical exception to the rule of free trade. Second, other countries might retaliate against the optimum tariff. Therefore, the likelihood of successful (i.e., welfare-increasing) exploitation of monopoly power becomes quite dubious. Several economists have recently made their academic reputations by finding theoretical cases in which oligopolistic markets enable governments to use import tariffs to improve national welfare, but even these researchers have advised strongly against protectionist policies.

One may well think that any market failure could be a reason for protection. Economists did fall into this trap until the fifties. Economists now argue, instead, that protection would be an inappropriate way to correct for most market failures. For example, if wages do not adjust quickly enough when demand for an industry's product falls, as was the case with U.S. autoworkers losing out to foreign competition, the appropriate government intervention, if any, should be in the labor market, directly aimed at the source of the problem. Protection would be, at best, an inefficient way of correcting for the market failure.

Many economists also believe that even if protection were appropriate in theory, it would be "captured" in practice by special interests who would misuse it to pursue their own interests instead of letting it be used for the national interest. One clear cost of protection is that the country imposing it forces its consumers to forgo cheap imports. But another important cost of protection may well be the lobbying costs incurred by those seeking protection. These lobbying activities, now extensively studied by economists, are variously described as rent-seeking or directly unproductive profit-seeking activities. They are unproductive because they produce profit or income for those who lobby without creating valuable output for the rest of society.

Protectionism arises in ingenious ways. As free trade advocates squelch it in one place, it pops up in another. Protectionists seem to always be one step ahead of free traders in creating new ways to protect against foreign competitors.

One way is by replacing restrictions on imports with what are euphemistically called "voluntary" export restrictions (VERs) or "orderly" market arrangements (OMAs). Instead of the importing country restricting imports with quotas or tariffs, the exporting country restricts exports. The protectionist effect is still the same. The real difference, which makes exporting nations prefer restrictions on exports to restrictions on imports, is that the VERs enable the exporters to charge higher prices and thus collect for themselves the higher prices caused by protection.

That has been the case with Japan's voluntary quotas on exports of cars to the United States. The United States could have kept Japanese car imports in check by slapping a tariff on them. That would raise the price, so that consumers would buy fewer. Instead, Japan limits the number of cars shipped to the United States. Since supply is lower than it would be in the absence of the quotas, Japanese car makers can charge higher prices and still sell all their exports to the United States. The accrual of the resulting extra profits from the voluntary export restraint may also have helped the Japanese auto producers to find the funds to make investments that made them yet more competitive!

The growth of VERs in the eighties is a disturbing development for a second reason as well. They selectively target suppliers (in this case Japan) instead of letting the market decide who will lose when trade must be restricted. As an alternative, the United States could have provided just as much protection for domestic automakers by putting a quota or tariff on all foreign cars, letting consumers decide whether they wanted to buy fewer Japanese cars or fewer European ones. With VERs, in other words, politics replaces economic efficiency as the criterion determining who trades what.

Protectionism recently has come in another, more insidious form than VERs. Economists call the new form "administered protection." Nearly all industrialized countries today have what are called "fair trade" laws. The stated purpose of these laws is twofold: to ensure that foreign nations do not subsidize exports (which would distort market incentives and hence destroy efficient allocation of activity among the world's nations) and to guarantee that foreign firms do not dump their exports in a predatory fashion. Nations, therefore, provide for procedures under which, when subsidization or dumping is found to occur, a countervailing duty (CVD) against foreign subsidy or an antidumping (AD) duty can be levied. These two "fair trade" mechanisms are meant to complement free trade.

In practice, however, when protectionist pressures rise, "fair trade" is misused to work against free trade. Thus, CVD and AD actions often are started against successful foreign firms simply to harass them and coerce them into accepting VERs. Practices which are thoroughly normal at home are proscribed as predatory when foreign firms engage in them. As one trade analyst put it, "If the same anti-dumping laws applied to U.S. companies, every after-Christmas sale in the country would be banned."

Much economic analysis shows that in the eighties "fair trade" mechanisms turned increasingly into protectionist instruments used unfairly against foreign competition. U.S. rice producers got a countervailing duty imposed on rice from Thailand, for example, by establishing that the Thai government was subsidizing rice exports by less than 1 percent—and ignoring the fact that Thailand also slapped a 5 percent tax on exports. We usually think a foreign firm is dumping when it sells at a lower price in our market than in its own. But the U.S. government took an antidumping action against Poland's exports of golf carts even though no golf carts were sold in Poland.

Therefore, economists have thought increasingly about how these "fair trade" mechanisms can be redesigned so as to insulate them from being "captured" and misused by special interests. Ideas include the creation of binational, as against purely national, adjudication procedures that would ensure greater impartiality, as in the U.S.-Canada Free Trade Agreement. Also, greater use of GATT dispute-settlement procedures, and readier acceptance of their outcomes, has been recommended.

Increasingly, domestic producers have labeled as "unfair trade" a variety of foreign policies and institutions. Thus, those who find Japanese commercial success hard to take have objected to its retail distribution system, its spending on infrastructure, and even its work habits. Opponents of the U.S.-Mexico Free Trade Agreement have claimed that free trade between the two nations cannot be undertaken because of differences in Mexico's environmental and labor standards. The litany of objections to gainful, free trade from these alleged sources of "unfair trade" (or its evocative synonym, "the absence of level playing fields") is endless. Here lies a new and powerful source of attack on the principles of free trade.


TOPICS: Business/Economy; Culture/Society; Extended News; Foreign Affairs; Government
KEYWORDS: bush; freetrade; ftaa; gatt; gop; leftwingactivists; millenniumchallenge; nafta; oas; protectionism; trade; un; wto
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1 posted on 03/09/2004 8:07:50 PM PST by freebacon
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To: freebacon

But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.

~Karl Marx, "On the Question of Free Trade" - January 9, 1848


2 posted on 03/09/2004 8:10:44 PM PST by Willie Green (Go Pat Go!!!)
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To: freebacon
So you think protectionism is bad. How about telling the truth: free-tradism is global socialism.

3 posted on 03/09/2004 8:14:58 PM PST by hedgetrimmer
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To: hedgetrimmer
Actually its global capitalism.
4 posted on 03/09/2004 8:16:00 PM PST by freebacon
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To: freebacon
Actually no it isn't. You must read the WTO charter, NAFTA, GATT and the FTAA. They clearly posit socialist policies withing their trade agreements.
5 posted on 03/09/2004 8:17:16 PM PST by hedgetrimmer
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To: Willie Green
This is Communist rhetoric, Marx's economic theory was outdated the day he wrote it. He wrote it over 150 years ago, and the social revolution already happened in Russia and various other countries. And it was a miserable failure. Not to mention the fact that it killed over 100 million people.
6 posted on 03/09/2004 8:19:15 PM PST by freebacon
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To: hedgetrimmer
Do you have a link?
7 posted on 03/09/2004 8:19:53 PM PST by freebacon
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To: hedgetrimmer
"free-tradism is global socialism."

Orwell would be proud


8 posted on 03/09/2004 8:21:52 PM PST by luckydevi
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To: freebacon
In order for Brazil to sign the FTAA, they are demanding that the US create a program to end global hunger, and also to give free US taxpayer dollars to that country for "infrastructure development". That is not "free trade".

In order for Venezuela to sign the FTAA they are demanding tht the US create a program of redistribution of US taxpayer dollars called "structural convergence". Than is not "free trade" but our salivating little trade minister will give any concession in order to make the FTAA happen.

In order for Mexico to sign the FTAA the US must allow open migration of Mexican nationals, social security for illegal immigrants and lower fees for sending remittances outside of the country. The president just met with Vicente Fox this weekend and agreed to all their "conditions" on "free trade".

The idea of "infrastructure development" evolved directly from the WTO who says "rich" countries must pay to bring teh standard of living of "poor" countries, or "least developed countries" like china, up. That is not "free trade".

In fact, there is no "free trade" only managed trade by the global socialists who run the WTO and the UN.
9 posted on 03/09/2004 8:24:03 PM PST by hedgetrimmer
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To: Willie Green
Willie

As with pretty much everything, Marx anaylsis of free trade was wrong

Do you actually agree with that quote?

10 posted on 03/09/2004 8:27:19 PM PST by luckydevi
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To: freebacon
This is Communist rhetoric, Marx's economic theory was outdated the day he wrote it.

Marx was in agreement with Adam Smith on the consequences of free trade.
He was patheticly wrong in his theory of constructing a communist utopian alternative.

Excerpted and condensed from:

Adam Smith: The Wealth of Nations, Book 4, Chapter 2

Of Restraints upon the Importation from Foreign Countries
of such Goods as can be produced at Home

"There seem, however, to be two cases in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry...

  • The first is, when some particular sort of industry is necessary for the defence of the country....

  • The second case, in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry is, when some tax is imposed at home upon the produce of the latter. In this case, it seems reasonable that an equal tax should be imposed upon the like produce of the former....

As there are two cases in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry, so there are two others in which it may sometimes be a matter of deliberation; in the one, how far it is proper to continue the free importation of certain foreign goods; and in the other, how far, or in what manner, it may be proper to restore that free importation after it has been for some time interrupted....

  • The case in which it may sometimes be a matter of deliberation how far it is proper to continue the free importation of certain foreign goods is, when some foreign nation restrains by high duties or prohibitions the importation of some of our manufactures into their country. Revenge in this case naturally dictates retaliation, and that we should impose the like duties and prohibitions upon the importation of some or all of their manufactures into ours....

  • The case in which it may sometimes be a matter of deliberation, how far, or in what manner, it is proper to restore the free importation of foreign goods, after it has been for some time interrupted, is, when particular manufactures, by means of high duties or prohibitions upon all foreign goods which can come into competition with them, have been so far extended as to employ a great multitude of hands. Humanity may in this case require that the freedom of trade should be restored only by slow gradations, and with a good deal of reserve and circumspection. Were those high duties and prohibitions taken away all at once, cheaper foreign goods of the same kind might be poured so fast into the home market as to deprive all at once many thousands of our people of their ordinary employment and means of subsistence. The disorder which this would occasion might no doubt be very considerable....


11 posted on 03/09/2004 8:31:31 PM PST by Willie Green (Go Pat Go!!!)
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Comment #12 Removed by Moderator

To: luckydevi
As with pretty much everything, Marx anaylsis of free trade was wrong
Do you actually agree with that quote?

As I just posted, Adam Smith agreed with it.
Marx's proposed alternative may have been an abomination,
But that doesn't discredit his analysis of the consequences of unrestricted free trade.
Even David Ricardo asserted that such policies would drive labor to the subsistance level.

13 posted on 03/09/2004 8:37:34 PM PST by Willie Green (Go Pat Go!!!)
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To: hedgetrimmer
In fact, there is no "free trade" only managed trade by the global socialists who run the WTO and the UN.

Who is arguing in favor of welfare payments, abroad or otherwise? Free trade is about removing barriers to trade, and not imposing new ones. It's wrong to argue against free trade because politicians tie socialism to it in treaties. Don't toss out the baby with the bathwater.

14 posted on 03/09/2004 8:40:06 PM PST by Gunslingr3
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To: freebacon
President Bush promoted these policies during the international conference on development finance in Monterrey, Mexico, during the week of March 18th, and subsequent visits to Peru and El Salvador, where Bush met with various Latin American heads of state. With few concrete initiatives to offer Latin Americans, the brief visit was intended to shore up support for free trade initiatives (FTAA, CAFTA, Andean Trade Preference Act), security programs (Expansion of Plan Colombia, Plan Sur in Mexico). Plan Sur has dramatically increased military presence in southern Mexico, especially in the narrowest part of the Isthmus of Tehuantepec, to curtail Central American immigration to the U.S.. Coincidentally, the isthmus is the heart of Plan Puebla Panama, a development plan that would potentially displace hundreds of indigenous communities for the construction of transportation corridors and maquila factories. In return, regional presidents hope to win amnesty for undocumented workers and a plan that will allow for orderly immigration of workers, but Mexican President Fox would settle for a modest guest worker program.

President Bush announced that the United States would contribute $5 billion over the next three budget years to a Millennium Challenge Account to help developing nations improve their economies and standards of living. He said the new funds–which are over and above the current U.S. foreign assistance budget–would be directed toward countries that demonstrate a strong commitment to good governance, the health and education of their people, and economic policies that foster enterprise and entrepreneurship.

In an unusual correction to the President’s remarks, the White House later clarified that the U.S. is in fact offering an amount that is double what the President initially referred to in his speech. The US Treasury confirmed that last week'snews of a $5bn fund over three years from 2004 had been increased to a three-year total of nearly $10bn, followed by a permanent increase of $5bn a year thereafter. Paul O'Neill, the US Treasury secretary, promised on Wednesday to consult international partners on the way the US would spend its new aid budget, which he confirmed was twice as big as previously announced.

"Greater contributions from developed nations must be linked to greater responsibility from developing nations," Bush said. To that end, his administration is advocating the use of concrete indicators of the effectiveness of assistance programs, so that aid can be directed to countries that show positive results.

President Bush also proposed changes in multilateral development aid. "I challenge the development banks to provide up to half of the funds devoted to poor nations in the form of grants, rather than loans," he said. "All the development banks should adopt a growth agenda, increasing their support for private sector enterprises and focusing more on education, as the Inter-American Development Bank has done," he added.

NGOs meeting in Monterrey as well as other delegates welcomed the U.S. pledge as a first step toward meeting the estimated $50 billion per year in grants to poor countries estimated as necessary to meet the Millennium Goals.

The United States is one of the founding member countries of the IDB, and it holds 30 percent of the institution’s shares. The U.S. is also a member of the Inter-American Investment Corporation–an IDB affiliate that invests small and medium-sized private companies, and of the Multilateral Investment Fund, which was created as part of the Enterprise of the Americas initiative under the administration of President George Herbert Walker Bush in 1990.

http://www.interaction.org/development/idb/enewsmar2002.html

The Millennium Challenge Account taxpayer money giveaway.

President Bush called for “a new compact for global development, defined by new accountability for both rich and poor nations alike. Greater contributions from developed nations must be linked to greater responsibility from developing nations.” The President pledged that the United States would lead by example and increase its core development assistance by 50 percent over the next three years, resulting in an annual increase of $5 billion by FY 2006.
15 posted on 03/09/2004 8:48:04 PM PST by hedgetrimmer
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To: Gunslingr3
Politicians, especially on the international scene,will never allow "free trade" to exist because they are making out like bandits with all the tax dollar giveaways to coerce them into signing "free trade' agreements. So arguing for "free trade" is an exercise in futility.
16 posted on 03/09/2004 8:51:10 PM PST by hedgetrimmer
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To: Silas Hardacre
Horse puckey. The only actual restriction on free trade besides sheer stupidity or mendacity is the general tax structure of the government.

I'm not sure why you're saying "horse puckey" when, based on the rest of your reply, I suspect we'd generally be in agreement on this issue. For instance, while you've neglected the economic impact of our bloated regulatory bureaucracy, I do agree that a shift in our tax policy is in order. The federal government should implement a relatively low, flat-rate "revenue tariff" on ALL imported goods while simultaneously reducing the corporate income tax to promote domestic industries and production.

but we also raise barriers all across the board on trade by maintaining high personal tax rates.

The personal income tax isn't a "barrier" to trade, but it is a shackle placed on our own domestic work force.

17 posted on 03/09/2004 8:51:59 PM PST by Willie Green (Go Pat Go!!!)
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To: hedgetrimmer
Politicians, especially on the international scene,will never allow "free trade" to exist because they are making out like bandits with all the tax dollar giveaways to coerce them into signing "free trade' agreements. So arguing for "free trade" is an exercise in futility

Is arguing for an end to welfare an exercise in futility?

18 posted on 03/09/2004 9:02:11 PM PST by Gunslingr3
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To: Silas Hardacre
The only actual restriction on free trade besides sheer stupidity or mendacity is the general tax structure of the government.

What about the barriers of other nations, like India and China?

19 posted on 03/09/2004 9:02:50 PM PST by Shermy
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To: Gunslingr3
So arguing for "free trade" is an exercise in futility

It is as long as there is a UN, a WTO, OAS and all the "free trade" areas like ASEAN, EU, FTAA etc etc etc
20 posted on 03/09/2004 9:11:09 PM PST by hedgetrimmer
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To: Willie Green
You sound like a Federalist. Are you a Federalist?
21 posted on 03/09/2004 9:14:24 PM PST by hobson
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To: hedgetrimmer; Willie Green
hedgetrimmer

So you think protectionism is bad. How about telling the truth: free-tradism is global socialism.

So... let me get this straight. The system of no government interference (free trade) is the socialist system, and the system of taxes and government subsidies (proectionism) is the capitalist system?

Actually no it isn't. You must read the WTO charter, NAFTA, GATT and the FTAA. They clearly posit socialist policies withing their trade agreements.

Well, since these treaties are ostensibly chalk-full of socialist policies, perhaps you wouldn't mind kindly citing such a passage for verification?

In order for Brazil to sign the FTAA, they are demanding that the US create a program to end global hunger, and also to give free US taxpayer dollars to that country for "infrastructure development". That is not "free trade".

In order for Venezuela to sign the FTAA they are demanding tht the US create a program of redistribution of US taxpayer dollars called "structural convergence". Than is not "free trade" but our salivating little trade minister will give any concession in order to make the FTAA happen.

In order for Mexico to sign the FTAA the US must allow open migration of Mexican nationals, social security for illegal immigrants and lower fees for sending remittances outside of the country. The president just met with Vicente Fox this weekend and agreed to all their "conditions" on "free trade".

Conditional trade is not free trade. In an environment of free trade all such trade deals as you've mentioned would be impossible. Another reason to adopt free trade.

The idea of "infrastructure development" evolved directly from the WTO who says "rich" countries must pay to bring teh standard of living of "poor" countries, or "least developed countries" like china, up. That is not "free trade".

Since when does the WTO say that? Source?

In fact, there is no "free trade" only managed trade by the global socialists who run the WTO and the UN.

Well, if there isn't any free trade then what are you criticizing it for? Let's get rid of the "managed global socialist" trade and establish free trade in its stead.

Willie Green

Marx was in agreement with Adam Smith on the consequences of free trade.

Well, if we look at the passages that you cited, I am having some trouble seeing where Smith said anything along the lines of "[free trade] breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution." Care to point that out to me?

As I just posted, Adam Smith agreed with it.

I doubt Adam Smith had any take at all on Marxism, seeing as he predated it.

Marx's proposed alternative may have been an abomination, But that doesn't discredit his analysis of the consequences of unrestricted free trade.

Ahh, just because Marx wasn't completely and utterly wrong in all the rest of his philosophy doesn't mean that we should question this part.

Even David Ricardo asserted that such policies would drive labor to the subsistance level.

No, David Ricardo said that population growth coupled with increasing rent costs would do that. He was, in fact, a free trade advocate. He even lobbied against the Corn Laws.

22 posted on 03/09/2004 9:20:17 PM PST by explodingspleen (When life gets complex, multiply by the complex conjugate.)
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To: hedgetrimmer
It is as long as there is a UN, a WTO, OAS and all the "free trade" areas like ASEAN, EU, FTAA etc etc etc

If those insitutions removed socialism, would you oppose free trade?

23 posted on 03/09/2004 9:21:09 PM PST by Gunslingr3
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To: Gunslingr3
If those insitutions removed socialism, would you oppose free trade?

I oppose any international institution having authority over the US and American citizens. Our Constitution is supposed to be our ultimate authority, remember?
24 posted on 03/09/2004 9:24:58 PM PST by hedgetrimmer
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To: Willie Green
You're something else Willie.

You spend your time in a conservative website quoting Marx (a known liar), and defending Lindbergh (a known Nazi).

Your heroes are Henry Ford and Pat Buchanan, both renown antisemites, with Pat being America's best known Hitler apologist. Rock on Willie!

25 posted on 03/09/2004 9:28:32 PM PST by Luis Gonzalez (Unless the world is made safe for Democracy, Democracy won't be safe in the world.)
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To: hedgetrimmer
hedgetrimmer

http://www.freerepublic.com/focus/news/1094376/posts?page=15#15

Bush signed off on steel tariffs. He is hardly what I would call an exemplary free-trade advocate.

Politicians, especially on the international scene,will never allow "free trade" to exist because they are making out like bandits with all the tax dollar giveaways to coerce them into signing "free trade' agreements. So arguing for "free trade" is an exercise in futility.

Then, naturally, so is arguing against it.

Willie Green

I'm not sure why you're saying "horse puckey" when, based on the rest of your reply, I suspect we'd generally be in agreement on this issue. For instance, while you've neglected the economic impact of our bloated regulatory bureaucracy, I do agree that a shift in our tax policy is in order. The federal government should implement a relatively low, flat-rate "revenue tariff" on ALL imported goods while simultaneously reducing the corporate income tax to promote domestic industries and production.

Huh? Who are they producing for? Once you pass your tariff other countries are going to pass retaliatory tariffs and you can say bye-bye to your exports.

The personal income tax isn't a "barrier" to trade, but it is a shackle placed on our own domestic work force.

It's a barrier in as much as it increases the cost of goods.

26 posted on 03/09/2004 9:33:38 PM PST by explodingspleen (When life gets complex, multiply by the complex conjugate.)
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To: *"Free" Trade
bump
27 posted on 03/09/2004 10:53:28 PM PST by Libertarianize the GOP (Ideas have consequences)
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To: hedgetrimmer
The WTO's charter states that WTO members recognise:

“that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development.”
28 posted on 03/10/2004 4:48:52 AM PST by Cronos (W2K4!)
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To: hedgetrimmer
They're not socialists no more than the Stock Exchange Board is socialist. In fact they do less than the Securities Exchange board and have less powers, faar less powers. All the WTO (derived from GATT) is, is a forum for countries and trading blocs to settle disputes. If the WTO rules against, say, the EU ( as it did in the bananas case when it ruled FOR THE USA), that bloc CAN ignore it, but they don't. It's NOT a world government, it's NOT a socialist conspiracy, all it is, is a place to settle disputes, not even a court.
29 posted on 03/10/2004 4:54:32 AM PST by Cronos (W2K4!)
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To: hedgetrimmer
If you say the WTO is socialist or that the FTAA is socialists, then explain WHY ALL SOCIALISTS IN BRAZIL, ETC. CALL THE WTO AND NAFTA AND FTAA CAPITALIST PLOTS? Why do they decry them as tools of the US? Why do they consider them a threat to their socialist states? And why does the US still use them? Because they're good for capitalism and by extension, they're good for the USA
30 posted on 03/10/2004 4:57:15 AM PST by Cronos (W2K4!)
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To: explodingspleen
Hedge: So you think protectionism is bad. How about telling the truth: free-tradism is global socialism.

Explodinspleen: So... let me get this straight. The system of no government interference (free trade) is the socialist system, and the system of taxes and government subsidies (proectionism) is the capitalist system?


good one.
31 posted on 03/10/2004 4:59:43 AM PST by Cronos (W2K4!)
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To: hedgetrimmer
The idea of "infrastructure development" evolved directly from the WTO who says "rich" countries must pay to bring teh standard of living of "poor" countries, or "least developed countries" like china, up. That is not "free trade".

Nowhere in the WTO website does it say that.
32 posted on 03/10/2004 5:00:55 AM PST by Cronos (W2K4!)
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To: hedgetrimmer
I oppose any international institution having authority over the US and American citizens.

They have no authority.....
33 posted on 03/10/2004 5:02:13 AM PST by Cronos (W2K4!)
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To: explodingspleen
Huh? Who are they producing for? Once you pass your tariff other countries are going to pass retaliatory tariffs and you can say bye-bye to your exports.
If all of these tariffs and counter-tariffs are put in place then we go back to the 1700s, when nations must be self-sufficient. If they lack a good then they'll invade another country to get it. So, the US is big enough to get most of what it needs from it's own land mass, but I guess China and India and Russia will carve up Asia and Africa and Australia while Europe may fall under the Russian bear's shadow. South America will form a giant state and probably rope in central America on anti-gringo hysteria. Finally, we'd end up with only a half dozen empires in the world
34 posted on 03/10/2004 5:05:50 AM PST by Cronos (W2K4!)
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To: freebacon
Hmm...but protectionism is sure as hell working for our trading partners.
35 posted on 03/10/2004 5:08:37 AM PST by Wolfie
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To: hedgetrimmer
I oppose any international institution having authority over the US and American citizens. Our Constitution is supposed to be our ultimate authority, remember?

That is not an answer to the question I asked. Let me try again: "If those insitutions removed socialism, would you oppose free trade?" Free trade means the removal of government erected barriers to trade. For it or against it?

36 posted on 03/10/2004 5:32:20 AM PST by Gunslingr3
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To: Willie Green
Putting you countrymen first in trade negotiations is not protectionism, it is Patriotism.
37 posted on 03/10/2004 5:37:16 AM PST by TXBSAFH (KILL-9 needs no justification.)
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To: Cronos
The system of no government interference (free trade) is the socialist system, and the system of taxes and government subsidies (proectionism) is the capitalist system?

It is interesting that you feel that there is no government interference. Clearly, you may have heard something about a small problem that we have been having with the way China currently pegs its currency; or, you may have noticed that US exports are usually hit with a 70% tariff by many of our "free trade" partners. I would consider those and perhaps hundreds of other imposed structural impediments and subsidies to make mockery of your global free trade system. Can you explain where our US farm subsidies fit under your model for free trade?

There is no global free trade. What there is is a perversion of our system of government. We do not have a direct democracy; we have a system that is designed to strike a balanced between the voice of our citizens and our respect for property. This works so longs as "what is good for General Motors is good for America," but, it starts to collapse when control over that property is given to hostile foreign interests.

Why are so many willing to risk so much while setting a blind eye to the outright fraud of a global "free trade system?" Perhaps, too barren of ideas to come up with anything constructive, some have decided to sell our system for a few silver pieces. Look at our trading partners: they are taking control of our system and we are becoming them. Is that what we want? To become another nation like China, or India?
38 posted on 03/10/2004 5:38:28 AM PST by ARCADIA (Abuse of power comes as no surprise)
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To: Cronos
The FTAA Deception--William Norman Grigg


But from the very beginning, the European Union was intended to become a socialist regional government, functioning as an administrative unit of a UN-based global government. This was laid out with commendable candor in the Resolutions on Political Union at the 1948 Congress of Europe: "The creation of a United Europe must be regarded as an essential step towards the creation of a United World."

The FTAA is designed to be nothing less than the Western Hemisphere counterpart to the European Union. The FTAA would enlarge upon the so-called North American Free Trade Agreement, or NAFTA, under which the United States, Canada, and Mexico have begun the process of merging our economies and political systems.

In a 2002 address in Madrid, Spain, Mexican President Vicente Fox was remarkably blunt in his description of the purposes to be served by NAFTA and the FTAA: "Eventually our long-range objective is to establish with the United States, but also with Canada, our other regional partner, an ensemble of connections and institutions similar to those created by the European Union."




39 posted on 03/10/2004 6:44:15 AM PST by hedgetrimmer
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To: Cronos
The FTAA Deception--William Norman Grigg

To accomplish NAFTA's stated intention -- lowering government barriers to trade -- a very brief document would be necessary. Yet the text of the basic NAFTA accord devours hundreds of pages and is divided into two thick, heavy volumes. Much of the text is devoted to a blueprint for a large, cumbersome international regulatory bureaucracy. Furthermore, at several places the agreement anticipates the creation of additional "annexes" that would create even more layers of international bureaucracy.

The NAFTA pact called for creation of 30 new international government committees, subcommittees, councils, working groups, and subgroups. It also mandated the creation of a Free Trade Council that would function as a continental government-in-waiting with enormous discretionary powers. Provision was also made for numerous additional permanent committees, various "working groups," subcommittees, subgroups, and other bureaucratic bodies whose enactments would supposedly have the force of law.

Rather than relieving the burden of regulation that impedes genuine free trade, NAFTA internationalized the regulatory apparatus -- thereby making it less accountable to the U.S. citizens affected by those regulatory decisions.
40 posted on 03/10/2004 6:47:22 AM PST by hedgetrimmer
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To: Gunslingr3
Former Secretary of State Henry Kissinger, stated in a 1993 Los Angeles Times op-ed column that NAFTA "will represent the most creative step toward a new world order taken by any group of countries since the end of the Cold War...." NAFTA, Kissinger admitted, "is not a conventional trade agreement, but the architecture of a new international system."
41 posted on 03/10/2004 6:49:37 AM PST by hedgetrimmer
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To: Cronos
Because they are losing their sovereignty to the OAS for one reason.

Since its adoption, the Democratic Charter has been formally invoked in dealing with the alteration of constitutional order in Venezuela that occurred in April, 2002 and to send a mission to Venezuela headed by OAS Secretary General Gaviria to facilitate national dialogue and to broker consensus solutions to the political impasse and polarization that threaten democracy in Venezuela. The United States has fully supported the important work of the OAS in Venezuela in fulfilling the objectives laid out in OAS Permanent Council Resolution 883 to bring about a “ peaceful, democratic, constitutional, and electoral solution” to the political stalemate. What is important now is that the international community, led by the OAS, ensure that the dialogue table agreement signed last week is implemented, and that resolution 833 is carried out to its conclusion.

Ambassador John Maisto, U.S. Permanent Representative to the Organization of American States
Remarks to the Senate Committee on Foreign Relations
Washington, DC
June 3, 2003
42 posted on 03/10/2004 6:59:39 AM PST by hedgetrimmer
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To: Cronos
In 1989, when I first worked in multilateral diplomacy at the OAS as deputy to Ambassador Luigi Eiunadi, thinking about how the OAS could be active in strengthening democracy was in its infancy, and playing a role in fighting corruption and evaluating individual country performances in fighting narcotics was anathema. But the OAS has changed. It must now change again to meet new challenges. These include:

applying the Inter-American Democratic Charter to all the hemispheric countries, leaving no country out;

enhancing all the OAS entities that deal with strengthening democracy in efforts to make the institutional changes needed to permit social mobility through equality of opportunity;

doing realistic work with institutions in member countries to complement the march toward a Free Trade Agreement for the Americas—the key to jobs, growth, and fighting poverty effectively;

following through in ways that address realistically the post 9/11 security threats from international and home-grown terrorists, and international crime;

helping countries deal effectively with burgeoning domestic crime at a time of high citizen insecurity in both urban and rural areas throughout the hemisphere;

and implementing the new governance mandate of the upcoming Special Summit of the Americas.

An OAS Update on Democracy and Development in the Western Hemisphere

Ambassador John Maisto, U.S. Permanent Representative to the Organization of American States
Remarks to the Senate Committee on Foreign Relations
Washington, DC
June 3, 2003
43 posted on 03/10/2004 7:04:17 AM PST by hedgetrimmer
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To: hedgetrimmer
You're correct about the united world thing: http://www.eurplace.org/thehague.congress/history/history-ind.html says that too.

But the FTAA is purely trade and nowhere near the level of inter-governmental unity as laid down in the EU.

Furthermore, don't you think countries grow organically in any case? The US expanded from a strip of land on the east coast to coast-to-coast. It would be inevitable that we (note I emphasis that America would be the dominant force) will take over Canada and Mexico?
44 posted on 03/10/2004 7:08:44 AM PST by Cronos (W2K4!)
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To: explodingspleen
I doubt Adam Smith had any take at all on Marxism, seeing as he predated it.

Correct. Adam Smith died in 1790. Karl Marx was born in 1818, and didn't come out with his writings with Engels until the mid-1840s.

Kinda hard for a dead man to agree with anything.


Show 'em my motto!

45 posted on 03/10/2004 7:30:49 AM PST by rdb3 (The Servant of Jehovah is the Christ of Calvary and of the empty tomb. <><)
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To: hedgetrimmer
That is not an answer to the question I asked. Let me try again: "If those insitutions removed socialism, would you oppose free trade?" Free trade means the removal of government erected barriers to trade. For it or against it?
46 posted on 03/10/2004 12:34:58 PM PST by Gunslingr3
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To: Gunslingr3
If the global institution remains, there is no free trade. If it is "free trade" then one individual would contact another to set up the deal would they not? Then removing socialism from the global instutition still does not make for free trade.

Why don't you rephrase the question. If the global institutions that regulate trade were dissolved, could there actually be free trade? Does nationality and devotion to your country impact "free trade"? If so, in what way? Does "free trade" trump everything,even human instinct and love of country, in reality?
47 posted on 03/10/2004 1:07:55 PM PST by hedgetrimmer
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To: hedgetrimmer
If it is "free trade" then one individual would contact another to set up the deal would they not?

THAT is exactly what free trade is. Are you for it or against it?

48 posted on 03/10/2004 1:11:34 PM PST by Gunslingr3
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To: hedgetrimmer
Free trade is the absence of trade barriers among countries. Whether or not the U.S. spends money on hunger or development programs has nothing to do with free trade: We don't have free trade now; and, as I recall, we're doling out some $15 billion for AIDS in Africa.
49 posted on 03/10/2004 1:22:16 PM PST by kevao
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To: Gunslingr3
What if an individual wanted to import oranges infested with mediterranean fruit fly because he could get it really cheap? Is it free trade if that individual brings something into the country that destroys the value of the oranges grown here and the property of the people that own them? Are you for or against this?

If that individual wanted to bring in cows with mad cow disease for the slaughterhouse, because he can give a better price to the consumer for mad cow meat, is that free trade? Are you for that or against that?
50 posted on 03/10/2004 1:48:02 PM PST by hedgetrimmer
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