Slider From United States of America, joined Feb 2004, 6625 posts, RR: 36 Posted (7 years 10 months 1 week 2 days 8 hours ago) and read 1847 times:
For a moment, please set aside the argument of subsidies and sanctions and such for this thread. I acknowledge they exist, that they fundamentally do more harm than good, and affect the so-called "free trade" concept.
However, for the sake of this argument, I just read a very interesting Pat Buchanan column that got me thinking.
I am an unabashed advocate of free trade. And I think that, on balance, a level playing field is a good thing for the MOST people. However, in re-assessing the situation, it's clear that the leveling of this playing field is coming at the expense of and not entirely to the benefit of the American worker and consumer.
Quote: Now that the U.S. trade deficit for 2005 has come in at $726 billion, the fourth straight all-time record, a question arises.
What constitutes failure for a free-trade policy? Or is there no such thing? Is free trade simply right no matter the results?
Last year, the United States ran a $202 billion trade deficit with China, the largest ever between two nations. We ran all-time record trade deficits with OPEC, the European Union, Japan, Canada and Latin America. The $50 billion deficit with Mexico was the largest since NAFTA passed and also the largest in history.
Buchanan cites further food for thought:
Quote: When NAFTA was up for a vote in 1993, the Clintonites and their GOP fellow-travelers said it would grow our trade surplus, raise Mexico's standard of living and reduce illegal immigration.
None of this happened. Indeed, the opposite occurred. Mexico's standard of living is lower than it was in 1993, the U.S. trade surplus has vanished, and America is being invaded. Mexico is now the primary source of narcotics entering the United States.
Buchanan makes the point that almost all of our job growth has been in the service sector, and since 2001, we've lost 17% of the total job base in the manufacturing sector. Even the knowledge based jobs in technology have been outsourced.
Now, the Adam Smith part of me would say that it is not the legislation and trade policies per se that have driven this failure, and that we simply need to be lower cost producers of many of the manufacturing jobs we've outsourced. I also personally believe that the current situation is also a direct legacy of blue collar unionism, which was resulting in higher structural costs than were viable. That's not to trash unions, but to state that I think there was a bubble of sorts in wages and benefits in the manufacturing sector that became an untenable situation and accelerated the outsourcing phenomenon. So when Buchanan talks about how real wages have not increased, that's both true but misleading on the surface. He doesn't get into a more detailed causal analysis in this column, but I know in reading one of his books that he has discussed it.
However, the root point is an interesting one.
If the US trade deficit is at an all-time high (again), and we are being negatively impacted in a host of other areas, is it reasonable to question the trade policy as flawed? Or is it simply that we are in the midst of a cyclical shift of sorts to which we've not fully adjusted?
I don't see any reforms from within a corrupt nation of Mexico, and the entire illegal immigration issue has become the single largest powder keg out there as far as I'm concerned. I harken back to our debate about the Canadian timber issue as well in that it was flawed trade policies that set the stage for that.
So what are your thoughts about this?
I must admit to being at an intellectual crossroads about free trade. Not due to a singular piece of commentary, but because the entire body of evidence is becoming pretty damning. We're losing our hard manufacturing capability. I think that's a national security issue to boot. We're also trading away--literally--our economic sovereignty for the sake of cheap plastic goods from China and elsewhere. Long term, something has to give.
AeroWesty From United States of America, joined Oct 2004, 20322 posts, RR: 64 Reply 1, posted (7 years 10 months 1 week 2 days 8 hours ago) and read 1847 times:
I agree our trade policy is flawed. Clinton may have blown it with NAFTA, but Bush followed it up with CAFTA. Did we learn anything from whatever mistakes might have been made? Doubtful, but I'm open to alternate views.
Quoting Slider (Thread starter): since 2001, we've lost 17% of the total job base in the manufacturing sector.
I believe the fear of losing jobs can actually accelerate it. An example is that in the 60's and 70's Japanese car companies were beginning to import small inexpensive cars to the U.S. When it became a flood, we imposed quantity, not dollar value controls on them.
What that did was encourage them to create higher value products to send our way, and ultimately resulted in the Infinity, Lexus and Acura brands, with high dollar goods coming in.
The same thing happened with stoneware. We limited the flood of cheap stoneware dishes, and what we got instead was Noritake china.
We haven't been smart about our trade policy for decades--this isn't a recent phenomena, but it is due in part to our wanting to encourage local enterprises around the world in areas where the economies were damaged during the last world war. It's time to realize these economies are self-sufficient.
Derico From Argentina, joined exactly 14 years ago today! , 4262 posts, RR: 12 Reply 2, posted (7 years 10 months 1 week 2 days 8 hours ago) and read 1847 times:
I think he is incorrect saying the US has a record trade deficit with Latin America. If you exclude Mexico, the US deos very well in most of SA, Brazil, Chile, Colombia, Peru, all have big trade with the US. Venezuela would be the exception for obvious reasons. And the smaller countries of Ecuador, Uruguay, Paraguay, etc all have very good relations with the US and want free trade.
Thankfully, Argentina will never sign a free trade deal with the US, even as virtually the rest of South America really wants to.
My internet was not shut down, the internet has shut me down
AeroWesty From United States of America, joined Oct 2004, 20322 posts, RR: 64 Reply 5, posted (7 years 10 months 1 week 2 days 8 hours ago) and read 1847 times:
Quoting WhiteHatter (Reply 4): Free trade is free market economics, no matter how blustering rightards try and cut off the bits they don't like.
That's very true, and part of what you have to do if you're running a huge trade deficit is actually make something people want to buy in exchange. I don't think the U.S. has been very aware of overseas markets beyond a few high-brow brands that end up being licensed for manufacture in foreign plants anyway.
WhiteHatter From , joined Dec 1969, posts, RR: Reply 6, posted (7 years 10 months 1 week 2 days 8 hours ago) and read 1847 times:
So why can't I buy a genuine pair of Levi jeans with a Made In The USA tag?
Why do t-shirt makers use Haynes Genuine US Made t-shirts for their products? And sell them by the boatload? Why did I spend extra on Wahl hair clippers then find they were made in China?
Too many people want to ditch US made goods for sweatshop produced cheaper products. Much of that is due to US business not being export-led, and I still think that is tied in to lack of international awareness in the population generally.
Business leaders should not be riding Southwest across the country to sell domestically. They need to be doing it internationally, and exploiting the US Made = Quality Made factor. Believe me, it would work. But too many people in the USA want cheap products and profits at minimum effort, and that's why manufacturing is failing. Produce quality goods at a decent (not knockout cheap necessarily) price and hawk them internationally, and they will buy.
Arrow From Canada, joined Jun 2002, 2647 posts, RR: 2 Reply 7, posted (7 years 10 months 1 week 2 days 8 hours ago) and read 1847 times:
Quoting WhiteHatter (Reply 4): There isn't any middle way, it is either the free market or not. Free trade is free market economics, no matter how blustering rightards try and cut off the bits they don't like.
That's right on the money. Free trade is free trade, pure and simple. The problem is that with free trade, there will always be winners and losers in terms of the flow of trade between two countries, and that happens on both sides of the border. There are too many people who are quite happy to have the winners, but won't accept the losers.
NAFTA is a good case in point. I'm not sure how the stats work with Mexico, but two-way trade between Canada and the US has grown dramatically since the implementation of the original FTA (followed by NAFTA when Mexico joined) and both nations have benefitted from that. Both nations have winners and losers from that process. Some of the losers (e.g. US lumber producers) just can't tolerate the idea that someone else does it better for a whole bunch of reasons, and they cook up a subsidy case to try and kill the competition.
The trade gap the US now experiences, at least with Canada, is very misleading. The bulk of Canada's trade surplus with the US comes from very high priced energy -- oil, gas, electricity-- which the US cannot live without. A simple way to get Canada/US trade on a more even keel would be for the US to stop buying all that oil and gas. Don't think that's going to happen.
Protectionists in all countries (Canada has lots of them too) think the answer to free trade and trade deficits is to erect big walls to keep all that furrin stuff out, either through ridiculous tariffs or quotas. It is counterproductive, and look no further back than the 1930s depression for an example of what happens when you take that approach.
The U.S. Smoot-Hawley tariffs single-handedly tipped the world into depression when it might have escaped with nothing more than a nasty couple of years of low growth. The real worry is that politicians with very short memories (or they're completely stupid) will push the U.S. in that direction again. Watch out if they do, because all bets are off.
Free trade works better for everyone than managed trade; but you have to be serious about applying the principles and you have to accept losers as well as winners.
Never let the facts get in the way of a good story.
AeroWesty From United States of America, joined Oct 2004, 20322 posts, RR: 64 Reply 8, posted (7 years 10 months 1 week 2 days 8 hours ago) and read 1847 times:
Quoting WhiteHatter (Reply 6): Much of that is due to US business not being export-led, and I still think that is tied in to lack of international awareness in the population generally.
That's very true, and part of what I addressed.
In the late 80's I worked with a company that was producing a new product, made in the U.S., that they wanted to export too. I went down to the Commerce Dept. and there were literally people sitting on their hands waiting to give out info on doing business overseas, help with identifying markets, and offering assistance with attending trade shows and export formalities.
If you were to talk to 90% of U.S. manufacturers, I doubt they'd know this assistance was available, or how to even go about identifying if they had a product with a market beyond our borders.
I wouldn't say that. In fact I think it is the other way around. Has this guy visited Mexico in 1993 and then in 2006?
Quoting Slider (Thread starter): Mexico is now the primary source of narcotics entering the United States.
Of course.... simply because the US population keeps getting higher and higher, US kids keep puffing and puffing the green stuff. Which is the easier way to get that bad stuff into the US? Mexican border... Mexico is the primary source simply because it shares a border with the US, but the drugs that get into the US come from other countries, especially Colombia.
Well, then you have not been looking very hard, have you? Mexico's economy and its political institutions have undergone thorough reforms over the past two decades.
Mexico is now an investment-grade sovereign. Its Central Bank and monetary policy are independent; its annual inflation rates don't exceed 5 percent. Its political system, with three parties, is active and competitive. The nation is scheduled to have presidential elections in July and all three candidates are offering competing policy proposals to garner popular support.
The country has changed DRAMATICALLY in recent years and will continue to change over time as Mexico's political system is further liberalized. It is in the strategic interest of the US to further develop and strengthen our economic and political ties to our southern neighbor.
Quoting Slider (Thread starter): We're also trading away--literally--our economic sovereignty for the sake of cheap plastic goods from China and elsewhere.
Over the last decade or so since NAFTA has been in place, we have seen a huge amount of manufacturing jobs lost to other countries, but cheap foreign goods have been coming in, the problem is, most of it isnt coming from our neighbors Canada and Mexico but from overseas. NAFTA, hasnt to this point been as effective as thought IMO.