I just want to know why we haven't reaped noticeable benefits from all these lower tariffs? At best our manufacturing sector has been decimated and it appears to coincide with freeing up trade with Mexico and Asia.
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Do you support the removal of all trade barriers with other nations?
- Thread starter Cutlerzzz
- Start date
I just want to know why we haven't reaped noticeable benefits from all these lower tariffs? At best our manufacturing sector has been decimated and it appears to coincide with freeing up trade with Mexico and Asia.
LibertyEagle
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Thing is, you need to remember that those of us who post here, are just a fraction of who are actually reading what is written. A large number of Americans do not realize that NAFTA, CAFTA, etc. are not real free trade. So, when discussing this subject, it would help if you made that clear.
Also, approaching the subject with some humility, rather than collectivistically denigrating an entire group of people, tends to entice more people to listen to what you have to say. Especially since the "paleocons" are the Republicans whose votes we MUST get for Ron Paul to win the Republican nomination. Ron Paul is their logical choice. Surely, denigrating them is not the way to win them over.
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ProIndividual
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Rifleman, please read what I posted for you protectionist guys in another thread:
Part 1:
Statist Economic Fallacies: Breaking Through the Nonsense (so far a 3 part blog, 21 fallacies)
http://www.campaignforliberty.com/blog.php?view=41436
4. Tariffs that limit imports, and policies that encourage exports, are good ideas
The fallacy that government is a better judge of the most profitable modes of directing labor and capital than individuals is well illustrated by exporting policies. In the twentieth century, the federal government has sought to promote exports in various ways. The first was by forcing open foreign markets through a combination of diplomatic and military pressure, all the while keeping our own markets wholly or partially closed. The famous "open door" policy, formulated by Secretary of State John Hay in 1899 was never meant to be reciprocal (after all, he served in the McKinley administration, the most archly protectionist in American history), and it often required a gun boat and a contingent of hard charging marines to kick open the door.
A second method was export subsidies, which are still with us. The Export-Import Bank was established by Roosevelt in 1934 to provide cash grants, government-guaranteed loans, and cheap credit to exporters and their overseas customers. It remains today-untouched by "alleged" free market Republican administrations and congresses.
A third method was dollar devaluation, to cheapen the selling price of American goods abroad. In 1933, Roosevelt took the country off the gold standard and revalued it at $34.06, which represented a significant devaluation. The object was to allow for more domestic inflation and to boost exports, particularly agricultural ones, which failed; now Bush is trying it.
I'd just like to point out, FDR's agriculture policies caused the "soup lines" or "bread lines" we always hear so much about. He had 10 million acres of crops destroyed and 6 million farm animals killed in order to boost domestic food prices for producers. This raised the price of food. His subsidies to export made exporting the food more profitable than selling it domestically. The combination of the two led to food shortages. So, next time some liberal claims that stimulus and bailouts prevented "soup and bread lines", remind them those were the fault of FDR and bad economics. It doesn't even matter that stimulus and bailouts don't work (or work well), it's enough the Obama administration isn't as dull on economics as their Roosevelt predecessors. We simply don't have these "soup and bread lines" because no one is repeating FDR's mistakes, which caused them to begin with.
A fourth method, tried by the Reagan administration, was driving down farm prices to boost exports, thereby shrinking the trade deficit. The plan was that America would undersell its competitors, capture markets, and rake in foreign exchange. (When others do this it is denounced as unfair, as predatory trade.) What happened? Well, it turned out that the agricultural export market was rather elastic. Countries like Brazil and Argentina, depending on farm exports as one of their few sources of foreign exchange, which they desperately needed to service their debt loads, simply cut their prices to match the Americans. Plan fails.
But it got worse: American farmers had to sell larger quantities (at the lower prices) just to break even. Nevertheless, although the total volume of American agricultural exports increased, their real value (in constant dollars) fell - more work, lower profits. Furthermore, farmers had to import more oil and other producer goods to expand their production, which worsened the trade deficit. Then, there were the unforeseen and deleterious side-effects. Expanded cultivation and livestock-raising stressed out and degraded the quality of the soils, polluted watersheds, and lowered the nutritional value of the expanded crop of vegetables, grains, and animal proteins.
The author says "worsened" trade deficits, in italics, for a reason. Trade deficits are not negative, and the fact people think trade deficits are negative is itself a fallacy. We will cover this fallacy here, after we have finished with this part.
Finally, the policy of lower price/higher volume drove many small farmers, here and abroad, off the land, into the cities, and across the border, our border. Here is an economic policy that not only failed in its purpose but worsened the very problem it was intended to alleviate, and caused a nutritional, ecological, and demographic catastrophe.
I wished the author would have also italicized "problem", as to further drive home the point that trade deficits are not negative. So, let's address this fallacy now.
•The instinctive reaction of politicians is that if one country places a tariff barrier on our exports, we should respond by doing the same. However economic theory suggests that placing a tariff barrier on imports leads to a loss of economic welfare. It is better to not retaliate.
Time and time again, trade restrictions like tariffs have hurt our country's economy, not helped it.
The Embargo Act of 1807 and the subsequent Nonintercourse Acts were American laws restricting American ships from engaging in foreign trade between the years of 1807 and 1812. They led to the War of 1812 between the U.S. and Britain.
Despite its unpopular nature, the Embargo Act did have some limited, unintended benefits, especially as entrepreneurs and workers responded by bringing in fresh capital and labor into New England textile and other manufacturing industries, lessening America's reliance on the British merchants.[8] (Since the damage that was caused was so widespread and severe, you can liken this to 'stepping over dollars, to pick up pennies')
The Embargo was in fact hurting the United States as much as Britain or France. Britain, expected to suffer most from the American regulations, found consolation in the development of a South American market, and the British shipowners were pleased that American competition had been removed by the action of the U.S. government.
The attempt of Jefferson and Madison to resist aggression by peaceful means gained a belated success in June 1812 when Britain finally promised to repeal her Orders in Council. The British concession was too late, for by the time the news reached America the United States had already declared the War of 1812 against Britain.
The entire series of events was ridiculed in the press as Dambargo, Mob-Rage, Go-bar-'em or O-grab-me ('Embargo' spelled backward); there was a cartoon ridiculing the Act as a snapping turtle, named "O' grab me", grabbing at American shipping.
Smoot-Hawley Tariff Act
The Tariff Act of 1930, otherwise known as the Smoot-Hawley Tariff or Hawley-Smoot Tariff (P.L. 71-361)[1] was an act, sponsored by United States Senator Reed Smoot and Representative Willis C. Hawley, and signed into law on June 17, 1930, that raised U.S. tariffs on over 20,000 imported goods to record levels.[2]
The overall level tariffs under the Tariff were the second-highest in US history, exceeded (by a small margin) only by the Tariff of 1828[3] and the ensuing retaliatory tariffs by U.S. trading partners reduced American exports and imports by more than half.
Some economists have opined that the tariffs contributed to the severity of the Great Depression.[4][5][6]
U.S. imports decreased 66% from US$4.4 billion (1929) to US$1.5 billion (1933), and exports decreased 61% from US$5.4 billion to US$2.1 billion, both decreases much more than the 50% decrease of the GDP. ( I want everyone to notice, we are in an era of a horrible economy with high unemployment and trade surpluses. In 1929, the trade surplus was $1 billion, this did not however translate to long term growth or more employment. In 1933, we ran a smaller trade surplus and had worsening effects, along with LESS TRADE OVERALL. Trade surpluses (foreign exchange deficits) are often regarded as good, but they have almost never translated into higher growth rates or low unemployment rates. The higher growth rates and lower unemployment rates are found in periods of high trade deficits (foreign exchange surpluses). The very way governments come up with trade numbers, and whether a nation has deficits or not, has been criticized as nearly erroneous, by free market economists from Frederic Bastiat to Don Boudreaux. Bastiat demonstrated that a government can record a deficit, even though a net profit was made by their citizen who was involved in the trade. This is counter intutitive, but deductively logical. The government numbers record the price at sale, not the resale value and profit made. When this profit is taken into account, then the only debt in the 'trade deficit' that is not covered by the foreign exchange surplus is government debt acrued by borrowing from foreigners. When people say "we need to do something about the trade deficit", I say "yes we do, we need to stop letting the government run in deficit and debt by borrowing money from foreigners". The common misconception is that unbalanced, or even unreciprocated, trade is bad for the economy. In fact, private sector trade is not debt, and is not bad for the economy at all. It's the debt the government runs up in the trade deficit that materializes as debt, and gives trade deficits a bad name. Private sector trade, good...Public Sector borrowing, bad. As you can see from the severely diminished trade numbers above, protectionism shrinks the economic pie, while free trade (or at least free-er trade) expands the total economic pie, benefiting everyone.)
According to government statistics, U.S. imports from Europe decreased from a 1929 high of $1,334 million to just $390 million during 1932, while U.S. exports to Europe decreased from $2,341 million in 1929 to $784 million in 1932. Overall, world trade decreased by some 66% between 1929 and 1934.[15]
Although the tariff act was passed after the stock-market crash of 1929, some economic historians consider the political discussion leading up to the passing of the act a factor in causing the crash, the recession that began in late 1929, or both, and its eventual passage a factor in deepening the Great Depression.[16] Unemployment was at 7.8% in 1930 when the Smoot-Hawley tariff was passed, but it jumped to 16.3% in 1931, 24.9% in 1932, and 25.1% in 1933.[17]
Imports during 1929 were only 4.2% of the United States' GNP and exports were only 5.0%. Monetarists such as Milton Friedman who emphasize the central role of the money supply in causing the depression, downplay the Smoot-Hawley's effect on the entire U.S. economy.[18]
I think it's fair to say the money supply was responsible for the deflation (too little money in circulation), and the tariffs were responsible for reduction in trade and GDP, overall.
I think it's pretty clear, interfering in the economy to spur exports or reduce imports only hurt the economy. Which, by chance, brings us to our next fallacy...
5. The fallacy of trade deficits
The 19th century economist and philosopher Frédéric Bastiat expressed the idea that trade deficits actually were a manifestation of profit, rather than a loss. He proposed as an example to suppose that he, a Frenchman, exported French wine and imported British coal, turning a profit. He supposed he was in France, and sent a cask of wine which was worth 50 francs to England. The customhouse would record an export of 50 francs. If, in England, the wine sold for 70 francs (or the pound equivalent), which he then used to buy coal, which he imported into France, and was found to be worth 90 francs in France, he would have made a profit of 40 francs. But the customhouse would say that the value of imports exceeded that of exports and was trade deficit against the ledger of France.[30]
In the above example, there is a single trader who is traveling and trading across national borders. The Frenchman owns a cask of wine worth 50 francs, and travels with it to England. France records an export of 50 francs, England an import of 50 francs.. In England, he sells his wine for 70 francs (or the pound equivalent) and buys 70 francs worth of English coal. He then leaves England for France with the 70 francs of coal, so that Enland records this as an export and France as an import. So, England has exported 20 francs more than it has imported, for a trade surplus of 20 francs. Meanwhile France imported 20 francs more than it exported, for a trade deficit of 20 francs. This is the last time the trade is recorded by either government, the entire reason why trade numbers are irrelevant in most cases to trade effects. Therefore, it's important to notice that the nation with the trade surplus (England) actually "lost money" on the trades, while the nation with the trade deficit (France) actually made all the profits. But the trade did not conclude with the importation of 70 francs of English coal by the Frenchman...he then sells it in his native France for 90 francs, without any government recording it as an import/export. This means the trader profited 40 francs overall (he turned 50 francs of wine into 90 francs), and yet his government calls it a 20 franc loss. The idea he lost money for himself, or for his nations GDP, is erroneous.
The idea trade surplus or deficit is directly tied to whether the trade is "balanced" or not, is fallacious. The trade deficit is exactly balanced by the foreign exchange surplus in the private sector. The trade surplus is exactly balanced by the foreign exchange deficit. Every product traded for currency is an investment in currency. Every trade of currency for a commodity is an investment in that commodity. There basically is no such thing as "balanced trade", because every trade is balanced by virtue of the fact they are voluntary, and because of the inverse relationship of trade and foreign exchange. Trade and foreign exchange are negatively correlated.
By reductio ad absurdum, Bastiat argued that the national trade deficit was an indicator of a successful economy, rather than a failing one. Bastiat predicted that a successful, growing economy would result in greater trade deficits, and an unsuccessful, shrinking economy would result in lower trade deficits. This was later, in the 20th century, affirmed by economist Milton Friedman.
Contrary to popular misconception, trade deficits are correlated with higher growth rates, lower unemployment, and wealthier periods. The opposite is true for trade surpluses. We should embrace trade deficits, if in fact we put any creedance in them at all.
6. Immigration causes unemployment or lower wages for natives
Immigrants increase the supply of labour but they also increase Aggregate Demand in the Economy. This means that they buy more goods and create additional demand in the economy. They provide labour supply and increase labour demand.
If immigration caused unemployment why did America not have high unemployment during times of mass immigration? Because the immigrants created as many jobs as they took.
Often immigrants take jobs that native workers just don't want to do. - You won't see big multinationals cueing up to stop immigration.
Furthermore immigrants tend to be of working age. Therefore they tend to contribute more tax than receive in benefits. Without immigration US demographics would have a larger % of dependent old people.
Fears that immigrants threaten American workers are mostly misplaced. Just as working women haven't deprived men of jobs, immigrants create jobs as well as filling them--both when they spend their wages and in complementary lines of work. Mexican construction workers, for instance, create jobs for Americans selling building materials, as well as spending their wages at Wal-Mart ( WMT - news - people ).
Nor do immigrants depress wages, since they rarely compete directly with native-born Americans for jobs. On the contrary, their efforts often complement one another. A foreign nanny may enable an American doctor to return to work more quickly after childbirth, where hardworking foreign nurses and cleaners enhance her productivity. Research by Gianmarco Ottaviano of Bologna University and UC, Davis' Giovanni Peri found that the influx of foreign workers between 1990 and 2004 raised native-born Americans' wages by 2%. Only one in ten--high school dropouts--lost slightly, by 1%. All Americans benefited from higher capital returns, cheaper goods and services and faster productivity growth.
Immigrant diversity and dynamism stimulates new ideas and businesses. Migrants are a self-selected minority who tend to be young, hardworking and enterprising. Like starting a new business, migrating is risky, and hard work is needed to make it pay off. Immigrants are 30% more likely than native-born Americans to start their own business.
That number would surely be higher if we legitimized their status. People who lack formal property and business rights can't get a bank loan to start a business or ink legally enforceable contracts. Legalizing them would unleash their entrepreneurial energies and swell tax revenues.
Exceptional individuals who generate brilliant new ideas are often migrants. Instead of following conventional wisdom, they tend to see things differently, and as outsiders they are more determined to succeed. Nearly a quarter of America's Nobel laureates were born abroad. Nearly half of Silicon Valley's venture capital-funded startups were cofounded by immigrants. No one could have guessed when he arrived at age 6 as a refugee from the Soviet Union that Sergey Brin would go on to cofound Google ( GOOG - news - people ). How many potential Brins does America turn away--and at what cost?
Immigration limits not only make us less safe by encouraging people to not get background and medical checks, but are impossible to expect immigrants to follow:
As you can see, no 30 year old Mexican with a H.S. diploma, and a U.S. citizen sister already in the U.S. , is going to wait an estimated average wait time of 131 years. It's untrue to say "they need to just wait in line like everyone else", as most of these quotas and restrictions on immigration were not in effect when our ancestors came, and if they were, many would of came anyway (as in the people fleeing fascism or famine). We create criminals with the law, not the other way around. We are trying to fight free market forces in the exchange of labor and goods (the cardinal rule in free market economics), and expecting that it will remain enforcable. I won't even go into the ethical and moral implications. Natural law is a great argument here, but that's for another time.
The fact is, there has never been a negative correlation between native poverty and unemployment rates and immigration levels. At times, there has been a positive correlation. This means immigrants can be a net benefit to a society, both in terms of employment levels and wage rates for natives, but they cannot be a drag on either. Like all other free exchange, this creates more activity in the economy, not less.
7. You can't have open borders in a welfare state
Many worry that if America opened its borders now, millions would come, the welfare burden would be unsustainable and society would collapse. Yet such fears are misplaced. Most people don't want to leave home at all, let alone forever. Since 2004 three rich European countries--Britain, Ireland, and Sweden--have allowed people in eight poor eastern European countries (notably Poland) to come work there freely. All 75 million of those eastern Europeans could have moved, yet only 1 million did--and half have already gone home.
The belief that free migration is incompatible with a welfare state--asserted by Milton Friedman and recently echoed by Paul Krugman--is also incorrect. When in 2004 Poles were given the option of moving to Sweden--which has the most generous welfare state on earth--or to Britain and Ireland, which denied Poles access to any benefits until they had worked for a year, less than 1% opted for Sweden. America, too, could deny immigrants access to welfare initially.
Opening up to eastern Europeans gave Britain a big boost. Growth soared. Unemployment fell. Wages continued to rise. Newcomers paid much more in taxes than they took out in benefits and public services. After the global financial crisis plunged the economy into recession, many Poles went home rather than remain unemployed in Britain. Considering that Sweden is as rich as the U.S. and that Romania is poorer than Mexico, if open borders can work within the European Union, they can work in North America.
Allowing people to move freely is not just a matter of economic self-interest. It is also a moral imperative: Freedom of movement is a basic human right that should not be denied to people less fortunate than ourselves.
In February 2011, Reason Foundation senior policy analyst Shikha Dalmia spoke at the International Students For Liberty Conference about immigration.
Calling for open borders, Dalmia argues that immigrants create more wealth than they consume and that an increasingly globalized economy inevitably means that people, like goods and services, will be crossing borders in growing numbers. While nativists and protectionists may view such developments with alarm, allowing people to move more freely is a great advance both for human rights and economic progress.
In this video, she also addresses several mini-fallacies being spread by "libertarians" who call for closed borders (among other statist policies), like Hans Hermann Hoppe.
http://www.reason.tv/video/show/shik...ves-lecture-on
11. Hamilton was an economic genius and was just great
Another myth is that the financial genius and economic statesmanship of Alexander Hamilton saved the credit of the infant United States and established the sound financial and economic foundation essential for future growth and prosperity. Ron Chernow's hagiographic biography of Hamilton is now moving up the best seller charts, cluttering the display tables of Borders and Barnes & Noble, and taking up time on C-Span's Booknotes; but its greatest contribution will be to perpetuate the Hamilton myth for another generation.
Sumner's concise and devastating biography of that vainglorious popinjay, written over a hundred years ago, remains the best. He closely studied Hamilton's letters and writings, including the big three - his Report on the Public Credit (1790), Report on a National Bank (1790), and Report on Manufactures (1791) - and came to three conclusions: first, the New Yorker had never read Smith's Wealth of Nations (1776), the most important economic treatise written in the Anglo-American world in that period; second, he was a mercantilist, who would have been quite at home serving in the ministry of Sir Robert Walpole or Lord North; and third, Hamilton believed many things that are not true - that federal bonds were a form of capital; that a national debt was a national blessing; that the existence of banks increased the capital of the country; that foreign trade drained a country of its wealth, unless it resulted in a trade surplus; and that higher taxes were a spur to industry and necessary because Americans were lazy and enjoyed too much leisure.
The idea here was that if you taxed Americans more, they would have to work harder to maintain their standard of living, thus increasing the gross product of the country and providing the government with more revenue to spend on grand projects and military adventures. Hamilton was once stoned by a crowd of angry New York mechanics. Is it any wonder why?
Part 1:
Statist Economic Fallacies: Breaking Through the Nonsense (so far a 3 part blog, 21 fallacies)
http://www.campaignforliberty.com/blog.php?view=41436
4. Tariffs that limit imports, and policies that encourage exports, are good ideas
The fallacy that government is a better judge of the most profitable modes of directing labor and capital than individuals is well illustrated by exporting policies. In the twentieth century, the federal government has sought to promote exports in various ways. The first was by forcing open foreign markets through a combination of diplomatic and military pressure, all the while keeping our own markets wholly or partially closed. The famous "open door" policy, formulated by Secretary of State John Hay in 1899 was never meant to be reciprocal (after all, he served in the McKinley administration, the most archly protectionist in American history), and it often required a gun boat and a contingent of hard charging marines to kick open the door.
A second method was export subsidies, which are still with us. The Export-Import Bank was established by Roosevelt in 1934 to provide cash grants, government-guaranteed loans, and cheap credit to exporters and their overseas customers. It remains today-untouched by "alleged" free market Republican administrations and congresses.
A third method was dollar devaluation, to cheapen the selling price of American goods abroad. In 1933, Roosevelt took the country off the gold standard and revalued it at $34.06, which represented a significant devaluation. The object was to allow for more domestic inflation and to boost exports, particularly agricultural ones, which failed; now Bush is trying it.
I'd just like to point out, FDR's agriculture policies caused the "soup lines" or "bread lines" we always hear so much about. He had 10 million acres of crops destroyed and 6 million farm animals killed in order to boost domestic food prices for producers. This raised the price of food. His subsidies to export made exporting the food more profitable than selling it domestically. The combination of the two led to food shortages. So, next time some liberal claims that stimulus and bailouts prevented "soup and bread lines", remind them those were the fault of FDR and bad economics. It doesn't even matter that stimulus and bailouts don't work (or work well), it's enough the Obama administration isn't as dull on economics as their Roosevelt predecessors. We simply don't have these "soup and bread lines" because no one is repeating FDR's mistakes, which caused them to begin with.
A fourth method, tried by the Reagan administration, was driving down farm prices to boost exports, thereby shrinking the trade deficit. The plan was that America would undersell its competitors, capture markets, and rake in foreign exchange. (When others do this it is denounced as unfair, as predatory trade.) What happened? Well, it turned out that the agricultural export market was rather elastic. Countries like Brazil and Argentina, depending on farm exports as one of their few sources of foreign exchange, which they desperately needed to service their debt loads, simply cut their prices to match the Americans. Plan fails.
But it got worse: American farmers had to sell larger quantities (at the lower prices) just to break even. Nevertheless, although the total volume of American agricultural exports increased, their real value (in constant dollars) fell - more work, lower profits. Furthermore, farmers had to import more oil and other producer goods to expand their production, which worsened the trade deficit. Then, there were the unforeseen and deleterious side-effects. Expanded cultivation and livestock-raising stressed out and degraded the quality of the soils, polluted watersheds, and lowered the nutritional value of the expanded crop of vegetables, grains, and animal proteins.
The author says "worsened" trade deficits, in italics, for a reason. Trade deficits are not negative, and the fact people think trade deficits are negative is itself a fallacy. We will cover this fallacy here, after we have finished with this part.
Finally, the policy of lower price/higher volume drove many small farmers, here and abroad, off the land, into the cities, and across the border, our border. Here is an economic policy that not only failed in its purpose but worsened the very problem it was intended to alleviate, and caused a nutritional, ecological, and demographic catastrophe.
I wished the author would have also italicized "problem", as to further drive home the point that trade deficits are not negative. So, let's address this fallacy now.
•The instinctive reaction of politicians is that if one country places a tariff barrier on our exports, we should respond by doing the same. However economic theory suggests that placing a tariff barrier on imports leads to a loss of economic welfare. It is better to not retaliate.
Time and time again, trade restrictions like tariffs have hurt our country's economy, not helped it.
The Embargo Act of 1807 and the subsequent Nonintercourse Acts were American laws restricting American ships from engaging in foreign trade between the years of 1807 and 1812. They led to the War of 1812 between the U.S. and Britain.
Despite its unpopular nature, the Embargo Act did have some limited, unintended benefits, especially as entrepreneurs and workers responded by bringing in fresh capital and labor into New England textile and other manufacturing industries, lessening America's reliance on the British merchants.[8] (Since the damage that was caused was so widespread and severe, you can liken this to 'stepping over dollars, to pick up pennies')
The Embargo was in fact hurting the United States as much as Britain or France. Britain, expected to suffer most from the American regulations, found consolation in the development of a South American market, and the British shipowners were pleased that American competition had been removed by the action of the U.S. government.
The attempt of Jefferson and Madison to resist aggression by peaceful means gained a belated success in June 1812 when Britain finally promised to repeal her Orders in Council. The British concession was too late, for by the time the news reached America the United States had already declared the War of 1812 against Britain.
The entire series of events was ridiculed in the press as Dambargo, Mob-Rage, Go-bar-'em or O-grab-me ('Embargo' spelled backward); there was a cartoon ridiculing the Act as a snapping turtle, named "O' grab me", grabbing at American shipping.
Smoot-Hawley Tariff Act
The Tariff Act of 1930, otherwise known as the Smoot-Hawley Tariff or Hawley-Smoot Tariff (P.L. 71-361)[1] was an act, sponsored by United States Senator Reed Smoot and Representative Willis C. Hawley, and signed into law on June 17, 1930, that raised U.S. tariffs on over 20,000 imported goods to record levels.[2]
The overall level tariffs under the Tariff were the second-highest in US history, exceeded (by a small margin) only by the Tariff of 1828[3] and the ensuing retaliatory tariffs by U.S. trading partners reduced American exports and imports by more than half.
Some economists have opined that the tariffs contributed to the severity of the Great Depression.[4][5][6]
U.S. imports decreased 66% from US$4.4 billion (1929) to US$1.5 billion (1933), and exports decreased 61% from US$5.4 billion to US$2.1 billion, both decreases much more than the 50% decrease of the GDP. ( I want everyone to notice, we are in an era of a horrible economy with high unemployment and trade surpluses. In 1929, the trade surplus was $1 billion, this did not however translate to long term growth or more employment. In 1933, we ran a smaller trade surplus and had worsening effects, along with LESS TRADE OVERALL. Trade surpluses (foreign exchange deficits) are often regarded as good, but they have almost never translated into higher growth rates or low unemployment rates. The higher growth rates and lower unemployment rates are found in periods of high trade deficits (foreign exchange surpluses). The very way governments come up with trade numbers, and whether a nation has deficits or not, has been criticized as nearly erroneous, by free market economists from Frederic Bastiat to Don Boudreaux. Bastiat demonstrated that a government can record a deficit, even though a net profit was made by their citizen who was involved in the trade. This is counter intutitive, but deductively logical. The government numbers record the price at sale, not the resale value and profit made. When this profit is taken into account, then the only debt in the 'trade deficit' that is not covered by the foreign exchange surplus is government debt acrued by borrowing from foreigners. When people say "we need to do something about the trade deficit", I say "yes we do, we need to stop letting the government run in deficit and debt by borrowing money from foreigners". The common misconception is that unbalanced, or even unreciprocated, trade is bad for the economy. In fact, private sector trade is not debt, and is not bad for the economy at all. It's the debt the government runs up in the trade deficit that materializes as debt, and gives trade deficits a bad name. Private sector trade, good...Public Sector borrowing, bad. As you can see from the severely diminished trade numbers above, protectionism shrinks the economic pie, while free trade (or at least free-er trade) expands the total economic pie, benefiting everyone.)
According to government statistics, U.S. imports from Europe decreased from a 1929 high of $1,334 million to just $390 million during 1932, while U.S. exports to Europe decreased from $2,341 million in 1929 to $784 million in 1932. Overall, world trade decreased by some 66% between 1929 and 1934.[15]
Although the tariff act was passed after the stock-market crash of 1929, some economic historians consider the political discussion leading up to the passing of the act a factor in causing the crash, the recession that began in late 1929, or both, and its eventual passage a factor in deepening the Great Depression.[16] Unemployment was at 7.8% in 1930 when the Smoot-Hawley tariff was passed, but it jumped to 16.3% in 1931, 24.9% in 1932, and 25.1% in 1933.[17]
Imports during 1929 were only 4.2% of the United States' GNP and exports were only 5.0%. Monetarists such as Milton Friedman who emphasize the central role of the money supply in causing the depression, downplay the Smoot-Hawley's effect on the entire U.S. economy.[18]
I think it's fair to say the money supply was responsible for the deflation (too little money in circulation), and the tariffs were responsible for reduction in trade and GDP, overall.
I think it's pretty clear, interfering in the economy to spur exports or reduce imports only hurt the economy. Which, by chance, brings us to our next fallacy...
5. The fallacy of trade deficits
The 19th century economist and philosopher Frédéric Bastiat expressed the idea that trade deficits actually were a manifestation of profit, rather than a loss. He proposed as an example to suppose that he, a Frenchman, exported French wine and imported British coal, turning a profit. He supposed he was in France, and sent a cask of wine which was worth 50 francs to England. The customhouse would record an export of 50 francs. If, in England, the wine sold for 70 francs (or the pound equivalent), which he then used to buy coal, which he imported into France, and was found to be worth 90 francs in France, he would have made a profit of 40 francs. But the customhouse would say that the value of imports exceeded that of exports and was trade deficit against the ledger of France.[30]
In the above example, there is a single trader who is traveling and trading across national borders. The Frenchman owns a cask of wine worth 50 francs, and travels with it to England. France records an export of 50 francs, England an import of 50 francs.. In England, he sells his wine for 70 francs (or the pound equivalent) and buys 70 francs worth of English coal. He then leaves England for France with the 70 francs of coal, so that Enland records this as an export and France as an import. So, England has exported 20 francs more than it has imported, for a trade surplus of 20 francs. Meanwhile France imported 20 francs more than it exported, for a trade deficit of 20 francs. This is the last time the trade is recorded by either government, the entire reason why trade numbers are irrelevant in most cases to trade effects. Therefore, it's important to notice that the nation with the trade surplus (England) actually "lost money" on the trades, while the nation with the trade deficit (France) actually made all the profits. But the trade did not conclude with the importation of 70 francs of English coal by the Frenchman...he then sells it in his native France for 90 francs, without any government recording it as an import/export. This means the trader profited 40 francs overall (he turned 50 francs of wine into 90 francs), and yet his government calls it a 20 franc loss. The idea he lost money for himself, or for his nations GDP, is erroneous.
The idea trade surplus or deficit is directly tied to whether the trade is "balanced" or not, is fallacious. The trade deficit is exactly balanced by the foreign exchange surplus in the private sector. The trade surplus is exactly balanced by the foreign exchange deficit. Every product traded for currency is an investment in currency. Every trade of currency for a commodity is an investment in that commodity. There basically is no such thing as "balanced trade", because every trade is balanced by virtue of the fact they are voluntary, and because of the inverse relationship of trade and foreign exchange. Trade and foreign exchange are negatively correlated.
By reductio ad absurdum, Bastiat argued that the national trade deficit was an indicator of a successful economy, rather than a failing one. Bastiat predicted that a successful, growing economy would result in greater trade deficits, and an unsuccessful, shrinking economy would result in lower trade deficits. This was later, in the 20th century, affirmed by economist Milton Friedman.
Contrary to popular misconception, trade deficits are correlated with higher growth rates, lower unemployment, and wealthier periods. The opposite is true for trade surpluses. We should embrace trade deficits, if in fact we put any creedance in them at all.
6. Immigration causes unemployment or lower wages for natives
Immigrants increase the supply of labour but they also increase Aggregate Demand in the Economy. This means that they buy more goods and create additional demand in the economy. They provide labour supply and increase labour demand.
If immigration caused unemployment why did America not have high unemployment during times of mass immigration? Because the immigrants created as many jobs as they took.
Often immigrants take jobs that native workers just don't want to do. - You won't see big multinationals cueing up to stop immigration.
Furthermore immigrants tend to be of working age. Therefore they tend to contribute more tax than receive in benefits. Without immigration US demographics would have a larger % of dependent old people.
Fears that immigrants threaten American workers are mostly misplaced. Just as working women haven't deprived men of jobs, immigrants create jobs as well as filling them--both when they spend their wages and in complementary lines of work. Mexican construction workers, for instance, create jobs for Americans selling building materials, as well as spending their wages at Wal-Mart ( WMT - news - people ).
Nor do immigrants depress wages, since they rarely compete directly with native-born Americans for jobs. On the contrary, their efforts often complement one another. A foreign nanny may enable an American doctor to return to work more quickly after childbirth, where hardworking foreign nurses and cleaners enhance her productivity. Research by Gianmarco Ottaviano of Bologna University and UC, Davis' Giovanni Peri found that the influx of foreign workers between 1990 and 2004 raised native-born Americans' wages by 2%. Only one in ten--high school dropouts--lost slightly, by 1%. All Americans benefited from higher capital returns, cheaper goods and services and faster productivity growth.
Immigrant diversity and dynamism stimulates new ideas and businesses. Migrants are a self-selected minority who tend to be young, hardworking and enterprising. Like starting a new business, migrating is risky, and hard work is needed to make it pay off. Immigrants are 30% more likely than native-born Americans to start their own business.
That number would surely be higher if we legitimized their status. People who lack formal property and business rights can't get a bank loan to start a business or ink legally enforceable contracts. Legalizing them would unleash their entrepreneurial energies and swell tax revenues.
Exceptional individuals who generate brilliant new ideas are often migrants. Instead of following conventional wisdom, they tend to see things differently, and as outsiders they are more determined to succeed. Nearly a quarter of America's Nobel laureates were born abroad. Nearly half of Silicon Valley's venture capital-funded startups were cofounded by immigrants. No one could have guessed when he arrived at age 6 as a refugee from the Soviet Union that Sergey Brin would go on to cofound Google ( GOOG - news - people ). How many potential Brins does America turn away--and at what cost?
Immigration limits not only make us less safe by encouraging people to not get background and medical checks, but are impossible to expect immigrants to follow:
As you can see, no 30 year old Mexican with a H.S. diploma, and a U.S. citizen sister already in the U.S. , is going to wait an estimated average wait time of 131 years. It's untrue to say "they need to just wait in line like everyone else", as most of these quotas and restrictions on immigration were not in effect when our ancestors came, and if they were, many would of came anyway (as in the people fleeing fascism or famine). We create criminals with the law, not the other way around. We are trying to fight free market forces in the exchange of labor and goods (the cardinal rule in free market economics), and expecting that it will remain enforcable. I won't even go into the ethical and moral implications. Natural law is a great argument here, but that's for another time.
The fact is, there has never been a negative correlation between native poverty and unemployment rates and immigration levels. At times, there has been a positive correlation. This means immigrants can be a net benefit to a society, both in terms of employment levels and wage rates for natives, but they cannot be a drag on either. Like all other free exchange, this creates more activity in the economy, not less.
7. You can't have open borders in a welfare state
Many worry that if America opened its borders now, millions would come, the welfare burden would be unsustainable and society would collapse. Yet such fears are misplaced. Most people don't want to leave home at all, let alone forever. Since 2004 three rich European countries--Britain, Ireland, and Sweden--have allowed people in eight poor eastern European countries (notably Poland) to come work there freely. All 75 million of those eastern Europeans could have moved, yet only 1 million did--and half have already gone home.
The belief that free migration is incompatible with a welfare state--asserted by Milton Friedman and recently echoed by Paul Krugman--is also incorrect. When in 2004 Poles were given the option of moving to Sweden--which has the most generous welfare state on earth--or to Britain and Ireland, which denied Poles access to any benefits until they had worked for a year, less than 1% opted for Sweden. America, too, could deny immigrants access to welfare initially.
Opening up to eastern Europeans gave Britain a big boost. Growth soared. Unemployment fell. Wages continued to rise. Newcomers paid much more in taxes than they took out in benefits and public services. After the global financial crisis plunged the economy into recession, many Poles went home rather than remain unemployed in Britain. Considering that Sweden is as rich as the U.S. and that Romania is poorer than Mexico, if open borders can work within the European Union, they can work in North America.
Allowing people to move freely is not just a matter of economic self-interest. It is also a moral imperative: Freedom of movement is a basic human right that should not be denied to people less fortunate than ourselves.
In February 2011, Reason Foundation senior policy analyst Shikha Dalmia spoke at the International Students For Liberty Conference about immigration.
Calling for open borders, Dalmia argues that immigrants create more wealth than they consume and that an increasingly globalized economy inevitably means that people, like goods and services, will be crossing borders in growing numbers. While nativists and protectionists may view such developments with alarm, allowing people to move more freely is a great advance both for human rights and economic progress.
In this video, she also addresses several mini-fallacies being spread by "libertarians" who call for closed borders (among other statist policies), like Hans Hermann Hoppe.
http://www.reason.tv/video/show/shik...ves-lecture-on
11. Hamilton was an economic genius and was just great
Another myth is that the financial genius and economic statesmanship of Alexander Hamilton saved the credit of the infant United States and established the sound financial and economic foundation essential for future growth and prosperity. Ron Chernow's hagiographic biography of Hamilton is now moving up the best seller charts, cluttering the display tables of Borders and Barnes & Noble, and taking up time on C-Span's Booknotes; but its greatest contribution will be to perpetuate the Hamilton myth for another generation.
Sumner's concise and devastating biography of that vainglorious popinjay, written over a hundred years ago, remains the best. He closely studied Hamilton's letters and writings, including the big three - his Report on the Public Credit (1790), Report on a National Bank (1790), and Report on Manufactures (1791) - and came to three conclusions: first, the New Yorker had never read Smith's Wealth of Nations (1776), the most important economic treatise written in the Anglo-American world in that period; second, he was a mercantilist, who would have been quite at home serving in the ministry of Sir Robert Walpole or Lord North; and third, Hamilton believed many things that are not true - that federal bonds were a form of capital; that a national debt was a national blessing; that the existence of banks increased the capital of the country; that foreign trade drained a country of its wealth, unless it resulted in a trade surplus; and that higher taxes were a spur to industry and necessary because Americans were lazy and enjoyed too much leisure.
The idea here was that if you taxed Americans more, they would have to work harder to maintain their standard of living, thus increasing the gross product of the country and providing the government with more revenue to spend on grand projects and military adventures. Hamilton was once stoned by a crowd of angry New York mechanics. Is it any wonder why?
osan
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Poorly structured query.
First, it would have been more precise to have asked:
"Do you support free market trade with every nation on earth?"
Even so stated, no. The reason being that trading with slaver nations such as China leads to grotesque distortions of the market, thereby rendering it not free.
Free markets are inherently problematic because they fundamentally conflict with human nature. I do not know whether there is any way around this problem. That said, the freer the markets, the better the prosperity.
I support balanced trade with all nations, meaning that if China wants to trade with us while maintaining a slave labor market, perhaps they should be trading with someone other than the USA. Halting trade is the only practical solution that I can see which protects our economy from the sorts of freedom-destroying distortions that trade with nations like China has brought to us.
If you sleep with dogs, do not be surprised at the fleas.
Your use of force is going to solve this problem...how exactly?
There are two major reasons why industries move overseas:
1. Government strangles business at home to the point where people rely on foreign production instead.
2. Foreign industries are simply superior and out-compete the ones at home.
Concerning the first point, protectionism as a solution in this instance does nothing but make people poorer, like we've pointed out a million times already. The tariff is basically a tax on people, taking money from them that they could have spent elsewhere. The only workable solution is to reduce regulation on business. Do you see that? You need to cut off the interventionism at its source, not add more of it.
Concerning the second instance, what is the big deal? The superior industry should be making more profit, that's the point of a capitalist system. A tariff would have the same counterproductive results as in the first instance. People have less money to spend and you have basically subsidized the inferior industry. Everyone ends up poorer in the long run except the 'protected' industry. This is corporate welfare plain and simple.
As to your example of lower tariffs correlating to a reliance on Asian and Mexico for manufacturing, you are absolutely right. Our lowering of trade barriers has caused a migration of industries out of the US. There are two potential reasons for this and I have already listed them. Either unionism, minimum wage laws, various regulations and other anti business practices are causing a deficiency in our manufacturing capability or the Asian and Mexican industries are simply winning on the market.
If the first seems to be the case we need to deregulate businesses. If the second is true then tough luck. Tariffs, which are just a clever form of subsidy paid for by the consumers, will not make anyone richer.
Seriously this stuff goes all the way back to Adam Smith. It should be common knowledge by now. Economics does not look kindly on you my friend. Now, no offense intended, but are you going to answer my question about why violent interventions in the market to subsidize American industries somehow produces prosperity? I would like to see a good economic reason.
Edit: Woah, ProIndividual beat me to it big time. His is a little more technical.
I commend you sir.
Last edited:
ProIndividual
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Part 2 :
15. The economic pie is finite, and when one person wins, another must necessarily lose
This usually comes from folks who learn economics from the movie "Wall Street".
The fact is, as I've demonstrated throughout this blog, wages grow due to: a) task maximization due to technological advances, competition with low paid labor, and competition in the global economy, b) which are caused by accumulations of capital in the hands of wealthy producers, c) that lead to said task maximizing strategies causing productivity to rise, and d) creating profits and causing them to rise, and therefore the amount of money that can be negotiated for wages. The fact is, the pie always continues to grow as long as we can task maximize.
The most simple way to do this has been to grow the population. I mean which army can do more, the army of 3, or 3,000? Obviously building that base will go way faster with 3,000 soldiers, whether it's a base for 3 or the 3,000. After population, there is equality under the law. Notice how most third world countries don't let women work or own property of any real equity to males? When you keep half the population forcably unemployed you get half the possible economy for your population...which apparently means cave-living and a steady diet of bad food in insufficient quantities. And no education, I forgot that part. Because that's the next method of task maximization. If I teach you my job, I can do other stuff, and we can adapt more quickly to shocks like a wave of illness causing usual specialists to be absent, or retractions in the economy.
So, without going on and on regarding all the different ways mankind task maximizes, let me just say, all of it is wholly dependent on wealth accumulation in a few hands. Who would pay the soldiers in my example? Some government, corporation, union, or church (or some other institution), take your pick. No matter what, in order to task maximize, wealth must accumulate in sufficient levels to allow longterm investment in things like technology, new labor sources (that can bear drawbacks and risks), and relocation to better fit into the specialization of Division of Labor. As the tasks maximize, the economy grows, and the pie expands.
The predicatble path of this process should be the poor recieving a smaller and smaller fraction of the total pie in play at any given moment, but with overall real wages rising, therefore raising their standard of living far exceeding inflation. Since decimals are infinite (on a number line for the visual reader), then this process can continue infintely (which I do not necessarily believe would happen, especially in a truely free market where remaining mercantilist state supported coercions on power and capital erode and die). But even if this process continued infinitely, the poor would be better off generation to generation in all respects, even as the gap between rich and poor (poverty being something that would be largely a matter of perspective instead of need) continues to grow.
So the economic pie is certainly not finite.
I think between this and the last couple fallacies, you should see several very important facts:
- You can receive a smaller and smaller piece (%) of the total pie, and at the same time recieve a larger and larger piece ($) each time, because the pie continuously grows, and is not finite.
- Unions are not corollary or causal to wage rates, real wages, household income, total compensation, or national income share.
- Productivity is corollary to wage rates, real wages, household income, total compensation, and national income share. Except for national income share, productivity is also causal to those things. In the case of national income share, it's causal (currently) to productivity.
- Wage rates, real wages, household income,and total compensation are negatively correlated to national income share (when income share goes down, compensation rises), by way of productivity (productivity leads to higher wages, etc., but productivity is caused by wealth accumulation leading to technological advances, etc., which is corrolary to national share of income via the wealth gap increasing).
- Unions do not improve the situation of the middle class in terms of any form of compensation listed, unless it is at the expense of some other middle class or lower class worker. This is evident from the graphs, that the top 1% continues to accumulate capital, and the middle class' and lower class' share continues to decline (it shows the bottom 80% on the one graph). So, if the income share continued to rise for the top 1% of earners with or without unions being a major aspect of the workforce (depending on the time frame), then obviously the income share the middle class is seeking to hold onto is rightfully the poor's. The lower class and middle class mostly share the same "slice of pie", as it were. The whole system depends on increasing standards of living, which depends on ever increasing productivity, which relies on ever increasing amounts of capital accumulation...so it's no suprise the rich aren't losing any momentum (and thank God, because if they did, the whole thing begins to erode). Since the top 1% NEED to continue increasing their share, that leaves the other two "classes" to fight over the constantly diminishing share (keeping in mind, their compensation and standard of living are continuously rising, and it's because of this widening wealth gap in the national income shares). So, unions can only raise wages artifically above the market value, causing more unemployment for equal or lesser wage workers, and therefore grabbing income share away from those same people. It's become my opinion, unions should never be allowed to collectively bargain on compensation...workers shouldn't all be paid the same wage either, some are more productive than others, and profit motive is enough to cause individual task maximization by workers on it's own, and eroding that inequity of pay but fairness of competition you end up rewarding the lazy to mediocre, and punishing the hard working. You do not have to be paid by wages, persay, however, you can be paid by any means, like percentage for example. The flexibility is important.
I'm not sure if unions have a causal relationship with safety...and after the research I've done on wages, I wouldn't be suprised either way. If they are not causal to safety in anyway, like standard of living, then I will have no reason to ever support any union again...which is mind blowing for me, as I have been a member of several unions. Admittedly, if I wouldn't have researched this stuff myself, I would never have believed it. That's how strong these economic fallacies are in regards to unions.
16. There is a war on the middle class
There is no war on the middle class. If I haven't given enough evidence of that thus far, then please watch this video:
To hear the Lou Dobbses and Bill O'Reillys of the world--not to mention politicians ranging from Ron Paul to Hillary Clinton--the middle class of America (however you define that term) has never had it so tough. Between credit squeezes, out-of-control immigration, rising costs of education and health care and everything else, it's all darkness out there for those of us who are neither millionaires nor welfare cases, right?
In "Living Large," Drew Carey and reason.tv examine the plight of the American middle class. What do they find? Click on the link below to find out.
http://www.reason.tv/video/show/living-large
17. We need government to provide roads, police, and firemen...not to mention help the poor
Privatization or public-private partnerships can more efficiently handle all four of these services. First, let's examine roads.
When you buy a gallon of gas at the national average of $4 per gallon, $1 of that is tax (federal,state, and local combined). That $1 not only covers your local contractors profit, employees wages, and road maintenance/construction, but it also covers a bereaucrat's salary and benefits (including the coverage of his family).
Now, imagine you pay no such tax. Imagine you also are sitting at a gas station. You get one gallon of gas for $3, and pull out onto a private road which requires tolls. At the toll booth, you pay 85 cents for your daily round trip usage, and keep the other 15 cents. The 15 cents savings was the bereaucrat's salary and benefits.
Or you could imagine paying a monthly fee that amounts to 85 cents a gallon. Maybe being taxed (I'm hoping we can avoid this), and then using private-public partnerships to transition into a privatized system. Universal coverage can be achieved by basing amount due in payment for us, if any, on income ratings. Or you can just see the obvious...no one without the $4 drives now, so we aren't pricing anyone out of the driving market by cutting their total expense 15 cents.
Police and fire are very similar. For most of our nation's history we didn't have centralized police. The idea we need to have a monopoly on policing is absurd. Private security should be able to compete with current government police services for public-private contracts, at the very least. If not that, then fully privatize it to allow bad and violent police forces to be hired and fired by their communities. We all know police are NOT receptive to criticism or complaints. They have a horrible record of "customer relations". Although they have gotten better in the age of cameras, they still kill people every other day and never face any real standard of the law that can be called equal, by any stretch of the imagination. The ability to just compete for tax dollars, or private dollars, would not mean the poor would recieve no police service. Again, universal coverage is possible in a free market model. Even if you don't do it as I explained, there are several other ways. One is allowing insurance companies to hire and fire police as a side effect of trying to keep insurance payouts for crime victimization low, another is to include the costs of all dealings in the justice system into the penalties assesed to the violators, and unpaid penalties acrue on the costs of subsequent criminals, making it increasingly unprofitable to be a career criminal.
Either way, police and fire require no monopoly on force to exist, and they do not need to be necessarily run or funded by the government.
As for the poor...
...in the greatest influxes of immigration to this country we saw the largest poverty problems. Yet, no mass starvation or homelessness (overall). True, there were horror stories, but wages continued to rise, and standards of living continued to drive down poverty despite the issues. Why did those poverty stricken immigrants make such a "good go of it"? Was it welfare? Entitlements?
No. Those who fled Italy pre and post fascism, and the Irish immigration fleeing the Great Potato Famine, did not have a welfare or entitlement system to depend on. So how did they make it?
Mutual aid societies.
Unfortunately private welfare is now illegal for the most part. It was deemed racist, and in many cases I agree. However, a monopoly on welfare is not necessary in order to stop racist business practices. You could base the membership of a mutual aid society on geographics, or anything besides race, and it would largely be as beneficial. Not only would charity driven or profit driven welfare be more efficient, it would be less likely to okay welfare for those abusing the system. The beauty of decentralized welfare was the ability to sniff out and police fraud more effectively. It's much easier to sucker a nation of millions for welfare than a group of a dozen.
There's also an issue with taxation. Taxing the poor and lower middle class (those right above the poverty line) CREATES or EXACERBATES poverty. They wouldn't be in poverty at all, or for as long, or as far, if you didn't tax them at all. You might think this a great argument for a progressive tax rate, but in actuality it's an argument for not taxing people into poverty, and then claiming to solve poverty with their money. Stop taxing anyone lower middle class or worse off, and you will essentially lessen the poverty problem.
With the combination of not taxing the poor and allowing mutual aid societies (not race based) one can eliminate the "need" for government welfare.
I hope you can see, police, firemen, roads, and welfare can be better supplied by the private market, existing without a monopoly.
19. You must give to charity, or pay taxes, or you are not a benefit to society
Creating jobs for others is a huge benefit. In fact, charity is less efficient than profit driven pursuits, and government is less effecient than charity. This means profit seeking leads to the employment of others, and in doing so you spend capital more efficiently than if you just gave it away to a charity.
The best way to help the poor is to save the money you were going to give them, and instead employ them.
"If you give a man a fish, you feed him for a day. If you teach him to fish, you feed him for a lifetime."--- old proverb
Now, I'm not against charity, and I do think it's necessary, as some problems (like rare diseases) have little market value in solving, and require immediate capital to help. Also, emergencies are more likely to require charity than long standing issues.
But all in all, you do not have to pay taxes or give to charity to benefit society. Society is lucky to have whatever you are willing to contribute of your own free will and spirit.
20. The rich get richer, and the poor get poorer
As I've demonstrated, we all get richer. The fact the ratio of richness isn't egalitarian isn't evidence of failure, it's an observation of a mechanism. In order for us all to get collectively wealthier, the top percentage of us needs to accumulate large amount of capital. So, as I showed previously in this blog, we all get richer even as the gap between rich and poor grows, and this is completely sustainable.
(And lastly, but please, before you give any cooky hypothetical situation whre "this doesn't work", read about externalities, and make sure what you are describing is not an externslity!)
21. Externalities force our hand in interfering in the markets to achieve efficiency
This one fallacy took me a whole separate, two-part, blog to cover. Read that debunk here:
The Externality Fallacy: The Failure of the Statist Economic Case (Part I)
http://www.campaignforliberty.com/blog.php?view=41342
The Externality Fallacy: The Failure of the Statist Economic Case (Part II)
http://www.campaignforliberty.com/blog.php?view=41344
Sources: me, bing (search engine), http://econ.economicshelp.org/2007/0...fallacies.html
http://100777.com/node/906
The above link was originally posted at Mises.org, but I had issues viewing that copy so linked the alternative.
Also sourced, various Wikipedia articles. Almost anything not in bold print is copied and pasted. (in the original copy, go to the links to see what I wrote, what others wrote)
http://www.forbes.com/forbes/2010/06...them-in_2.html
http://econ.economicshelp.org/2007/0...fallacies.html
http://www.reason.tv/
originally posted at Mises.org:
http://100777.com/node/906
15. The economic pie is finite, and when one person wins, another must necessarily lose
This usually comes from folks who learn economics from the movie "Wall Street".
The fact is, as I've demonstrated throughout this blog, wages grow due to: a) task maximization due to technological advances, competition with low paid labor, and competition in the global economy, b) which are caused by accumulations of capital in the hands of wealthy producers, c) that lead to said task maximizing strategies causing productivity to rise, and d) creating profits and causing them to rise, and therefore the amount of money that can be negotiated for wages. The fact is, the pie always continues to grow as long as we can task maximize.
The most simple way to do this has been to grow the population. I mean which army can do more, the army of 3, or 3,000? Obviously building that base will go way faster with 3,000 soldiers, whether it's a base for 3 or the 3,000. After population, there is equality under the law. Notice how most third world countries don't let women work or own property of any real equity to males? When you keep half the population forcably unemployed you get half the possible economy for your population...which apparently means cave-living and a steady diet of bad food in insufficient quantities. And no education, I forgot that part. Because that's the next method of task maximization. If I teach you my job, I can do other stuff, and we can adapt more quickly to shocks like a wave of illness causing usual specialists to be absent, or retractions in the economy.
So, without going on and on regarding all the different ways mankind task maximizes, let me just say, all of it is wholly dependent on wealth accumulation in a few hands. Who would pay the soldiers in my example? Some government, corporation, union, or church (or some other institution), take your pick. No matter what, in order to task maximize, wealth must accumulate in sufficient levels to allow longterm investment in things like technology, new labor sources (that can bear drawbacks and risks), and relocation to better fit into the specialization of Division of Labor. As the tasks maximize, the economy grows, and the pie expands.
The predicatble path of this process should be the poor recieving a smaller and smaller fraction of the total pie in play at any given moment, but with overall real wages rising, therefore raising their standard of living far exceeding inflation. Since decimals are infinite (on a number line for the visual reader), then this process can continue infintely (which I do not necessarily believe would happen, especially in a truely free market where remaining mercantilist state supported coercions on power and capital erode and die). But even if this process continued infinitely, the poor would be better off generation to generation in all respects, even as the gap between rich and poor (poverty being something that would be largely a matter of perspective instead of need) continues to grow.
So the economic pie is certainly not finite.
I think between this and the last couple fallacies, you should see several very important facts:
- You can receive a smaller and smaller piece (%) of the total pie, and at the same time recieve a larger and larger piece ($) each time, because the pie continuously grows, and is not finite.
- Unions are not corollary or causal to wage rates, real wages, household income, total compensation, or national income share.
- Productivity is corollary to wage rates, real wages, household income, total compensation, and national income share. Except for national income share, productivity is also causal to those things. In the case of national income share, it's causal (currently) to productivity.
- Wage rates, real wages, household income,and total compensation are negatively correlated to national income share (when income share goes down, compensation rises), by way of productivity (productivity leads to higher wages, etc., but productivity is caused by wealth accumulation leading to technological advances, etc., which is corrolary to national share of income via the wealth gap increasing).
- Unions do not improve the situation of the middle class in terms of any form of compensation listed, unless it is at the expense of some other middle class or lower class worker. This is evident from the graphs, that the top 1% continues to accumulate capital, and the middle class' and lower class' share continues to decline (it shows the bottom 80% on the one graph). So, if the income share continued to rise for the top 1% of earners with or without unions being a major aspect of the workforce (depending on the time frame), then obviously the income share the middle class is seeking to hold onto is rightfully the poor's. The lower class and middle class mostly share the same "slice of pie", as it were. The whole system depends on increasing standards of living, which depends on ever increasing productivity, which relies on ever increasing amounts of capital accumulation...so it's no suprise the rich aren't losing any momentum (and thank God, because if they did, the whole thing begins to erode). Since the top 1% NEED to continue increasing their share, that leaves the other two "classes" to fight over the constantly diminishing share (keeping in mind, their compensation and standard of living are continuously rising, and it's because of this widening wealth gap in the national income shares). So, unions can only raise wages artifically above the market value, causing more unemployment for equal or lesser wage workers, and therefore grabbing income share away from those same people. It's become my opinion, unions should never be allowed to collectively bargain on compensation...workers shouldn't all be paid the same wage either, some are more productive than others, and profit motive is enough to cause individual task maximization by workers on it's own, and eroding that inequity of pay but fairness of competition you end up rewarding the lazy to mediocre, and punishing the hard working. You do not have to be paid by wages, persay, however, you can be paid by any means, like percentage for example. The flexibility is important.
I'm not sure if unions have a causal relationship with safety...and after the research I've done on wages, I wouldn't be suprised either way. If they are not causal to safety in anyway, like standard of living, then I will have no reason to ever support any union again...which is mind blowing for me, as I have been a member of several unions. Admittedly, if I wouldn't have researched this stuff myself, I would never have believed it. That's how strong these economic fallacies are in regards to unions.
16. There is a war on the middle class
There is no war on the middle class. If I haven't given enough evidence of that thus far, then please watch this video:
To hear the Lou Dobbses and Bill O'Reillys of the world--not to mention politicians ranging from Ron Paul to Hillary Clinton--the middle class of America (however you define that term) has never had it so tough. Between credit squeezes, out-of-control immigration, rising costs of education and health care and everything else, it's all darkness out there for those of us who are neither millionaires nor welfare cases, right?
In "Living Large," Drew Carey and reason.tv examine the plight of the American middle class. What do they find? Click on the link below to find out.
http://www.reason.tv/video/show/living-large
17. We need government to provide roads, police, and firemen...not to mention help the poor
Privatization or public-private partnerships can more efficiently handle all four of these services. First, let's examine roads.
When you buy a gallon of gas at the national average of $4 per gallon, $1 of that is tax (federal,state, and local combined). That $1 not only covers your local contractors profit, employees wages, and road maintenance/construction, but it also covers a bereaucrat's salary and benefits (including the coverage of his family).
Now, imagine you pay no such tax. Imagine you also are sitting at a gas station. You get one gallon of gas for $3, and pull out onto a private road which requires tolls. At the toll booth, you pay 85 cents for your daily round trip usage, and keep the other 15 cents. The 15 cents savings was the bereaucrat's salary and benefits.
Or you could imagine paying a monthly fee that amounts to 85 cents a gallon. Maybe being taxed (I'm hoping we can avoid this), and then using private-public partnerships to transition into a privatized system. Universal coverage can be achieved by basing amount due in payment for us, if any, on income ratings. Or you can just see the obvious...no one without the $4 drives now, so we aren't pricing anyone out of the driving market by cutting their total expense 15 cents.
Police and fire are very similar. For most of our nation's history we didn't have centralized police. The idea we need to have a monopoly on policing is absurd. Private security should be able to compete with current government police services for public-private contracts, at the very least. If not that, then fully privatize it to allow bad and violent police forces to be hired and fired by their communities. We all know police are NOT receptive to criticism or complaints. They have a horrible record of "customer relations". Although they have gotten better in the age of cameras, they still kill people every other day and never face any real standard of the law that can be called equal, by any stretch of the imagination. The ability to just compete for tax dollars, or private dollars, would not mean the poor would recieve no police service. Again, universal coverage is possible in a free market model. Even if you don't do it as I explained, there are several other ways. One is allowing insurance companies to hire and fire police as a side effect of trying to keep insurance payouts for crime victimization low, another is to include the costs of all dealings in the justice system into the penalties assesed to the violators, and unpaid penalties acrue on the costs of subsequent criminals, making it increasingly unprofitable to be a career criminal.
Either way, police and fire require no monopoly on force to exist, and they do not need to be necessarily run or funded by the government.
As for the poor...
...in the greatest influxes of immigration to this country we saw the largest poverty problems. Yet, no mass starvation or homelessness (overall). True, there were horror stories, but wages continued to rise, and standards of living continued to drive down poverty despite the issues. Why did those poverty stricken immigrants make such a "good go of it"? Was it welfare? Entitlements?
No. Those who fled Italy pre and post fascism, and the Irish immigration fleeing the Great Potato Famine, did not have a welfare or entitlement system to depend on. So how did they make it?
Mutual aid societies.
Unfortunately private welfare is now illegal for the most part. It was deemed racist, and in many cases I agree. However, a monopoly on welfare is not necessary in order to stop racist business practices. You could base the membership of a mutual aid society on geographics, or anything besides race, and it would largely be as beneficial. Not only would charity driven or profit driven welfare be more efficient, it would be less likely to okay welfare for those abusing the system. The beauty of decentralized welfare was the ability to sniff out and police fraud more effectively. It's much easier to sucker a nation of millions for welfare than a group of a dozen.
There's also an issue with taxation. Taxing the poor and lower middle class (those right above the poverty line) CREATES or EXACERBATES poverty. They wouldn't be in poverty at all, or for as long, or as far, if you didn't tax them at all. You might think this a great argument for a progressive tax rate, but in actuality it's an argument for not taxing people into poverty, and then claiming to solve poverty with their money. Stop taxing anyone lower middle class or worse off, and you will essentially lessen the poverty problem.
With the combination of not taxing the poor and allowing mutual aid societies (not race based) one can eliminate the "need" for government welfare.
I hope you can see, police, firemen, roads, and welfare can be better supplied by the private market, existing without a monopoly.
19. You must give to charity, or pay taxes, or you are not a benefit to society
Creating jobs for others is a huge benefit. In fact, charity is less efficient than profit driven pursuits, and government is less effecient than charity. This means profit seeking leads to the employment of others, and in doing so you spend capital more efficiently than if you just gave it away to a charity.
The best way to help the poor is to save the money you were going to give them, and instead employ them.
"If you give a man a fish, you feed him for a day. If you teach him to fish, you feed him for a lifetime."--- old proverb
Now, I'm not against charity, and I do think it's necessary, as some problems (like rare diseases) have little market value in solving, and require immediate capital to help. Also, emergencies are more likely to require charity than long standing issues.
But all in all, you do not have to pay taxes or give to charity to benefit society. Society is lucky to have whatever you are willing to contribute of your own free will and spirit.
20. The rich get richer, and the poor get poorer
As I've demonstrated, we all get richer. The fact the ratio of richness isn't egalitarian isn't evidence of failure, it's an observation of a mechanism. In order for us all to get collectively wealthier, the top percentage of us needs to accumulate large amount of capital. So, as I showed previously in this blog, we all get richer even as the gap between rich and poor grows, and this is completely sustainable.
(And lastly, but please, before you give any cooky hypothetical situation whre "this doesn't work", read about externalities, and make sure what you are describing is not an externslity!)
21. Externalities force our hand in interfering in the markets to achieve efficiency
This one fallacy took me a whole separate, two-part, blog to cover. Read that debunk here:
The Externality Fallacy: The Failure of the Statist Economic Case (Part I)
http://www.campaignforliberty.com/blog.php?view=41342
The Externality Fallacy: The Failure of the Statist Economic Case (Part II)
http://www.campaignforliberty.com/blog.php?view=41344
Sources: me, bing (search engine), http://econ.economicshelp.org/2007/0...fallacies.html
http://100777.com/node/906
The above link was originally posted at Mises.org, but I had issues viewing that copy so linked the alternative.
Also sourced, various Wikipedia articles. Almost anything not in bold print is copied and pasted. (in the original copy, go to the links to see what I wrote, what others wrote)
http://www.forbes.com/forbes/2010/06...them-in_2.html
http://econ.economicshelp.org/2007/0...fallacies.html
http://www.reason.tv/
originally posted at Mises.org:
http://100777.com/node/906
ProIndividual
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And one more for Rifleman and protectionist folks:
Notice how productivity (not to be confused with a necessarily production-based industrial base) and compensation always continued to rise to beat inflation through the periods you and liberal economists SWEAR our standard of living was declining. Also, notice household income continued to rise (I know, the graphs do not match the years eactly, but you can do the rest on your own, use google image search.) And notice that unemployment rates are NOT at all related to immigration rates as well (look up immigration to verify, it's easily done; trust me).
And for the heck of it, notice unions have no relation to any of this:
The fact is, your real wages may have declined or stayed stagnant, but your medical costs are apart of your total compensation too. So, wages plus benefits is your total compensation, and until at least 2008, your standard of living continuously rose over the very period you said protectionism would have been better.
Now I showed you mine, show me yours...where has free trade caused wars like Smoot-Hawley caused WW2, and the Embargo Act of 1807 caused the War of 1812? Where has protectionism outperformed free trade? I WISH you'd compare period to period and see, the leaps and bounds are becuase of the decreasing of protectionism, not the increasing of it.
You are the isolationists the media should be concerned with, not us non-interventionist free traders.
Notice how productivity (not to be confused with a necessarily production-based industrial base) and compensation always continued to rise to beat inflation through the periods you and liberal economists SWEAR our standard of living was declining. Also, notice household income continued to rise (I know, the graphs do not match the years eactly, but you can do the rest on your own, use google image search.) And notice that unemployment rates are NOT at all related to immigration rates as well (look up immigration to verify, it's easily done; trust me).
And for the heck of it, notice unions have no relation to any of this:
The fact is, your real wages may have declined or stayed stagnant, but your medical costs are apart of your total compensation too. So, wages plus benefits is your total compensation, and until at least 2008, your standard of living continuously rose over the very period you said protectionism would have been better.
Now I showed you mine, show me yours...where has free trade caused wars like Smoot-Hawley caused WW2, and the Embargo Act of 1807 caused the War of 1812? Where has protectionism outperformed free trade? I WISH you'd compare period to period and see, the leaps and bounds are becuase of the decreasing of protectionism, not the increasing of it.
You are the isolationists the media should be concerned with, not us non-interventionist free traders.
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ProIndividual
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common liberal arguemnt...how are people starving in agrarian settings with mass child labor somehow "slaving" to WILLINGLY improve their lives by making more money in a budding adolescent economy where industrialization is taking place?
Every nation goes through a transition like this...every nation who was agrarian had child labor as a default, every nation has low wages until capital accumulation by the ruchest few leads to investments in longterm things like technology, which cause productivity per man hour to rise, and therefore real wages to beat inflation. Standards of living rise as total compensation rises, whether that's raises in real wages or just benefits, or both.
Slaver nations...lol. You mean young capitalist economies that are in the process of getting rid of rampant child labor (like us), rampant unsafe work conditions (like us), and low wages (like us). None of this is slavery, and when polled, these workers LOVE their conditions in comparison with the starvation and rampant death in the agrarian fields. True, they want better conditions in the factories, as we did, and more pay, as we did....but they would NEVER quit and go back to LOWER standards of living.
They are "slaves" only when you're a spoiled American.
Teaser Rate
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In an ideal world, I don't believe there should be any tariffs. However, in the real world, imposing a tariff on certain goods can improve your country's economy in certain situations.
osan
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You started off with some good stuff and have devolved into this? Jesus...
OK, China is a slaver nation - the largest in history to date - because they ARTIFICIALLY depress labor rates. There is no free labor market in China. There isn't one here, either, but there are two differences: first, we are not nearly as bad as China is, particularly where the individual is concerned, and second: the USA interferes with wages in the opposite direction, keeping them artificially high. Neither is good, but it can be argued that our way is better than China's.
In China, those with the temerity to ask for higher wages are treated to their famously humane "justice" system. If they are lucky, they get one to the brain stem and their miseries are put to an end. The less fortunate get to be "reeducated". Whoopdy doo.
Effectively, there is no meaningful opportunity to significantly improve one's lot beyond that which their rotten government deems reasonable. Where's the freedom there?
Try forming a union and see what happens to you. I am no fan of unions. In fact, I despise them, but in a free market unions should be available to those wishing to have them and who are able to swing them in private agreements with employers. They should not be banned, but they should likewise not be protected with governmental force, either.
This is a hopelessly naive assertion. Those with the money strive to keep wages as low as possible. That is one reason for the rise of unions in the USA. HUman nature being what it is, once established, the unions became just like the "evil" capitalist shareholders, trying to squeeze them for every penny they could because those whose smart, diligent, and often gutsy endeavors that brought wealth to the world somehow owed it to their workers to give them their "fair share", a complete load of crap. In so many ways people are their own worst enemies.
The bottom line is that people often do not deal squarely - freely - in economic affairs. They think they can "fix" human nature, or they are just hopelessly corrupt. The Chinese government maintains a blatant slave labor marker. There is no way around this truth. Yes, many Chinese went from abject slavery and perhaps even poverty to a less ugly form. So what? Where is the freedom? I see it nowhere because the avenues of personal choice for most Chinese are hopelessly narrow when compared with far freer nations. So to say that this blatant condition of economic slavery is somehow indicative of an organic move toward greater freedom is ridiculous on its face. Do you think that the Chinese government, once China's economy has eclipsed that of, say, the USA will somehow miraculously remove all wage restrictions, instituting a truly free market system? I'd bet money I don't have that that will not be forthcoming any time prior to hell's freezing solid to the core. Those at the top have a good thing going. They control everything - what motivation is there to change - to relinquish control? There is none and without such motivation, they will continue to hold their citizens as economic slaves. Of that I am comfortably certain. People are people and in all recorded history they have not changed a lick. Until someone holds their feet to the fire, I predict the Chinese "government" will keep chugging along just as they have been. In economic terms, I do not see this as a good thing for much of the rest of the world.
Have you been paying attention? They are doing everything they can to suppress the natural rise in wages that would occur, were their labor market not rigged by government force.
Well DUH... that does not mean their conditions rate with those of a free market economy.
Nor will they ask for better conditions, as those requests are met with grave violations of their human rights.
Spoiled American? Are you kidding? What are you, Canadian or something?
ProIndividual
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First of all, I'm completely accurate in the statement. They willingly work in these factories for the most part (slavery exists today, but is declining, as it has been since the dawn of market economics). Also, you seem to not realize slavery is MORE expensive than paid labor. Look at charts concerning slave states and resale value of slaves. Slavery dies economically on it's own. If you want a model of "cheap" statist forced labor, look at prisons....it isn't cheap at all. The cost of maintaining slaves, even when treated lower than normal animals, is too expensive to maintain. In Sicily (my people), slaves weren't even fed, they worked until they starved to death. Great rollers were set up to crush sugarcane, and if someone's arm got caught in the grinder, they had a fire and sword always lit to remove the crushed limb and simultaneously couterize it. They found it cheaper to stop importing slaves, and then they found it cheaper to end it altogether.
Slavery is economically ineffective...and for you to make the assumption it works as a system, is to assume falsely. Therefore, let our competitors use slave labor (economically, of course I'm against human rights violations), it would only give us greater advantage.
Now, as far as depressing wages...so what? We get cheaper products....that's not good? I mean, do you think market level wages that are not coerced down, but still are lower than American wages, are bad for the economy? If so, this is why you think this depressed wages thing is an issue at all. If you don't think normally cheaper labor in other countries which have less productivity per worker, and therefore lower standards of living, in their budding economies...then why would you think wages that are even CHEAPER are bad for us as Americans, since we consume those goods?
You can 50 liberals in 5 seconds on the net making your argument about "slave labor" overseas...it's a "fair trade" argument. You will not find any of them making the argument I just made...so why was it out of line to call that a liberal argument?
And what you call a naive assertion, is the basis of what all reputable economists say causes rises in the standards of living. Read Mises...hell, any of the free market capitalists...even Adam Smith talked about this.
Capital is accumulated (by the efficient private individuals, or by the inefficient State, depending on whether it's capitalism or socialism), then technology and other longterm investments are invested in, these lead directly to more productivity per worker and per man hour, and this leads to greater profits, which leads directly to the share the workers negotiate for increasing, allowing for wages rising to beat inflation and raises to standards of living. This isn't controversial. Please read what I post...the link to the Statist Economic Fallacies article addresses your fallacious believe that wages are held up by some other means. Wages can only bottom as far as your subjective value on time and money allow it; in short wages can not be driven down effectively past market levels without force of arms...people won't work for less than they need, and the labor market is competitive even when flooded.
For instance, if you read what I posted on immigration fallacies, you'd see they cause more jobs than they take, through consumption.
So, I'm still okay, your a little off.
Ps. We manipulate our money far more than the Chinese...say we depress wages also...real wages have been stagnant or falling largely for 30 years (although total compensation and standard of living kept rising...see the charts above). The reason it keeps wages lower is cost-push can't keep up with the rate of inflation when high constantly.
On Ron Paul forums?
The US benefits from trading with China. American and Chinese compensation has increased over the last few decades, and the division of labor is one of the main reasons why.
So it sounds like you don't believe in comparitive advantage or the division of labor? Or am I misinterpreting you?
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osan
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Accurate, but deceptive. What you describe is analogous to offering a prisoner the choice to be in solitary confinement in a maximum security prison or house arrest. Either way he is still a prisoner.
And their opportunities for furtherance are almost utterly stifled.
There is an operational difference between abject, chattel slavery and wage slavery. The former is very costly whereas the latter is relatively low cost. One reaps virtually all the benefits with almost none of the costs. The slave is in better stead, but is still a slave. Broader avenues of choice do not necessarily mean one is free. There are degrees of slavery, whereas there are no degrees of freedom. If you offer a slave a better grade of slavery, prettier flavors, he is likely to take it especially if he is unaware of his slave status. He simply feels that fortune has smiled upon him when no such thing has happened to him. All that has come upon him is the deign and din't of his master's wishes. Big deal. Great in the slave's narrowly channeled mind. Not always so good from the standpoint of one whose awareness is broader.
You apparently hold a very distorted and one-dimensional view of slavery. The most effective slavery is the brand where the slave is unaware of his condition. Were he to become aware of it, he might rebel. Kept blissfully ignorant, what crumbs are thrown him he is likely to take with gratitude for his good fortune.
Not if you only consider the US model. Put eyes on that of China and a very different picture emerges. Night and day.
Yet China uses an ever increasing prison labor force. Are they so stupid that they cannot add two and two?
Then why is economic slavery the standard model, no end in sight? Business and political power are the supreme pragmatic arts. Anything that does not meet the intended goals is rapidly retired from service. Economic slavery is alive, well, and growing, suggesting that it is in fact very economically, as well as politically, viable.
T
A nice sounding fairy tale with no basis in reality.
Not when it is done in this manner. Do you understand the fundamentals of macroeconomics? It appears that you are unfamiliar with the fundamentals because nothing you have written in this branch of the discourse indicates otherwise. On the one hand you go on, quite correctly, about the virtues of free markets. Then you falsely ID China as a (freely) capitalist economy, which it is not. There is nothing free about their economy, which is centrally planned - albeit more wisely than was that of the Soviets - but centrally in any event. If you cannot or will not see the deleterious effects of an artificial, state-enforced labor arbitrage market, then I don't know what else to say.
If they are "naturally" lower, then no. When they are so severely, not to mention artificially, depressed as we find in China - depressed with violence - nothing good stands to come of it in the long term. If all you can focus on is the lower cost of goods we enjoy today, then your gaze is very short. There are many dimensions to these affairs, some of which we don't hold sufficient truth on and the truth of which could reap widely varying results from another truth.
osan
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Greatly misinterpreting.
I did not even raise the issue of division of labor. It is an effective means of attaining greater efficiencies.
China's forced wage slavery is not a legitimate form of comparative advantage, IMO. It is not an element of free market capitalism. It is part of a rigged market system.
In macroeconomics classes comparative advantage is either explicitly or implicitly characterized as a "naturally" occurring phenomenon. That aside, government interference in such economic affairs are universally decried as drags on an economy - which is demonstrably correct. Therefore, interference in the wage markets would qualify as a deleterious, parasitic element.
What is this wage slavery? I hope that you're not refering to the Marxist term, and claiming that industrializing is somehow slavery.
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osan
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If you are not free to seek improved opportunities and conditions without fear of violent government reprisal, you are a wage slave. This is particularly so when that government controls wage rates, directly or otherwise.
Is this not clear?
None of this really matters. Trade barriers with China are still counterproductive. If you want to boycott Chinese production then go ahead and voluntarily boycott them. Don't mess with the market even more. People need to make the choice themselves.
Where is Rifleman? I'm still waiting on him to read my and ProIndividual's posts. I want an economic justification for protectionism.
Where is Rifleman? I'm still waiting on him to read my and ProIndividual's posts. I want an economic justification for protectionism.
ProIndividual
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Like I said, osan, you're making liberal arguments. Only from a spoiled American perspective could you derive such a point of view. The reality for us during the industrial revolution was very similar to the reality in China now...it's not slavery.
And we've never had less slavery in the world than since the dawn of wage labor. Capitalism kills child labor, high worker fatalities, and slavery...it doesn't produce it.
Chinese prisoners cost more than free Chinese citizens, it;s economically impossible for the State to guard you 24-7 and not spend shitloads of money....think it through.
If China is so imprisoned, then why do we have waaaaaay less population and waaaaaay more prisoners, both in TOTAL and PER CAPITA. Umm, we are the most incarcerated nation in history and currently. Stop it.
I don't know what branch of Keynesian macroeconomics you studied, but I suggest you ask for a refund.
Finally, since you admit "naturally" lower wages at market level are good for us and our economy, because we are made wealthier by buying cheaper cost products, then how can it be that even cheaper wages are somehow detrimental to the American consumer and relative wealth? Higher wages in process of production would depress standards of living here, not increase it. You THINK what you're advocating is helpful...but protectionism is economic suicide. I've provided enough evidence to that fact, now show me some or concede the point.
And we've never had less slavery in the world than since the dawn of wage labor. Capitalism kills child labor, high worker fatalities, and slavery...it doesn't produce it.
Chinese prisoners cost more than free Chinese citizens, it;s economically impossible for the State to guard you 24-7 and not spend shitloads of money....think it through.
If China is so imprisoned, then why do we have waaaaaay less population and waaaaaay more prisoners, both in TOTAL and PER CAPITA. Umm, we are the most incarcerated nation in history and currently. Stop it.
I don't know what branch of Keynesian macroeconomics you studied, but I suggest you ask for a refund.
Finally, since you admit "naturally" lower wages at market level are good for us and our economy, because we are made wealthier by buying cheaper cost products, then how can it be that even cheaper wages are somehow detrimental to the American consumer and relative wealth? Higher wages in process of production would depress standards of living here, not increase it. You THINK what you're advocating is helpful...but protectionism is economic suicide. I've provided enough evidence to that fact, now show me some or concede the point.
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Dr.3D
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With the EPA and OSHA and the like, manufacturing in the United States can not compete with countries that don't follow the same rules. If somehow the EPA and OSHA were either removed from the Unites States or implemented in the other countries, there can not be a level playing field and jobs will move to where there is less regulation.
Government regulation on U.S. industry is the major culprit when it comes to the loss of industry in the United States.
Government regulation on U.S. industry is the major culprit when it comes to the loss of industry in the United States.
The Grinning Maniac
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So then in order to get our industry back we should get rid of all rules concerning labor standards, wages and pollution. Lower taxes completely on large industries. Bust all the unions. Shame on workers for wanting more money.
...How exactly does that help anyone apart from the few people who own large factories? You guys keep dancing around the notion that you want our individual economic realities to be on par with the Chinese.
Cheapness = Superiority. All other factors...irrelevant. How else do you read this? This is why libertarians are not taken seriously. Their blind loyalty to certain economic viewpoints eclipses reality and facts on the ground. I'm sorry...were factory owners destitute and sobbing at night when they had their factories here and paid Americans decent wages? I'm willing to bet they were still...oh what's the word...filthy rich.
So how does this change benefit you? Tons of people are out of work and when you go to the store, the product (MAYBE) becomes .50 cheaper, you see .25 of the savings for one product. The owner keeps .25 for a million transactions. Whose living standards have improved more? I'm pulling numbers out of thin air, but you can see my point, yes?
Also, when China and India become first world nations with great living standards....what makes you think they'll let you come over to work? They have more than enough people. Why would they not simply allow America to fall into abject poverty and laugh at the irony? Explain.
...How exactly does that help anyone apart from the few people who own large factories? You guys keep dancing around the notion that you want our individual economic realities to be on par with the Chinese.
Cheapness = Superiority. All other factors...irrelevant. How else do you read this? This is why libertarians are not taken seriously. Their blind loyalty to certain economic viewpoints eclipses reality and facts on the ground. I'm sorry...were factory owners destitute and sobbing at night when they had their factories here and paid Americans decent wages? I'm willing to bet they were still...oh what's the word...filthy rich.
So how does this change benefit you? Tons of people are out of work and when you go to the store, the product (MAYBE) becomes .50 cheaper, you see .25 of the savings for one product. The owner keeps .25 for a million transactions. Whose living standards have improved more? I'm pulling numbers out of thin air, but you can see my point, yes?
Also, when China and India become first world nations with great living standards....what makes you think they'll let you come over to work? They have more than enough people. Why would they not simply allow America to fall into abject poverty and laugh at the irony? Explain.
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