Posted on 05/25/2014 1:55:13 PM PDT by ckilmer
Few economists have had a more distinguished career than Martin Feldstein. After graduating summa cum laude from Harvard in 1961, he became a fellow at Nuffield College, Oxford. In 1977, he won the John Bates Clark Medal, the most prestigious award in American economics. He went on to become chairman of the Council of Economic Advisors in the Reagan administration and is now a member of President Barack Obama’s Economic Recovery Advisory Board.
(Excerpt) Read more at forbes.com ...
I will agree to a point. Stop selling imports IF we can compete with cheaper and better products. Buy American just for the sake of it is self defeating. American ingenuity, entrepreneurship,rugged individualism and less....far less government needs to be resurrected and promoted. That cannot happen until we make Washington DC answer to the people.
The truth is that the staff of the Chinese central bank studied the same economic theories as those of the US central bank. Some even had the same professors in grad school. They pal around at the same clubs when they are at Davos. They razz each other when they make policy decisions that their peers disagree with them. They are all printing money like crazy. They all are in denial of the fiat-money boom and bust cycle.
“Free trade is always beneficial to both side whether you are a buyer or a seller.”
We have pursued one sided “free trade” for the past 25 years. During that time the average US household has experienced a decline in standard of living for the first time in our history, entire industries have been exported, the greater industrial infrastructure on the planet has been decimate, and the middle class is declining rapidly. The only people who have benefited from the “free trade” are academics, Wall Street investment firms, and the executives of multinational corporations. The average American citizens, and the nation’s economy, have been big losers.
During the 35 years from 1865 to 1900 the US experienced the highest economic growth rates in world history and went from a country decimated by a civil war to the greatest economic power on the planet. Throughout this period of unprecedented economic growth the nation ran high tariffs on almost all imported goods. Tariffs and duties completely funded the federal government.
If free trade were as beneficial as its advocates suggest, the United States should be enjoying a period of great prosperity and economic growth today. At one time I believed in free trade. No longer. I believe what I’ve seen and the history of the US economy. Time to end the experiment and slap a 30% tariff on imported goods. Watch manufacturing, jobs, and economic growth return to this country.
The high economic growth rates in the 1800 were in spite of tariffs. It was due mainly to the small size of the federal government with spending averaging around 4% of GDP. The free market flourished during that time. Government interference in the economy was insignificant.
Tariffs are a tax. Taxes and tariffs impede economic growth by forcing higher costs and prices leaving less in the market for investment and growth. Government interference slows down the economy and impedes wealth creation.
I'm amazed when you get down to cases, at how many so-called "conservatives" don't really believe in freedom especially freedom from government interference. Freedom and free market economy is and always has been the source of wealth creation. In theory as well as historical fact, government interference is the source of wealth depletion and rise in poverty.
Sorry, the deindustrialization of the past 25 years demonstrated that when tariffs were eliminated, the nation did not benefit. The promised benefits of the service economy that would replace manufacturing did not materialize.
The concept of free trade at the time of the founding was freedom to engage in trade with any nation or any individual, not freedom to trade without tariffs.
Charging foreign factories a fee (tariff) for access to the US market is not restricting Americans from trading freely. Foreign factories benefit from many costs currently borne by the US taxpayers — ports, Coast Guard, customs, roads to move products to market, etc. Requiring US companies taxes for these services and allowing foreign factories to bring goods in duty free effectively forces the US companies to subsidize their foreign competition. This is the free trade we have and it is not a level playing field for the US companies.
In addition foreign competitors are often subsidized by their governments. I worked in an industry in the 1990’s that was targeted by the Chinese government. The Chinese government provided zero interest loans to set up the factories in China to produce the products, and would not allow American companies to own those factories. In addition the Chinese government paid the Chinese exporters in that product segment a 15% rebate on the value of all exports, essentially a direct subsidy. Plus the Chinese producers were exempt from taxes on the value of exports. On the US side, our government eliminated all duties and quotas on that industry. What happened? The US factories shut down and moved to China thanks to free trade. In this instance free trade meant eliminating the US 20% tariff and allowing heavily subsidized foreign companies free access to the US market while continuing to levy taxes in access of 30% on the US competitors.
Free trade is wonderful in theory. However one sided free trade with a country that subsidizes exports and the construction of factories to compete with American producers is not free trade. We are in an economic war with a mercantilist nation. There has been zero economic growth in the US as a result of the free trade policies of the past 25 years. What we have witnessed is loss of entire industries that could not compete with foreign competitors subsidized by their government and the US taxpayer.
Our choice is to fight back by charging foreign factories tariffs for the privilege of access to our market and the infrastructure paid for by US taxpayers or continue to allow free and unfettered access and accept the fact we will become a third world impoverished nation.
As far as we're concerned it is. Just like Hong Kong, our wealth and advantage is not dependent on whether another country is going to shoot themselves in the foot with tariffs.
Our choice is to fight back by charging foreign factories tariffs for the privilege of access to our market
Au contraire mon FR-ami. Just becasue they shoot themselves in the foot doesn't mean we have to also. Tariffs are a tax. Taxes artificially raise the costs of production and therefore raise prices to the consumer. So if our trading partner raises tariffs at their end, they're simply raising the prices to their own consumers. But that doesn't hurt us. We can still freely buy and sell at our end with U.S. consumers getting the best products for the lowest prices. We win even if they choose to hurt themselves. We're stupid if we decide to hurt ourselves with traiff becasue they do.
Again, where are the true Americans who are believers of the power of a free society? A society essentially free from government interference is the wealthiest most powerful society on earth. You've steeped too long in the atmosphere of government-oriented indoctrination. What Reagan said then is just as true today about economic matters: government isn't the solution, it's the problem.
bump
There’s nothing wrong with having a supposed “trade deficit.”
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Yeah this has been the mantra of a lot of b school graduates for a couple generations.
The trouble is it only works if you have a reserve currency like the USA and even then over time it necessarily decapalitalizes your country—even the USA.
The USA —especially the dollar and US federal debt instruments— would have fallen down a terrible terrible rat hole on account of fed QE’s if not for the fantastic and miraculous and ongoing rise in US oil production.
Really? So you think taking another big chunk of money away from the middle class and giving it to the politicians in Washington will solve our economic ills? The last 25 years have seen the highest ratio of government revenue per gross domestic product in the countries history. In addition government regulations at all levels (local, state, federal) have grown apace. We have also seen the highest debt to GDP ratios since World War II.
As the article points out, it's the Chinese ability to use their dollars which they have received from trade to invest in Treasury Bonds that is harmful. The Chinese have a limited number of things they can do with the dollars they receive.
a) They can convert them to RMB and drive the exchange rate up along with the prices of Chinese goods.
b) They can buy U.S. products thereby equalizing the trade balance.
c) They can invest in the productive private sector of the U.S. economy, thereby improving our productive capacity.
d) They can lend money to our bloated bureaucracy so EBT card users can visit Disney World and Solyndra Executives can golf on well watered courses in California. Then sit back and wait for our children to toil away to pay them back.
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