The ideology of "Free trade" is Killing America's Economy

40 million corn farmers in a country with a population of 112 million? You may want to check your sources.

http://www.sfgate.com/news/article/Mexico-s-corn-farmers-see-their-livelihoods-2515188.php

 

Only people that are afraid of globalization will make this argument. Outsourcing jobs is actually a positive sign of US business interests. It helps the country as a whole more than it hurts the workers laid off. the standard of living goes up and prices for American consumers go down. It's the beauty of Capitalism.

Probably won't respond tonight. I'll enact revenge tomorrow.

 

There is the autonomist anarchist argument that globalisation reflects the success of unionisation (and therefore the need to use international competition to minimise bargaining power). Its not an argument I'd use though, especially with the analysis supporting the view that those economic gains can subsequently increase the effectiveness of union bargaining over the created economic rent

 

Free trade (including domestic outsourcing AKA immigration) is at an all time high. So is unemployment (of Americans). And if you take the immigrants out of the employment counts (as should be), the then REAL unemployment rate is even much higher than the abysmal government reported one.

Big problem with free trade is it takes spending money away from the American consumer. That equals less sales for American business. Guess what you get ? That's easy. Just look around.

 

A spurious relationship.
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This is a particularly ignorant comment. We've known for yonks that specialisation according to comparative advantage generates huge gains in terms of higher consumer surplus. Those against trade are either innocent of the economics involved (there's no excuse for that as the analysis goes back to Smith and Ricardo) or actively support an economically irrational result

 

<<< MODERATOR EDIT: REPLY TO DELETED FLAMEBAIT >>> Outsourcing is simply the use of cheap foreign labor to cut costs and boost profits. Obviously, there 2 types. International & domestic. International goes overseas and takes advantage of lax environmental and other regulations. Domestic (AKA immigration) endures the domestic regulation, but applies to work that CAN ONLY BE DONE INSIDE THE USA (landscaping, construction, janitorial, hotels, etc).

What's so ignorant about the fact that as Americans lose jobs, they don't have money to spend in America's stores (AKA the economy) ? Answer - nothing. And that as foreigners take American jobs and send the wage $$ back to their home country ($25 Billion/year to Mexico alone) this becomes a gain for their home country's economy. A loss from the US economy. Elementary, and 5th grade kids understand it quite well, if not everyone in this forum does (or chooses to not understand)

There certainly are other factors at work in America's economic troubles, but to deny this obvious part is to walk around in denial. No law against it.

 

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Its more than that. Its also a means to further eliminate the constraints on specialisation according to comparative advantage. And, if you knew what you were talking about, you'd know that will generate further gains for all involved (see it in terms of driving a distinction between the production possibility frontier and the trade possibility frontier, with comparative advantage- a basic application of opportunity costs- ensuring substantial consumer gains)

This continues to be an ignorant statement based primarily on first giving a misrepresentation. Outsourcing does not increase unemployment. It can increase frictional unemployment but, through the economic gains generated, that is typically a temporary phenomenon. We can't even say that, through competition, it reduces wages. Imperfect competition informs us that, just with trade union bargaining, worker income gains can be derived.

Do you even understand comparative advantage? I've seen nothing in your comment to suggest that you do. Why do you think you can derive a sensible remark on trade based on nothing more than mixing cliché with deliberate misrepresentation?

 

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So8 million of America's 14 million unemployed are gaining by having their jobs swiped huh ?
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You're obviously not a free-market major, lol. Could you explain how free-trade (A) is the reason for high unemployment, shouldn't the president take the blame since none of his promises have been kept and his jobs council is a joke, and (B) how does the free-market system take money away from the American consumer?

It's been in place for centuries yet here recently you believe it's the cause of the financial evil in this country? Free-market creates competition, jobs, wealth, and an environment where outsourcing jobs is profitable to the nation as a whole, therefore is practiced on a regular basis. When a company does outsource, it allows them to lower their prices. Your argument that it takes away consumer spending money it outrageous and it overlooks the fact that even if it did, it also lowers the cost of everything and raises the standard of living.

If the free-market system does not work, why are other countries going bankrupt? We're in debt because of individuals making stupid decisions, not because the nation as a whole recognizes Capitalism as superior to every other system. There is no argument that can factually debunk the fact that capitalism works in every situation.

 

First this statement is wrong and cannot be justified with any economic valid comment. Second free trade is not limited to the capitalist paradigm. It can be used, for example, to eliminate planning problems within market socialism. Further, capitalism can hinder free trade. Given first mover advantages, there can be a significant distinction between static comparative advantage and dynamic comparative advantage (i.e. without interventionism market failure can dominate, leading to a significant reduction in economic development and therefore harming mutually beneficial exchange)

 

In this country, it is a free-market Capitalist system. And my statement can be justified by opening your eyes and not blindly following the president. Your opinion is interventionism, but history PROVES that the American people will take care of each other.

 

It was Americans, such as Hamilton (first Treasury Secretary), that helped develop the infant industry hypothesis. The comment "there is no argument that can factually debunk the fact that capitalism works in every situation" was bogus and has been destroyed

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Can you deny, for example, that there is a distinction between static and dynamic comparative advantage? Can you deny that distinction leads to market failure? Can you dispute the available economic history (such as Chang's Kicking Away the Ladder)? Getting economic comment out of you is an exceedingly difficult task

 

There is obviously a distinction, but how is the distinction alone leading to market failure?

Just explain your argument for me one more time, because as it is now, it's like saying there's a distinction between Capitalism and Socialism and that distinction is causing market failure.

Also, what market are you referring to? It would have little immediate affect on housing market, wouldn't it?

 

Already gave the game away when I referred to the infant industry argument (and its American origins). There are elements within dynamic comparative advantage which certainly aren't a problem. The analysis into product life-cycle, for example, suggests the dynamic context is focused on the innovation process (i.e. we have a comparative advantage in new product and, as technical progress shifts from product innovation to production innovation, there will be natural shift towards imitator low cost countries). However, once we refer to economies of scale as a dynamic concept (i.e. cost reductions refers to accumulated output through, for example, learning-by-doing) then market failure is guaranteed. We have first mover advantages with market power stopping production specialisation according to economic efficiency criteria.

I referred to market socialism to advertise the severity of your error. Free trade isn't capitalism specific. And we know that 'free markets' will not generate an efficient outcome. Instead it will allow for an inefficient result based on static comparative advantage that hinders economic development and therefore, by definition, the maximisation of economic activity

Why on earth are you referring to the housing market? I've referred to trade in a thread about trade. Bit obvious really

 

I haven't read all of your threads.

I never said free-trade was capitalism specific, I did say that this country is exclusively a free-trade capitalistic country.

Doesn't free-trade allow for competition?

Shouldn't we also look at the absolute advantage? If men in China can produce a product for a tenth of the price and a company outsources the job, does that company not make more money, in turn boosting the standard of living and lowering costs to the consumer?

If this free-market Capitalistic system that has been in place in this country for decades is flawed, than why are we just now hitting record debt numbers under a socialist president? Why is Greece bankrupt? Is it simply because they are not America?

What system would you prefer here?

 

You merely gave an invalid remark. The US isn't free trade; it is neo-liberal. The Washington Consensus, for example, actively harmed economic development and stopped dynamic comparative advantage from being derived.

Depends if there is a distinction between free trade and fair trade. With first mover advantages free trade can ensure the elimination of competition.

Why would we bother? Absolute advantage, at least in terms of textbook theory, is merely used to demonstrate the folly of mercantilism and the bogus belief that trade is a zero-sum game.

Are you being serious? Sounds like you're clueless over what socialism means.

 

I'm not going to have someone insult my intelligence, all the while passing opinions on as fact. Everything you've said is paralleled by a protectionist and a sympathizer to a totalitarian regime. Your use of "neo-liberalism," leads me to believe you don't know what it means. It's related to globalization, which would be good for a free-trade country such as ours. Outsourcing and insourcing would lead to globalization and I feel would improve the economy alone. You're contradicting yourself with every new post.

Do you even know what you believe?

You demonize mercantilism while you demonize free-trade. One is regulation, one if free, so where does that leave you?

 

Given I support free trade that is a ridiculous reply! I merely acknowledge the dynamic nature of comparative advantage. You, in contrast, have gone for cliché and simply ignored trade theory and evidence.

Neo-liberalism is the use of 'free market economics' to coerce the hegemony of the financial class. The market suffers, but with instabilities actually providing opportunities for profiteering. It delivered economic instability and harmed economic development. Crikey, even the World Bank has acknowledged that trade liberalisation in Africa (typically coerced by the Washington Consensus) actually led to a reduction in well-being.

Again, the difference between you and me is that I know what I'm talking about. The error you make can only strengthen the hand of the economic nationalist.

No, I admit that trade is not a zero sum game but that comparative advantage is a dynamic concept. Whilst that means there is no defence for protectionism for countries such as the US, there certainly is a defence for protectionism in countries that require economic development. The amusing aspect of course is that you ramble incoherently about 'free market capitalistic US' even though US history is characterised by protectionism to enable development (and the intellectual analysis into the infant industry hypothesis originates from early American thought and policy)

 

I guess your opinions are fact? I'm a History major and study political science as well. I guess all I can say is read some history books. You keep spewing out opinions and presenting them as facts when they are in fact incorrect.

 

Opinion? Its economics. Go ahead and deny that comparative advantage is a dynamic concept. Go ahead and deny that every major western nation has an 'early' history (i.e. pre-development) of protectionism. Go ahead and deny that the World Bank has indeed shown that trade liberalisation has increased absolute poverty.

The problem is simple: I'm using economics and you are not. You are merely attempting to mate economic cliché with your ideological blinkering. I have no respect for that

 

You keep saying that, to everyone. I have yet to see any of your great economic insights, just strings of buzz words.

 

Also, just because neo-Liberal relates to free-market and you like the way it sounds...it's not descriptive of the United States. I'm not sure where you went to school but I'm guessing you were either educated in another country, or are from another country altogether. Either way, I feel sorry for pessimists like you. It doesn't matter what system we used, you'd argue it to the grave. To say you're for free-market is nonsense. You're clearly a liberal and you're just throwing in that you're for a free-market system to make yourself look more legit.

All of the sophisticated processes you describe are irrelevant. You should go back to square one and recognize what we have first. Neo-Liberalism? Lmao. What a joke.

 

This isn't just vague. It is also incompatible with political economy. First, we know that 'free trade' is not specific to any economic paradigm. As already mentioned, it can be used as part of feasible socialism such that socialistic calculation problems are avoided. Second, we know that the period of neo-liberalism has destroyed economic activity. It has disrupted economic development and therefore has fed market failure. Understanding that process is straight-forward as we've seen with the distinction between static comparative advantage and dynamic comparative advantage. It is not about 'free markets' (with laissez faire capitalism a myth used for kiss chase purposes with the gullible right wing), it is about how 'free market economics' can be used to coerce an irrational result that only benefits the financial class (to the detriment of exchange)

 

Oh please. Neoliberalism is the foundation of all modern practical economics. Market socialists like yourself are such a tiny minority that they are completely disregarded as nothing but a fringe.

I only wish there was a properly trained neo-liberal economist on here. He would crush your theories in a minute. You come here rather than dedicated economics forums because you like lording your economic expertise over laymen. You are a big fish in a tiny pond. A true neo-liberal economist would tear you apart in a minutes.