This whole free trade/ free market thing

[christagious]

I 'll be the first to admit that I really don't understand this issue one bit. From what I understand, I think that free trade is allowing corporations to run things however they want, thus allowing them to outsource jobs and exploit the poor. I really don't understand Ron Paul's stance on this. I would think that if the government had less interference in business then things would be even worse than they are now. Wal-Mart would increase its aggressiveness and put even more small businesses out of business and force suppliers to lower their prices even more just so the Waltons can make more money. It seems as if free trade is just an exploitation machine.
And I really don't understand how lowering taxes will help bring jobs back. Even if a company can pay less taxes by being here, there is the matter of the wages they pay their employees. Why pay an American 10 to 15 bucks an hour when you can pay a Chinese or Honduran person 30 cents and hour AND you can hit them if they aren't working fast enough? And did you know that the sweatshops in Latin America, including Disney's factory, force their employees to take birth control pills, and sometimes the supervisors have been known to rape the workers?

Can someone please tell me why my understanding of free trade is wrong and tell me how this whole thing would change if Ron Paul is president?

 

[Brutus]

Hi Christagious,

Your understanding of free trade is wrong. It would require you to learn a bit about how markets work. How our government has actively made capital intensive business in the US unprofitable (the capital is the part that makes the US worker better paid) via inflation, regulation and taxes, and some other economic concepts which aren't complicated, but do require a bit of consideration.

What you've stated is a common misunderstanding and there is plenty of literature to explain it to you if you are interested. It is late. If you really do want to know I'll post some links tomorrow.

Consider that if the people in the third world countries considered it exploitation they wouldn't be fleeing the rural areas in such great numbers to get into the cities and get these jobs.

The key is to remember that getting a lot of dollars isn't what makes you wealthy. Production is the root of wealth. Division of labor increases production. Capital investment increases production. Countries which have an abundance of labor but aren't allowed to use that labor are essentially being locked into poverty. It would be like putting up black-out blinds during the day and using candles to light your work.

Personal message me if you're really interested and I'll find the links and put them here.

 

[jblosser]

http://bastiat.org/en/the_law.html

 

[JDeVriese]

Christagious,

May I recommend to you the book "Economics in One Lesson" by Henry Hazlitt? It is a truly phenomenal book to those seeking to understand free-market economics. Written in a non-academic, down-to-earth fashion, it is a wonderful foundation for those interested. Many of your questions are answered within it.

You can pick it up here: http://www.amazon.com/Economics-One...bs_sr_1?ie=UTF8&s=books&qid=1197179907&sr=8-1

 

[kalami]

It's a misconception to think that corporations can simply do whatever they want and it's because of other market forces. I don't think I can articulate what markets are as well as this guy:
http://www.econlib.org/library/Columns/y2005/Robertsmarkets.html

wal-mart actually earns a net profit of 3.5% and it's been that way for many years. If wal-mart was trying to squeeze out every penny to earn a profit, then why has their net profit been stagnant for the last several years? It should be growing, but it's not because they have to compete.

 

[angrydragon]

http://video.google.com/videoplay?docid=-5658307639261829691

http://www.youtube.com/watch?v=EpATNp5DjYI

Same videos.

 

[apc3161]

Let me tell you a simple fact about trade, it is voluntary. No one is forcing either side. Why would any person engage in a transaction that was not in their benefit?
Two people can walk out of transaction and both be better off, but most seem to think that one has to get screwed in the process in order for the other to benefit which is not true.

Most seem to think that wealthy countries are worse off when they trade with poor countries. Let me ask you a question concerning say a wealthy doctor, should he spend time cutting his own lawn or should he simply pay poor people to do it for him? It seems most would argue that he should do it himself. I would argue that he should work, make a lot of money, and then use some of that to pay the gardeners, that way not only is his yard nice, but he also made some money.

The same analogy can be used for wealthy and rich countries. Why should a wealthy country focus on say textiles? They shouldn't. They should focus on IT, service jobs, banking, consulting, aerospace, and other high tech industries. Why? Because it pays better. To focus on lesser paying tasks would be a waste of the wealthy country's intelligence and infrastructure. It makes more sense to just buy low tech products from poor countries, not create them yourselves.

A good proof for free trade is this. Try and name ONE country in the history of all mankind, that was ruined for having an open trade policy, or name one country with a closed trade policy that has done better than an open trade country over the long run.

I'm going to leave you with one of my fav. Benjamin Franklin quotes, "No nation was ever ruined by trade." When you go and do the research, you will find that he is right.

 

[Corydoras]

I don't agree with Ron Paul on free trade, and I simply accept that fact. During the nineteenth century, Japan with protectionism was much more stable than China with its free trade. I think the United States is in danger of becoming a country that exports nothing but raw materials (like lumber) and entertainment, leaving it vulnerable when all the manufacturing for an important product is in another country that could refuse to deal with the United States or could produce with lower standards than the United States would. This matters a lot with medical products, for example.

 

[christagious]

Thanks to everybody for the links, I will checking them out.
I agree with Corydoras too about some of points he brought up.

The same analogy can be used for wealthy and rich countries. Why should a wealthy country focus on say textiles? They shouldn't. They should focus on IT, service jobs, banking, consulting, aerospace, and other high tech industries. Why? Because it pays better. To focus on lesser paying tasks would be a waste of the wealthy country's intelligence and infrastructure. It makes more sense to just buy low tech products from poor countries, not create them yourselves.

First of all, service jobs suck and pay shit, same could be said for banking unless you've worked your way up in the rankings.
And I think it's funny how some of the people on here think that higher education isn't necessary but right here we have somebody naming off jobs that require college education.
I think manufacturing jobs are important to have here because what about all of the people in the older generation (I'd say 40 and above) who have been laid off due to the manufacturing jobs going overseas. I don't think it makes more sense to buy products from poor countries, first of all we could use those jobs here, and second we should learn to become less dependent on other countries.
I'm sorry but i'm having a lot of trouble buying into this whole free market thing, it seems more harmful than the system we have right now. It seems as if the big businesses have everything to gain with a free market. How will WE THE PEOPLE benefit from this, and how will this help small businesses who are struggling to compete with the likes of Wal-Mart, Lowes, etc.?

 

[christagious]

Look what free trade has done already to us, besides the job loss. We have lower quality standards, i.e. lead paint in toys. Corporations have more power than WE THE PEOPLE do. I want to support this free market stuff but I don't see how it will benefit me.

I do agree with some of it though, I like the fact that when we start trade with Cuba there will be alot of money to be made initially by selling Cigars and rum, until people realize that there's nothing different about the Cuban stuff than, say, the tobacco in Nicaragua. It's all the same dysentery laden people licking the cigar papers closed anyways.

 

[CelestialRender]

If you don't understand why free trade is a good thing, you haven't educated yourself thoroughly enough on Economics. Period.

The current _corporatist_ system is NOT a _capitalist_ system. To use examples from our current system to attack capitalism is poor logic...our corporations are bloated on government welfare, and hampered by government regulations. Between the two, the market forces are hardly being allowed to work.

The same goes for the Chinese. If we weren't giving them better trade terms than everyone else, we wouldn't have a problem.

 

[Kregener]

I think the United States is in danger of becoming a country that exports nothing but raw materials (like lumber) and entertainment, leaving it vulnerable when all the manufacturing for an important product is in another country that could refuse to deal with the United States or could produce with lower standards than the United States would.

This is EXACTLY what we have now....compliments of government interference.

 

[jblosser]

Look what free trade has done already to us,

We don't have anything resembling free trade right now. We don't have anything resembling a market economy.

You can't have a market economy/free trade system that is a little bit regulated and still call it free. Minor external pressures on the market have dramatic long-term effects. Read the two books mentioned earlier, _The Law_ and _Economics in One Lesson_. These are both titles that Dr. Paul also recommends, they're short and easy to read, and reading them is a lot more productive use of time coming to an understanding of these issues than jawing about them on a forum.

I would suggest they should be required reading for anyone who wants to post here but, you know, that would be an external regulatory pressure on the market of ideas here and no good.

 

[specsaregood]

It all goes back to monetary policy.
If the Fed was not able to "make money" there would be no trade deficit, as people would HAVE to buy stuff from US in order for us to get money back to buy from THEM.

If I understand Ron Paul's position, Free Trade is good, but incompatible with our current monetary policy.
Like Immigration is good, but incompatible with our welfare state.

Once again, the the Dr. looks at the cause, not the symptom.

 

[angrydragon]

We have managed trade, not free-trade. Manage trade benefits the few on top. Free-trade benefits everyone.

 

[user]

Like CelestialRender said, we do not have capitalism or free trade today. We have corporatism and managed trade. Wal-Mart gets government subsidies, for example.

 

[ErikBlack]

The same analogy can be used for wealthy and rich countries. Why should a wealthy country focus on say textiles? They shouldn't. They should focus on IT, service jobs, banking, consulting, aerospace, and other high tech industries. Why? Because it pays better. To focus on lesser paying tasks would be a waste of the wealthy country's intelligence and infrastructure. It makes more sense to just buy low tech products from poor countries, not create them yourselves.

That would be nice if America had a higher number of intelligent people than other countries, but it does not. America's former success was never a product of intelligence. It was a product of opportunity. This was a virtually untouched land of great natural resources which the early Americans stole from the Indians and exploited to gain its wealth.

With that wealth, for a short time, it endeavored to educate its people better than other countries and for a time, we were #1 in this regard. Not anymore. Not even close. America is not an intellectual or academic nation. This country has its fare share of stupid people, in fact more than its fair share. But these people need to make a living too.

Joe Sixpack needs his factory job down at the tire plant because otherwise how will he feed his six kids, keep his wife over 300 lbs, his fridge full of Schlitz and WWE wrestling re-runs on the tube? If Joe Sixpack's factory job goes to China he is not going to become an accountant. He's going on welfare. If there is no welfare he will become homeless.

Many people do not have the intelligence or the capacity to succeed in a free market. That doesn't mean we should give them handouts. But we should at least make sure that there are low-paying jobs available for which they are suited so that they can contribute to society and pay their own way.

"God must have loved the common people, he made so many of them" -Abraham Lincoln

 

[user]

But we should at least make sure that there are low-paying jobs available for which they are suited so that they can contribute to society and pay their own way.

That's exactly what a free market would do!

 

[angrydragon]

And what the minimum-wage laws don't do. They keep out the low wage earners.

 

[majinkoola]

I disagree with Ron Paul on free trade, though I believe if he cut corporate tax rates then outsourcing would slow.

Look at Ireland. They cut their corporate tax rates, which undercut the rest of Europe, and spearheaded massive growth the last decade or so. Obviously a company will want to invest in a country where they get taxed the least.

But think about what would happen if the US cut taxes AND put up decent sized tariff barriers. While also getting rid of a lot of government spending, of course. Most of the companies that have been outsourcing jobs would be greatly compelled to invest in the country again. Otherwise they wouldn't be able to compete in the giant US market.

I look at it this way. Say there are no tariff walls. Then companies can use slave labor from other countries to flood our market with goods. While in the meantime nobody will want to hire Americans because they cost too much. Either that or our own wages start to decrease, which unions won't accept.

My economic policy would not be to get the cheapest goods possible to the US at any means necessary. I want to beef up the middle class and make the lower class as small as possible. Socialist policies obviously fail, and there needs to be a free market, within the US. But I don't think allowing the rest of the world to undercut our workers will lead to much prosperity. We'd just continue to run a massive trade deficit