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The Concise Guide to Economics: Free Trade vs. Protectionism
conciseguidetoeconomics.com ^ | Unknown | Jim Cox

Posted on 03/22/2004 6:24:36 AM PST by Luis Gonzalez

Free Trade vs. Protectionism

Economists of all schools recognize the value of free trade:  greater overall production.  This greater production is due to the freedom of each producer to specialize in that line where he or she has a natural advantage.  The natural advantage of each trading partner results from the differences among people and locations.  A major reason the U.S. economy is as productive as it is, is that there is a large geographic area of free trade (the U. S. Constitution wisely prohibits protectionist tariffs and quotas among the various states).

Adam Smith enunciated the principle that it is foolish to produce at home that which can be obtained more cheaply abroad.  This is true not only literally of the home, but of the county, state, region and country as well.

This emphasizes that there is no distinction between trade and international trade in principle--one "exports" his labor to "import" goods consumed, as it is a cheaper means of obtaining goods than producing the consumed goods directly.

Despite the value of free trade there are continuous calls for disruption of an international division of labor by way of taxes on imports (tariffs) and numerical limitations on imports (quotas).  Such arguments are ultimately special interest pleadings advanced for the sake of a transfer of income to the special interest at the expense of the rest of the economy.

Henry George summarized the fallacy of protectionism this way:  "What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war."

A review of the seven most common protectionist arguments and their rebuttals follows:

Military Self-Sufficiency

This argument claims that some vital military goods may be unavailable from other countries in time of war and therefore a viable domestic industry is necessary for defense.  A true concern with such a scenario, however, can be dealt with by means of stockpiling the needed goods.  Such a stockpiling program would leave the consumer still free to shop the world and not disrupt the international division of labor.  One must suspect many such arguments when those making the argument are the very firms supplying those goods.  Examples in recent U. S. experience include even wool socks and steel--goods with easy substitutes and existing viable U. S. production. 

Further, a program of reducing taxes and regulations would allow continued viable U. S. production.  As is so often the case, any concerns should recognize the violence done to the U. S. economy by current policies and the fact that it is economically more efficient and just to reduce, not compound government interference in the market.

Protection of Domestic Industry

The fallacy of such claims is that the protection of any U. S. industry is to that same extent a detriment to other U. S. industries.  Protectionism against steel imports, for example, harms American firms which use steel as an input in their production process--auto, washing machine manufacturers, all firm's transportation expenses, etc.

Employment Protection

As Milton Friedman has stated, "we work to live, we do not live to work."  The concern should be with our production, not its means--employment.  Tariffs and quotas to protect American employment reduce our standard of living as we engage in lines of production that are not the most efficient in providing for ourselves.  The move to free trade which would reconfigure employment patterns in the U. S. would not be necessary except for the artificial pattern currently existing due to those tariffs and quotas.  In other words, the loss of employment in certain lines of work which would undeniably occur with a movement to free trade are due to the current absence of free trade.  These particular jobs would not have been created in the U. S. if policy had been one of free trade in the first place.

Diversification for Stability

Though this argument has little application to the U. S. economy, it is often used for say, Chile  which is heavily dependent on copper exports.  The fallacy is that Chile has a strong advantage in copper production and to forcibly diversify would be to pay dearly in opportunity costs.  Individual entrepreneurs should make these decisions according to their own assessments.  (On an individual basis this may be like cautioning a surgeon to find other means of  making a living.  While this would offer protection against the risks of being unable to perform as a surgeon the lost income in pursuing say, training as a lawyer would be vast.)

Infant Industry

Again this is not a currently fashionable argument for modern day America.  But the basic notion of protecting new industries competing with established foreign firms until they can "mature" and compete toe-to-toe is still false.  In effect, this suggests the substitution of government officials' judgment for that of private investors.  A truly viable firm can find investors who will be willing to absorb losses--as a form of investment--for the sake of the future profits to be earned.  This is in fact routine in the market as most new businesses or products earn losses in the early stages yet investors still see merit in such investments.  The fact that such firms are not currently successful in attracting investors voluntarily is strong evidence that there are no future profits to be earned.  Whose judgment would be superior:  private investors with their own money to lose or government officials with no personal financial stake in the outcome?  If in fact this was a truly valid argument for protectionism, it would logically be applicable not just to domestic firms competing with established foreign firms but to domestic firms competing with established domestic firms--a special tax on NBC programs for the sake of newcomer FOX, for example?

Dumping

There are two versions of dumping.  The first is selling products abroad at lower prices than at home.  But this is to be expected.  Buyers are normally more loyal to domestically produced goods (all other things held constant of course) than to foreign made goods.  The only way to successfully sell to foreigners is therefore with price concessions.  (Because of this loyalty factor, it would be strange if dumping was not the norm.) 

A second version of dumping is a subsidy to firms to sell abroad.  Naturally, American firms complain about such practices by other nations.  (And this is not to say that American firms receive no such subsidies--as special interests using the power of government for their own financial gain, it is common.)  If other countries do subsidize their sales in the U. S. then they are making a gift to American consumers.  While this is not wise for the sake of the economy doing the subsidizing, it is not right to correct the situation by punishing the American consumer with tariffs and quotas.  A consitent application of a prohibition of gifts  would prohibit samples!  The analogy often cited in other countries resorting to this form of dumping is to consider each economy to be a man in a lifeboat.  The lifeboat is the overall standard of living in the world.  If one person in the lifeboat foolishly takes out a gun a fires a hole into the bottom of the boat, the last thing others should do is to retaliate likewise with additional blasts to the boat bottom!  Compounding mistakes is not a solution.


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; Government; News/Current Events; Politics/Elections
KEYWORDS: economics; freetrade; leftwingactivists; trade
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1 posted on 03/22/2004 6:24:39 AM PST by Luis Gonzalez
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To: Luis Gonzalez
"This emphasizes that there is no distinction between trade and international trade in principle"

In principle? There is a big difference between free trade within the nation and enriching unfriendly foreign nations using child and slave labor at the expense of the US manufacturing and industrial base.

I think we have had about enough of these elite think tanks that can't find their rear ends with both hands.
2 posted on 03/22/2004 6:31:45 AM PST by MissAmericanPie
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To: MissAmericanPie
"I think we have had about enough"

Dictionary Information: Definition Self-aggrandizement
Thesaurus: Self
Description and Meaning: The Self

  Self-aggrandizement (Self`-ag*gran"dize*ment) (?), n.

The aggrandizement of one's self.

Back to speaking for all the people I see.

3 posted on 03/22/2004 6:43:34 AM 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: MissAmericanPie
I somehow just knew that you would be all in favor of protectionism, which in all actuality is an elite few who are unwilling to compete in the business sector, seeking protection from the government for their income and their inneffective industries, at the expense of the rest of the nation's people.
4 posted on 03/22/2004 6:46:01 AM 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: Luis Gonzalez; MissAmericanPie
Back to speaking for all the people I see.

She can speak for me any day of the week.

5 posted on 03/22/2004 6:47:16 AM PST by lewislynn (Free traders know it isn't , they just believe cheap popcorn makers raises their living standards.)
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To: MissAmericanPie
I think we have had about enough of these elite think tanks that can't find their rear ends with both hands.

You can certainly include me in that "we". I've said it before, and I'll say it again - China and India have high trade barriers and strong protections for their economies. We don't. They are growing more rapidly than we are. This is a logical inconsistency.

Free traitin' - just UN sponsored global welfare that the US taxpayers get stuck for.

6 posted on 03/22/2004 6:49:15 AM PST by neutrino (Oderint dum metuant: Let them hate us, so long as they fear us.)
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To: MissAmericanPie; iamright; AM2000; Iscool; wku man; Lael; international american; No_Doll_i
Offshoring ping!

If you'd like on or off the offshoring ping list, please FReepmail me!
7 posted on 03/22/2004 6:50:23 AM PST by neutrino (Oderint dum metuant: Let them hate us, so long as they fear us.)
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To: lewislynn
I never expected you to actually have a mind of your own.
8 posted on 03/22/2004 6:52:51 AM 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: Luis Gonzalez
Adam Smith enunciated the principle that it is foolish to produce at home that which can be obtained more cheaply abroad. This is true not only literally of the home, but of the county, state, region and country as well.

There is a little club consisting of authors of dead theories from previous centuries, and Adam Smith is a charter member. The United States was built upon the ideas of Friedrich List and not those of Smith. Had Smith's thinking been the model, we'd still be an English colony.

9 posted on 03/22/2004 6:52:54 AM PST by greenwolf
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To: Luis Gonzalez
at the expense of the rest of the nation's people.

Do tell that to the millions of unemployed and underemployed Americans who are being financially destroyed as a direct result of "free traitin". In fact, why not go to some working-class neighborhood bar and tell them face to face?

No?

Now who's views are elitist?

10 posted on 03/22/2004 6:53:44 AM PST by neutrino (Oderint dum metuant: Let them hate us, so long as they fear us.)
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To: Luis Gonzalez
As Milton Friedman has stated, "we work to live, we do not live to work." The concern should be with our production, not its means--employment. Tariffs and quotas to protect American employment reduce our standard of living as we engage in lines of production that are not the most efficient in providing for ourselves.

There is NO area of endeavor in this world in which Americans can compete with slave labor or people living in thatch huts. That's the basic problem.

11 posted on 03/22/2004 6:56:20 AM PST by greenwolf
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To: neutrino
"China and India have high trade barriers and strong protections for their economies. We don't."

So, your solution is for the US to govern itself like China and India.

They are shi%holes, and you want us to be shi%holes as well.

If China and India were so damned smart, they would be us...they're not. They're not because they limit their people's freedom to trade freely. They are growing because they are starting to adopt our system, and you want to counter by us adopting theirs.

But, it's a lot for you to figure that out, isn't it?

12 posted on 03/22/2004 6:58:45 AM 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: greenwolf
So, did slave labor and thatch huts just get invented?

We seem to have been doing just fine competing in that world up to now.


13 posted on 03/22/2004 7:00:30 AM 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: Luis Gonzalez

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14 posted on 03/22/2004 7:00:49 AM PST by lewislynn (Free traders know it isn't , they just believe cheap popcorn makers raises their living standards.)
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To: Luis Gonzalez
The only way to successfully sell to foreigners is therefore with price concessions. (Because of this loyalty factor, it would be strange if dumping was not the norm.)

Is this the policy Bill Clinton was following when he gave missile guidance secrets to the Chinese for campaign cash? Another part of his bargain was taking all the jobs in Japan and sending them to China, causing a collapse in Japan's economy. This was a brutal assault against our friends the Japanese, and offering our enemy, the Chinese Communists, America on a platter.

From then on it has been down hill, as American jobs are being destroyed in a free for all attitude by our government and their friends the corporations.

Pat Buchanan was certainly right about NAFTA and the horrors it would bring on this country. America gets millions of unskilled illegal workers, and jobs Americans once held are being down graded to match those unskilled workers demands. Meanwhile, the American taxpayer is going broke subsidizing these illegals and their families. I see nothing good in any of this, and it all began with so called, free trade that rewards our enemies, and destroys the American worker.

15 posted on 03/22/2004 7:05:25 AM PST by swampfox98 (Beyond 2004 - Chaos! 200 million illegals waiting in the wings)
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To: Luis Gonzalez
Laissez Faire

Opposition to mercantilism and state paternalism also motivated Adam Smith, father of classical economics, whose name more than any other is connected with British laissez-faire doctrines. Smith believed that individual welfare rather than national power was the correct goal; he thus advocated that trade should be free of government restrictions. When individuals were free to pursue self-interest, the “invisible hand” of rivalry or competition would become more effective than the state as a regulator of economic life. Smith did not believe in laissez-faire in an absolute sense; he found a place for government activity in public works, such as the building of canals and docks to facilitate trade, and in the regulation of foreign commerce to protect certain home industries.

16 posted on 03/22/2004 7:08:47 AM PST by lewislynn (Free traders know it isn't , they just believe cheap popcorn makers raises their living standards.)
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To: swampfox98
You can substitute any Democrat's name for Dick Gephardt's in the article linked below. It wouldn't mean a damn difference. Question...Would Paul O'Neil and Bono have to travel the world so much for debt relief if the U.S. and our G7 partners didn't impose protective tariffs and impose "minimum wages" on our trading partners? We've been under very heavy attack by the E.U., lead by the French and Germans.

I have maintained that our 'moral superiors', the 'progressive Europeans' are racist. Just ignore what they tell you and look at the actual results of their 'moral' policies. Getting that information won't be easy because the media is controlled by progressives, and they choose not to focus on the effects of their policies. They had a lock and a sweet deal until Fox News Channel screwed things up by focusing more on the results as opposed to spinning Democratic talking points Liberals use for their stated justifications for inflicting their policies on lesser developed countries. Fox News is the crack in the dike. Progressives like to offer 'their' filter of 'reality', and it just really messes up all their hard work to have Fox not play along.

What am I talking about? Next time you hear a Democrat lament the loss of our European allies, ask them about the effects of their trading practices.

Liberals practice racist trade, employment and currency policies designed to keep the non-Western Europeans under their boot heel and OUR LIBERALS support them and their racist policies. If it walks like a duck...

A politician's public service
Walter E. Williams
November 12, 2003

http://www.townhall.com/columnists/walterwilliams/ww20031112.shtml
17 posted on 03/22/2004 7:10:23 AM PST by dgallo51
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To: neutrino
One in three thousand people have had their jobs "offshored", the rest of the hundreds of millions working owe their success to free enterprise.

Why don't you quit the histrionics and try posting some actual numbers?

And if offshoring is such a damned evil thing, then we should shut down all those Toyota and Honda plants here...right?

One more thing...hard for you to prove the negative financial aspects of our economic system in light of the constantly rising wages, and industrial productivity these past two hundred plus years.

More work outsourced to US than away from it


18 posted on 03/22/2004 7:10:36 AM 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: swampfox98
"From then on it has been down hill, as American jobs are being destroyed in a free for all attitude by our government and their friends the corporations."

Histrionics.

19 posted on 03/22/2004 7:12:46 AM 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: lewislynn
Yes, that's the source I listed on the article header.
20 posted on 03/22/2004 7:13:35 AM 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: swampfox98
"Is this the policy Bill Clinton was following when he gave missile guidance secrets to the Chinese for campaign cash?"

If you can prove that, and have another person who can testify to it, then you can charge Bill Clinton with treason.

Unfortunately, you can't, nor can anyone else.

That makes your post nothing more than histrionics.

21 posted on 03/22/2004 7:16:29 AM 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: Luis Gonzalez
One in three thousand people have had their jobs "offshored", the rest of the hundreds of millions working owe their success to free enterprise.

If it is, in fact, that small a number then eliminating free trade won't have much effect on our economy, now, will it?

Why don't you quit the histrionics and try posting some actual numbers?

You want numbers? You got it!

You can get lots of numbers here

They show an increasing trade deficit for combined goods and services. Note that your chart takes one small area and generalizes based on that subcategory. Such tactics smack of histrionics.

And if offshoring is such a damned evil thing, then we should shut down all those Toyota and Honda plants here...right?

We need to encourage domestic companies to open those factories instead of depending on foreign compaines to do so.

One more thing...hard for you to prove the negative financial aspects of our economic system in light of the constantly rising wages, and industrial productivity these past two hundred plus years.

No, most of that two hundred years of growth was enjoyed with strong protections for domestic producers. Only recently has "free traitin" come into vogue.

22 posted on 03/22/2004 7:37:57 AM PST by neutrino (Oderint dum metuant: Let them hate us, so long as they fear us.)
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To: Luis Gonzalez
"China and India have high trade barriers and strong protections for their economies. We don't." So, your solution is for the US to govern itself like China and India.

They are shi%holes, and you want us to be shi%holes as well.

If China and India were so damned smart, they would be us...they're not. They're not because they limit their people's freedom to trade freely. They are growing because they are starting to adopt our system, and you want to counter by us adopting theirs.

But, it's a lot for you to figure that out, isn't it?

(Chuckle) Getting a little desperate, are you, Luis? That's OK. Anger and denial are all part of the process of saying goodbye to old, flawed patterns. Free traitin', for example.

23 posted on 03/22/2004 7:47:55 AM PST by neutrino (Oderint dum metuant: Let them hate us, so long as they fear us.)
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To: Luis Gonzalez
Case closed - there are no arguments left for not outsourcing & free trade. It's all so clear to me now. Thank you, thank you - I can put all my worries about the US economy & defense contracts to rest now. I feel much better now that my eyes have been opened!!!

All questions and arguments have been put to rest by this fine posting.
24 posted on 03/22/2004 7:49:26 AM PST by familyofman
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To: neutrino
Slave labor is not free trade, but not that you would see the difference.

Come on big guy, post somehting other thanm empty rethoric.

25 posted on 03/22/2004 7:53:09 AM 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: Luis Gonzalez
That makes your post nothing more than histrionics.

And that makes your post a giant suck up. There are people who don't want the truth about what is happening to this country to be discussed. In order to shut up the people like me, the word has gone out that my arguments mustn't be discussed, but that I must be insulted. If you think this is going to stop me, you are wrong.

There was proof that Clinton gave the guidance system to China for campaign cash. Yeah, try Clinton for treason? The Senate Republicans would laugh at that, seeing as how they acted when the House sent over boxes of proof that he was a liar, among other things. Have we sunk so low that we'd try to cover this over just to get back at me?

26 posted on 03/22/2004 7:53:45 AM PST by swampfox98 (Beyond 2004 - Chaos! 200 million illegals waiting in the wings)
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To: Luis Gonzalez
Yes, Luis you are right, I am a patriot, and a protectionist regarding the security and safety, economic, and otherwise, of my country.
27 posted on 03/22/2004 7:53:53 AM PST by MissAmericanPie
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To: lewislynn
Thank you lewislynn
28 posted on 03/22/2004 7:54:34 AM PST by MissAmericanPie
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To: neutrino
"No, most of that two hundred years of growth was enjoyed with strong protections for domestic producers."

Post proof of America's protectionst past.

Go ahead.

29 posted on 03/22/2004 7:54:37 AM 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: MissAmericanPie
Rethoric.

You want the government to restrict if not control, the flow of trade, that makes you a communist at worst, a socialist at best.

30 posted on 03/22/2004 7:55:56 AM 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: neutrino
I travel all over Asia. We are being suckered in so many ways. If you want to work for Hewlett Packard, you need to live in Kuala Lumpur, Malaysia.And work for 1000 or less a month.
31 posted on 03/22/2004 7:56:40 AM PST by international american (Support our troops!! Send Kerry back to Boston!!!!)
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To: MissAmericanPie
"Whose judgment would be superior: private investors with their own money to lose or government officials with no personal financial stake in the outcome? If in fact this was a truly valid argument for protectionism, it would logically be applicable not just to domestic firms competing with established foreign firms but to domestic firms competing with established domestic firms--a special tax on NBC programs for the sake of newcomer FOX, for example?

Your model=more government.

Not a conservative value, hardly a "patriot".

32 posted on 03/22/2004 7:59:07 AM 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: swampfox98
"There was proof that Clinton gave the guidance system to China for campaign cash."

Much as I would have liked to actually have that be true, it isn't.

To qualify as treason under the Constitution, you would need two people testifying that they saw Bill Clinton either give the guidance system to a ChiCom agent in return for cash, or gaving those specific orders for that express purpose.

That's not a "suck up", that's the Constitution.

Section 3. Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.

33 posted on 03/22/2004 8:05:14 AM 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: dgallo51
Fox News is the crack in the dike

Then I'll be waiting for the dike to break. Or does that sound too much like the "histrionic" talk I was accused of in another post? :-)

34 posted on 03/22/2004 8:05:52 AM PST by swampfox98 (Beyond 2004 - Chaos! 200 million illegals waiting in the wings)
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To: swampfox98
Or you could get Bill to confess in open Court.
35 posted on 03/22/2004 8:06:38 AM 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: swampfox98
You would also be hard put defining China as an enemy...most favored trading partner status and all that.
36 posted on 03/22/2004 8:10:39 AM 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: Luis Gonzalez
Why don't you answer my argument that free trade and NAFTA has destroyed the country, and brought millions of illegal immigrants here who are taking jobs away from American workers?

Why don't you answer my argument that the American tax payers are being taken to the cleaners by having to pay for health care, schooling, and housing for illegal's children?

Why don't you answer the argument?

37 posted on 03/22/2004 8:11:35 AM PST by swampfox98 (Beyond 2004 - Chaos! 200 million illegals waiting in the wings)
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To: MissAmericanPie
Thank you lewislynn

You're welcome.

Luis Gonzalez is consistant on his support of protectionism as long as it isn't for America but rather for places like India and comminists/communism in China.

As long as his underpaid dishwashers have cheap shit to buy to keep them happy and hence his profits up, then he'll be happy.

38 posted on 03/22/2004 8:29:06 AM PST by lewislynn (Free traders know it isn't , they just believe cheap popcorn makers raises their living standards.)
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To: Luis Gonzalez
This does not take into consideration that since 1974, when
so-called free trade began in the U. S., real wages stated
to decline. Also, the rate of productivity stated to decline.
39 posted on 03/22/2004 8:44:55 AM PST by upcountryhorseman (An old fashioned conservative)
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To: upcountryhorseman
"This does not take into consideration that since 1974, when so-called free trade began in the U. S., real wages stated to decline. Also, the rate of productivity stated to decline."

Free trade has existed since the inception of the Republic, protectionism and excessive tariffs were either the cause of the Great Depression, or made it worse, depending on which school of thought you believe, but you're welcome to prove me wrong, and welcomed to substantiate your claims.

Here's my shot: you're dead wrong.

40 posted on 03/22/2004 8:53:35 AM 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: upcountryhorseman
Consumer electronics are cheaper today than in 1974, gas (even at the current level), was more expensive in 1974, cars are cheaper today than in 1974. Those are just starters.
41 posted on 03/22/2004 8:55:36 AM 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: lewislynn
And you want the Us government to traet its citizens like China.

That makes you a communist.

You should have listened to your mother: "So, if Johnny jumps off a building, you should jump off that buildng too?"
42 posted on 03/22/2004 8:57:50 AM 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: upcountryhorseman
For the first time since the 1960s, U.S. productivity has been growing at an annual rate above 2.5 percent. As numbers go, this may not seem spectacular, but it has enabled the economy to sustain a very low level of unemployment--less than 5 percent in each of the past three years--while holding retail price inflation to about 2 percent a year. The late stages of most business cycles put irresistible pressure on employers to raise wages, which ordinarily leads to increased prices and in turn acts to slow or stop the expansion. But in the present circumstances, employers can raise wages without upping prices because of increased productivity.

According to the President's Council of Economic Advisers, about half of the increase in productivity since 1995 is explained by increased capital equipment--particularly computers and software--plus increased productivity in the computer-manufacturing industry. The remaining half of the productivity increase may reflect new efficiencies from Internet use by business and the normally greater efficiency of employees during periods of high demand.

The better educated benefited the most from the rise in productivity. Average hourly earnings in private, nonagricultural business increased in real terms by about 16 percent during the past 40 years, but professionals did better: physicians, for example, enjoyed an increase in real earnings of 33 percent in the same period. One way of looking at the benefits of rising productivity is to compare various family income groups. The top 5 percent of families had an increase in income of 129 percent in real terms from 1960 to 1998, while the middle fifth had an increase of 54 percent and the bottom fifth only 38 percent. Family income went up not only because productivity was greater for other reasons, such as the increasing number of wives taking jobs outside the home. The average real income of working Americans, as the chart shows, increased beginning in 1995--undoubtedly made possible by the spurt in productivity over the same period. [emphasis added]

Source: Scientific American

43 posted on 03/22/2004 9:06:22 AM PST by 1rudeboy
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oops . . . the above refers to the period up to the year 2000.
44 posted on 03/22/2004 9:07:37 AM PST by 1rudeboy
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To: Luis Gonzalez
Good post, but there's no way you'll get through to them. They've invested a lot in doom'n'gloom and won't let go. It's like arguing with creationists.
45 posted on 03/22/2004 9:14:40 AM PST by edsheppa
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To: *"Free" Trade
bump
46 posted on 03/22/2004 9:39:27 AM PST by Libertarianize the GOP (Ideas have consequences)
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To: 1rudeboy
That's very good info but it does neglect an inescapable yet never discussed facet of this whole debate and that is the explosion of debt at all levels since free trade became a front and center issue. I've been in the com'l/military electronics business since the early 80's and that's about the time frame I recall major concerns being expressed about the path we were embarking on at that time. (I'm sure the debate started much sooner but I do recall fierce discussions about Asian penetration at that time).

Here's the point....according to the Federal Reserve's own figures, since the early 80's corporate debt has gone from a little over 1 trillion to approx. 5 trillion in about 20 years....that's five-fold increase. What's more household debt went from a shade under 2T to almost 10T in the same time frame (5X). Also, fedgov debt went from a little over 1 trillion in '83 to the current 7 trillion they're willing to publicize and the over 40 TRILLION in "unfunded liabilites" that they're somewhat reticent to discuss....anyone heard any discussions on this fact during the debates? (I think not).

Of course there are numerous reasons for the dramatic increase in those numbers but it's undeniable that if free trade policies had delivered the wealth creating possibilities we were all left to believe would be created, those levels of debt would not be even close to what we've witnessed. It doesn't take a rocket scientist or even a free trade cheerleader to figure out that the explosion of debt has masked the debillitating effects of a flawed policy that will wreak havoc on future generations of Americans....and all the name calling and swarmy remarks cannot change that UNDENIABLE FACT!

47 posted on 03/22/2004 9:54:29 AM PST by american spirit
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To: Luis Gonzalez
So, did slave labor and thatch huts just get invented?

We seem to have been doing just fine competing in that world up to now.

The civil war was fought over tarrifs and industrial policy. If Abraham Lincoln had believed in Adam Smith, the civil war would not have happened. The fruits of those policies coupled with our free internal systems propelled us to world dominance and, for a period of time after WW-II, we were the only nation on earth left with a manufacturing capacity which was still relatively intact.

ANY theory could look good under those circumstances, but circumstances change. And, unless republicans get some sort of a handle on present realities involving jobs and outsourcing and the like, their circumstances are going to change too...

48 posted on 03/22/2004 10:12:58 AM PST by greenwolf
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To: Luis Gonzalez
According to the Economic Report of the President, 1991; a chart showing Trade/GNP Ratio and National Productivity Growth indicates that, starting in 1973, productivity growth
declined as the trade/GNP ratio increased.

Real wages have declined because since 1973 we have converted to a service economy and lost manufacturing jobs:
manufacturing jobs paid more than service jobs, consequently, two-job households became necessary.
49 posted on 03/22/2004 1:20:46 PM PST by upcountryhorseman (An old fashioned conservative)
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To: edsheppa
"It's like arguing with creationists."

I have a very simple answer to that debate: God created evolution.

50 posted on 03/22/2004 1:35:09 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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