Guru of economics does an about-turn on free trade

Indian Express Newspapers (Bombay) ^ | Tuesday, October 19, 2004 | Jay Bhattacharjee

[mlocher]

The Smoot-Hawley Tariff was more a consequence of the onset of the Great Depression than an initial cause.

you nailed that one on the head. couple that with a few keynesian policies passed by fdr and some complete buffonnery on the part of the fed in the early 1930s, and the world economy suffered.

it is clear throug history that protecting jobs and taxing imports is a sure fire way to send the world enocomy, including that of the united states, into a downward spiral.

[Ed_in_NJ]

If Samuelson checked in here on a regular basis, he could have found this out a couple of years ago.

Wonder if he is a lurker, and got it here.

[gcruse]

Conservatives expect a business-friendly domestic economic environment that generates employment opportunities.
The Bush Administration's priorities don't address that expectation.

By erecting steel tariffs, Bushhurt domestic industry, driving up the price of steel, creating no new jobs in a rust belt unable to increase output sufficiently, and having no effect on the minimills which were eating big steel's lunch.  After all that, the rustbelt states went Democrat in 2002, and the tariffs were called off.

By listening to anti-free traders, Bush would succeed in driving up costs domestically, harming the economy, going loggerheads at the WTO, and triggering a worldwide trade war.  All to keep Joe Sixpack from having to learn a new trade.

Like the steel tariffs, protectionism hurts more than it helps.

[UnbelievingScumOnTheOtherSide]

. There is now sufficient evidence (and semi-official admission) that Japan was a major protectionist country throughout its period of growth in the 1960s and much later on.

No doubt. And what did it get them? Poorer consumers and a hyperinflated real estate and stock market that went bust and took all that money with it. What a model for China to emulate.

What do we get? Essentially a slave labor force and debt that we will never have to repay because they will lose it all in their greed to hang onto it.

[Moonman62]

Don't you think it's past time for blaming Clinton for all our economic problems?

For all things yes, but for the destructive powers of his overly strong dollar, no. GWB did make the so called recession much worse. Of course it was really a business spending depression of historical scale, not a consumer spending recession.

[Moonman62]

those "freed up resources" are going to go to taxes - to pay for all the social welfare programs americans who now have lower wage jobs, will need. and to pay for the increasing number of americans working for government, directly and indirectly.

I guess those taxes will be paid by the more productive people who got better paying jobs.

[FITZ]

It is the lack of will of Americans to educate themselves in new career fields.

It's not so much lack of will --- and obviously going to college forever is a wonderful idea --- but many people are working 50-60 hours, they're trying to get bills paid, kids raised, maintain their homes, enjoy a little of their lives --- finding 20-30 hours a week to attend classes and study isn't as easy it might sound for everyone to do.

[FR_addict]

Thanks for the post.

I'm go glad Bush won. Defense is the primary function of the federal government and there is no way an anti-American like Kerry should be commander-in-chief of America's military.

Now, its time to fight this head-in-the-sand attitude on the globilization of the economy.

Put America first!

[oceanview]

if you can locate them, let me know, I have friends who worked in tech - who are at Lowes now, or in real estate.

let's not forget - government workers, teachers and those who work in education, and many who work in health care - are paid for through taxes, they are net "takers" from the system. only private sector workers provide net inflows.

[FITZ]

But, people expect the government to hand jobs to them.

No one expect that --- but the government involving itself in every kind of 30,000 "free trade" or NAFTA deal it can arrange is far from handing jobs to Americans --- that's intentionally pulling jobs out from under Americans.

[gcruse]

but many people are working 50-60 hours, they're trying to get bills paid, kids raised, maintain their homes, enjoy a little of their lives --- finding 20-30 hours a week to attend classes and study isn't as easy it might sound for everyone to do.

If they're already working, then they aren't part of the outsource-driven unemployed, I should think.  When/if they lose that job, class time opens up.  Unless, of course, they are over say, 45, in which case they're too old to get a job regardless of what they know.  Age discrimination is rampant.

[JustDoItAlways]

The actual history of economics and the rising wealth of trading nations has proved the total opposite.

Left-wingers excel at unproven theory while right-wingers look at actual evidence and proven theories.

I look at China today versus 30 years ago and the US today versus 30 years ago and I see two countries that are better off. I see two countries which will eventually be allies versus two countries destined to blow each other up.

[Moonman62]

if you can locate them, let me know, I have friends who worked in tech - who are at Lowes now, or in real estate.

Aren't people in real estate making a killing these days?

[FITZ]

The real power is that it frees up resources so we can create newer more lucrative markets.

Okay --- we give up our jobs and wait for some kind of consumer base to develop in China --- but what happens if the Chinese also decide they like their cheap things --- plus by then --- what would we be manufacturing? China can get technology cheaper from India -- and look at Mexico --- with all their new-found US dollars, they're importing the cheap stuff from China. Now we've got a fast-growing trade deficit with Mexico when it used to be them with a trade deficit with us.

[gcruse]

Aren't people in real estate making a killing these days?

Trump doesn't seem to be struggling too much.  ;)

[Willie Green]

Such policies contributed to a drastic decline in international trade.

Nonsense.
You're wrongly attributing cause and effect.

In 1929, imports formed only 6 percent of the GNP, yet the Great Depression resulted in a 31 percent drop in GNP. It was the overall economic decline that led to the decline in imports, not vice-versa.

[FITZ]

A lot of times when you lose a job -- no matter if you're over 40 or over 30, you're so worried trying to save your home and pay other bills, you don't enroll in a University -- no time or tuition money.

[A. Pole]

And what did it get them? Poorer consumers and a hyperinflated real estate and stock market that went bust and took all that money with it.

It lifted them from the Third World to the First. I assure you that today Japan is much, much richer country than it was in 1950s. And Japan is a major lender to America.

Chinese will be very happy to have Japanese level of development (even with the Japanese problems). At the Japanese PPP, Ceinese economy would be FOUR times larger than USA and make HALF of the world economy. Not a bad deal for having Japanese style problems!

[Moonman62]

I look at China today versus 30 years ago and the US today versus 30 years ago and I see two countries that are better off. I see two countries which will eventually be allies versus two countries destined to blow each other up.

There is no such thing as a sure thing, but I think the odds favor such an outcome. I certainly hope so.