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| Jerry Pournelle on free trade. |
| 2016-07-29 |
| h/t Instapundit ...One reason Conservatives are advised by Conservative leaders to disagree with Trump is his position on Free Trade. The problem for me is that I do not see Free Trade, particularly laissez faire Free Trade, as necessarily Conservative at all, The advantages of Free Trade are lower prices for stuff. That means they are more cheaply produced. As the economist David Ricardo wrote, there is a principle of comparative advantage that coupled with free trade guarantees maximum profits for when there are no trade restrictions, and impediments to free trade are supposed to be mutually disadvantageous. But do understand, what is conserved is lower prices. Nor social stability. Not communities. Not family life. Indeed those are often disrupted; it’s part of the economic model. Under free trade theory, it’s better to have free trade than community preservation, better to have ghost towns of people displaced because their jobs have been shipped overseas; better to have Detroit as a wasteland than a thriving dynamic industrial society turning out tail finned Cadillacs and insolent chariots and supporting workers represented by rapacious unions in conflict with pitiless corporate executives. The theory of free trade includes liquidity: liquidity in capital flow, and liquidity in labor relocation. What was conserved by turning Detroit into a wasteland? How was that conservative? Wouldn’t it be more conservative to argue that if everyone pays a little more for stuff made here, by people who work here, we are better off than having it made south of the border and inviting our people to go work there at their prevailing wages? Go further. You don’t have to move. We’ll pay you for not working and you don’t have to move. Of course we’ll have to raise taxes on those who do work to pay those people no longer working, but that’s life. But after unemployment benefits work out ‐ in my days the government would pay you $26 a week for 26 weeks ‐ you’re in trouble. So much so that welfare benefits kept being raised. Food stamps, which became larger and bought more items. Negative income tax. And if you dropped out of the labor force ‐ no longer looking for a job ‐ you are no longer unemployed. The unemployment rate just went down. You stopped looking for a job. Of course you don’t have a job ‐ you are certainly not employed ‐ but you aren’t unemployed and don’t count toward the unemployment rate. I wouldn’t have thought that sort of lying to the people by government officials was a very Conservative thing to do at all. Would a 15% tariff on cars have saved Detroit? It would mean that I would have had to pay about $5000 more for my 1988 Ford Eddie Bauer V8 Explorer I bought in 1999. I could have afforded that. And I suspect that I’ve paid more in income taxes sent to welfare recipients in Detroit than that. Is paying people not to work more Conservative than trying to keep their jobs ‐ and manufacturing capabilities and potential here, bot dismantling it and leaving its former site to rust away ‐ Conservative? And is encouraging people not to work ‐ at least making it easier and more possible ‐ building a Conservative nation? What, precisely, is being conserved here? Also, free trade should be bi-directional. And nobody else in the World is that kind of sucker. |
| Posted by:g(r)omgoru |
| #22 The problem with free trade is that intellectual capital - paid for in one way or another over generations by the citizens of a country - flows in the opposite direction. You may be able to buy cheap TVs from China, but China gets to know how to make cheap TVs, which is far more valuable. |
| Posted by: phil_b 2016-07-29 18:10 |
| #21 As Ricardo and Adam Smith were mentioned.... You should tax titles, not income or deferred income (sales taxes). |
| Posted by: Bright Pebbles 2016-07-29 17:55 |
| #20 A great deal of regulations and taxes might as well be labeled "internal tariffs." IMHO. |
| Posted by: Thing From Snowy Mountain 2016-07-29 16:52 |
| #19 "Tariffs are a tax paid by consumers" And income tax is a tax paid by the workers. I'd rather tax consumption than productivity. |
| Posted by: rjschwarz 2016-07-29 15:06 |
| #18 The Cuyahoga River in downtown Cleveland is no longer in danger of catching on fire and so pure the long-term unemployed can go fishing there. |
| Posted by: Anguper Hupomosing9418 2016-07-29 14:29 |
| #17 And if it's rigged, gamed or otherwise abused, that's not free trade. Another strawman. That statement is a convenient distortion. The discussion by everyone else so far is an illustration of competing fundamental values and attempts to clarify & share them. |
| Posted by: Anguper Hupomosing9418 2016-07-29 14:27 |
| #16 The thing about "free trade" as it exists today, with the Mandarinate we have running the country, it amounts to some semblance of a free market for people who run what were once import/export businesses and are now just import businesses, and no economic freedom if you do anything else for a living. |
| Posted by: Thing From Snowy Mountain 2016-07-29 13:57 |
| #15 Our 330 million people have 330 million requirements which, can be met by the same 330 million people....'freely trading' with one another. If those 330 million discover they have a trading surplus, stop production until surplus is exhausted, or ship the surplus overseas. If those 330 million discover they have a trading shortfall, then and only then, should oversees stuff be brought in. I suppose this is far too simplistic. Probably far too late for such a foggyish old concept. |
| Posted by: Besoeker 2016-07-29 13:47 |
| #14 I'm sorry I started it --- apparently, it's religious. |
| Posted by: g(r)omgoru 2016-07-29 13:46 |
| #13 Free trade creates wealth that is true...for those who are already wealthy. The rest of us get fucked. Nobody is seeing those sweet profits from manufacturing in Bangladesh and China other than international companies. If you want to imagine the future, imagine the American worker, being laid off, forever. |
| Posted by: Slutle Snore7910 2016-07-29 13:35 |
| #12 Ah, but for libertarians, there is no "common good." Ah, Pappy, but we're talking about economists and politicians. When you speak about the aggregate system totals rather than specific transactions than there is a "common" good defined as total aggregate wealth which is used to justify these "free" trade deals and writes off the suffering of Detroit, for example, as just acceptable collateral damage. After all the aggregate is the measurement of success.. This ignores two salient points. 1) is the average issue: On average this is best for everyone. Like the man with one foot in ice and the other in boiling water feels fine, on average. 2) free trade is the sum of all the individual transactions that are made by individuals based on their view of what's best at that moment for them. Therefore, an aggregate, as a measure of worth, is meaningless. Think of college grades if I get an A in physics and an F in sociology I'm a C student, does that mean anything at all? |
| Posted by: AlanC 2016-07-29 13:33 |
| #11 Only ignorant people look at trade as the problem Ask the Japanese about oil and iron circa 1940-45 and then food for '45. |
| Posted by: Procopius2k 2016-07-29 12:28 |
| #10 The advantages of Free Trade are lower prices for stuff. Stuff which you don't need. |
| Posted by: Skidmark 2016-07-29 11:21 |
| #9 Do we have to live through this again? Only ignorant people look at trade as the problem, when in fact it is a large part of our economy. Why can't these stupid people mean simple maths? |
| Posted by: newc 2016-07-29 11:10 |
| #8 Tariffs are a tax paid by consumers...yes, but non-tariff taxes are paid by the consumer for the welfare system to support those not working and the bureaucracy that goes along with that welfare. Where is the lesser cost and graft to be found? |
| Posted by: Procopius2k 2016-07-29 10:49 |
| #7 Another narrative derives from the "best for the common good" approach. Ah, but for libertarians, there is no "common good." |
| Posted by: Pappy 2016-07-29 10:34 |
| #6 I get the basic argument on free trade, but I also get that we really don't have "free trade" -- we have "managed trade" with NAFTA, TPP and the other agreements out there. Mr. Trump is correctly pointing out that in a managed trade situation, America has been a sucker for a long time -- we're transferring a significant amount of wealth (and per Mr. Pournelle, social stability) to other countries, in return for cheap goods. Okay, everyone likes inexpensive stuff, but the question is, what did we give up for that? Trump and Pournelle point out that we've given away too much. I'm all for "free" trade, but I don't think it exists, and I don't think we can work our way to it. So if it's going to be managed trade, we need to get a better deal. |
| Posted by: Steve White 2016-07-29 10:28 |
| #5 You've got too many competing narratives. Pure free-trade is fine but impossible for several reasons not the least of which is an imperfect knowledge base. Another narrative derives from the "best for the common good" approach. Pournelle is pointing out that individuals have different definitions of good and you can't aggregate economic wealth creation and declare it best. All you can say is that this maximizes total wealth in the system, whether or not that's good is a whole nother story. So it's not a straw man at all just a part of a much larger and more complex story having to do with societal organization. |
| Posted by: AlanC 2016-07-29 10:04 |
| #4 Pournelle is offering a common misunderstanding of free trade as a strawman. Free trade creates wealth. It's that simple. Tariffs are a tax paid by consumers - American citizens. Read your Adam Smith. And if it's rigged, gamed or otherwise abused, that's not free trade. Another strawman. |
| Posted by: Iblis 2016-07-29 09:39 |
| #3 It's not Free Trade when it's rigged on both sides to the advantage of castes or special interests groups. That's not just international trade, it's also interstate commerce that obstructs or 'regulates' industries favoring native businesses over national businesses - see dairy and limited liquor distribution, automotive sale businesses etc by state. We're not even talking subsidizes that pols and precipitants are so fond of that alter price levels. Then there are 'partnership' deals, that require someone, group or family, on the inside of the governmental/business entity to get a piece of the action in order to do business in the state or nation. Free Trade has long lost its meaning. Sort of like Mom (but before the sex change operation), the Flag (now made overseas), and Apple Pie (additives with 5% apple content). Before you bring up Smoot–Hawley as a Bogeyman, I too was taught about the 'evil's of that back in school. However after sitting through 8 years of a de facto depression (using the metrics of 1930s rather than the manipulated metrics of today), that scare is losing its value as we do not have Smoot-Hawley and yet we still have a long term depression running. People's images of the 30s Depression is largely long lines of hungry out of work men in black and white film. However the vast majority of the workforce was employed through that time in a flat economy. IIRC around 75%, less the black community whose numbers were much lower. Sounds familiar? So was Smoot-Hawley the devil or the scapegoat? Mr. Pournelle is asking the questions that need to be raised. If government exists to serve the people, who really is being served by 'Free Trade'. It ain't free if its rigged to the advantage of a few or others over the many. |
| Posted by: Procopius2k 2016-07-29 08:04 |
| #2 It's not surprising that Marxists reduce everything to money in trying to control people. Over 48,000,000 people on Food Stamps appears to support your theory. Other examples are readily available. |
| Posted by: Besoeker 2016-07-29 07:40 |
| #1 Read this yesterday. Good article in pointing out that their are more priorities than money that motivate people. It's not surprising that Marxists reduce everything to money in trying to control people. Proggies (aka Marxists) can't conceive of anyone not being driven by monetary greed so if you don't agree with the left you are obviously too stupid to tie your own shoes and need to be "led". |
| Posted by: AlanC 2016-07-29 07:37 |