Posted on 06/10/2019 9:27:59 PM PDT by impimp
There seems to be a growing appreciation among some on the right for economic nationalism. If the goal is global growth then the concept of comparative advantage makes free trade a clear winner. If the goal is “America First” then there are certain situations in which one could claim Mercantilism is the best thing for the USA. I contend that the USA is currently not in one of those situations in which Mercantilism is best.
Mercantilism adherents believe that tariffs should be placed on high value imports and raw material exports, for purposes of a definition. They also dislike free trade because a prospective 1% gain to our economy is offset by let’s say a 10% gain to a foreign economy.
Mercantilism only succeeds in the long run if a nation (or reliable block of trading allies) represents more than half of the global economy and an “enemy” represents less than half. In this case the antagonist country will produce less output as their trading block should, all else being equal, be smaller than the trading block that represents more than half of the global economy. The USA represents only 20% of the global economy so protectionism will stunt the USA relative to the rest ISD the world and stunt itself relative to any larger trading block.
Secondly, the USA has the global reserve currency. The US dollar and US financial services dominate the planet. The US is also the home of many major global corporations outside of financial services. Protectionism hurts America’s strength as it cripples a major source of our economic power. An economic nationalist could argue that free trade promotes America’s interest because of the global nature of our economy.
For the aforementioned reasons an economic nationalist should reject mercantilism and embrace free trade if the goal is to maintain US global superiority.
Note that I am not economic nationalist but I wanted to present an argument to support free trade for the growing group of “America First” people on the right. I prefer global economic growth through free trade to America First growth because an economically integrated planet is a more peaceful planet - the cost of war with a trading partner is too high. I also think we have more to gain by trading with all countries than we do by demonizing economic competitors.
“What I disagree with in your post is the concept of protecting manufacturing capacity. This is not a legitimate security threat. It is a poor excuse for implementing protectionist actions as it hurts America and it’s consumers.”
Honestly, you don’t care about American consumers.
To be a consumer requires you to have a decent job. Free Trade destroys the Middle Class and Blue Collar workers.
All you care about is your own wallet.
It is easy for those uneducated in economics to weigh the needs of a visible victim over the needs of a statistical unseen future victim. Who will be harmed in the future due to increased economic stagnation if consumers don’t have more money to spend, which triggers the start of new businesses?
I don’t think you quite understand whats going on here so let me explain it to you.
First China is our competitor not our trading partner. They need us far more than we need them.
Demographics are not in China’s favor. Due to decades of a one child policy they have an aging population. Unlike the US China got old before they got rich.
The only reason that China has been able to compete with us is years of us allowing them to manipulate their currency, steal our intellectual property and put tariffs on our exports to them. This has culminated in allowing a country that is basically our enemy to enrich itself and engage in military expansion which is dangerous to its neighbors and the concept of open seas.
Trump is doing to China what Reagan did to Russia. He is forcing them to go head to head with the US economy which no country in the world can do without imploding. The sooner we get this over with the better.
Paul Craig Roberts is one of the fathers of Supply-side economics. He was the primary author Reagan’s 1981 Tax Act.
He is a much more credible economist than the endlessly self-promoting Art Laffer. The French even awarded Roberts their Legion of Honour in recognition of his contributions to economic theory.
Anyway, with that as background, Roberts says that what has been occurring between the United States and China isn’t a case of David Ricardo’s Comparative Advantage. It is simple Labor Arbitrage on a global scale. And there is a large enough pool of low cost labor in China to siphon off all American manufacturing leaving a massive army of the unemployed. Only a fool thinks this is a good idea.
Maybe you know unemployed people in the USA. I don’t. Unemployment rates are low. I don’t know why you care so much about US unemployment right now - it isn’t a problem.
Global warming is a myth. Why would I want a carbon tax?
Good post, thanks. I never understood those who believe Ricardo has validity in 2019. Why should nations be limited to doing what they do best when they could add subcategories to their A-list. As an example, over the past few years America has become a net exporter of oil/energy. Why not dominate the market, while keeping our technology superiority? IOW, nations, like people, should do more than just your best.
Read your post in #44 and you tell us.
I have no problem with playing hardball with China in order to protect IP rights. I have a problem with people complaining about the giant sucking sound of blue collar manufacturing jobs going to foreign countries. I am not a fan of protecting special interests. I equate the mentality of those people trying to protect blue collar manufacturing jobs with high school kids throwing a protest over climate change.
I deny saying it. You read the wrong post.
“Maybe you know unemployed people in the USA. I don’t. Unemployment rates are low. I don’t know why you care so much about US unemployment right now - it isn’t a problem.”
To be concerned would require you to have a family history in the US. You don’t.
Which surely explains your cavalier indifference to the plight of Americans who have had their livelihoods vanish.
The globalism that you have personally benefited from has gone through parts of America like a tornado. We care because it’s our country.
Do you understand that this is a screen shot of a post you made?
That was trolling sarcasm. Search my posts and you would see that I am a denier.
So if that was trolling, so is this absurd vanity. Gotcha.
I often see this idea repeated on FR, but it needs clarification and debunking. China's rural areas are aging. China's rural areas have a big shortage of females. China's rural areas are still poor, no matter how old they are. That's a billion people...but a billion people who still live very simply and whose social concerns have no particular effect on the trade war debate.
China's cities, on the other hand, populated with a middle class of over 400 million, are very young, very heavily populated with females, and very, very rich. Walk around the central business district of one of these cities some time - you'll see vast numbers of young women and almost nobody over 40. They have far, far more intelligent young people doing professional/office work than we do.
Come to the USA where 70-year-olds are working at McDonalds because they need the money (shocking and unheard of in China) and you will see the real aging nation. Our white majority's birthrate is far too low - which is one of the reasons the GOPe is so busy trying to import the next generation of Social Security payers.
I agree 100% with Trump drawing the line at this point - especially over the intellectual property issues - but China doesn't need us that much. Thanks to the Clintons and the RINOs, they have already had all the industrial and technological base they need for quite a long time. They have huge markets for their products in Europe and all over Asia. At most, a reduction of exports to the US at this time will be an inconvenience to them, and add to a number of pre-existing economic problems they are dealing with. Xi Jinping certainly isn't happy that someone finally stood up to China, but he isn't panicking, either.
Please.
We have had 30 years to see the results of free trade and they aren’t good.
The victims are real while the promises never materialize.
China now has 3 aircraft carrier built by free trade.
Do you ever figure that in your calculations.
There is no such thing as free trade between countries. Each so called “free trade agreement” is thousands of pages long dictating the “rules of this free trade”. Depending on the skills of each country’s negotiators these rules may end up favoring one country over another. So the fact that Trump may want to renegotiate some of the terms of these monstrosities only means that we have someone that realizes we’ve been screwed by these treaties and wants to get a fairer deal.
Free trade between me and a chinese individual or company would mean I can go over there negotiate a deal with the company or individual without either government entering into the discussion. No such thing ever existed except for very small transactions.
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