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Debates Forum

Debates Forum

  1. Standard member spruce112358
    Democracy Advocate
    12 Jan '13 23:31
    The theory of free trade is that reducing trade barriers benefits everyone in the long run. But as has often been noted in these forums, free trade has only benefited US corporations. US wages are stagnant while corporate profits are at record highs.

    What is the reason and what should be done, if anything?

    Low wages are not necessarily a reason to change anything in the operation of markets. The immediate reason broader prosperity is being delayed is wage competition: Chinese and Indians now compete for jobs Americans used to do. Technology has prevented some deterioration by making American workers more productive per capita -- but at a cost of again shrinking the job market. High unemployment also puts downward pressure on wages.

    The question is, is there anything wrong with the increased wage competition Americans are facing? Here I believe the answer is that foreign governments continue to intervene in market operations to benefit their own citizens -- and to the extent that they do that, American workers are facing unfair competition.

    Foreign government protect themselves against American competition with a whole raft of measures, from subsidies to manipulating their currency, to outright trade barriers. The US can and does respond in kind to some of these unfair trade practices. But there is one large aspect that is not being addressed: there has been a huge influx of foreigners coming into the US to get jobs, but the number of opportunities for US workers to take jobs overseas is nowhere near the same. Again, much of the reason boils down to the US being a more hospitable environment for immigrants than vice-versa. Other reasons include that whereas many foreigners learn English, few Americans learn Mandarin, for instance. Chinese is not taught in American schools, by and large,

    Trade should be free and fair -- and that includes the movement of labor. To the extent that trade is not free or labor cannot or does not move, the free market has been interfered with. In that situation, since foreign government are unlikely to stop, there is an an appropriate role for US government to step in and balance the situation -- with tariffs or with immigration restrictions. This should continue until such time as foreign governments adopt equally non-restrictive policies regarding trade and movement of labor.

    Example:
    India doesn't allow the US to send over Walmart employees to open up stores on every corner in India. There is massive political pressure to keep Walmart OUT of India because of mon and pop shops. Yet Indians come to the US in droves to work at high-paying programming jobs.

    So people like to say "free markets don't work" or "there is something wrong with capitalism" when in fact the only thing wrong is a worst case regarding government intervention: best is no intervention, second best is equal (e.g. retaliatory), worst is unequal.

    You don't want to be living in the country that is pursuing "free trade" when no one else is. That's a government failure.
  2. Subscriber FMF
    a.k.a. John W Booth
    13 Jan '13 03:13
    Originally posted by spruce112358
    Trade should be free and fair -- and that includes the movement of labor.
    What degree of freedom of movement [and right to domicile, right to work etc.] would you advocate for labour?
  3. Standard member vivify
    rain
    13 Jan '13 04:00
    There will never be a perfect system, because humans are collectively an evil, selfish bunch. Free trade is great in theory, but has failed (at times) in practice, for this reason.
  4. Subscriber AThousandYoung
    Poor Filipov :,(
    13 Jan '13 05:05
    Cause it can't find a job
  5. 13 Jan '13 08:40
    Free trade is working fine, in principle.

    The problem in the US is largely a cultural one. American culture is one of winners and losers. This increases the gap in gross incomes. The US government could and should alleviate this inbalance, but unfortunately has opted to make the taxes much less progressive than in most other rich industrialized nations, thus making the problem worse. Full employment could easily be obtained by making taxation more progressive.
  6. 13 Jan '13 12:01
    Originally posted by spruce112358
    The theory of free trade is that reducing trade barriers benefits everyone in the long run. But as has often been noted in these forums, free trade has only benefited US corporations. US wages are stagnant while corporate profits are at record highs.

    What is the reason and what should be done, if anything?

    Low wages are not necessarily a reason to ...[text shortened]... ountry that is pursuing "free trade" when no one else is. That's a government failure.
    Free trade works better for those in countries with a low standard of living than those with a higher standard of living. How do you compete with slave prison labor making goods and trying to send your kids to college?
  7. Standard member shavixmir
    Guppy poo
    13 Jan '13 12:08
    Originally posted by FMF
    What degree of freedom of movement [and right to domicile, right to work etc.] would you advocate for labour?
    Complete freedom.
    The mere idea that a packet of crisps and a Yen have more freedom to travel than a human being is absurd.

    The free market is 't about freedom. It's about freedom for a select few to pick and choose as they will.
  8. Donation rwingett
    Ming the Merciless
    13 Jan '13 12:15
    Originally posted by spruce112358
    The theory of free trade is that reducing trade barriers benefits everyone in the long run. But as has often been noted in these forums, free trade has only benefited US corporations. US wages are stagnant while corporate profits are at record highs.

    What is the reason and what should be done, if anything?

    Low wages are not necessarily a reason to ...[text shortened]... ountry that is pursuing "free trade" when no one else is. That's a government failure.
    "Free Trade" has been a complete and utter disaster. Its accomplishments have been increasing disparity and economic insecurity around the globe. Wealth and power are concentrated into fewer and fewer hands, while it has become a race toward the bottom for everyone else. Every syllable vomited forth by neo-classical economists is a complete lie. The globalized economic system does not work, cannot work, and one way or another will end in the total devastation of everything its pestilential tentacles come into contact with.
  9. Standard member spruce112358
    Democracy Advocate
    13 Jan '13 13:50
    Originally posted by vivify
    There will never be a perfect system, because humans are collectively an evil, selfish bunch. Free trade is great in theory, but has failed (at times) in practice, for this reason.
    Selfish, yes. Some are evil, but not that many. "Easily mislead by emotional appeals" is how I would characterize most humans -- which is the problem. People don't adhere to fair principles because they see fluctuations in the outcomes -- "Oh my God, that person over there is so poor! We need to pass a law!"

    So they increase the variability in the system by continually passing contradictory laws based on the latest emotional appeal.
  10. Standard member spruce112358
    Democracy Advocate
    13 Jan '13 13:55
    Originally posted by KazetNagorra
    Free trade is working fine, in principle.

    The problem in the US is largely a cultural one. American culture is one of winners and losers. This increases the gap in gross incomes. The US government could and should alleviate this inbalance, but unfortunately has opted to make the taxes much less progressive than in most other rich industrialize ...[text shortened]... the problem worse. Full employment could easily be obtained by making taxation more progressive.
    If just implementing progressive taxation was a panacea, France would have full employment. They don't have anything close to it.

    I think that rule-following (e.g. Germanic) cultures can operate under a wide variety of systems including strongly progressive taxation. Rule-challenging cultures of which Greece, France, and the US are all examples tend to fail under it.
  11. 13 Jan '13 14:00
    Originally posted by spruce112358
    The theory of free trade is that reducing trade barriers benefits everyone in the long run. But as has often been noted in these forums, free trade has only benefited US corporations. US wages are stagnant while corporate profits are at record highs.

    What is the reason and what should be done, if anything?

    Low wages are not necessarily a reason to ...[text shortened]... ountry that is pursuing "free trade" when no one else is. That's a government failure.
    There is no free trade.

    If there were Brazilian sugar would be cheap in the USA. Protectionism is still here, just selectively. If you drink soda pop and you see high fructose corn sweeteners at the top of the list that is all the evidence you need that free trade is a farce.
  12. Standard member spruce112358
    Democracy Advocate
    13 Jan '13 14:06
    Originally posted by joe beyser
    Free trade works better for those in countries with a low standard of living than those with a higher standard of living. How do you compete with slave prison labor making goods and trying to send your kids to college?
    Only when the government in the country with a low standard of living (SOL) intervenes.

    Take China -- they refuse to let their currency inflate fully in order to ensure full domestic employment. But if they did, Chinese consumers would suddenly have huge buying power and would be looking for goods made in the US or Europe.

    People from countries with a high SOL usually have better education and skills that are in demand in the lower SOL country. There should be huge opportunities there -- but the low SOL country governments block foreigners from taking advantage of them.
  13. Subscriber no1marauder
    It's Nice to Be Nice
    13 Jan '13 14:52 / 1 edit
    Originally posted by spruce112358
    Selfish, yes. Some are evil, but not that many. "Easily mislead by emotional appeals" is how I would characterize most humans -- which is the problem. People don't adhere to fair principles because they see fluctuations in the outcomes -- "Oh my God, that person over there is so poor! We need to pass a law!"

    So they increase the variability in the system by continually passing contradictory laws based on the latest emotional appeal.
    People are programmed to cooperate and coexist with their fellow humans; they are not "selfish" according to the standard definition of the word. Selfishness is almost uniformly condemned in human societies; laissez faire advocates praising it as a high virtue are aberrant.

    EDIT: People even assist cardboard robots with no benefit to themselves. http://www.tweenbots.com/
  14. Standard member spruce112358
    Democracy Advocate
    13 Jan '13 16:26
    Originally posted by no1marauder
    People are programmed to cooperate and coexist with their fellow humans; they are not "selfish" according to the standard definition of the word. Selfishness is almost uniformly condemned in human societies; laissez faire advocates praising it as a high virtue are aberrant.

    EDIT: People even assist cardboard robots with no benefit to themselves. http://www.tweenbots.com/
    People love to be helpful, but that doesn't mean they don't also like their "stuff". I've never heard anyone praise greed as a virtue apart from Michael Douglas in a caricature in a Hollywood movie.

    The vast majority of businesses are built around cooperation and compromise and service to customers. Free trade is fundamentally about cooperation and trust -- it collapses immediately without those elements. So nothing about laissez-faire extolls greed as a virtue.
  15. Standard member spruce112358
    Democracy Advocate
    13 Jan '13 16:27
    Originally posted by Metal Brain
    There is no free trade.

    If there were Brazilian sugar would be cheap in the USA. Protectionism is still here, just selectively. If you drink soda pop and you see high fructose corn sweeteners at the top of the list that is all the evidence you need that free trade is a farce.
    The Farm Bill is a perfect example of government intervention that is absolutely unnecessary and actually harmful.