Free Trade vs Protectionism (help me out here)

[shadowhooch]

Regarding free trade vs protectionism......

If we keep our currency strong, then imports become cheaper for us -- FACT.
Because of this, manufacturing eventually goes overseas and we become a consumer/service economy -- FACT.
So how does having a strong currency help us?
Isn't this what happened to the US and also what Switzerland is currently concerned about?

Someone educate me. Why is pure free trade good if all your manufacturing leaves?

Thanks.

 

[Cutlerzzz]

The point of having a job is not to produce, the point is to consume. Production (and working) is just an means to an end, not the end of it's self.

 

[Seraphim]

The US is still a manufacturing powerhouse - just not per capita as it was before....Manufacturing doesn't all vanish.

 

[Stevo_Chill]

you produce more complex products like OSes, power grid managements, space fleets, communication methods. etc.
people need to be students of history to understand what i'm saying.
imagine taking you position during the times in history when ag laborers were losing jobs to tractors or factory workers were losing jobs to automated robots, or wagon makers losing their jobs to auto makers. every time someone was losing ajob to a more productive endeavor/.

 

[shadowhooch]

Hmmm....
So it is not important to produce per se; but it is important to produce cutting edge materials, correct?
So it is important to incent technology?
I guess what I'm asking is at what point is it a diservice to your country to have manufacturing go overseas?

To make money and consume, you need a job. And if the job isn't to produce something, then what is your contribution?
Since China produces most everything, why don't they produce for themselves to consume?
Why do we as US citizens make so much more money?

I guess I'm trying to understand Peter Schiff's Crash Proof where he is stating the case that Consumption is not a good measure of GDP. And since we no longer produce goods, our economy is destined to suffer.

 

[phill4paul]

The 1 in 7 on food stamps, the hundreds that stood at the local food bank grateful to be given a Thanksgiving meal, those that have played out their one hundred plus weeks of unemployment and those that currently live with a relative instead of a house they use to own all hail the coming of the service economy. We are soooo much better for it.

 

[Steven Douglas]

Since China produces most everything, why don't they produce for themselves to consume?

They do. There is a massive (and massively growing) internal consumer market in China. In Wuxi, where I have residence, with a population of 6 million (sprawling by US standards, small by Chinese), ultra-modern malls, mega-department stores, etc., are everywhere - and just as busy as anything you'll find in the most bustling and expensive markets in New York. Equivalent prices too, with massive expenditures.

 

[phill4paul]

Of course there is also the fact that once you become a service economy you lose the infrastructure to be a manufacturing country. So if ever there was a glitch in the wonderful service plan, say war, the manufacturing base is not able to rebound. And then of course you have these other countries producing things like electronic componenets that may or may not work when they are attached to your military hardware. Yep. This service economy seems like a great idea.

 

[shadowhooch]

They do. There is a massive (and massively growing) internal consumer market in China. In Wuxi, where I have residence, with a population of 6 million (sprawling by US standards, small by Chinese), ultra-modern malls, mega-department stores, etc., are everywhere - and just as busy as anything you'll find in the most bustling and expensive markets in New York. Equivalent prices too, with massive expenditures.

Yep. So again, why is it important to have a strong currency if it simply encourages manufacturing and production to go overseas?
Are the Swiss wrong to peg their currency to the Euro? Their currency was getting so strong, that their exports were suffering massively and consequently, their manufacturing started suffering losses. So they devalued to protect their production. Is this wrong?

 

[Cutlerzzz]

A strong currency does not cause manufacturing to go overseas. Look at how many third world countries that have pathetic currencies and no manufacturing. It might help a few manufacturing firms that want to be subsidized, but there is more to manufacturing than the currency.

As for US manufacturing...

 

[Becker]

The point of having a job is not to produce, the point is to consume. Production (and working) is just an means to an end, not the end of it's self.

which is exactly why we should applaud wall street, and ignore blue collar workers. In addition, not care about unemployment, nobody cares about employment, we care about consuming power.

 

[Becker]

The 1 in 7 on food stamps, the hundreds that stood at the local food bank grateful to be given a Thanksgiving meal, those that have played out their one hundred plus weeks of unemployment and those that currently live with a relative instead of a house they use to own all hail the coming of the service economy. We are soooo much better for it.

1/7 on food stamps because we allow it. if we allowed 6/7 to be on food stamps, I have no doubt every single person will take it (unless there's a price to pay in return)

 

[AlexMerced]

look up on youtube my videos:

The Case for Free Trade

The Case Against Protectionism

 

[Becker]

look up on youtube my videos:

The Case for Free Trade

The Case Against Protectionism

Alex, are you consistently for free trade, meaning you're for open borders, free for all immigration, outsourcing, importing?

 

[shadowhooch]

look up on youtube my videos:

The Case for Free Trade

The Case Against Protectionism

Hey Alex,
I listened to the first video and I understand the benefits of free trade with nations and how it makes for the most efficient global system.

However, I'm more interest in what free trade does to a country if the currency valuations are drastically different (i.e. US vs China or Swiss vs Euro). Peter Schiff critisizes the Swiss for their recent move to peg their currency to the Euro. He said "a strong currency is always a good thing". But if a country's exports are suffering because their goods are too expensive due to their strong currency, how is that a good thing?

Is there a situation where a country should inflate their currency in order to stay competitive and not lose their manufacturing base? Like others have said on this thread and like Schiff has said, once you lose the infrastructure, it takes much longer to rebuild it.

Isn't the fact that the US has such a strong currency a big reason why we have lost so many manufacturing jobs? I work for a retail company. It isn't even close to being economically feasible to create the product here. If every industry is like this, I don't see how a super strong currency helps.

Thanks for responding. I'd love some more opinions and facts on this. I'm just trying to balance free trade and how it partners with a strong currency.

 

[mojobo]

One thing that a weak currency does is make it harder to purchase the capital necessary to increase the value of labor. The benefit of having a strong currency is that the cost of income producing assets comes down which means workers will produce more. Greater production = more jobs plus higher wages and greater wealth.
The theory that keynsians like to argue is that the country with a weaker currency will export more and therefor have more jobs. The two flaws of that thinking is that normally the currency is weakened by increasing the supply of that currency which usually goes towards imports in one way or another. The second is that they assume only consumption goods go down in price for the stronger currency and don't account for the fact that the goods of production, which is what produces higher wages/more jobs, become more expensive in a weak currency.

 

[shadowhooch]

One thing that a weak currency does is make it harder to purchase the capital necessary to increase the value of labor. The benefit of having a strong currency is that the cost of income producing assets comes down which means workers will produce more. Greater production = more jobs plus higher wages and greater wealth.
The theory that keynsians like to argue is that the country with a weaker currency will export more and therefor have more jobs. The two flaws of that thinking is that normally the currency is weakened by increasing the supply of that currency which usually goes towards imports in one way or another. The second is that they assume only consumption goods go down in price for the stronger currency and don't account for the fact that the goods of production, which is what produces higher wages/more jobs, become more expensive in a weak currency.

Interesting. Very helpful. Thanks.
So is there ever a case where you need some protectionism? Like if a country were to lose it's entire automotive industry (which almost happened)? Some things you want to keep the production capabilities, no?

 

[Becker]

Hey Alex,
I listened to the first video and I understand the benefits of free trade with nations and how it makes for the most efficient global system.

LOL, that sounds awfully familiar. Didn't I hear people here complaining how an "efficient global trading system" is an NWO plot for one government, one currency and to rob innocent people blind?

However, I'm more interest in what free trade does to a country if the currency valuations are drastically different (i.e. US vs China or Swiss vs Euro). Peter Schiff critisizes the Swiss for their recent move to peg their currency to the Euro. He said "a strong currency is always a good thing". But if a country's exports are suffering because their goods are too expensive due to their strong currency, how is that a good thing?

Strong currency basically just means "valuable currency", meaning you can buy more for less. Why do you need to export if you have too much money?

Is there a situation where a country should inflate their currency in order to stay competitive and not lose their manufacturing base? Like others have said on this thread and like Schiff has said, once you lose the infrastructure, it takes much longer to rebuild it.

Yes, countries often need to inflate their currency to faciliate trade and lubricate movement of goods. It also creates the illusion of less labor spent.

Isn't the fact that the US has such a strong currency a big reason why we have lost so many manufacturing jobs?

yes, and it shouldn't be a bad thing.

I work for a retail company. It isn't even close to being economically feasible to create the product here. If every industry is like this, I don't see how a super strong currency helps.

Thanks for responding. I'd love some more opinions and facts on this. I'm just trying to balance free trade and how it partners with a strong currency.

 

[Becker]

Interesting. Very helpful. Thanks.
So is there ever a case where you need some protectionism? Like if a country were to lose it's entire automotive industry (which almost happened)? Some things you want to keep the production capabilities, no?

that's like asking do you ever need taxes, or inflation? Of course there's always cases for something.
Is there ever such thing as "good" unemployment? Is there ever such thing as "bad" economic growth? of course!
My answer is, no. There's nothing inherently good about production, unless it means avoiding dependence and risk (which is not inherent)
Logically, there's nothing bad about losing jobs, unless it means losing consumption power.

 

[Anti Federalist]

The point of having a job is not to produce, the point is to consume. Production (and working) is just an means to an end, not the end of it's self.

See, maybe that's where the disconnect for me is.

I do not see it that way at all.

The point of working is not to mindlessly "consume", the point is to do something productive with your time here on earth and to save, invest and build something better for the future and your family.

I hate to think that the one that dies with most flat screen TVs and XBoxes and new cars, wins.