Free Trade

Originally posted by ianpickering
There were some interesting ideas on the 'Minimum Wage'. Many seem to be of the opinion that the 'Market should decide'. If this is the case, then shouldn't we allow free trade, without any forms of protectionism?

Not necessarily. Then again, as I wrote on the first page of the "Minimum Wage" thread, I think "Let the market decide!" is a shallow response. Markets by definition assume a set of laws. We then have to ask which laws should be enacted.

Now government intervention in the form of subsidies, tarriffs, and quotas are generally bad in the long run. I think the overall goal should be free trade. I also think the most critical questions are based in short run transition dynamics (recall Keynes, that the short run may not be so "short" ). In the short run, labor is far less mobile across sectors than capital. Basically, it may not be easy to up and switch professions, especially if it requires migration to another part of the country. Even more restrictive is that people aren't infinitely-lived. Some people probably won't be around to enjoy the gains of FT. How do you compensate people who have spent 30 years building up sector-specific human capital that must quit being say steel workers and become financial analysts? If you can't compensate them how can you at least ease the pains of transition. Or maybe, as Friedman would say, a slow transition causes more harm and shock therapy is the answer.

I'm planning on writing a paper in the near future that will try to seriously model something like this.

Originally posted by telerion
Now government intervention in the form of subsidies, tarriffs, and quotas are generally bad in the long run. I think the overall goal should be free trade. ...I'm planning on writing a paper in the near future that will try to seriously model something like this.

After observing the way free-trade empowers the global elites and cripples my country, I've changed my mind about it. "Free" anything sounds so wonderful but if we intend to retain our national sovereignty (something infinitely more important than cheap stuff or maximum efficiency) "free-trade" won't work. The Founding Fathers must have realized that. The constitution calls for the federal govt to be financed with fees and tariffs. Hehe. Those guys continue to amaze me. IF we had followed their directions - continued operating the federal govt on tariffs - we would not be in the mess we are in today, poised, tipping over into national and individual slavery...or revolution. I notice this topic only got 2 responses. That speaks volumes.

Get crackin' on that economic model. The others coming down the pike combine the badness of what we have now with more badness even less accountable. 🙁