Free Trade vs Protectionism (help me out here)

[Becker]

When most people from the protectionist point of view try to put themselves in the shoes of the view of someone who is free trade they often think they are saying "who cares if a few U.S. workers go unemployed its better to have cheaper goods." That is not the point I am trying to make. The point is that you will end up hurting not only the consumer who gets to enjoy the low prices but more importantly it will come at the expense of other industries and will cause a net loss in the number and quality of jobs in other industries.

is there any guarantee or reliable promise that employers and companies who import and outsource necessarily pass savings on to consumers?
it'd be nice if there was, but what if there isnt and they do not?

 

[mojobo]

is there any guarantee or reliable promise that employers and companies who import and outsource necessarily pass savings on to consumers?
it'd be nice if there was, but what if there isnt and they do not?

Competition... and they will either pass it on by adding quality and or lowering price. If you don't believe me look at some of the insane deals businesses were offering on black Friday or the lower computer prices that exist today versus a few years ago. Not only that but we have more brands and more computer jobs than we did when they were expensive.

 

[cavalier973]

Free trade doesn't send jobs overseas; the blame for that rests solely on bad gov't--high taxes, heavy regulation, licensing requirements, subsidies, etc., which are the real reasons for a company to move its operations overseas. A $50-an-hour American worker, with his knowledge, skills, and abilities, and tools, can be less expensive to hire, all things being equal, than a foreign worker who only makes a few dollars a day, when one considers the relative levels of productivity. Gov't intervention jacks the price of production up in other areas, though, and allow people to think that wages are the only expense a company considers. Instituting protectionism would only make things more expensive and of lower quality, because there would be less competition. As others have stated, using government coercion to prop up one particular firm or industry only hurts other firms and industries--and consumers.

 

[AlexMerced]

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.

If that's the case look up all my videos regarding currency and Japan, there dozens of videos on that topic alone

just go to youtube.com/alexmerced for a quick search

I'd link to those videos but can't till I get back to NY from CT

 

[TomL]

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.

Just wanted to say, I like this post. Where's the "like" button?

 

[low preference guy]

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.

Would you like to be slave? That's what slaves do, work and not enjoy the fruits of their labor.

 

[TomL]

You fellas have my head spinning.

I always thought productivity was linked to consumption.

Productivity means jobs, the more jobs the greater the buying power, and the greater the buying power the more consumption. Is that not the way it works? I mean, for something to be consumed, doesn't someone have to produce it?

 

[Jtorsella]

You fellas have my head spinning.

I always thought productivity was linked to consumption.

Productivity means jobs, the more jobs the greater the buying power, and the greater the buying power the more consumption. Is that not the way it works? I mean, for something to be consumed, doesn't someone have to produce it?

Also TomL, Welcome to the forums! Glad to see you're contributing to the discussion.

 

[TomL]

Also TomL, Welcome to the forums! Glad to see you're contributing to the discussion.

Thanx. But I am limited. Sometimes I have to sleep. With that. Goodnight.

 

[heavenlyboy34]

Would you like to be slave? That's what slaves do, work and not enjoy the fruits of their labor.

I don't think that's what he meant. He qualified "consume" with "mindlessly". It's easy to consume in a manner that is not mindless.

 

[limepickle]

I think the balance works so that we produce only after feeling or seeing the consumption. We produce as a means to achieve the end of putting food on the shelves and meeting our other demands

 

[romacox]

 

[Mogambo Guru]

Free trade doesnt work so well with global fiat currency and central banks/governments manipulating to their advantage every chance they get. I imagine its hard for someone to think of how free trade could work when they are thinking in the context of how things are being run today...

 

[limepickle]

I disagree- although I would prefer that countries would stop manipulating their currency, ultimately it only hurts them and not us at all. If we got all free stuff from China, we would have no employment, but at the same time, we wouldn't need employment because everything would be free. It works out that way so that the country with stronger currency never really gets hurt.

 

[specsaregood]

I disagree- although I would prefer that countries would stop manipulating their currency, ultimately it only hurts them and not us at all. If we got all free stuff from China, we would have no employment, but at the same time, we wouldn't need employment because everything would be free. It works out that way so that the country with stronger currency never really gets hurt.

Short-sighted. It does hurt us. It makes us fat, weak, lazy and incapable of supporting ourselves. We'll be ready for the culling when the feed gets cut off.

 

[limepickle]

specsaregood, I wouldn't say that service jobs encourage us to be lazy. And if China's currency eventually became stronger and it became advantageous to move manufacturing back to the US, it would happen and people would learn the trade and do the job.

 

[Becker]

Short-sighted. It does hurt us. It makes us fat, weak, lazy and incapable of supporting ourselves. We'll be ready for the culling when the feed gets cut off.

what's wrong with that if you can afford it?

 

[arkana]

Thanks for the knowledge and feedback. Any good book you'd recommend dealing with currency value, free trading, and the effect on the economy? I read Crash Proof by Peter Schiff -- who is a free market and strong currency advocate. But he sort of condemns the service-based economy stating true wealth can only be derived by producing things -- which is why he pushes for investment in China. I need more understanding on the currency value effect. Thanks again if you have a recommendation!

I think what everyone should keep in mind is Schiff is condemning the service sector that only serves the U.S. consumer. It offers zero services for export and doesn't produce. The only way a country grows is to export products or services.

Think about all the mobile dry cleaning, car washes, and random service businesses were popping up before 2008 hit. While there's nothing wrong with living in comfort and spending your money on things like that those were 'malinvestments' as the majority are now bankrupt.

The reason financial service countries, and even Vegas do well is because they bring in money from outside of their country(or city) in exchange for their services. They aren't just shining each others shoes to 'prosperity'.

What Schiff is condemning is the fact that regulations, taxes, etc are not favorable for firms to produce products for export(or domestic consumption) and therefore we have a nation simply servicing itself. Add on top of that the deficit spending and inflation that has given us a false sense of prosperity and you have a situation ripe for collapse.

 

[specsaregood]

what's wrong with that if you can afford it?

Give a man a fish and he eats for a day....and all that jazz.

 

[Becker]

Give a man a fish and he eats for a day....and all that jazz.

and I can ask again, what's wrong with not knowing how to fish if he never needs to?

Sure, its a big IF, but WHAT IF?