Why FREE TRADE was never the answer.

self | 7/28/03 | RaceBannon

[RaceBannon]

There has been a few threads on here where Free Trader enthusiasts have defended their view, and have been responded to by those who feel that Free Trade is not helping the American Economy, in fact, is part of the reason we are NOT going to see a great recovery any time soon.

I am one of the latter. The following is a cut and paste job, taken from my own comments on these threads, which I feel tell my side of the story.

Some of the points are repeatd, 3 and 4 times. That is because I feel they are the forgotten reasons and ideas why we are in what I believe are dire economic straits.

Feel free to comment.

[Alberta's Child]

Your post goes right to the heart of the issue. This country's policies regarding public assistance are as much a problem as anything else in the realm of free trade. I have long suggested that we could go a long way toward fixing this problem by going through one simple exercise:

Sit down and make a list of all the things the government spends money on that provide benefits to illegal aliens in some form or another (public schools, public hospitals, government-paid disability insurance claims, etc.). Then make a list of all those things that you don't think the government should be providing to illegal aliens.

Every item that you included on the second list should be eliminated immediately. Not just eliminated for illegal aliens -- eliminated for everyone. If you really want to see the U.S. become more competitive on a global scale, just imagine what we could do without the burdensome government costs to keep these things going.

[Cacophonous]

That's true, but R&D costs are out of the normal realm of doing business.

[Alberta's Child]

The scenario you present is an interesting one. On the other hand, a case like the Airbus one illustrates why France is always going to come out on the losing end by subsidizing Airbus.

If U.S. airlines buy subsidized aircraft from Airbus, then the French taxpayer is effectively subsidizing either the U.S. airlines directly (through reduced capital costs) or U.S. air passengers indirectly (through lower air fares than they would have had with "more expensive" Boeing aircraft). If I'm the French taxpayer, you can bet I'd be asking myself why I'm paying 50% of my salary in income taxes and $4 per gallon for gasoline just so Americans can fly to Disney World on a regular basis.

[Cacophonous]

France is already socialist and used to paying taxes. They like it.

[Alberta's Child]

The corporate execs are very happy KEEPING the enormous profits made from using near slave wages.

Please note that we do not live in the age of robber barons anymore. "Corporate executives" are hired by the shareholders of a company, and any profits that they make are also made by everyone in the company who owns any shares. The ultimate irony here is that union labor in the U.S. has reached the point where they don't even keep a straight face when it comes to their own interests. If you ask a UAW leader, he'll insist that we should all buy UAW-manufactured cars from Ford and General Motors. But if you look at his union's pension fund activity, you'll find that they are far more interested in a 15% return on Toyota (non-UAW) stock than in a 10% return on Ford or GM stock.

I agree with you that this country has a serious immigration (legal and illegal) issue to contend with. What most people don't realize, however, is that immigration is the only thing that is going to keep this country from sliding into a deflationary spiral similar to what Japan is going through right now and what Europe will be going through over the next 50 years. If there is any chance in hell that the Mexican immigrant sneaking across the border today is going to pay $400,000 for your house in 15 years, he's going to be permitted to sneak across the border. Because I've got some news for you -- if he isn't around to pay $400,000 for your house in 15 years, then there's a good chance that nobody will be paying that much for it.

[Alberta's Child]

That's true, but R&D costs are out of the normal realm of doing business.

Huh? Do you really believe that?

Can I get the U.S. government to finance my R&D costs, too?

[the gillman@blacklagoon.com]

Haven't read any replies except for the halfwit egomeimihi's, but you are absolutely right.

Many of the pro Free/slave Trade advocates are shills working in a basement somewhere.

[Cacophonous]

Maybe not in all businesses (I used too broad a brush).

[Alberta's Child]

France is already socialist and used to paying taxes. They like it.

Actually, then don't. I read a recent article about the myth of the superior quality of life in Western Europe compared to the United States. The research they did showed a surprising result: Something like 70% of Americans were happy with their lives, while only slightly more than 20% of Western Europeans were happy with theirs.

It turns out that 32-hour work weeks, six weeks of paid vacations, guaranteed lifetime unemployment benefits, etc. don't make for very happy people -- in fact, this kind of crap produces a nation of malcontents who get six weeks of paid vacation but complain that they deserve twelve.

Something to think about.

[Alberta's Child]

But you did hit on a good point. Is there any difference between France subsidizing Airbus directly and the United States subsidizing Boeing through military contracts?

[the gillman@blacklagoon.com]

OK, now I've read most of them.
I can only conclude that those advocating the total destruction of our manufacturing and information technologies are looking forward to the day we are destroyed by our enemies.

Perhaps these idiots think they will be placed as exalted leaders over the enslaved survivors of the ruin of this nation.

[Cacophonous]

If Boeing wins a contract to provide airplanes to the Fed, and there is an R&D element as part of the scope, it is not subsidization (assuming it was won through open competition and there were no back door shenanigans...a different issue). If it happens that that is the one contract that keeps Boeing alive, it is still not subsidization, just fortunate for Boeing.

It IS government subsidization, however, when the government bails out an industry, like the airlines, or when it keeps a poorly run business afloat, such as Amtrak, especially when good business alternatives are available.

Airbus is federally subsidized by European governments. It was created specifically to compete in the US market, and committed itself to winning the market, even if it took losses (propped up by the European govs) to do it. It has lost money.

Just like Amtrak is artificially propped up because no self-respecting railroad can profitably run trains through every podunk village it runs across.

[Alberta's Child]

Airbus is federally subsidized by European governments. It was created specifically to compete in the US market, and committed itself to winning the market, even if it took losses (propped up by the European govs) to do it. It has lost money.

OK. So what does Airbus gain from all this? At its most basic level, this is no different than the guy who spends $5 to make a product and sells it on the street for $4. Any rational person would agree that this guy is a moron. And any person or government that feels a need to step in and pay him $1 to make up the difference is even dumber than that.

[Lazamataz]

Would you support complete free trade with nations that had true free market economies, or not?

Probably.

[Cacophonous]

If Airbus wins the market, and drives US competitors out of business, they are then the only game in town. A monopoly. They can then name their own price and recover, massively, their earlier losses. And since their governments are still committed to them, they can undersell and muscle out any new competition that may come along.

[Alberta's Child]

My point about Boeing is that these R&D costs are only included in their government contracts. After a period of time, Boeing then uses the advances they've made in producing military aircraft to produce more advanced aircraft for the private sector. In effect, the private sector is getting a discount on their aircraft because Boeing's R&D has already been done through government contracts.

[Cacophonous]

Would you support complete free trade with nations that had true free market economies, or not?

Probably.

Most definitely, but only with the conditions described by Adam Smith (see post # 35).

[Lazamataz]

By the way, howzit feel to have won the argument and swayed me to your guys' side?

[Cacophonous]

Well, that's true, but you cannot expect Boeing, or anyone, to forget what they learned conducting the R&D and passing those on to the consumer. That's a benefit of doing business. Unless the Government puts a "Proprietary" stamp on it.

It's not the same thing as subsidization, a guarantee to keep them in business.

[Cacophonous]

We did? Cool! Walk toward the light!