NationStates Jolt Archive

I have noticed in the news and many other areas recently a heavy backlash against the globalization/free trade movement, notably Barack Obama's protectionist policies and the breakdown of the Doha round due to American insistence on protection from excessive importation of food.

Anyways, I just can't understand why people don't see free international trade as what it is, a positive wealth creating engine for international growth. It allows the product manufacturers to earn more money that they would without it, and it allows the consumers to get goods at lower prices, so what is the problem.

That it supports the movement of business out of "well off" countries and into countries with poor economies so that these companies can use the cheaper labor provided there. This, in turn, causes a lowering in minimum wages and increases the gap between rich and poor even further

that some people will be put out of a job, due to competition.

You can't eat money.

And when Free Trade lulls countries into exchanging food self-sufficiency for cash crops, that often ends up being the only thing left to eat.

Free trade isn't, in and of itself, a bad thing. One-sided free trade, on the other hand, hinders the economy in one area while boosting it in another.

The principles of free trade only work within a single market. So, in order to have free trade, one must first ensure that the starting conditions in each market area are the same. If, for instance, one country in the market funnels money into a given industry while another does not, said industry in the first country is artificially boosted. If one country guarantees a living wage while the other does not, the latter country has an economic advantage in many areas of the market. These sorts of forces keep free trade from actually resulting in the best products for the best price.

So, in the end, you cannot have useful free trade without fair trade.

That it supports the movement of business out of "well off" countries and into countries with poor economies so that these companies can use the cheaper labor provided there. This, in turn, causes a lowering in minimum wages and increases the gap between rich and poor even further

This. Free trade is easy not to like if you're the one getting reamed because of it. It makes a lot of profit for the corporate leadership, but not very much for the employee.

That it supports the movement of business out of "well off" countries and into countries with poor economies so that these companies can use the cheaper labor provided there. This, in turn, causes a lowering in minimum wages and increases the gap between rich and poor even further

But what you fail to realize is that while those poor workers may be making only pennies an hour, they are making more pennies per hour than they would without those jobs, therefore, allowing the growth of their economies. So no, it is not increasing the gap between the rich and the poor so much as it is growing the pie altogether.

that some people will be put out of a job, due to competition.

And you are acting like competition is a bad thing.

But what you fail to realize is that while those poor workers may be making only pennies an hour, they are making more pennies per hour than they would without those jobs, therefore, allowing the growth of their economies. So no, it is not increasing the gap between the rich and the poor so much as it is growing the pie altogether.
What about our economy? That's great that people in poorer countries get jobs and stuff... but you seem to forget about people over here who also need jobs.

Also, the thing about countries switching over and becoming dependent on cash crops when before they were self sustaining with food is quite a good point as well.

And you are acting like competition is a bad thing.

It is if you suddenly have no money to support your family because of it.

That it supports the movement of business out of "well off" countries and into countries with poor economies so that these companies can use the cheaper labor provided there. This, in turn, causes a lowering in minimum wages and increases the gap between rich and poor even further

This. There's nothing wrong with free trade in theory, but in practice with it unregulated the way it is, all it leads to is raping of 3rd world countries and leaving countries like the U.S. completely devoid of their forming manufacturing base. We went from being one of the most powerful in terms of manufacturing to one of the least powerful, and I don't see why we should have done that. Certainly not for the sake of slightly cheaper goods.

You can't eat money.

And when Free Trade lulls countries into exchanging food self-sufficiency for cash crops, that often ends up being the only thing left to eat.

But you can use that money to purchase food from other nations, so there is still food to be put on the table. You have forgotten that free trade is multidemensional.


So, in the end, you cannot have useful free trade without fair trade.

Conditions that the Doha Rounds are trying to achieve, only to be foiled by anti-free trade pressures within the countries of the WTO

You CAN eat the money in my country!!

But you can use that money to purchase food from other nations, so there is still food to be put on the table.

Unfortunately, it's not that simple.

When you're food self-sufficient, times of economic trouble are bad, but endurable: the food you grow serves as a guarantor of economic security.

When you're not, if you can't get enough money to pay someone else for food, you're in real trouble.

Considering how volatile the prices of cash crops can be, this is a real problem.

*Laughs and ridicules those people who have the ridiculous notion that free trade is a bad idea, as they should be*

Really, you guys should read every now and then instead of believing this outdated and wrong notion.

I will be back later when I have more a lot more time not 15 minutes to give you some facts on how free trade is beneficial to both countries.

What about our economy? That's great that people in poorer countries get jobs and stuff... but you seem to forget about people over here who also need jobs.

Also, the thing about countries switching over and becoming dependent on cash crops when before they were self sustaining with food is quite a good point as well.


It is if you suddenly have no money to support your family because of it.

Cheaper goods will create a higher quantity demanded for those goods, and the stores that sell them will naturally need more workers, creating jobs for those who lost them to the original outsource.

This. There's nothing wrong with free trade in theory, but in practice with it unregulated the way it is,
Isn't free trade unregulated by the name itself.


all it leads to is raping of 3rd world countries

Yes, this is why there is a rising middle class in the two premier examples of modern globalization, China and India. This is why the Japanese rose from the ashes of World War II to become one of the most powerful economies in the world today, because globalization is bad for developing economies, right.

and leaving countries like the U.S. completely devoid of their forming manufacturing base. We went from being one of the most powerful in terms of manufacturing to one of the least powerful, and I don't see why we should have done that.

First off, we have not lost all of our manufacturing base, before you go off making outrageous claims that place the United States near the bottom of industrial output, go look at the facts, buddy.

Also, the raw industry that you are thinking of is not even what we WANT to be focusing on, when there is higher demand and better pay in areas like IT and service industries.

*Laughs and ridicules those people who have the ridiculous notion that free trade is a bad idea, as they should be*

Really, you guys should read every now and then instead of believing this outdated and wrong notion.

I will be back later when I have more a lot more time not 15 minutes to give you some facts on how free trade is beneficial to both countries.

glad to have you Blouman

And you are acting like competition is a bad thing.

Actually no. I think that if those people would lose their jobs to people thousands of miles away, and with gas at the price it is, then they're doing a shitty job.

EDIT: there are some exceptions to this, for example some things are subsidized in one country and not another, that's some pretty tough competition, and I don't think it'd be wrong for the gov't to step in at that point.

Countries have different levels of mechanisation/efficiency etc. Most notably in agriculture with combine harvesters vs pickers etc etc.

If due to this it's cheaper to import food from other countries than to buy it from local farmers then it all gets imported and the local agricultural sector collapses and all the farmers are out of work and have no money to buy food from other countries.

Unfettered competition means somebody loses, usually the small guys, and in a lot of countries there are a lot of small guys.

Unfortunately, it's not that simple.

When you're food self-sufficient, times of economic trouble are bad, but endurable: the food you grow serves as a guarantor of economic security.

When you're not, if you can't get enough money to pay someone else for food, you're in real trouble.

Considering how volatile the prices of cash crops can be, this is a real problem.

It has worked for the United States.

Do you think that we make are own food, heck no, we don't have to, we can get it cheaper from other countries.

I have noticed in the news and many other areas recently a heavy backlash against the globalization/free trade movement, notably Barack Obama's protectionist policies and the breakdown of the Doha round due to American insistence on protection from excessive importation of food.

Anyways, I just can't understand why people don't see free international trade as what it is, a positive wealth creating engine for international growth. It allows the product manufacturers to earn more money that they would without it, and it allows the consumers to get goods at lower prices, so what is the problem.

"Free" and "Fair" trade are not the same thing.

/discussion

"Free" and "Fair" trade are not the same thing.

/discussion

Commie pinko.

It has worked for the United States.
So far.

Your economy is about to go down the shitter as is the value of your currency. That ain't good in a totally 'free market'. If I was an American delegate at Doha, I'd be praying for Fair Trade to kick in pretty quickly.

I can see the Chinese and Indians rubbing their hands with glee.

Cheaper goods will create a higher quantity demanded for those goods, and the stores that sell them will naturally need more workers, creating jobs for those who lost them to the original outsource.

This only works in theory.

Unfortunately, neither labor nor capital actually have such flexibility. Farms can't magically become factories. Workers skilled in one kind of work can't magically become skilled in another kind. There are substantial costs involved here... and one consequence is that, even if the economy as a whole does better due to comparative advantage, there will be many people and regions that are left behind.

It has worked for the United States.

Do you think that we make are own food, heck no, we don't have to, we can get it cheaper from other countries.

Actually, US agriculture is one of the most protected industries we have... we are in the business of exporting food, and on a large scale.

What else is wrong with "free trade"? Double standards, enforced by the inequitable structure of global power.

Commie pinko.

I know. I like equality and fairness. What a (commie pinko - probably liberal?) bastard.

*Laughs and ridicules those people who have the ridiculous notion that free trade is a bad idea, as they should be*

Really, you guys should read every now and then instead of believing this outdated and wrong notion.

I will be back later when I have more a lot more time not 15 minutes to give you some facts on how free trade is beneficial to both countries.

BE, I can't speak for anyone else, but I'm really getting tired of you showing up in threads and trying to tell everyone "the way it really is" when half of the time you don't know what you're talking about. If you want to contribute something of substance then do it and let that speak for itself, rather than this juvenile grandstanding.

I know. I like equality and fairness. What a (commie pinko - probably liberal?) bastard.

You forgot 'bleeding-heart'.

Also, the raw industry that you are thinking of is not even what we WANT to be focusing on, when there is higher demand and better pay in areas like IT and service industries.

Which is why IT is primarily based in the U.S. and not shipped out to other countries like Ind---oh, wait.

Actually, US agriculture is one of the most protected industries we have... we are in the business of exporting food, and on a large scale.

What else is wrong with "free trade"? Double standards, enforced by the inequitable structure of global power.

We import the majority of our food these days, that is the point I was making.

A question: if "free trade" is so unambiguously good, why does it bring about a great deal of popular opposition, both in developed and developing countries?

Is it just the stubborn stupidity of the ignorant masses, who can't understand the marvelous wonders the enlightened people like you want to grant to them?

We import the majority of our food these days, that is the point I was making.

Can you source that?

We're definitely a net exporter of food... and in any case, the largest economy in the world, with a heavily protected agricultural industry, is not a good example when it comes to analyzing the effects of "free trade" policies on agriculture in developing countries.

Cheaper goods will create a higher quantity demanded for those goods, and the stores that sell them will naturally need more workers, creating jobs for those who lost them to the original outsource.


Someone else already pointed out the phenomenal stupidity of this statement, but I will as well.

People can't switch over to an entirely different kind of job that easily. Nor are the jobs created necessarily on an equal level with the jobs lost. Store clerks and stockers don't make as much money as factory workers do. And that's just one type of job.

You forgot 'bleeding-heart'.

I forgot Atheist, too. It's not my day.

It's just not fair.

But it is free...

I forgot Atheist, too. It's not my day.

It's just not fair.

But it is free...

*ba dum - tish*

(I felt it needed it *nods* )

*ba dum - tish*

(I felt it needed it *nods* )

Thank you thank you. I'll be here all week.

No, really.

The problem with unrestricted free trade is the same problem with unrestricted laissez-faire capitalism. It's fair in theory, but in reality it quickly devolves into a few very large firms (or countries) taking advantage of consumers and smaller firms (or countries.) International trade needs oversight, just as intranational trade does.

This, in turn, causes a lowering in minimum wages and increases the gap between rich and poor even further
No it doesn't. Minimum wages aren't affected by trade at all, that's all due to politicians.

The empirical evidence on income inequality in poor countries suggests that whatever increases we witness are due to poor people moving from agricultural, subsistence labour into manufacturing or other value-adding processes, earning more and moving up in the world. Since not everyone does that at any one point, you now have some reasonably well-off people and some poor people, as opposed to only poor people. More inequality certainly, but not exactly a bad thing.

This. There's nothing wrong with free trade in theory, but in practice with it unregulated the way it is, all it leads to is raping of 3rd world countries and leaving countries like the U.S. completely devoid of their forming manufacturing base.
You do realise that you're on one hand saying that poor countries are getting "raped" by having manufacturing and investment moving there, and the US is getting screwed by having manufacturing and investment moving away from there, right?

We went from being one of the most powerful in terms of manufacturing to one of the least powerful, and I don't see why we should have done that. Certainly not for the sake of slightly cheaper goods.
Exactly what do you get out of being a "powerful" location of manufacturing?

A question: if "free trade" is so unambiguously good, why does it bring about a great deal of popular opposition, both in developed and developing countries?

Is it just the stubborn stupidity of the ignorant masses, who can't understand the marvelous wonders the enlightened people like you want to grant to them?
I would say it's a problem of perception: it's quite obvious when a factory closes nearby and a lot of people lose their jobs. It's not so obvious when over a few years' time the goods made in that factory drop by 30% in real prices, for example.

The benefit is obviously there, and I don't think anyone can seriously argue that it isn't, but it's hard to make a news story out of it that will motivate people to believe one way or another. It invariably comes down to dry numbers, statistics and comparisons to a time most people don't bother to remember.

International trade needs oversight, just as intranational trade does.
Yeah, but the response to that isn't protectionism, it's trade agreements that make sure regulatory agencies work together when necessary.

Anyway, the failure of the Doha round now was due to India and China wanting to make sure their farmers didn't face competition from those of rich countries. In India's case that is due to there being 200 million farmers who are currently doing it tough, and in a democracy that's hard to ignore. In China it's due to government policy apparently being that the best response to rising food costs is self-sufficiency, which I find questionable at best. For a change western countries actually went very far in making concessions on all sorts of things.

And on a broader level, these negotiations over the past few years have taught us primarily that this whole "north v south", "developed vs developing" stuff is over. The parties doing the most to stall talks and making the least concessions are developing countries who are scared of Chinese competition. That reality will take a while to reach the various anti-globalisation campaigners out there, but it's the truth.

I would say it's a problem of perception: it's quite obvious when a factory closes nearby and a lot of people lose their jobs. It's not so obvious when over a few years' time the goods made in that factory drop by 30% in real prices, for example.

Two things.

First, this is actually perfectly solvable on the political level: you can say "These industries are exploiting you by demanding that the government cheat for them and protect their high prices." That's a message that can sell--its logic is simple, its appeal in accordance both with self-interest and with common-sense morality. Yet at least much of the time it doesn't actually sell... perhaps because the average person in the US and Europe hasn't actually seen much benefit from "free trade" policies (even if certain parts of the economy have), and isn't willing to buy into a framework that hasn't followed through.

Second, while "outsourcing" is a major focus of the complaints in Western countries, popular opposition in developing countries isn't so narrowly characterizable, except perhaps with respect to agriculture (where the complaints have real merit).

Because if your only goal is to make as much profit as possible, and you dont care what you have to do in order to obtain it...


Then you inevitably hurt and destroy things and people along the way...

The Free Market has to be controlled in some way in order to keep them from elevating themselves at the expense of the people...

SNIP

its very easy to understand the anti-globalization movement when you use the correct tools to find out information (like this (google.co.uk) or watch the free instructional video (http://www.youtube.com/watch?v=bgpqaHLsX6A))

basically saying "sum up a whole global movement for me" is lazy and quite a demand to make

First, this is actually perfectly solvable on the political level: you can say "These industries are exploiting you by demanding that the government cheat for them and protect their high prices." That's a message that can sell--its logic is simple, its appeal in accordance both with self-interest and with common-sense morality.
That would require politicians to transcend their current thinking purely in terms of 'nations' rather than the actual interests of their citizens. Assuming they're not being paid off by lobbyists, that is. But few countries are willing to let "national champions" and industries with long traditions go - it happens, as Britain has demonstrated, but it seems to be a tough sell for many politicians. And in Germany for example there are those politicians who are essentially saying what you're saying here, but they are then attacked quite viciously by labour groups and -parties who obviously want to protect the jobs in these old-school industries. It took many, many years to shut down the subsidies for coal mining for example, even though the mines had basically run dry long ago.

Yet at least much of the time it doesn't actually sell... perhaps because the average person in the US and Europe hasn't actually seen much benefit from "free trade" policies (even if certain parts of the economy have), and isn't willing to buy into a framework that hasn't followed through.
I think they certainly have seen the benefits, they just have a hard time recognising them as such. Japanese cars breaking into the US market, or Wal-Mart in more recent times have certainly changed what average Americans can expect to get for their money, but since it happened gradually and the underlying causes are rarely talked about in that context, you get a lot of people who might drive a Toyota and shop at Wal-Mart but would honestly tell you "globalisation has done nothing for me".

Second, while "outsourcing" is a major focus of the complaints in Western countries, popular opposition in developing countries isn't so narrowly characterizable, except perhaps with respect to agriculture (where the complaints have real merit).
I think it's difficult to get reliable information on what exactly people in developing countries think about various aspects of globalisation. Poor farmers who have to compete with subsidised industrial farms in the EU or US are obviously not going to be in favour. But go beyond that, and when people think of free trade they almost certainly include some judgement on globalisation in general and domestic reforms that are supposed to facilitate its take-up in it. And when that happens, you could get financial crises, inefficient formerly state-owned industries collapsing, perhaps an erosion of traditional all-powerful political labour movements, corporate and regulatory scandals and so on into the mix.

These things aren't necessarily a direct result from free trade, and many could be avoided with more competent domestic management. But ask someone in Latin America what they think of free trade, and many of these things are going to be included in their judgement.

Yes, this is why there is a rising middle class in the two premier examples of modern globalization, China and India.
Who both use extensive protectionist measures.

This is why the Japanese rose from the ashes of World War II to become one of the most powerful economies in the world today...
...by using extensive protectionist measures, as it still uses today.

'Free Trade' isn't useful to the nation-state, and none would dare impleent a totally free market.

I think they certainly have seen the benefits, they just have a hard time recognising them as such. Japanese cars breaking into the US market, or Wal-Mart in more recent times have certainly changed what average Americans can expect to get for their money, but since it happened gradually and the underlying causes are rarely talked about in that context, you get a lot of people who might drive a Toyota and shop at Wal-Mart but would honestly tell you "globalisation has done nothing for me".

I'm not so sure those are benefits, or if they are, I don't think they fill the gap left by outsourcing. Being employed is more than just a source of income, it brings status, security, and a place in the community. If I were to lose my job at a cheap plastic do-dad factory, over thirty years I may more than make up for my temporary income losses through cheaper, Chinese plastic do-dads. But as you say, most people don't realize that, and aren't happier even though they "should" be.

All of this might not matter so much if free trade led to, say, cheaper foods or medicines, products which most people would agree are objectively beneficial. (It does in some countries, but not much in the US.) Instead, it leads to cheaper cars, cameras, plastic do-dads...things which are desired, obviously, but don't increase the average happiness the same way hospitals in developing countries do.

BE, I can't speak for anyone else, but I'm really getting tired of you showing up in threads and trying to tell everyone "the way it really is" when half of the time you don't know what you're talking about. If you want to contribute something of substance then do it and let that speak for itself, rather than this juvenile grandstanding.

As I said when I have more time to post a more comprehensive post on free trade I will. The information I intend to place on that post will be the result two university courses on international trade and I will be referring to the text books I have in my bookcase for clarification of my knowledge.

When I get some time not the quick 15 minutes or so that I get every now and then. Just a quick question what were these threads were I told everyone "the way it really is"? And which ones was I wrong one? that I refused to change my mind about? I know there are threads that I saaid something somebody showed me something and I accepted it and changed my mind.

I'm not so sure those are benefits, or if they are, I don't think they fill the gap left by outsourcing. Being employed is more than just a source of income, it brings status, security, and a place in the community. If I were to lose my job at a cheap plastic do-dad factory, over thirty years I may more than make up for my temporary income losses through cheaper, Chinese plastic do-dads. But as you say, most people don't realize that, and aren't happier even though they "should" be.
Well, if we're being fair, it really is a relatively small number of people who actually lose their jobs because of free trade compared to the whole of the public. Many of those whose factories were closed or jobs cut since the 70s weren't victims of free trade either, but companies with bad management, or simply automatisation (which incidentally means that China is actually losing almost as many manufacturing jobs as it is gaining at the moment).

If you actually find everyone whose job loss was solely contributable to the dropping of protectionism and who didn't find a better job since then, it surely isn't a huge group. Nonetheless, it is a very public group and a very public event. Many people who didn't lose their jobs and are at no risk to might still think NAFTA was a bad idea because it "cost us jobs". These people might be unequivocally better off because of it, but they have a harder time listing the benefits than the costs.

But you're obviously right, there is a group of people who are made much worse off by free trade. But then, there was a group of people who were made much worse off by the development of the car, namely those in the horse-drawn carriage industry. It sucks for them, but you'd be hard-pressed to argue that it's a bad thing on balance.

All of this might not matter so much if free trade led to, say, cheaper foods or medicines, products which most people would agree are objectively beneficial. (It does in some countries, but not much in the US.) Instead, it leads to cheaper cars, cameras, plastic do-dads...things which are desired, obviously, but don't increase the average happiness the same way hospitals in developing countries do.
I'm really in no position to comment on the judgements of individual people in this way. I'd like to think that people have actually gotten some appreciable benefit from being able to buy plastic do-dads and cars for much less than before, but I suppose that's something you'd have to ask of every one of them. And indeed, there are also quite useful things, such as electronics and computers, which are so affordable today only because of overseas manufacturing. And given how international big pharma is, free trade and overseas investment has probably reduced the cost of medicines too, at least moreso than would otherwise have been the case.

As for food, I don't think anyone would argue we're actually seeing a free market there today. And there is a point that for something as essential as this, really free trade and specialisation is hampered by global politics. I'm quite certain that a global market for food could work quite well - if it wasn't for countries being able to erect trade barriers for political reasons to starve others, or the fact that some governments are so heavily involved in the production and distribution of food (or the use of foreign currency to purchase it) that changes in price can really cripple them.

That's not really an excuse for protectionism though - simply a call for the offending parties to sit down together and think about starting a new framework from a clean sheet of paper.

As I said when I have more time to post a more comprehensive post on free trade I will. The information I intend to place on that post will be the result two university courses on international trade and I will be referring to the text books I have in my bookcase for clarification of my knowledge.
Why don't you give a summary of why you believe free trade to be good, before using your textbooks?

I mean, those two university courses must have taught you something... no?

Well, if we're being fair, it really is a relatively small number of people who actually lose their jobs because of free trade compared to the whole of the public. Many of those whose factories were closed or jobs cut since the 70s weren't victims of free trade either, but companies with bad management, or simply automatisation (which incidentally means that China is actually losing almost as many manufacturing jobs as it is gaining at the moment).

If you actually find everyone whose job loss was solely contributable to the dropping of protectionism and who didn't find a better job since then, it surely isn't a huge group. Nonetheless, it is a very public group and a very public event. Many people who didn't lose their jobs and are at no risk to might still think NAFTA was a bad idea because it "cost us jobs". These people might be unequivocally better off because of it, but they have a harder time listing the benefits than the costs.

That's true, and in fact I believe the unemployment rate has actually dropped since NAFTA. I don't know if NAFTA caused the drop, but I think the numbers show the agreement definitely didn't hurt, overall at least. Job losses are just the most famous example of free trade related issues.

I'm really in no position to comment on the judgments of individual people in this way. I'd like to think that people have actually gotten some appreciable benefit from being able to buy plastic do-dads and cars for much less than before, but I suppose that's something you'd have to ask of every one of them. And indeed, there are also quite useful things, such as electronics and computers, which are so affordable today only because of overseas manufacturing. And given how international big pharma is, free trade and overseas investment has probably reduced the cost of medicines too, at least moreso than would otherwise have been the case.

This goes along with my larger point. I derive some satisfaction from cheap Chinese stuff, but it's completely subjective. There's nothing wrong with that. However, if I'm worried cheap Chinese stuff has a harmful stuff on the US, for whatever reason, the lower cost doesn't matter because I subjectively value it less. Just look at all of the products that have MADE IN THE USA emblazoned on their packages. They may cost more, but that's because people value them more. The 30% decrease in costs, then, doesn't matter, because I value the stuff 30% less. There's no net gain.

I don't know about free trade affecting medicine, but you may be right. That's something I'll look up.

As for food, I don't think anyone would argue we're actually seeing a free market there today. And there is a point that for something as essential as this, really free trade and specialisation is hampered by global politics. I'm quite certain that a global market for food could work quite well - if it wasn't for countries being able to erect trade barriers for political reasons to starve others, or the fact that some governments are so heavily involved in the production and distribution of food (or the use of foreign currency to purchase it) that changes in price can really cripple them.
My favorite (if that's the right word) picture from a slide show about work in Haiti I once saw was a pile of rice bags with the EU flag pressed on them. Rice was grown just down the road, but for whatever reason, the rice from the EU was cheaper. That's when you know your economy is screwed up.

This doesn't exactly relate to your point, which I agree with almost verbatim. I just wanted a place to interject an interesting anecdote.

That's not really an excuse for protectionism though - simply a call for the offending parties to sit down together and think about starting a new framework from a clean sheet of paper.
I'm not a fan of tariffs. But more than economic efficiency should be taken into account when coming up with these deals. For example, many places market "fair trade" coffee now; I think a beneficial condition in this new framework you speak of would be all imported coffee would meet whatever those requirements are. China's abysmal human rights record is another point that should be considered. These are things which in the short-run may lead to inefficiencies, and may even lead to conditional tariffs. But trade affects more than the flow of goods, and regulations should reflect that.

Why don't you give a summary of why you believe free trade to be good, before using your textbooks?

I mean, those two university courses must have taught you something... no?

Very well, let’s start off with tariffs.

If a country like America decides to implement a tariff on a particular good/service/industry then, in the country which has implemented the tariff, this will cause the domestic price to increase, this in turn will cause demand to decrease, which in turn will also cause a drop in imports. The country since I am talking about a country like America it is a large country and so they have an effect on the world price of this good, with the tariff this is of benefit to the domestic country as it can now import at a lower world price (aka terms of trade effect), however, the country exhibits a net welfare loss because the production and consumption effects of the tariff has increased despite the terms of trade increasing. As I said America being a large country there is also a effect on the rest of the world, that is the world price decreases, while this increases demand it is outweighed by a decrease in production, a decrease in exports and a decrease in the terms of trade for the world. This thus results in a net loss for the rest of the world, coupled with the net loss in the domestic country means that the entire world has suffered a net loss. (I wish I had some graphs to place on here because it is much easier to explain)

Of course this is taking the $1, 1 vote value judgment. The large country can place a very small tariff which will be of benefit to the country (not the world) this is known as the optimal tariff and should be placed so that when it raises the domestic price for the good, this new price is equal to the marginal cost of producing said good.

Now I am aware that part of the Doha trading talks concerned subsidies that the US has on its food crops.

When I have some more time I will type about subsidies, I will say now, that a subsidy is better than a tariff, so watch this space!

This goes along with my larger point. I derive some satisfaction from cheap Chinese stuff, but it's completely subjective. There's nothing wrong with that. However, if I'm worried cheap Chinese stuff has a harmful stuff on the US, for whatever reason, the lower cost doesn't matter because I subjectively value it less. Just look at all of the products that have MADE IN THE USA emblazoned on their packages. They may cost more, but that's because people value them more. The 30% decrease in costs, then, doesn't matter, because I value the stuff 30% less. There's no net gain.
But if this was the case for a sufficiently large number of people wouldn't we see manufacturing remaining in the US? If customers were happy to buy something at a much higher price because it says "Made in USA", then moving away may not be worth it.

But though some people may think that the country of origin is important for some goods, it doesn't seem to be the case on a sufficiently large scale. Ultimately the market is a reflection of customer preferences, and if the market tends towards outsourcing and in the end you can't blame it on anything but the interests of consumers (and producers, though competition is strong enough to force the vast majority of producers to do what consumers want rather than the other way around).

My favorite (if that's the right word) picture from a slide show about work in Haiti I once saw was a pile of rice bags with the EU flag pressed on them. Rice was grown just down the road, but for whatever reason, the rice from the EU was cheaper. That's when you know your economy is screwed up.
To be fair, rice was never a great idea in Haiti. I'm not sure whether it was colonial- or post-colonial ill-devised development policy, but there are other crops that Haitians had been growing for a long time and which suit the climate better.

But it's not really a matter of the economy being screwed up as it is one of misguided priorities. Some countries offer better conditions for certain production than others, and it makes sense for those to specialise and trade with others. The question is whether the EU (or the US, which played an even larger role in rice imports into Haiti) are really at a comparative advantage in these goods, or whether the government is artificially improving conditions by using taxpayer funds for subsidies. If the latter is the case, all the trouble starts - just in and of itself the fact that EU rice is cheaper than Haitian rice, even though Haitians are growing it and it has to be shipped half-way across the world, isn't cause for any concern.

For example, many places market "fair trade" coffee now; I think a beneficial condition in this new framework you speak of would be all imported coffee would meet whatever those requirements are.
Well, if you look, "fair trade"-labeled coffee is also more expensive than the normal stuff. You know where the difference goes, and might be happy to pay for that, but not everyone is. Ultimately "fair trade" is currently about buying from small farmers rather than industrial producers or wholesalers which take a large chunk of the value added. Worthwhile as you may find that, there is a reason industrial farming and wholesalers exist, and it seems unjustified to me to force them out of business by law.

But trade affects more than the flow of goods, and regulations should reflect that.
That's not necessarily a new idea. It's just that trying to implement it generally doesn't work. Regardless of how justified your new tariff might be, as soon as you introduce it the other country basically has to match it. And if everything is even again at that point, your initial reason compels you to create the next barrier. Repeat ad nauseum.

A better idea would be to simply let trade go and use other measures to address these concerns. There is nothing wrong with common regulatory agencies and laws, if sovereignty concerns can be overcome. But ultimately trying to direct trade by use of barriers unilaterally, regardless of the reason, doesn't end up achieving what you want. Even the relatively tame "subsidy" of the artificially low renminbi has all sorts of side effects on the Chinese economy that they're having trouble dealing with.

The problem with "free trade" is that it is almost always not free.

That some other countries don't have the same safety standards we have, both for the products and for the workers. I can cite toys with lead based paint from China, and parsley with salmonella from Nicaragua.

Of course, if they raise their safety standards, they'll have to raise their prices

That it typically results in the standards in an industry (due to being located in a country) being lowered or eliminated completely as the industry is moved to a country that lacks laws against low standards or the legal framework to enforce said laws.

Also, a loss of self-sufficiency, which can be important to keep a country from getting caught up in regional turmoil (such as oil in the MidEast).

This only works in theory.

Unfortunately, neither labor nor capital actually have such flexibility. Farms can't magically become factories. Workers skilled in one kind of work can't magically become skilled in another kind. There are substantial costs involved here... and one consequence is that, even if the economy as a whole does better due to comparative advantage, there will be many people and regions that are left behind.Don't be silly. The Skill Fairy visits everyone who makes the right choices.

Very well, let’s start off with tariffs.

If a country like America decides to implement a tariff on a particular good/service/industry then, in the country which has implemented the tariff, this will cause the domestic price to increase, this in turn will cause demand to decrease, which in turn will also cause a drop in imports. Unless the company who makes the product that has a tariff on it decides to eat the tariff by dropping its price accordingly.

Trade is considered especially unpopular because of the simple fact that large scale international trade forces change on all parties involved. It forces industrialized countries towards service and information fields, it drives LDC's to urbanization and industrialization, and increased competition means that individuals must continually keep updating themselves to stay in the game.

That, plus the fact that governments of LDC's usually don't know how to respond to large multinational corporations in the way the industrialized world does. It's far too often that MNC's are given a free hand, and even government indulgence for a time, until a backlash brews. Lacking in oversight and regulation, local managers are notorious at cutting corners. When instructed to cut costs, local managers do so however they feel like.

The abuses and incompetence mount to some sort of disaster or collapse. At which point we get idiotic economic-nationalist policies as a response to the primarily governmental failing, such as what we are seeing in Latin America these days.




In the industrialized world, though, it's just white dudes shouting "They took our jaawwwbs!"

Nothing is wrong with free trade of goods and services, something the US seems to have issues with in general, something hardly unique to Obama's campaign.

Luckily, I come from the UK, which is about the freest place in the world to do business. I can invest pretty much anywhere, they can invest here, it's all gravy. Happy days etc.

My favorite (if that's the right word) picture from a slide show about work in Haiti I once saw was a pile of rice bags with the EU flag pressed on them. Rice was grown just down the road, but for whatever reason, the rice from the EU was cheaper. That's when you know your economy is screwed up.
The Haitians got screwed by NAFTA, and their government can no longer pay subsidies to rice farmers. The EU, on the other hand, gives massive subsidies to farmers because they are the base of the economy. That said, I'd not take your one picture you saw in a slideshow to be all that representative of the normal situation in Haiti.
I'm not a fan of tariffs. But more than economic efficiency should be taken into account when coming up with these deals. For example, many places market "fair trade" coffee now; I think a beneficial condition in this new framework you speak of would be all imported coffee would meet whatever those requirements are.
Why bother? People will go with their consciences. Middle class, white people will buy fair trade due to some kind of class and race guilt, other people won't, because they can't afford it, that's how these things go.
China's abysmal human rights record is another point that should be considered.
From a country which has more people per head in jail than the Chinese, supports the illegal detention and torture of people in Guantanamo, still has the death penalty, and is fighting a war of occupation in Iraq (and that is what it is), I'd not get too up your arse about human rights abuses and how much of a role they should play on world trade, I'll be honest.

Unless the company who makes the product that has a tariff on it decides to eat the tariff by dropping its price accordingly.

Umm no, because then that would mean they would only be willing to produce even less goods at this much lower price which only makes things worse.

Speaking specifically about China and the US here:

The problem is that it's not widespread enough to achieve its full economic benefits. The world's biggest exporters, China and the US, still retain huge barriers to trade and considerable subsidies on major products that are continuing to produce many of the problems currently advanced as arguments against free trade. We constantly blame China for problems but fail to address those ones still remaining he/re at home. If we want to act as a responsible international trade partner, we need to get serious about the issue and not resort to childish threats of tariffs and quotas.

The levels of sinophobia in particular are quite disturbing given the fact that the country is a colossal distance away from rivaling the economic power of the US or Japan, let alone the UK, Germany, or even smaller nations like Belgium or Ireland. A country whose entire manufacturing sector is over 80% foreign-owned, foreign-managed, and supplied entirely by foreign expertise and whose information sector is well over 90% of those three and which lacks any real domestic innovation will never become a true economic power.

Umm no, because then that would mean they would only be willing to produce even less goods at this much lower price which only makes things worse.Not if they're still making a profit even with the reduced price.

Not if they're still making a profit even with the reduced price.

Then that's the most poorly designed tariff I can imagine. You'd expect whoever was behind its implementation would at least take into account how high the tariff would have to be to eliminate an importers profit.

Then that's the most poorly designed tariff I can imagine. You'd expect whoever was behind its implementation would at least take into account how high the tariff would have to be to eliminate an importers profit.Not if the goal is merely to protect domestic industries. The domestic industries are protected, but the people who prefer the importer's product will still buy it.
The tariff could also be used to subsidize a competing domestic product.

Not if they're still making a profit even with the reduced price.

Did you read the rest of what I posted? I talked about how tariffs decrease the amount produced and how this resulted in a net welfare loss, if the companies decided to decrease their prices even further (which hardly matter because we are talking about the world price, which is set by both the amount demanded and the amount the company is willing to produce at that price) then the net loss to the world will be even lower.

Not if the goal is merely to protect domestic industries. The domestic industries are protected, but the people who prefer the importer's product will still buy it.
The tariff could also be used to subsidize a competing domestic product.

Subsidies and tariffs are two different things.

When I am a bit more sober I will discuss it more.

Did you read the rest of what I posted? I talked about how tariffs decrease the amount produced and how this resulted in a net welfare loss, if the companies decided to decrease their prices even further (which hardly matter because we are talking about the world price, which is set by both the amount demanded and the amount the company is willing to produce at that price) then the net loss to the world will be even lower.The reason that the company produces less is not because of the tariff, it is because the increased price will cause a reduction in demand.
Without a price increase, there is no reduction in demand, and thus no reduction in production.

Subsidies and tariffs are two different things.

When I am a bit more sober I will discuss it more.Yes, I know, but they can both be implemented at once.

The Haitians got screwed by NAFTA, and their government can no longer pay subsidies to rice farmers. The EU, on the other hand, gives massive subsidies to farmers because they are the base of the economy. That said, I'd not take your one picture you saw in a slideshow to be all that representative of the normal situation in Haiti.
It's probably not. Like I said, it was just an interesting anecdote I've been trying to thread into a conversation lately.

Why bother? People will go with their consciences. Middle class, white people will buy fair trade due to some kind of class and race guilt, other people won't, because they can't afford it, that's how these things go.
Coffee was just an example, I know little about the actual conditions of coffee farms and if they're as bad as some say.

People buy what is cheapest because it is available. If the United States were to put a tariff on "evil coffee" (or something like it), it's no longer a choice between what's cheap and what's ethical. In fact, fair trade coffee would probably (eventually) become cheaper, because it would have the greater demand.
From a country which has more people per head in jail than the Chinese, supports the illegal detention and torture of people in Guantanamo, still has the death penalty, and is fighting a war of occupation in Iraq (and that is what it is), I'd not get too up your arse about human rights abuses and how much of a role they should play on world trade, I'll be honest.
But the US doesn't support illegal detention and torture of people, or even the occupation of Iraq: the courts and the legislatures have condemned both. The president of the US supports these things. China wasn't exactly an enlightened republic that only began abuses when Hu became president, whereas most of the things you list are specific to one administration. Working conditions are also much better in the US, which was actually what I was thinking when I said human rights. "Workers' rights" may have been a better term.

I really can't stand protectionism. It's one of those rare things which are both wrong in a pragmatic sense AND a moral sense.

glad to have you Blouman
OH! OH! I'm here!:D
"Free" and "Fair" trade are not the same thing.

/discussion

Life ain't fair. Why should trade be any different?

But if this was the case for a sufficiently large number of people wouldn't we see manufacturing remaining in the US? If customers were happy to buy something at a much higher price because it says "Made in USA", then moving away may not be worth it.

But though some people may think that the country of origin is important for some goods, it doesn't seem to be the case on a sufficiently large scale. Ultimately the market is a reflection of customer preferences, and if the market tends towards outsourcing and in the end you can't blame it on anything but the interests of consumers (and producers, though competition is strong enough to force the vast majority of producers to do what consumers want rather than the other way around).
To a degree, yes. I think I have much less faith in consumer sovereignty than you. While I agree that conditions are not unfavorable enough for people to boycott foreign goods on a massive scale (because, obviously, people aren't boycotting foreign goods on a massive scale), that doesn't mean this is the best possible situation. A certain amount of "activation energy," I guess you could call it, is necessary to instigate something like that.


Well, if you look, "fair trade"-labeled coffee is also more expensive than the normal stuff. You know where the difference goes, and might be happy to pay for that, but not everyone is. Ultimately "fair trade" is currently about buying from small farmers rather than industrial producers or wholesalers which take a large chunk of the value added. Worthwhile as you may find that, there is a reason industrial farming and wholesalers exist, and it seems unjustified to me to force them out of business by law.
I probably shouldn't have used coffee as an example because I know almost nothing about it. (Never a good idea.) I don't think it would kill large farms, though, only farms which don't meet whatever standards are agreed upon. In the US, businesses have to give the minimum wage, have safety regulations, etc. I don't see why what we buy from other countries should have different expectations.


That's not necessarily a new idea. It's just that trying to implement it generally doesn't work. Regardless of how justified your new tariff might be, as soon as you introduce it the other country basically has to match it. And if everything is even again at that point, your initial reason compels you to create the next barrier. Repeat ad nauseum.

A better idea would be to simply let trade go and use other measures to address these concerns. There is nothing wrong with common regulatory agencies and laws, if sovereignty concerns can be overcome. But ultimately trying to direct trade by use of barriers unilaterally, regardless of the reason, doesn't end up achieving what you want. Even the relatively tame "subsidy" of the artificially low renminbi has all sorts of side effects on the Chinese economy that they're having trouble dealing with.
That's fine; I was thinking of tariffs because it reminded me of the restrictions the UN imposes. But any rule would work.

Life ain't fair. Why should trade be any different?

You're confusing "should" with "is." Life is not fair, but should be, and can actually be made fairer. Same with trade.

You're confusing "should" with "is." Life is not fair, but should be, and can actually be made fairer. Same with trade.
You keep believing that. Life can never be made to be fairer, and neither can trade.

You're confusing "should" with "is." Life is not fair, but should be, and can actually be made fairer. Same with trade.

I disagree - attempts to improve mankind's situation has never worked, and never will. We should all just accept our situation and move on.

I disagree - attempts to improve mankind's situation has never worked, and never will. We should all just accept our situation and move on.

Correction, attempts to make mankind's situation fairer has never worker.

Example: The computer. How many lives has it improved? Who made the most out of it though? Those who make computers. Their lives were improved, but also those above them. Still unequal, but both better for the invention.

Correction, attempts to make mankind's situation fairer has never worker.

Example: The computer. How many lives has it improved? Who made the most out of it though? Those who make computers. Their lives were improved, but also those above them. Still unequal, but both better for the invention.

Humans didn't have furs. Everyone else did. Fire.

I disagree - attempts to improve mankind's situation has never worked, and never will. We should all just accept our situation and move on.

That's a rather silly thing to say, man kinds conditions, at least in the west, have improved massively over the last century.

Humans didn't have furs. Everyone else did. Fire.

Humans got furs, if you'll remember. However, certain groups want to reverse our progress...:D

That's a rather silly thing to say, man kinds conditions, at least in the west, have improved massively over the last century.

Commie.

Commie.

:rolleyes:

A certain amount of "activation energy," I guess you could call it, is necessary to instigate something like that.
But that's social engineering, and an imposition of your opinion on others. On balance it's gotta be pretty clear that the US is not doing any worse because it imports a lot of stuff. Economics, though perhaps not public discourse, has moved beyond mercantilism as a yardstick. The people who lose their jobs due to trade are no different to the people who lose their jobs due to technological innovation, and many of them ultimately get over it - particularly in the US, where switching locations and careers is a lot more common and probably a lot easier than it is in Europe.

By providing this "activation energy" and forcing people to buy "Made in USA", you're actively trying to waste economic resources to benefit one particular section of society. That's worthy of a long, public and well-informed debate at the best of times, in this particular case I really don't think you have much of a leg to stand on. As Mill said, you can argue, reason and plead all you want, but you shouldn't visit anyone with any evil in case they don't agree with your view of what they should be doing.

I probably shouldn't have used coffee as an example because I know almost nothing about it. (Never a good idea.) I don't think it would kill large farms, though, only farms which don't meet whatever standards are agreed upon. In the US, businesses have to give the minimum wage, have safety regulations, etc. I don't see why what we buy from other countries should have different expectations.
Well, let's take the example of minimum wages. How much is fair? A Chinese worker getting paid the American minimum wage would be a very happy man, though there is no way that with the tools at his disposal he could actually produce the value that he's getting paid. Chinese business by the nature of their development can't survive paying current American wages, just like American businesses from 60 years ago couldn't. So you try figuring out how much an appropriate wage is...in reality there's never going to be much agreement, and whatever you come up with is probably not going to reflect the economic situation accurately.

Or to take the reasoning a step further: do you think western Europe should be placing tariffs or quotas on US goods because American labour standards are less generous than European ones?

Realistically the question of labour rights in a country like China has to be settled by Chinese workers and employers. The way it currently works is not a secret, and American consumers have all the opportunity in the world to inform themselves. Additional labeling may be possible, though it seems unnecessary and expensive to me, given that what it would say is already common knowledge.

That's fine; I was thinking of tariffs because it reminded me of the restrictions the UN imposes. But any rule would work.
I don't think any rule would. There is a big difference between an agreement between regulatory agencies to cooperate when businesses operate across borders, and implementing measures which are supposed to stop this business operating.

But that's social engineering, and an imposition of your opinion on others. On balance it's gotta be pretty clear that the US is not doing any worse because it imports a lot of stuff. Economics, though perhaps not public discourse, has moved beyond mercantilism as a yardstick. The people who lose their jobs due to trade are no different to the people who lose their jobs due to technological innovation, and many of them ultimately get over it - particularly in the US, where switching locations and careers is a lot more common and probably a lot easier than it is in Europe.

By providing this "activation energy" and forcing people to buy "Made in USA", you're actively trying to waste economic resources to benefit one particular section of society. That's worthy of a long, public and well-informed debate at the best of times, in this particular case I really don't think you have much of a leg to stand on. As Mill said, you can argue, reason and plead all you want, but you shouldn't visit anyone with any evil in case they don't agree with your view of what they should be doing.
I didn't mean interference from the government, necessarily, and I certainly didn't mean forcing people to buy what they don't want. This spark could take the form of a crusading politician, but it could also be a grassroots movement, a book, even a YouTube sensation. The point is, something has to happen, something that's independent of consumer preferences.

Well, let's take the example of minimum wages. How much is fair? A Chinese worker getting paid the American minimum wage would be a very happy man, though there is no way that with the tools at his disposal he could actually produce the value that he's getting paid. Chinese business by the nature of their development can't survive paying current American wages, just like American businesses from 60 years ago couldn't. So you try figuring out how much an appropriate wage is...in reality there's never going to be much agreement, and whatever you come up with is probably not going to reflect the economic situation accurately.

Or to take the reasoning a step further: do you think western Europe should be placing tariffs or quotas on US goods because American labour standards are less generous than European ones?

Realistically the question of labour rights in a country like China has to be settled by Chinese workers and employers. The way it currently works is not a secret, and American consumers have all the opportunity in the world to inform themselves. Additional labeling may be possible, though it seems unnecessary and expensive to me, given that what it would say is already common knowledge.
It's certainly a matter of debate, and I don't have a trade agreement draft in my back pocket. But I think a good rule of thumb is that if conditions in China are such that American businesses cannot compete and still follow American law, we should consider why that is. In many cases, I imagine it would be because the American economy is more developed, and that's fine. Good, in fact, because it helps further China's development. But if it's because Chinese health regulations are less strict, or because the products are ineffective, there is room for concern. Health is especially a concern, just look at all of the cases of toy recalls.

I don't think any rule would. There is a big difference between an agreement between regulatory agencies to cooperate when businesses operate across borders, and implementing measures which are supposed to stop this business operating.
What would regulatory agencies do, then? I'm not sure how you can regulate without rules, unless you leave every instance of trade to the discretion of a council or board.

I disagree - attempts to improve mankind's situation has never worked, and never will. We should all just accept our situation and move on.

I don't know about "improving mankind's situation," that's a pretty weighty phrase. But I think there are plenty of instances where injustice has been righted. What else are legal courts for?*

*Besides protecting the propertied class against the proletariat, of course.

Free trade in and of itself is a good thing... However, organizations such as the WTO and NAFTA are bad.

WTO and NAFTA are organizations that do not answer to any particular government, yet make policy that member nations must abide by. The WTO, NAFTA, CAFTA, etc. all destroy national soverignty which is a very BAD thing.

Not to mention, these organizations are quite contrary to what free trade means. Free trade means trade without government involvement. While trade organizations aren't a government, they put up barriers and create rules which regulate said trade... It's sort of an oxymoron to have free trade and then have organizations that govern it.

But if it's because Chinese health regulations are less strict, or because the products are ineffective, there is room for concern. Health is especially a concern, just look at all of the cases of toy recalls.
That's the sort of thing where you'd want the authorities in the US talk to the authorities in China and set up a common system for inspections at the manufacturing site. And if it turns out that the Chinese don't want to make any concessions or just aren't able to implement agreed standards, then US authorities can say as much in public and let consumers make up their own minds.

What would regulatory agencies do, then? I'm not sure how you can regulate without rules, unless you leave every instance of trade to the discretion of a council or board.
I think that's a misunderstanding, I meant to say that not just any rule would do.

WTO and NAFTA are organizations that do not answer to any particular government, yet make policy that member nations must abide by. The WTO, NAFTA, CAFTA, etc. all destroy national soverignty which is a very BAD thing.
NAFTA isn't an organisation at all. But that's an aside - exactly what is national sovereignty good for in your eyes? Why is its erosion a bad thing?

You can't eat money.

And when Free Trade lulls countries into exchanging food self-sufficiency for cash crops, that often ends up being the only thing left to eat.

^^^^^^^
This point is the most important. Food first. Everything else later.

No it doesn't. Minimum wages aren't affected by trade at all, that's all due to politicians.

Except that, as you say, politicians can be manipulated by lobby groups (i.e., certain industries). Also, not all countries have minimum wage laws. In either case, industry groups have a large amount of power over minimum wages.

The empirical evidence on income inequality in poor countries suggests that whatever increases we witness are due to poor people moving from agricultural, subsistence labour into manufacturing or other value-adding processes, earning more and moving up in the world. Since not everyone does that at any one point, you now have some reasonably well-off people and some poor people, as opposed to only poor people. More inequality certainly, but not exactly a bad thing.

IN times of food shortage having people move out of agriculture into other industries to chase money is not a particularly "good" thing. Making small-scale agriculture more attractive would be a preferable solution. Any increase in earnings is increasingly eaten up (so to speak) by increased costs of basic food supplies.

Exactly what do you get out of being a "powerful" location of manufacturing?

As the politician, kickbacks...

I would say it's a problem of perception: it's quite obvious when a factory closes nearby and a lot of people lose their jobs. It's not so obvious when over a few years' time the goods made in that factory drop by 30% in real prices, for example.

The benefit is obviously there, and I don't think anyone can seriously argue that it isn't, but it's hard to make a news story out of it that will motivate people to believe one way or another. It invariably comes down to dry numbers, statistics and comparisons to a time most people don't bother to remember.

For people in the west, reduced costs og manufactured goods isn't that big a deal. Whether or not a DVD player in the UK costs £15 or £40 isn't that big a deal. Whether or not they have a job in making said DVD players would be much more important. Unemployment is a bigger problem than many who advocate market principles are willing to admit, and you also tend to see far more "flexibility" in people to find new work (which often simply isn't available, or is so different that people trained in other occupations simply won't get hired for it) or "move up the payscale". It destroys peoples lives far more so than not being able to afford an DVD player.

Anyway, the failure of the Doha round now was due to India and China wanting to make sure their farmers didn't face competition from those of rich countries. In India's case that is due to there being 200 million farmers who are currently doing it tough, and in a democracy that's hard to ignore. In China it's due to government policy apparently being that the best response to rising food costs is self-sufficiency, which I find questionable at best. For a change western countries actually went very far in making concessions on all sorts of things.

Actually China's view makes a lot of sense. I'm not familiar with the food situation there but the exact same arguments are being made in Egypt regarding wheat production. When you look at the situation on the ground, it makes sense. The general population can't afford to buy bread made with grain imported at world prices, so the government has to either subsidise or starve the population, since the farmers within Egypt focus on cash cropping sugar and cotton. However the cotton market is totally undermined by US farmers, so export revenues are low. Shifting to grain production would allow for domestic demand to be met at controlled prices, and possibly produce a surplus which could either be stockpiled or exported for what is, at the moment, a good price. It also keeps money in the country, rather than, essentially, rather than essentially taking money from your own farmers to give it to American ones.

And on a broader level, these negotiations over the past few years have taught us primarily that this whole "north v south", "developed vs developing" stuff is over. The parties doing the most to stall talks and making the least concessions are developing countries who are scared of Chinese competition. That reality will take a while to reach the various anti-globalisation campaigners out there, but it's the truth.

No conflict is ever definitively over. Rather two of the factions have, for the time being, a common enemy. Once that enemy is no longer the enemy of one or the other factions (for whatever reason) they will go back to fighting each other. To say the North/South divide in trade "is over" is like saying that the situation of Chechnya "is over".

It took many, many years to shut down the subsidies for coal mining for example, even though the mines had basically run dry long ago.

And Wales is still paying the price for that decision. The mines weren't the most productive in the world, but coal came out. Had the government put subsidies into creating work for those towns affected then it may have been justified. As it was, they made a few token gestures and left them to rot.

I think they certainly have seen the benefits, they just have a hard time recognising them as such. Japanese cars breaking into the US market, or Wal-Mart in more recent times have certainly changed what average Americans can expect to get for their money, but since it happened gradually and the underlying causes are rarely talked about in that context, you get a lot of people who might drive a Toyota and shop at Wal-Mart but would honestly tell you "globalisation has done nothing for me".

I don't' think most people would genuinely say (at least those who have any social awareness) that having the choice between Toyota and GM cars is worth the near total destruction of the economy in places such as Michigan, or the same in Britain.

I think it's difficult to get reliable information on what exactly people in developing countries think about various aspects of globalisation.

It really isn't. Just speak to them.

Poor farmers who have to compete with subsidised industrial farms in the EU or US are obviously not going to be in favour. But go beyond that, and when people think of free trade they almost certainly include some judgement on globalisation in general and domestic reforms that are supposed to facilitate its take-up in it. And when that happens, you could get financial crises, inefficient formerly state-owned industries collapsing, perhaps an erosion of traditional all-powerful political labour movements, corporate and regulatory scandals and so on into the mix.

Collapse of industries, state owned or otherwise, means disaster for thousands, perhaps even tens or hundreds of thousands of people. s you said, it may be boring numbers and statistics. Behind them are people, for whom the government is responsible for protecting. If reform fails a nations people, even if the intention was good, then the government has failed. This is often how they, rightly, see it. If "free trade" is hurting a nation, it's hardly wrong for a country to shun it.

These things aren't necessarily a direct result from free trade, and many could be avoided with more competent domestic management. But ask someone in Latin America what they think of free trade, and many of these things are going to be included in their judgement.

I've seen few examples of where this happens, though. and I'd like some examples. Even the few where it does happen (Malaysia, for example) have other unpleasant side effects.

Worthwhile as you may find that, there is a reason industrial farming and wholesalers exist, and it seems unjustified to me to force them out of business by law.

If something is harming the interests of a nation, I would say it's "unfair" for the government to take action against it. However I think there is place for large agricultural concerns to exist, but this is not necessarily as part of a "free trade" network.

That's not necessarily a new idea. It's just that trying to implement it generally doesn't work. Regardless of how justified your new tariff might be, as soon as you introduce it the other country basically has to match it. And if everything is even again at that point, your initial reason compels you to create the next barrier. Repeat ad nauseum.

There are non-tariff solutions to trade that doesn't favour a nations interests, such as diverting trade through a state regulatory agency that directly chooses what to buy and sell and to whom and where. I.e. the USA doesn't want to sell Uranium to Iran, but what is Iran really wants tot buy? Under free trade a private enterprise should be free to sell it to them. The US gets around this by simply forbidding them to do so. It's a lot simpler.

A better idea would be to simply let trade go and use other measures to address these concerns. There is nothing wrong with common regulatory agencies and laws, if sovereignty concerns can be overcome.

Precisely.

But ultimately trying to direct trade by use of barriers unilaterally, regardless of the reason, doesn't end up achieving what you want.

Sometimes it does... I think the focus on tariffs though, is unproductive. You need to look at the whole range of tools available to govern trade effectively.


PS - Sorry for this post being behind the flow of the thread, was meant to be posted last night, couldn't log on.

mostly that its a euphamisim for explotation and nothing 'free' about it at all.

=^^=
.../\...

The problem with free trade is that most people confuse it with managed trade (of the NAFTA/WTO variety).

Main problem with free trade is that it costs jobs in developed countries with decent work conditions. How is a company based in a country like Australia with a 40-hour work week, various benefits, decent pay and strong safety regulation supposed to produce goods that compete with manufacturers from china who work people up to 13 hours a day, every day with no sick leave etc. and dangerous conditions (workplaces built and run on the cheap)? We need to level the playing field a bit so we don't suffer for the fact that we don't treat our workers like slaves.

The problem with free trade is that most people confuse it with managed trade (of the NAFTA/WTO variety).

its not a question of "most people" "confusing" anything, rather the former is what those who promote the latter deceptively call it!

=^^=
.../\...

And most people believe the promoters who promote the latter as the former. Hence, they are confused.

The reason that the company produces less is not because of the tariff, it is because the increased price will cause a reduction in demand.
Without a price increase, there is no reduction in demand, and thus no reduction in production.

My God man did you just listen to yourself?

"The reason that the company produces less is not because of the tariff, it is because the increased price will cause a reduction in demand"

The reason why the price increased is because the tariff was implemented. This causes a reduction in demand.

So yes your second sentence is absolutely correct, but a tariff increases prices.

And most people believe the promoters who promote the latter as the former. Hence, they are confused.

well of course the whole pseudo-science of economics is the biggest con game humanity ever inflicted on itself, whether or not religeon might or might not be one also.

anyone who exposes themselves to corporate media without taking its infotainment with a very major grain of salt, and its all infoTAINMENT, however much they may try to pretend they are offering the real news, the whole news and nothing but the news, so help them ceo and cfo, or so they'd swear, is OF COURSE "confused" in that sense, otherwise known as brainwashed.

=^^=
.../\...

well of course the whole pseudo-science of economics is the biggest con game humanity ever inflicted on itself, whether or not religeon might or might not be one also.

anyone who exposes themselves to corporate media without taking its infotainment with a very major grain of salt, and its all infoTAINMENT, however much they may try to pretend they are offering the real news, the whole news and nothing but the news, so help them ceo and cfo, or so they'd swear, is OF COURSE "confused" in that sense, otherwise known as brainwashed.

=^^=
.../\...

You have a very flippant and rather obnoxious view of the world, but fortunately overshadowed by other peoples even more extreme view of the world (andaras).

well of course the whole pseudo-science of economics is the biggest con game humanity ever inflicted on itself, whether or not religeon might or might not be one also.

anyone who exposes themselves to corporate media without taking its infotainment with a very major grain of salt, and its all infoTAINMENT, however much they may try to pretend they are offering the real news, the whole news and nothing but the news, so help them ceo and cfo, or so they'd swear, is OF COURSE "confused" in that sense, otherwise known as brainwashed.

=^^=
.../\...

Uh, right, economics is a psuedoscience, that is why the theories of it have been able to get us out of depressions, (keynesian multiplier), why Reagan was able to end stagflation (monetarism) and why the world is the way it is today.

I am not even going to touch your comments about religion and the media, they are not worthy of this thread, this is about economic issues, not about your oddball outlook on life. Please, stick on topic.

May the debate carry on... *slouches back on the couch and listens*

That's the sort of thing where you'd want the authorities in the US talk to the authorities in China and set up a common system for inspections at the manufacturing site. And if it turns out that the Chinese don't want to make any concessions or just aren't able to implement agreed standards, then US authorities can say as much in public and let consumers make up their own minds.


Because, obviously - all the problems are at the China end. American companies don't need to have any responsibility for checking the products they import, nor should they have any assurance to customers that they are providing a fir product for the purpose for which it is intended.

Fuck America's "Buyer Beware" mentality.

I have noticed in the news and many other areas recently a heavy backlash against the globalization/free trade movement, notably Barack Obama's protectionist policies and the breakdown of the Doha round due to American insistence on protection from excessive importation of food.

Anyways, I just can't understand why people don't see free international trade as what it is, a positive wealth creating engine for international growth. It allows the product manufacturers to earn more money that they would without it, and it allows the consumers to get goods at lower prices, so what is the problem.

This is something that I have thought about ever since I was entirely too young to worry about this stuff. I am against free trade. However, I remain open minded on the subject because peopel who are apparently a lot smarter than me seem to be in favor of it.

I have many reasons that I oppose free trade. However, they fall into two categories that are related. The first theme is the notion that trade policy should be directed primarily at doing what is best for the economy of the nation and not directed primarily at increasing global wealth. I do not believe that global wealth is necessarily in the best interests of the United States. Economic power is what provides the taxes to build up military forces afterall. It is in our interests for our allies to have strong economies but not our potential enemies. Since "global wealth" applies to everyone this helps our allies and our enemies.

My primary concern though is more of an umbrella concern that takes into account the environment, consumer safety, and human rights. Trade policy needs to be at the forefront of advancing these areas of progress internationally. Let's say that a country like China is able to produce a widget for $5.00 less per unit because it does not have environmental protections that American firms must adhere to. By not raising our tariffs to internalize that cost we are rewarding the same activity occurring abroad that we are discouraging at home. As an environmentalist, I want the environment protected and cleaned up everywhere not just in my own country.

We need trade barriers that promote the common good of the Earth (ie. protect and advance the environment, promote human rights, etc.). We also need trade barriers that advance the national economic interest. It is not simply a matter of the cheapest goods in the stores it is also the matter of the income to go out and buy the goods in the stores. Free trade may lower costs but I am not sure it increases incomes in the USA.

We need trade barriers that keep out goods that were not produced in countries with good human rights records. We also need trade barriers that prohibit spoilers of the environment from benefiting from their misdeeds. We also need trade barriers to protect the consumers from foreign firms to at least the extent that they are protected from domestic firms.

However, I do not want any trade barriers on investing in the United States' economy. I am unable to think of a reason why a trade barrier of tha tsort would benefit us in any material way.

However, I do not want any trade barriers on investing in the United States' economy. I am unable to think of a reason why a trade barrier of tha tsort would benefit us in any material way.

Doesn't that policy mean we have no problem with countries' appalling human rights records so long as they give us money rather than the other way around? I don't think China would be keen on investing in us on those terms.

Doesn't that policy mean we have no problem with countries' appalling human rights records so long as they give us money rather than the other way around? I don't think China would be keen on investing in us on those terms.

So we should not let companies from countries with evil regimes invest in our economy? I can sort of see your point. However, at least they are investing in our nice market rather than their nasty market. The capital has to go somewhere. It might as well be us than them.

Because, obviously - all the problems are at the China end. American companies don't need to have any responsibility for checking the products they import, nor should they have any assurance to customers that they are providing a fir product for the purpose for which it is intended.

Caveat Emptor.
Fuck America's "Buyer Beware" mentality.
If that doesn't work, why do you think we've allowed lawyers to live for so long?:D

Caveat Emptor.

If that doesn't work, why do you think we've allowed lawyers to live for so long?:D

Please keep letting me live.

Please keep letting me live.

*mutters about overcharging*:tongue:

Caveat Emptor.


The problem is - by holding themselves completely uninvolved - the buyer can't beware, because they're not given the information. Mattel - was it? Importing the toys? No quality control at this end, at all. The product was potentially lethal, and the supplier acted as nothing more than a relay (with mark-up, obviously) - and then they got treated like heroes when they pulled the product!

The problem is - by holding themselves completely uninvolved - the buyer can't beware, because they're not given the information. Mattel - was it? Importing the toys? No quality control at this end, at all. The product was potentially lethal, and the supplier acted as nothing more than a relay (with mark-up, obviously) - and then they got treated like heroes when they pulled the product!
They shouldn't have been treated like heroes, and they should've been sued.

It's that simple.

My God man did you just listen to yourself?

"The reason that the company produces less is not because of the tariff, it is because the increased price will cause a reduction in demand"

The reason why the price increased is because the tariff was implemented. This causes a reduction in demand.

So yes your second sentence is absolutely correct, but a tariff increases prices.A tariff usually increases prices, but it isn't the case that a tariff must do so.

They shouldn't have been treated like heroes, and they should've been sued.

It's that simple.Replace "sued" with "prosecuted" and you've got it right.

I have noticed in the news and many other areas recently a heavy backlash against the globalization/free trade movement, notably Barack Obama's protectionist policies and the breakdown of the Doha round due to American insistence on protection from excessive importation of food.

Anyways, I just can't understand why people don't see free international trade as what it is, a positive wealth creating engine for international growth. It allows the product manufacturers to earn more money that they would without it, and it allows the consumers to get goods at lower prices, so what is the problem.It's because international growth and wealth creation aren't as cool as they sound, even when they happen. Free trade destroys local markets by swamping them with cheap foreign goods because they have the ability to produce more cheaply. I'm aware that the removal of subsidies would lessen the effect "free" trade has today, but it will still end up reducing the amount of money people have (this is called negative growth) in the following manner: Cheap foreign goods outcompete local goods. Demand for local goods drops. Local goods are no longer produced at all, or in lower quantities. Local people lose jobs associated with producing local goods. This is a particularly pronounced problem where food is concerned, since not only is the local populace poorer than before free trade was allowed to ruin their economy, they're now dependent on foreign food imports. This example has been brought to you by the letters E and U, and the country Ghana.

Another thing: Free trade doesn't care whose pockets the money goes to. So, a plantation owner in a country that sees workers' rights as less than desireable is going to be able to produce certain things cheaper than in countries where there is legislation in place or enforced that would ensure that workers aren't kept in slave-like conditions and paid near to nothing. And countries wouldn't be able to do anything about it, since putting a tarriff on goods produced under harsh conditions would be infringing on free trade. Basically, the only wealth production would occur with the plantation owner. Asia and South America are the primary locations where this occurs.

So, yeah, completely free trade? No thanks.

A tariff usually increases prices, but it isn't the case that a tariff must do so.

Explain.

You have a very flippant and rather obnoxious view of the world, but fortunately overshadowed by other peoples even more extreme view of the world (andaras).

It may be a flippant and obnoxious one at times, but Cameroi does often have fairly insightful and/or thought provoking things to say. There's much more genuine discussion material there than Andaras, for a start.

It's because international growth and wealth creation aren't as cool as they sound, even when they happen. Free trade destroys local markets by swamping them with cheap foreign goods because they have the ability to produce more cheaply. I'm aware that the removal of subsidies would lessen the effect "free" trade has today, but it will still end up reducing the amount of money people have (this is called negative growth) in the following manner: Cheap foreign goods outcompete local goods. Demand for local goods drops. Local goods are no longer produced at all, or in lower quantities. Local people lose jobs associated with producing local goods. This is a particularly pronounced problem where food is concerned, since not only is the local populace poorer than before free trade was allowed to ruin their economy, they're now dependent on foreign food imports. This example has been brought to you by the letters E and U, and the country Ghana.

Free trade will always lead to economic change as more goods are imported. No one is denying that importing cheap foreign goods will weaken uncompetitive domestic producers. But free trade is a two way system - it also strengthens competitive domestic producers by creating an export market as well. That is why countries which have opened up to trade have not seen mass unemployment. Although some industries die, other industries flourish. The average citizen also benefits from being able to buy cheap, imported products than having to buy expensive local products.

Dependence on foreign food imports is no bad thing either, especially in countries where land availability or climate make the concept of food self sufficiency impossible. You only have to look at the famines in North Korea to see what happens when a country attempts forced food independence. Food trade restrictions are also contributing to the current high food prices. The price of rice, in which trade is very limited thanks to export bans in Vietnam and India, has skyrocketed. The Phillipines cannot achieve food self sufficiency due to its high population and small farming areas and now it can't get rice from Vietnam because of moronic attempts to limit food trade.

Another thing: Free trade doesn't care whose pockets the money goes to. So, a plantation owner in a country that sees workers' rights as less than desireable is going to be able to produce certain things cheaper than in countries where there is legislation in place or enforced that would ensure that workers aren't kept in slave-like conditions and paid near to nothing. And countries wouldn't be able to do anything about it, since putting a tarriff on goods produced under harsh conditions would be infringing on free trade. Basically, the only wealth production would occur with the plantation owner. Asia and South America are the primary locations where this occurs.

Free trade doesn't care whose pockets money goes to only if the people spending money don't care whose pockets the money goes to. Blocking trade won't improve the conditions for workers in developing countries.

Replace "sued" with "prosecuted" and you've got it right.

I was close...

You do realise that you're on one hand saying that poor countries are getting "raped" by having manufacturing and investment moving there, and the US is getting screwed by having manufacturing and investment moving away from there, right?
Yes I am. The "raping" as it were(a bad choice of words, please excuse me) is more due to the poor working conditions, wages, ect all of which would not occur in the U.S. That is, the workers of these nations are being taken advantage of in a way not unlike workers everywhere in the first period of industrialization.


Exactly what do you get out of being a "powerful" location of manufacturing?

Jobs, for Americans in this case. Personally, in my mind, that's more important than larger profits for certain companies and slightly cheaper goods. The lack of jobs in areas such as Detroit have been hitting the U.S. hard, and it's one of the primary reasons for such a huge upsurge in crime in those areas.

Now, please don't misunderstand me. I don't have a problem with companies making profit--that's how our economy works, after all. What I have a problem with is making profit at the expense of both Americans who need jobs AND the thousands upon thousands of workers in other countries who are being taken advantage of. If they would at least give those workers the same conditions we Americans would get, I wouldn't be anywhere near as bothered by it. (I'd still be irked, of course, but nothing to be helped there.)

Jobs, for Americans in this case. Personally, in my mind, that's more important than larger profits for certain companies and slightly cheaper goods. The lack of jobs in areas such as Detroit have been hitting the U.S. hard, and it's one of the primary reasons for such a huge upsurge in crime in those areas.

Now, please don't misunderstand me. I don't have a problem with companies making profit--that's how our economy works, after all. What I have a problem with is making profit at the expense of both Americans who need jobs AND the thousands upon thousands of workers in other countries who are being taken advantage of. If they would at least give those workers the same conditions we Americans would get, I wouldn't be anywhere near as bothered by it. (I'd still be irked, of course, but nothing to be helped there.)

Unemployment in the US does not reflect your claims. Michigan does indeed have the highest unemployment rate, but so do areas not associated with manufacturing like Mississippi. Pennsylvania is a traditionally industrial state and one which is often supposed to have suffered from manufacturing decline but its unemployment rate is average.

Free trade will always lead to economic change as more goods are imported. No one is denying that importing cheap foreign goods will weaken uncompetitive domestic producers. Course not. People are claiming that it's a good thing, which is false. Ghanan chicken farmers going out of business because they will never be able to compete with European chicken farmers is not a good thing, no matter how you twist it.
But free trade is a two way system - it also strengthens competitive domestic producers by creating an export market as well. That is why countries which have opened up to trade have not seen mass unemployment. Yes they have. There is near to noone working in the poultry agri sector in Ghana anymore. That is mass unemployment.
Although some industries die, other industries flourish. The average citizen also benefits from being able to buy cheap, imported products than having to buy expensive local products.Until something changes and Europeans no longer sell them cheap food. Now they have the fun time of trying to create a replacement overnight.

Dependence on foreign food imports is no bad thing either, No.
especially in countries where land availability or climate make the concept of food self sufficiency impossible. Said countries not having a choice in the matter doesn't make them being dependent on foreign food imports a good thing.
You only have to look at the famines in North Korea to see what happens when a country attempts forced food independence. North Korea is probably not the best example, considering its atypical and rather incompetent government.
Food trade restrictions are also contributing to the current high food prices. Indeed they are. They're also some countries only means of combatting said crisis, by banning exports to countries where people are willing to pay more for the food needed in the country. See India.
The price of rice, in which trade is very limited thanks to export bans in Vietnam and India, has skyrocketed. It did that before too.
The Phillipines cannot achieve food self sufficiency due to its high population and small farming areas and now it can't get rice from Vietnam because of moronic attempts to limit food trade."Cannot achieve" is no excuse for expanding dependency.
Free trade doesn't care whose pockets money goes to only if the people spending money don't care whose pockets the money goes to. Blocking trade won't improve the conditions for workers in developing countries.When exactly did people truly care about that? If they did, Transfair would be a lot more popular.

Course not. People are claiming that it's a good thing, which is false. Ghanan chicken farmers going out of business because they will never be able to compete with European chicken farmers is not a good thing, no matter how you twist it.

Its not good for Ghanian chicken farmers. Its good for anyone in Ghana who eats chickens but doesn't farm them. Its good for European chicken farmers.

I shall take this opportunity to point out that any export of food by the EU cannot possibly be considered free trade anyway due to the overwhelmingly large subsidies. If actual free trade xisted between Ghana and the EU, we would see cheap Ghanaian chickens available here, and the EU farmers would be struggling, which would be only fair.

Yes they have. There is near to noone working in the poultry agri sector in Ghana anymore. That is mass unemployment.

And yet, the cocoa industry is booming. Ghana is the second largest cocoa exporter in the world, due to its comparative advantage as Ghanain cocoa is considered of an above average quality.

Until something changes and Europeans no longer sell them cheap food. Now they have the fun time of trying to create a replacement overnight.

Why overnight? Economic transitions are not meant to be sudden.

No.

Do you want to explain that?

Said countries not having a choice in the matter doesn't make them being dependent on foreign food imports a good thing.

Indeed. My point was that the idea is impossible in many countries.

North Korea is probably not the best example, considering its atypical and rather incompetent government.

Its not the government's incompetence, its the attempt at food self reliance. Whenever they have a bad crop the people starve because they are entirely self sufficient for food. If they were importing from abroad they wouldn't have that problem.

Indeed they are. They're also some countries only means of combatting said crisis, by banning exports to countries where people are willing to pay more for the food needed in the country. See India.

Its not a case of 'willing to pay more'. India is a rice exporter because it produces a surplus of rice. The government are driving inflation in other countries to reduce their own, ahead of elections next May. This is the economic policy of petty nationalism and populism.

It did that before too.

Exports of rice were limited before India and Vietnam banned exports. It tends to be the foods that are traded infrequently that are seeing rapid price increases.

"Cannot achieve" is no excuse for expanding dependency.

Its an excellent reason. Land is a limited resource, why waste it producing what you can buy?

When exactly did people truly care about that? If they did, Transfair would be a lot more popular.

People don't care, that's my point. Until people do care aboout poor working conditions they won't change, no matter how many tariffs you create.

This. There's nothing wrong with free trade in theory, but in practice with it unregulated the way it is, all it leads to is raping of 3rd world countries and leaving countries like the U.S. completely devoid of their forming manufacturing base. We went from being one of the most powerful in terms of manufacturing to one of the least powerful, and I don't see why we should have done that. Certainly not for the sake of slightly cheaper goods.

So much wrong here:

- Trade right now is highly regulated by almost every country and international organizations. This fact should stop you from saying that regulation somehow stops the "raping" of third world countries. If anything it has expedited that "rape" in many ways.

- The US is STILL the number one manufacturer. Take a look at this:

http://management.curiouscatblog.net/2008/01/15/top-10-manufacturing-countries-2006/

Let us try to keep the free trade debate, if one breaks out, on a reality-based level.

This point is the most important. Food first. Everything else later.
Though food takes a special place in terms of importance, I'm not sure it can really be treated completely differently. Firstly, as long as you have some means of foreign money that allows people in the country to buy food from overseas, there's nothing wrong with it - as long as there exists a free market in which political interference can't suddenly cut your supply, which I already said is probably not realistic for all countries.

Secondly, why do you think a country that tries to cut itself off from the world market would do any better? Many poor countries are currently trying to implement export bans that prevent their farmers to export domestically produced food. But all that does is reduce the supply of food in the global market, and all your neighbouring countries are going to suffer from even higher prices - as are you if by any chance you can't produce as much food domestically as the population needs (and that is the case in many, many countries...it doesn't matter how many tariffs and export bans Ethiopia announces, it's not gonna happen).

Furthermore, what is to stop domestic farmers from realising that they're getting screwed over compared to world prices, and simply charging those as well? If you have tariffs to protect them, they can even go above them. The only way to stop that is with some level of price control - and if you do that, all you do is set yourself up for trouble in the future. Like it or not, current high world food prices are a reflection of the globally available supply and demand, and price controls don't make those underlying factors go away. Whether you declare it cheap by law, or you subsidise the consumers, you're gonna end up with unintended consequences.

That's not to say that poor countries will, or even should, simply sit by while their people can't afford a loaf of bread anymore, but the alternatives that they have at their disposal really don't look particularly worthwhile to me either.

Except that, as you say, politicians can be manipulated by lobby groups (i.e., certain industries). Also, not all countries have minimum wage laws. In either case, industry groups have a large amount of power over minimum wages.
In my experience, even more influence comes from unions, but that's an aside. What I was saying is that whether or not there is free trade, the minimum wages are still decided by the government.

IN times of food shortage having people move out of agriculture into other industries to chase money is not a particularly "good" thing. Making small-scale agriculture more attractive would be a preferable solution. Any increase in earnings is increasingly eaten up (so to speak) by increased costs of basic food supplies.
It is a good thing if it means they'll be able to afford food at world prices. The problem with a lot of food production in these poor countries is that it's subsistence farming: they grow enough food for themselves and the little bit that's extra is sold on the market for other essentials. Those guys aren't really taking part in any global food market, what they make never leaves their immediate environment, and the effect in terms of adding to supply is miniscule since they can only produce so little. Getting those guys out of agriculture and into some money-generating activity would be an excellent idea.

But assuming there is also some level of small-scale agriculture that could function as a reasonable supplier for a reasonable number of people: how would you make it more attractive? They're already getting more money for their food now, so throwing more cash* at them really isn't the answer. They already benefit from being much closer to their market than their western competitors. There are two things that can be done: one is to see the back of western subsidies to their own farmers, the other is to improve infrastructure at home and make sure those small-scale farms can grow into very big, industrial ones.

*Tariffs, by the way, are just like throwing cash at them, except it's not taxpayer cash, but the consumers' own as they now pay higher prices than they would have otherwise.

As the politician, kickbacks...
I don't think that's what Kyronea was mourning the loss of.

For people in the west, reduced costs og manufactured goods isn't that big a deal. Whether or not a DVD player in the UK costs £15 or £40 isn't that big a deal.
Of course it is. Imagine ten million DVD players being sold in the UK each year. That's £250 million a year saved that can be allocated to other stuff.

And for people in the developing world, that matters even more. Globalised manufacturing lowering prices also allows hundreds of millions of poor people to buy stuff their parents wouldn't even have dreamed of.

Whether or not they have a job in making said DVD players would be much more important. Unemployment is a bigger problem than many who advocate market principles are willing to admit, and you also tend to see far more "flexibility" in people to find new work (which often simply isn't available, or is so different that people trained in other occupations simply won't get hired for it) or "move up the payscale". It destroys peoples lives far more so than not being able to afford an DVD player.
Well, what is the UK's unemployment rate now? What was it before free trade started to cut into its manufacturing? What was people's spending power before and after?

As I said, there is a number of people who ended up getting hurt. They're the victims of creative destruction (http://en.wikipedia.org/wiki/Creative_destruction). If you really think it necessary, feel free to support them with some sort of welfare payment (if you can get the political support - or better still, use your own money). But don't stop the process itself, it's just not worth it.

...Shifting to grain production would allow for domestic demand to be met at controlled prices, and possibly produce a surplus which could either be stockpiled or exported for what is, at the moment, a good price...
The problem is these controlled prices. The fact that you agree that some sort of price fixing is necessary means that the business itself is not sustainable. Until Egyptians earn the cash to buy the food at something approaching world prices, it won't be - unless perhaps all the food is exported to those that can.

This the same thing that is going on in so many developing countries with regards to petrol at the moment. They feel compelled to subsidise prices and keep them low, and it's eating into their budgets something fierce. Some of the smaller ones are going to collapse into financial crises because of it. Even bigger ones like India are going to suffer because a lot more money goes into fuel subsidies than education at the moment.

Either way they're stuck between a rock and a hard place. But that's not the fault of free trade, or rather, getting rid of it wouldn't fix anything. The only actually sustainable long-term solution is to make sure your economy can grow to a point where people can feed themselves regardless of spikes in world prices, anything along the way is a stop-gap measure. And since these poor countries are so dependent on trade and investment to grow in the first place, cutting into it may (!) alleviate some immediate pressure, but also seriously hurt the chances of there being a long-term solution.

And Wales is still paying the price for that decision. The mines weren't the most productive in the world, but coal came out. Had the government put subsidies into creating work for those towns affected then it may have been justified. As it was, they made a few token gestures and left them to rot.
As I said, creative destruction. Regardless of how many subsidies you push into a mine in Wales, it's not gonna be able to compete with one here, which is basically the size of Wales.

I don't' think most people would genuinely say (at least those who have any social awareness) that having the choice between Toyota and GM cars is worth the near total destruction of the economy in places such as Michigan, or the same in Britain.
And they're free not to buy a Toyota (not to mention that Toyota builds, and has always done so, a huge number of cars in the US). And Britain not only has a lot of car manufacturing still, but it's also an absolutely vital R&D centre in that respect.

Collapse of industries, state owned or otherwise, means disaster for thousands, perhaps even tens or hundreds of thousands of people. s you said, it may be boring numbers and statistics. Behind them are people, for whom the government is responsible for protecting. If reform fails a nations people, even if the intention was good, then the government has failed. This is often how they, rightly, see it.
They should just make sure that they see the difference between the government, the reform package and the outside phenomenon that the reform was supposed to address.

If "free trade" is hurting a nation, it's hardly wrong for a country to shun it.
The question is: why can Taiwan become rich with free trade, and Egypt can't?

Over the last 50 years there was a competition between two ideas of development strategy: import substitution or export orientated. The East Asian countries used the latter, the Middle East, Latin America, India and especially Africa used the former. In South Korea or Japan the government subsidised the creation of particular industries for which there was a demand in world markets (occasionally using tariffs in the process, think of that what you will) which were aimed at raking in cash. They didn't really mind imports.

In India or African countries they saw their dependence on imports from rich countries as the reason they were poor, and decided to subsidise the same industries they were importing from with no concern for exports. That bombed horribly.

I've seen few examples of where this happens, though. and I'd like some examples. Even the few where it does happen (Malaysia, for example) have other unpleasant side effects.
There are always unpleasant side effects. It's the nature of economics that pretty much nothing ever comes without a cost of some sort.

But yeah, East Asia is the classic example of countries basically getting it right with regards to free trade (and then screwing it up with regards to domestic financial regulation, but that's precisely the sort of thing that one should be considering seperately).

However I think there is place for large agricultural concerns to exist, but this is not necessarily as part of a "free trade" network.
Do you know the basic theory behind comparative advantage?

There are non-tariff solutions to trade that doesn't favour a nations interests, such as diverting trade through a state regulatory agency that directly chooses what to buy and sell and to whom and where.
And how does it do that? With one eye on the voter and another on ideology. Economics are going to come short, and as a result people who shouldn't be poor will remain so.

I.e. the USA doesn't want to sell Uranium to Iran, but what is Iran really wants tot buy? Under free trade a private enterprise should be free to sell it to them. The US gets around this by simply forbidding them to do so. It's a lot simpler.
Now, uranium in Iran is probably not actually something a free market would demand in the first place.

Because, obviously - all the problems are at the China end. American companies don't need to have any responsibility for checking the products they import, nor should they have any assurance to customers that they are providing a fir product for the purpose for which it is intended.
Of course they're responsible, and of course they're providing this assurance. That's what American regulations say, and they apply to companies that sell in the US, regardless of where it was made.

My point is that you could get a better outcome if Chinese regulatory authorities talked to American ones and they could work out a more complete coverage of the entire production chain.

Yes I am. The "raping" as it were(a bad choice of words, please excuse me) is more due to the poor working conditions, wages, ect all of which would not occur in the U.S. That is, the workers of these nations are being taken advantage of in a way not unlike workers everywhere in the first period of industrialization.
Well, would you prefer them not being taken advantage of? They do make quite an effort to get to the places where these big factories sit and get a job there, and what one hears from them is usually some combination of "it's better than the farm" and "I want to make sure my kid can go to a good school eventually". Some places are worse than others, of course, but rather than rape, I think this is, at worst, more like prostitution.

Jobs, for Americans in this case. Personally, in my mind, that's more important than larger profits for certain companies and slightly cheaper goods. The lack of jobs in areas such as Detroit have been hitting the U.S. hard, and it's one of the primary reasons for such a huge upsurge in crime in those areas.
Certainly. But the question is: is the alternative (to keep unprofitable and ultimately inefficient companies running just to provide jobs) really worth it? In the Soviet Bloc, that was the name of the game, because unemployment was outlawed. But it didn't really give people fulfilling jobs, much of an opportunity for advancement, or decent quality and decent price consumption goods. And when it came crashing down (and there are many reasons for why these systems eventually do), it crashed hard.

Now, please don't misunderstand me. I don't have a problem with companies making profit--that's how our economy works, after all. What I have a problem with is making profit at the expense of both Americans who need jobs AND the thousands upon thousands of workers in other countries who are being taken advantage of. If they would at least give those workers the same conditions we Americans would get, I wouldn't be anywhere near as bothered by it. (I'd still be irked, of course, but nothing to be helped there.)
But how do they make a profit? They do it by selling you and me stuff that we want and happily pay for. If they were to improve wages, conditions or simply stay in a rich country, the workers will benefit, but at whose expense? The company wouldn't stop making a profit, it would adjust prices accordingly. It's you and me who will pay for those fewer hours and higher wages.

I for one don't think that those Chinese people in the factories are being exploited, or are even perceiving it to be so. I don't think I'd be doing American workers a service by encouraging them to stay in low-level manufacturing jobs. And I'm certainly not ready to spend the little money I do earn on this particular cause.

If you are, then it's your right as a citizen and consumer to act accordingly. But I think you'd be wrong.

free trade is good that is all.

free trade is good that is all.

Rape is good. That is all.

Though food takes a special place in terms of importance, I'm not sure it can really be treated completely differently. Firstly, as long as you have some means of foreign money that allows people in the country to buy food from overseas, there's nothing wrong with it ...

I don't think there is anything wrong with importing food in some circumstances, as some countries (particularly city states) don't have any realistic alternatives, but I think putting yourself in this position when there is an alternative is not a good option. It leaves a nation open to political pressure, takes money out of the country and leaves the country susceptible to other nations agricultural disasters.

Secondly, why do you think a country that tries to cut itself off from the world market would do any better?

As said, not advocating a total lock-down, merely focus on ramping up domestic production as much as possible so that a poor country can be self sufficient rather than struggling to pay world prices of supplies it can't actually afford.

Many poor countries are currently trying to implement export bans that prevent their farmers to export domestically produced food. But all that does is reduce the supply of food in the global market,

I was thinking less of export bans and more of switching away from cash cropping to production of local staples. I.e. for Egypt, reducing the amount of land given to sugar production (production of which is stupidity bordering on the criminal for a whole number of reasons) and cotton, and growing wheat instead. In Indonesia some palm oil plantations could be switched to rice and fruit production.

and all your neighbouring countries are going to suffer from even higher prices - as are you if by any chance you can't produce as much food domestically as the population needs (and that is the case in many, many countries...it doesn't matter how many tariffs and export bans Ethiopia announces, it's not gonna happen).

See above I'm not talking about export bans per se, though on certain crops it should be considered. Whilst trading with neighbouring countries who have a shortfall is good, it shouldn't come at the expense of your own people going hungry. Irish famine.

Furthermore, what is to stop domestic farmers from realising that they're getting screwed over compared to world prices, and simply charging those as well?

The law.

If you have tariffs to protect them, they can even go above them. The only way to stop that is with some level of price control - and if you do that, all you do is set yourself up for trouble in the future.

Laws against price gorging exist in most countries now, and haven't caused problems in the industries concerned. Telecoms is an example where prices are heavily restricted to prevent gorging.

Like it or not, current high world food prices are a reflection of the globally available supply and demand, and price controls don't make those underlying factors go away. Whether you declare it cheap by law, or you subsidise the consumers, you're gonna end up with unintended consequences.

As opposed to letting people starve. Wringing hands and wishing the poor had more money isn't really an option either. A government has to act decisively, or you get more people beaten to death in the bread queues.

That's not to say that poor countries will, or even should, simply sit by while their people can't afford a loaf of bread anymore, but the alternatives that they have at their disposal really don't look particularly worthwhile to me either.

I am not advocating an inflexible system. Every decision has consequences, including leaving the people to starve. The aim is to plan in advance to mitigate those consequences as far as possible, and have a clear plan as to how you respond when they develop. Internal and foreign trade controls need to be flexible to adapt, and enforced properly to begin with.

In my experience, even more influence comes from unions, but that's an aside. What I was saying is that whether or not there is free trade, the minimum wages are still decided by the government.

I don't see how when there is no minimum wage law this would be the case. Unions, I agree, a different issue.

It is a good thing if it means they'll be able to afford food at world prices.

But a lot of jobs in the third world don't pay enough to ensure that, whereas before at least they did have the food. £15 a month doesn't buy much bread and beans anywhere in the world.

The problem with a lot of food production in these poor countries is that it's subsistence farming: they grow enough food for themselves and the little bit that's extra is sold on the market for other essentials. Those guys aren't really taking part in any global food market, what they make never leaves their immediate environment, and the effect in terms of adding to supply is minuscule since they can only produce so little. Getting those guys out of agriculture and into some money-generating activity would be an excellent idea.

Subsistence farming isn't a problem. They are feeding themselves, contributing a bit to the national supply, and with that bit can obtain the other essentials. Increasing their productivity, with say, improved tools and better crop varieties, by increasing yield and therefore incomes, rather than closing up shop and packing off a skilled farmer to become a plug fitter on DVD players, would be my policy. There's a couple of ways this could be done, including land reform to consolidate small holding into larger estates with farmers being waged, or as tenant farmers on a managed estate (i.e. infrastructure provided) rather than smallholders. Getting those guys gradually into more productive agriculture would be a great idea...

But assuming there is also some level of small-scale agriculture that could function as a reasonable supplier for a reasonable number of people: how would you make it more attractive? They're already getting more money for their food now, so throwing more cash* at them really isn't the answer.

See above for some ideas. Introducing infrastructure such workable irrigation, improved tools would improve conditions as well as offer more income. Consolidate holdings together into larger estates where resources can more easily be managed across the board, with either tenant or waged workers. Give the job some credibility though positive publicity and build up infrastructure in rural areas with hings like electrification, sanitation etc. Such projects are not vastly costly if not done with the "overkill" factor usually employed.

the other is to improve infrastructure at home and make sure those small-scale farms can grow into very big, industrial ones.

basically, this.

Of course it is. Imagine ten million DVD players being sold in the UK each year. That's £250 million a year saved that can be allocated to other stuff.

Only partially, as if the players were higher priced, being a non-essential item, fewer people would buy them. The money is only really "wasted" if it's spent on imported goods which benefit an outside economy. If it's spent on domestic goods it benefits the internal economy, keeping people employed in the direct and associated industries.

And for people in the developing world, that matters even more. Globalised manufacturing lowering prices also allows hundreds of millions of poor people to buy stuff their parents wouldn't even have dreamed of.

Again, only if it's internally produced. If someone in Morocco pays £15 for a Chinese DVD player, Morocco looses out, though the Chinese are happy. If he spends £30 on a Moroccan DVD player he might have to save another few months to buy it, but Morocco as a whole benefits. If he spends £15 on a Moroccan DVD player than everyone's happy, and there is no reason why that shouldn't be the case. Because you use a barrier to restrict certain foreign goods, doesn't automatically mean you own will be more expensive, merely it gives them a chance to grow.

Well, what is the UK's unemployment rate now?

75% of working age people are currently employed. 5.5% are claiming unemployment benefit.

What was it before free trade started to cut into its manufacturing?

Depends at what specific time you would regard our manufacturing as entering decline.

What was people's spending power before and after?

It varies depending on the income group. For the bottom 1/3 of society purchasing power between the 1970's and the present it has remained largely static, though the goods that are affordable to them has changed.

As I said, there is a number of people who ended up getting hurt. They're the victims of creative destruction (http://en.wikipedia.org/wiki/Creative_destruction). If you really think it necessary, feel free to support them with some sort of welfare payment (if you can get the political support - or better still, use your own money). But don't stop the process itself, it's just not worth it.

If the current system is laying waste to entire regions, then it is not working, and so we should seek to modify it (or adopt another model) so that it does. If we had a type of aircraft that explodes at random whilst in flight, we redesign it or seek a replacement that is more reliable.

The problem is these controlled prices. The fact that you agree that some sort of price fixing is necessary means that the business itself is not sustainable.

Or rather, price gorging and the current mechanism is not sustainable. As I said earlier, most country's have rules concerning excessive prices in some sectors. There is no reason why controlled prices inherently mean a business is unviable, merely that the produce is too important tot be trusted to the vagrancies of the market.

Until Egyptians earn the cash to buy the food at something approaching world prices, it won't be - unless perhaps all the food is exported to those that can.

You and I both know in truth it isn't going to happen. Or rather, it's not absolutely impossible, but I doubt either you or I will live to see it. As such, in order to prevent mass suffering, there needs to be alternatives.

This the same thing that is going on in so many developing countries with regards to petrol at the moment. They feel compelled to subsidise prices and keep them low, and it's eating into their budgets something fierce. Some of the smaller ones are going to collapse into financial crises because of it. Even bigger ones like India are going to suffer because a lot more money goes into fuel subsidies than education at the moment.

This is because they use a highly inefficient blanket subsidy. Effectively they are paying execs to fill up their Mercedes. A targeted subsidy would save a lot of this wasted money. Most poor people will be using public transport (where increases in fuel costs are widely dispersed due to the number of passengers) so don't need this help. The directly affected in this group would be relatively few farmers who have gasoline/diesel powered machinery, taxi drivers and the like. Subsidies targeted to these groups would provide relief at a fraction of the cost of a blanket subsidy.

Previous attempts at solving the bread crisis we were discussing have run foul of this exact same issue.

Either way they're stuck between a rock and a hard place.

True. Careful planning can mitigate most (though not all) of these problems, however. Blanket solutions on either side are rarely a good idea.

But that's not the fault of free trade, or rather, getting rid of it wouldn't fix anything. The only actually sustainable long-term solution is to make sure your economy can grow to a point where people can feed themselves regardless of spikes in world prices, anything along the way is a stop-gap measure.

As a long term goal, any sane nation wants a people that can sustain themselves. However leaving the country wide open to self-serving business concerns and foreign conglomerates will eventually lead you to an Indonesia like scenario, and not a prosperous and well fed people.

And since these poor countries are so dependent on trade and investment to grow in the first place, cutting into it may (!) alleviate some immediate pressure, but also seriously hurt the chances of there being a long-term solution.

I haven't advocated cutting investment as a solution. Fostering appropriate and meaningful trade can be a great help, but not all trade is good and it's the responsibility for the government of any country to find out which trade is going to benefit the country.

As I said, creative destruction. Regardless of how many subsidies you push into a mine in Wales, it's not gonna be able to compete with one here, which is basically the size of Wales.

Doesn't necessarily have to. If it supplies the country with the coal it needs, it won't be needing Australian coal to be shipped in. Even though production costs are higher, it's generating local employment, which keeps down unemployment (and ergo saves the costs of providing benefits, as well as being socially beneficial), keeps money in the local economy, and saves of shipping. Also it wouldn't be subject tot the spike in global energy prices (production costs having little bearing on energy prices).

And they're free not to buy a Toyota (not to mention that Toyota builds, and has always done so, a huge number of cars in the US). And Britain not only has a lot of car manufacturing still, but it's also an absolutely vital R&D centre in that respect.

We still have some because we are good at it, but it's declined nonetheless. A lot of the assembly plant we do have were established here by foreign producers in an era when we did have tariffs in place, that encouraged those makers to have plants here to get around them, bringing jobs to this country. However it does mean the profit and control of those industries are not in our hands, as Longbridge showed very clearly.

Over the last 50 years there was a competition between two ideas of development strategy: import substitution or export orientated.....

Why not do both? Keep imports down, and encourage domestic industry to produce for local needs primarily, and export those same goods once internal demand is met?

India built up a large, sophisticated home grown industrial base of considerable sophistication using import substitute strategy. China's technology largely stems from transfer programs during the pre-split soviet era (look at their aerospace sector) and more recently from joint ventures. Relatively little of their economy is purely self sustained, and is VERY vulnerable to becoming nothing more than a bubble (we'll see this, in time), much more so than India.

But yeah, East Asia is the classic example of countries basically getting it right with regards to free trade (and then screwing it up with regards to domestic financial regulation, but that's precisely the sort of thing that one should be considering separately).

if pre-crisis Indonesia was free trade getting it right (not the financial regulation, but rather the "prosperity" and "progress" side) then I'd hate to see it go wrong.

Do you know the basic theory behind comparative advantage?

The basics

And how does it do that? With one eye on the voter and another on ideology. Economics are going to come short, and as a result people who shouldn't be poor will remain so.

Economics doesn't care about the poor, nor, about the country itself. We can manage an economy to serve a number of different ends, but it has to serve something.

Now, uranium in Iran is probably not actually something a free market would demand in the first place.

Certain people in Iran want to buy it, why shouldn't we sell it? That would be free trade.

Mainly because globalization is not about free trade. Its about trade controlled by an elite.

Explain.Let's take the scenario of two foreign companies, Company A and Company B.

Company A sees that the US is going to place a $10 tariff on its product. However, Company A makes $20 on each item. The company believes it can make more money by selling its products at a reduced profit as opposed to raising its prices by $10. Would Company A raise its prices?

Company B also sees the US is going to place a $10 tariff on its product. It petitions its host government to subsidize its product by $10 per unit. Its host government does so. Does company B need to raise its prices in addition to receiving subsidies?

Unemployment in the US does not reflect your claims. Michigan does indeed have the highest unemployment rate, but so do areas not associated with manufacturing like Mississippi. Pennsylvania is a traditionally industrial state and one which is often supposed to have suffered from manufacturing decline but its unemployment rate is average.I can't speak for the entire state, but at least in the Pittsburgh area we have managed to create a lot of jobs in the medical industry. This is due to two major things, namely a huge amount of universities and college students (the county has the second-highest number of college students in the country, for counties) and the fact that the biggest hospital company is a non-profit.

Why not do both? Keep imports down, and encourage domestic industry to produce for local needs primarily, and export those same goods once internal demand is met?
And the point of keeping imports down being?

There's no use exporting things if you don't exchange them for imports.
The only reason to eliminate some import is if you're being maliciously overpriced, can produce it locally for less, and it's more profitable than an export-oriented industry - but then the market will sort it out.


If someone in Morocco pays £15 for a Chinese DVD player, Morocco looses out, though the Chinese are happy. If he spends £30 on a Moroccan DVD player he might have to save another few months to buy it, but Morocco as a whole benefits.
Not really. By spending extra £15 on the player, the guy no longer can spend these £15 on something else. Thus, Morocco as a whole ends up with less goods than it could.
And where the money goes doesn't change things. By not requiring an inefficiently-made Moroccan player, he freed workforce to do something they're better at, since they're obviously not good at making players.

Say, £15 is one person's wage. So it takes two people (£30) to make a Moroccan player and one to make a Chinese player.
But let's suppose there's also something Moroccans and Chinese are equally good at - say, making headphones. Both cost £15, or one person's work.
If 150 Moroccans make players and headphones for themselves, they get 50 players and 50 headphones.
But if 150 Moroccans make instead 150 headphones and export 75 to China, they can still have 75 headphones - and buy 75 DVD players with the money from the export.

And I think 75 players and headphones is better than 50.

Let's take the scenario of two foreign companies, Company A and Company B.

Company A sees that the US is going to place a $10 tariff on its product. However, Company A makes $20 on each item. The company believes it can make more money by selling its products at a reduced profit as opposed to raising its prices by $10. Would Company A raise its prices?

Company B also sees the US is going to place a $10 tariff on its product. It petitions its host government to subsidize its product by $10 per unit. Its host government does so. Does company B need to raise its prices in addition to receiving subsidies?

But this has nothing to do with how a tariff will not raise prices.

But this has nothing to do with how a tariff will not raise prices.I just gave two examples of tariffs not raising prices.

I just gave two examples of tariffs not raising prices.

But the end result is that both countries end up getting screwed. One has to waste money to subsidize its industry (producing all kinds of negative effects) while the other company simply has to shoulder the costs, reducing the amount of money paid in taxes to its government as well as retaining less profit for dividends or reinvestment.

As said, not advocating a total lock-down, merely focus on ramping up domestic production as much as possible so that a poor country can be self sufficient rather than struggling to pay world prices of supplies it can't actually afford.
The reason poor countries aren't self-sufficient already may however be that they just aren't particularly good at growing cheap food. So now they have a few cash crops that may be bringing in a bit of foreign currency that keeps the economy crawling along - and now you propose they stop that and instead try and grow food. But if they could grow food at a cost that would allow them to undercut world market prices...don't you think farmers would be doing this by themselves?

If a huge part of world food production comes from efficient, technically sophisticated and often subsidised industrial farming companies, and world prices are still as high as they are, how do you expect a bunch of poor peasants in the third world to somehow make cheap food?

See above I'm not talking about export bans per se, though on certain crops it should be considered. Whilst trading with neighbouring countries who have a shortfall is good, it shouldn't come at the expense of your own people going hungry. Irish famine.
Have a look at how that idea works at the moment.

Laws against price gorging exist in most countries now, and haven't caused problems in the industries concerned. Telecoms is an example where prices are heavily restricted to prevent gorging.
Not anymore. "Natural Monopolies" (they usually aren't) often have their prices restricted after the formerly state-owned companies are being privatised, but no one can come up with an idea for actually creating competition. So regulators try and calculate "fair" prices (and I've actually seen the process for this in Queensland - there are huge conceptual errors in it) and force them on these companies.

As a result, these firms underinvest chronically, knowing they can't get higher rates of return than those assumed by the government or they'll suffer next time the prices are reset. They become hybrid entities, serving private shareholders by leeching off the government - not because it's such a great deal for them, but because they're not allowed to do honest business.

You'll see precisely the same thing in food production. Farmers will stop buying seeds, new machines or new irrigation according to their own expectations, and instead simply buy to optimise based on the arbitrary prices decided by the government. You'll get less food than you otherwise would have had, and end up with the same shortages that the very same ideas about making food prices law have produced in Zimbabwe and Venezuela (http://www.reuters.com/article/pressRelease/idUS186294+17-Apr-2008+BW20080417).

That is not a question of implementation, it's universal. If you set the prices lower than the market, ie demand, would have them, you get more demand and lower supply. The only way to stop this would be to set the prices equal to where they would have been in a free market anyways.

As opposed to letting people starve. Wringing hands and wishing the poor had more money isn't really an option either. A government has to act decisively, or you get more people beaten to death in the bread queues.
Rather than acting decisively in doing the wrong thing, I'd rather have them do nothing. It can't magically make food appear, and there is no use in pretending that it can - beyond public opinion, of course.

I am not advocating an inflexible system. Every decision has consequences, including leaving the people to starve. The aim is to plan in advance to mitigate those consequences as far as possible, and have a clear plan as to how you respond when they develop. Internal and foreign trade controls need to be flexible to adapt, and enforced properly to begin with.
It's not a question of flexibility (though a government can't possibly be as flexible as the market) or implementation (though that's virtually impossible to get right in the 3rd world too). It's a question of the nature of the tools to begin with. They produce these negative outcomes, and whatever short-term relief they could possibly provide comes at a significant cost to future development.

I don't see how when there is no minimum wage law this would be the case.
If there are no minimum wages, free trade doesn't cut them. Not that I've ever heard of legal minimum wages being decreased in the history of the world.

But a lot of jobs in the third world don't pay enough to ensure that, whereas before at least they did have the food. £15 a month doesn't buy much bread and beans anywhere in the world.
That's true. But rather than pretend that it can do something about the price of food, a government should then look at why people are only earning so little, while the Chinese for example are earning so much that they don't just buy bread and beans anymore, but meat and all the other stuff.

Subsistence farming isn't a problem. They are feeding themselves, contributing a bit to the national supply, and with that bit can obtain the other essentials. Increasing their productivity, with say, improved tools and better crop varieties, by increasing yield and therefore incomes, rather than closing up shop and packing off a skilled farmer to become a plug fitter on DVD players, would be my policy.
And so the better subsistence farmer might increase his crop production by 100% and now make $2 a day. As a plug fitter, he could earn five times that (and that seems to be the way it is in China at the moment, so I didn't pull that out of thin air), plus he'll be able to catch up to modernity and get a new perspective on what is actually possible for his kids, which is something a lot of subsistence farmers lack. Farming takes a lot of time, including those of children who would be better off at school.

There's a couple of ways this could be done, including land reform to consolidate small holding into larger estates with farmers being waged, or as tenant farmers on a managed estate (i.e. infrastructure provided) rather than smallholders. Getting those guys gradually into more productive agriculture would be a great idea...
Collectivisation, is it? An economist called Hernando de Soto has done some research into why capitalism failed Africa (his words) and come to the conclusion that the lack of properly enforcable property rights over land plays a large factor. When farmers can't reliably call a piece of land theirs, use it as collateral for loans or otherwise include in future plans, it really hurts their productivity.

See above for some ideas. Introducing infrastructure such workable irrigation, improved tools would improve conditions as well as offer more income. Consolidate holdings together into larger estates where resources can more easily be managed across the board, with either tenant or waged workers. Give the job some credibility though positive publicity and build up infrastructure in rural areas with hings like electrification, sanitation etc. Such projects are not vastly costly if not done with the "overkill" factor usually employed.
They are very costly for a country like Ethiopia. The place is huge, the farmers are thinly spread, the government is broke as it is. How is it going to build sanitation and a power grid?

basically, this.
And do you know who could afford this? Foreign investors. But they want returns, and if a cash crop offers better returns than food, that's what they'll want to invest in.

Only partially, as if the players were higher priced, being a non-essential item, fewer people would buy them. The money is only really "wasted" if it's spent on imported goods which benefit an outside economy. If it's spent on domestic goods it benefits the internal economy, keeping people employed in the direct and associated industries.
What do you think an economy is for?

Again, only if it's internally produced. If someone in Morocco pays £15 for a Chinese DVD player, Morocco looses out, though the Chinese are happy. If he spends £30 on a Moroccan DVD player he might have to save another few months to buy it, but Morocco as a whole benefits. If he spends £15 on a Moroccan DVD player than everyone's happy, and there is no reason why that shouldn't be the case.
That's not how it works. Morocco doesn't lose out because it imported a DVD player. Morocco doesn't benefit if things cost double what they could. And the reason Moroccan DVD players don't cost £15 is because they don't have thousands of large-capacity factories making the things.

Because you use a barrier to restrict certain foreign goods, doesn't automatically mean you own will be more expensive, merely it gives them a chance to grow.
Of course it'll make them more expensive. The reason they're not already being made domestically is that the country's resources aren't suited to making these things. It might be possible to make them, but it would require more resources being diverted from alternative uses than it does in another country. If you do it anyways, that's the waste I was talking about.

75% of working age people are currently employed. 5.5% are claiming unemployment benefit.
And that is despite manufacturing having largely disappeared from Britain.

Depends at what specific time you would regard our manufacturing as entering decline.
Let's make it a question about trends: has the disappearance of manufacturing from Britain resulted in a significant change in average unemployment rates? How about figures on the number of people employed?

It varies depending on the income group. For the bottom 1/3 of society purchasing power between the 1970's and the present it has remained largely static, though the goods that are affordable to them has changed.
So at the very least they're no worse off, correct?

If the current system is laying waste to entire regions, then it is not working, and so we should seek to modify it (or adopt another model) so that it does. If we had a type of aircraft that explodes at random whilst in flight, we redesign it or seek a replacement that is more reliable.
It's not the system that is laying waste to regions. The regions are waste to start with, with no jobs or other reasons to spend time there. Then comes the discovery of some coal, and jobs appear. And once the coal runs out, or isn't worth getting out of the ground anymore, the jobs disappear again and we're back to the status quo. What people don't understand is that economies are dynamic, and all jobs are temporary. Them disappearing is normal, and if they didn't, then no new jobs could appear somewhere else because we'd have to freeze the whole system at one point in time.

That's not just about free trade though, it's about technical innovation and any sort of change in the conditions as well.

There is no reason why controlled prices inherently mean a business is unviable, merely that the produce is too important tot be trusted to the vagrancies of the market.
Of course it's not unviable. It can exist indefinitely, charging the guaranteed prices with great certainty.

It just can't innovate and will be severely curtailed in its ability to expand, because its returns on investment will essentially be regulated by law. If such a business wants to earn more money, rather than make a better product it has to talk to its local politician. The biggest and most powerful lobby groups today are those of the industries that depend the most on government legislation.

You and I both know in truth it isn't going to happen. Or rather, it's not absolutely impossible, but I doubt either you or I will live to see it. As such, in order to prevent mass suffering, there needs to be alternatives.
And 60 years ago, we would've said the same about Asia. So Mao came along, fixing up food production to make sure the poor people didn't have to suffer anymore, and that failed. And later Deng Xiaopeng decided that letting people earn money was a good idea, and lo and behold, it was.

I'm not going to write off the chances of poor countries. All they need is one or two decent governments in a row, and they'll be fine. And decent, says the empirical evidence of the last century, means to stop telling everyone how to do everything.

This is because they use a highly inefficient blanket subsidy. Effectively they are paying execs to fill up their Mercedes. A targeted subsidy would save a lot of this wasted money. Most poor people will be using public transport (where increases in fuel costs are widely dispersed due to the number of passengers) so don't need this help. The directly affected in this group would be relatively few farmers who have gasoline/diesel powered machinery, taxi drivers and the like. Subsidies targeted to these groups would provide relief at a fraction of the cost of a blanket subsidy.
These guys seem to disagree.
http://www.asiasentinel.com/index.php?option=com_content&task=view&id=1239&Itemid=31
Malaysians most affected by the recent cut in fuel subsidy are the ordinary poor working people who own kancil/proton sagas or motobikes. These people have also experienced severe and significant loss in disposable incomes brought by the hefty rise in food,commodities and fuel prices.

As a long term goal, any sane nation wants a people that can sustain themselves. However leaving the country wide open to self-serving business concerns and foreign conglomerates will eventually lead you to an Indonesia like scenario, and not a prosperous and well fed people.
You mention Indonesia, but not what exactly the bad thing about it is. So what concerns you?

I haven't advocated cutting investment as a solution. Fostering appropriate and meaningful trade can be a great help, but not all trade is good and it's the responsibility for the government of any country to find out which trade is going to benefit the country.
Investment will be cut by governments who think they can decide what is and isn't good trade. They tend to impose rules and build regulations that force investors to benefit the country they're investing in rather than themselves.

Doesn't necessarily have to. If it supplies the country with the coal it needs, it won't be needing Australian coal to be shipped in. Even though production costs are higher, it's generating local employment, which keeps down unemployment (and ergo saves the costs of providing benefits, as well as being socially beneficial), keeps money in the local economy, and saves of shipping.
How much employment would it be worth to see three or four times higher energy prices in Britain? Because that's the range we must be talking about here, when we compare the tiny British suppliers with BNP, Rio or Vale.

Also it wouldn't be subject tot the spike in global energy prices (production costs having little bearing on energy prices).
No, it would be subject to spikes in local energy prices. Rather than demand in China moving about prices, it'll be demand in Manchester. The situation doesn't change...unless the local supply is less flexible in suddenly raising quanitites than purchases on the world market might be. In that case, expect the spikes to be considerably more severe.

We still have some because we are good at it, but it's declined nonetheless. A lot of the assembly plant we do have were established here by foreign producers in an era when we did have tariffs in place, that encouraged those makers to have plants here to get around them, bringing jobs to this country.
That's true, and for politicians battling for votes I'm sure it made a lot of sense.

However it does mean the profit and control of those industries are not in our hands, as Longbridge showed very clearly.
They never are in "your" hands. They're in the hands of the owners, and it doesn't matter what passport those owners hold.

Why not do both? Keep imports down, and encourage domestic industry to produce for local needs primarily, and export those same goods once internal demand is met?
That's not doing both, that's import substitution. Export focused strategies aim at producing for export first and foremost, to get the money and investors into the country, provide jobs and development and let that feed through the domestic economy.

India built up a large, sophisticated home grown industrial base of considerable sophistication using import substitute strategy.
Actually, it didn't. Disgusted with its lack of success, it gave up some time in the 90s and has been going different paths since then. Nonetheless, it's growth rates are signficantly lower than those of other developing countries, and much less than they could be.

China's technology largely stems from transfer programs during the pre-split soviet era (look at their aerospace sector) and more recently from joint ventures. Relatively little of their economy is purely self sustained, and is VERY vulnerable to becoming nothing more than a bubble (we'll see this, in time), much more so than India.
Yeah. On the plus side, there are many fewer people living in abject poverty in China than in India, and they are becoming fewer more rapidly as well. And of course export-driven economies are vulnerable to changes in demand in export markets - but even a worst case scenario would still leave the US with much more solid demand than China or India could have domestically.

China's gonna get into trouble some time soon. There's a lot of loose lending going on, a bit of overcapacity and kinda frothy real estate markets. That's part of the story, and it happens from time to time, regardless of your development strategy, or even how developed you are.

But that doesn't change the fact that China's economic policy has been vastly superior in producing outcomes for its people than India's.

The basics
So then why don't you accept that trade is not a fundamentally good thing? If it leaves everybody better off on aggregate, wouldn't any objection be based purely on picking certain groups within the economy and declaring their interests more important than those of others?

Economics doesn't care about the poor, nor, about the country itself. We can manage an economy to serve a number of different ends, but it has to serve something.
Economies only serve one end: the happiness of the people who participate in it. Economics can only care about that, even if it has to use proxies for it.

Certain people in Iran want to buy it, why shouldn't we sell it? That would be free trade.
Those certain people happen to be the government of Iran. As soon as it involves the government, it's not free trade anymore.

That being said, as long as a proper regulatory framework for such dangerous materials exists, I'm not opposed to private people being able to buy them. Ultimately what goes for cars, guns and fertilisers should probably go for uranium too.

But that doesn't change the fact that China's economic policy has been vastly superior in producing outcomes for its people than India's.

Well, to a degree. China's economic success has been primarily driven by their success at cultivating fixed-asset and public infrastructure investment, two things which are very good for an industrializing economy. That being said, China's human resources are in general badly underutilized compared to India's; when compared in terms of the two countries' relative performance in sectors necessary for successful growth, India wins by a landslide. Not only do they have one of the best-educated high-tech and information workforces in the world but they have successfully built domestic brands in to globally recognized powerhouses.

I cannot think of a single Chinese company that has established itself internationally like the Tata Group or Reliance Industries; they certainly have some major domestic brands (and outnumber India 4:1 on the Global Fortune 500), but so far their international presence has been entirely based on the accquisition of foreign companies. That will not be enough to ensure continued Chinese economic growth; they need a stronger entrepreneurial base to encourage the transition from a NIC secondary sector economy to one based on the tertiary and quaternary sectors seen in the developed world.

If China cannot leverage its current economic successes to develop a workforce like that available in India, they will fall behind while India assumes the role of economic supremacy in Asia. They are the current leaders for sure, but they face some challenges that are going to be far more trying for their government and economy than those facing India.

And I think 75 players and headphones is better than 50.
And that's a main part of my disagreement with the idea of free trade. I understand the economics of it, and agree that free trade is more efficient than restricted trade. (Not necessarily as efficient as it could be, I don't think it's that fluid, but more efficient.) But I don't believe 75 headphones is better than 50. It's something that bugs me about the science of economics as a whole, actually. Physicists describe how gravity works, but they don't endorse the inverse relationship between the force of gravity and the distance of two objects are morally good, which is what arguments for free trade do.

They are the current leaders for sure, but they face some challenges that are going to be far more trying for their government and economy than those facing India.
I tend to see the current situation as building a basis. It's really no different to early Japan, South Korea, Taiwan or some of the other tiger economies. Obviously at some point there'll have to be a switch, but at the very least the JV-agreements have given them access to the technology and expertise they need.

At any rate, I'm not at all convinced by India just yet, primarily because of its government structure. Nothing ever gets done, there's constantly an election going on in which socialists appeal to the poor (and who can blame them) and force governments to stop reforms or shell out more cash hand-outs. The fuel subsidies at the moment are a case in point: they spend six times their education budget on them. There is no doubt a very educated and wealthy, and by nature of the country very large class of people who provide a competitive advantage in IT and so on. But it's not spreading anywhere near as fast as it should.

I tend to see the current situation as building a basis. It's really no different to early Japan, South Korea, Taiwan or some of the other tiger economies. Obviously at some point there'll have to be a switch, but at the very least the JV-agreements have given them access to the technology and expertise they need.

True. The 2010's will be very interesting, especially if China is particularly pressed on trade and currency issues.

[QUOYE]At any rate, I'm not at all convinced by India just yet, primarily because of its government structure. Nothing ever gets done, there's constantly an election going on in which socialists appeal to the poor (and who can blame them) and force governments to stop reforms or shell out more cash hand-outs. The fuel subsidies at the moment are a case in point: they spend six times their education budget on them. There is no doubt a very educated and wealthy, and by nature of the country very large class of people who provide a competitive advantage in IT and so on. But it's not spreading anywhere near as fast as it should.[/QUOTE]

Yes, very much so. Indian infrastructure is especially lacking due to their bloated government and constant political squabbling over spending programs; China can easily build out whatever it needs to meet its economic goals and can do so in a flexible manner, while India simply can't.

Although I hesitate to praise authoritarian regimes, the Chinese government is clearly able to override public sentiment in order to do what it deems necessary. That's why they can eliminate subsidies and drive through economic reforms that would be politically impossible in a more democratic country. Of course, it also leads to its fair share of problems, but when it comes to industrialization I would say only this kind of authoritarian control or strict laissez-faire policies work. The kind of mixed governments in the developed world just don't work in countries where long-term and/or rapid decision making is necessary.

Obviously, the two countries' differences make them ideally suited for close economic cooperation, especially if a major developed patron is involved in the process.

And that's a main part of my disagreement with the idea of free trade. I understand the economics of it, and agree that free trade is more efficient than restricted trade. (Not necessarily as efficient as it could be, I don't think it's that fluid, but more efficient.) But I don't believe 75 headphones is better than 50. It's something that bugs me about the science of economics as a whole, actually. Physicists describe how gravity works, but they don't endorse the inverse relationship between the force of gravity and the distance of two objects are morally good, which is what arguments for free trade do.

I reckon that most physicists would describe a system for generating electricity which is 50% efficient as being better than a system that electricity energy at 40% efficiency with the same inputs.

Basically if you take the same inputs but produce more, most people would consider that an improvement.

The reason poor countries aren't self-sufficient already may however be that they just aren't particularly good at growing cheap food. So now they have a few cash crops that may be bringing in a bit of foreign currency that keeps the economy crawling along - and now you propose they stop that and instead try and grow food. But if they could grow food at a cost that would allow them to undercut world market prices...don't you think farmers would be doing this by themselves?


Most third world countries were previously growing their own food for their own needs. It was the "borrow your way to wealth" ideas of the IMF-WB in the latter part of the 20th century that put an end to this. Link (http://www.twnside.org.sg/title2/susagri/susagri036.htm)

If a huge part of world food production comes from efficient, technically sophisticated and often subsidised industrial farming companies, and world prices are still as high as they are, how do you expect a bunch of poor peasants in the third world to somehow make cheap food?

The production cost of most foods haven’t increased that dramatically. The increased “costs” are mostly just pure profit.

As a result, these firms underinvest chronically, knowing they can't get higher rates of return than those assumed by the government or they'll suffer next time the prices are reset. They become hybrid entities, serving private shareholders by leeching off the government - not because it's such a great deal for them, but because they're not allowed to do honest business.

This isn't necessarily the fault of the government. In the UK the rail companies at privatisation were allowed companies a great deal of flexibility in determining their fare structures, yet still let the infrastructure rot, because they adopted a take the money and run approach.

You'll see precisely the same thing in food production. Farmers will stop buying seeds, new machines or new irrigation according to their own expectations, and instead simply buy to optimise based on the arbitrary prices decided by the government. You'll get less food than you otherwise would have had, and end up with the same shortages that the very same ideas about making food prices law have produced in Zimbabwe and Venezuela (http://www.reuters.com/article/pressRelease/idUS186294+17-Apr-2008+BW20080417).

Neither of these countries is known for sanity in agricultural policies. Chavez is a socialist with populist tendencies and his policies rarely focus on concrete issues. Mugabe's land reforms seem to work on the principle that giving land to death squads is a good way to get food. I remain unconvinced of the viability of either of the above models.

That is not a question of implementation, it's universal.

No, as not all countries are like Venezuela or Zimbabwe.

If you set the prices lower than the market, ie demand, would have them, you get more demand and lower supply. The only way to stop this would be to set the prices equal to where they would have been in a free market anyways.

If a farmer is still making profit, there is no reason for him to grow less food, especially since he will have a local market ready and waiting, rather than having to shift cash crops though numerous agencies for export.

Rather than acting decisively in doing the wrong thing, I'd rather have them do nothing. It can't magically make food appear, and there is no use in pretending that it can - beyond public opinion, of course.

No one's talking about magical bread, nor public opinion.

It's not a question of flexibility (though a government can't possibly be as flexible as the market) or implementation (though that's virtually impossible to get right in the 3rd world too). It's a question of the nature of the tools to begin with. They produce these negative outcomes, and whatever short-term relief they could possibly provide comes at a significant cost to future development.

They are needed now to repair the damage that "free trade" has caused. It hasn't advanced agriculture, it has regressed it in all except a handful of countries.

That's true. But rather than pretend that it can do something about the price of food, a government should then look at why people are only earning so little, while the Chinese for example are earning so much that they don't just buy bread and beans anymore, but meat and all the other stuff.

They are earning little because their agriculture is being destroyed. Third world countries have got poorer since WW2.

And so the better subsistence farmer might increase his crop production by 100% and now make $2 a day.

Actually he'd make more, as if he could double his yield his fixed costs would still be fixed, only his variable costs would increase. Either way, he makes more food and more money, which I think we both agree is "A Good Thing"

As a plug fitter, he could earn five times that (and that seems to be the way it is in China at the moment, so I didn't pull that out of thin air), plus he'll be able to catch up to modernity and get a new perspective on what is actually possible for his kids, which is something a lot of subsistence farmers lack. Farming takes a lot of time, including those of children who would be better off at school.

China is a bubble economy. Factory workers in many third world nations earn only slightly more than farmers. Indonesian factory workers in Tangerang and Solo both earn around US$2/day, before deductions. This is hardly enough for the bread and beans, let alone red meat, which would be even more expensive if increasing numbers of workers drop the plough and fit plugs.

Catching up to modernity, in what ways exactly? In terms of advances that are of greater benefit, such as medical care, drinkable water, and high grade education, most industrial workers don't get access to it either.

As for perspective. This is my point. Give them a perspective. How to make their work more productive all round. Your children could benefit from a better run estate, make it efficient and productive, have a bigger estate, other farms, hire workers... A future.

Collectivisation, is it?

Collectivisation? No. That only gives you half empty bucket of fail. Literally as I said, larger estates, not "collectively" controlled ones.

An economist called Hernando de Soto has done some research into why capitalism failed Africa (his words) and come to the conclusion that the lack of properly enforceable property rights over land plays a large factor. When farmers can't reliably call a piece of land theirs, use it as collateral for loans or otherwise include in future plans, it really hurts their productivity.

I agree. A good Agricultural Development Bank hat offers micro credit and larger loans is an important part of developing agriculture for smallholders. However the bank should look as sustainability and local need over pure profit return. An NGO or state run scheme could offer such a service, and some such schemes already exist.

They are very costly for a country like Ethiopia. The place is huge, the farmers are thinly spread, the government is broke as it is. How is it going to build sanitation and a power grid?

BY avoiding overkill, you don't have to pull a Lake Nasser style epic fail to get people a basic amount of electricity and sanitation. Jordan is an excellent example of a practical, useful sanitation and power system produced without overkill. Should even a modest system prove unaffordable then there is the option of a region by region staged approach over several decades, or reserving a grid for the less remote regions, and using local level generation schemes elsewhere.

And do you know who could afford this? Foreign investors. But they want returns, and if a cash crop offers better returns than food, that's what they'll want to invest in.

A bigger block on afford-ability is the often over the top plans current governments tend to be shanghaied into, again usually by lenders, which often put conditions stating that the government must deal with a certain nations companies when undertaking any projects. This is practically begging for an ineffectual and vastly cost inflated system.

What do you think an economy is for?

Keeping the country in a working state of balance and order.

That's not how it works. Morocco doesn't lose out because it imported a DVD player.

Money that would have remained in that country has instead gone into a Chinese bank account. If I gave your family £15 to make for me something my own family could make for me, my family would has lost out. So it is with nations.

And that is despite manufacturing having largely disappeared from Britain.

It's actually a high figure, as the national rate is pulled down by sparsely populated rural areas, and wealthy areas like the home counties. In my area it's literally double that. In addition job replacement is not like for like. Relatively well paid industrial jobs are replaced by lower paid McJobs.

Let's make it a question about trends: has the disappearance of manufacturing from Britain resulted in a significant change in average unemployment rates? How about figures on the number of people employed?

Unemployment has increased during this period (http://www.parliament.uk/commons/lib/research/rp99/rp99-111.pdf). See page 25

So at the very least they're no worse off, correct?

Hardly a ringing endorsement. It's led to a wealth gap, as the middle class has increased it's position at the expense of the upper class and also the poor, creating a source of potential instability and corrosive social effects.

It's not the system that is laying waste to regions. The regions are waste to start with, with no jobs or other reasons to spend time there. Then comes the discovery of some coal, and jobs appear. And once the coal runs out, or isn't worth getting out of the ground anymore, the jobs disappear again and we're back to the status quo. What people don't understand is that economies are dynamic, and all jobs are temporary. Them disappearing is normal, and if they didn't, then no new jobs could appear somewhere else because we'd have to freeze the whole system at one point in time.

No, previously the regions were engaged in different activities, which were partly submerged by the new industries and the influx they caused. They were not devoid of life. When those new industries were destroyed, the traditional industries, were unable to provide employment for the influx of new people as well as those already there, making a situation more desperate than that which had existed before.

You can add to what is there rather than having to destroy it. The destruction of industry in the United Kingdom was no more necessary than the destruction of wheat cultivation in Egypt. Both were done for the gain of a corrupt few who cared about themselves more than the country or it's institutions.

That's not just about free trade though, it's about technical innovation and any sort of change in the conditions as well.

Yes, and thee can be adjusted too. But making a situation more unstable without purpose isn't wise.

Of course it's not unviable. It can exist indefinitely, charging the guaranteed prices with great certainty.

That's taking things a bit far. That many perfectly viable industries are closed down because the owners are unwilling to make long term commitments doesn't’t equal things being completely static. However, change/innovation as an end in itself is both pointless as destructive, and changing anything without asking why is merely acting blindly. It’s the whole Windows Vista argument.

It just can't innovate and will be severely curtailed in its ability to expand, because its returns on investment will essentially be regulated by law. If such a business wants to earn more money, rather than make a better product it has to talk to its local politician. The biggest and most powerful lobby groups today are those of the industries that depend the most on government legislation.

It depends on the nature of it’s regulation, bear in mind in your example we are assuming the business for some reason is unable to sell more of it’s product rather than make a new one?

And 60 years ago, we would've said the same about Asia. So Mao came along, fixing up food production to make sure the poor people didn't have to suffer anymore, and that failed. And later Deng Xiaopeng decided that letting people earn money was a good idea, and lo and behold, it was.

60 years ago, we said Africa was on verge of a renaissance, an emerging market where puppy dogs and children would play amongst lush fields of grain, and trees would be heavy with fruit, with families picnicking underneath. We're still saying it, and it's still BS. Wherever there is an imbalance of power between two parties (i.e. African countries and the West), no dealings between them are ever going to be equal or "free", least of all exchange of goods.

I'm not going to write off the chances of poor countries. All they need is one or two decent governments in a row, and they'll be fine. And decent, says the empirical evidence of the last century, means to stop telling everyone how to do everything.

I'm not writing them off, but I don’t' think it's realistic to expect things to change dramatically in the medium term, and I don't think leaving the nations doors wide open to others to come and help themselves is a good way to look after nation, be it weak or powerful.

These guys seem to disagree.
http://www.asiasentinel.com/index.php?option=com_content&task=view&id=1239&Itemid=31

They are talking about blanket cuts to a blanket subsidy. I was talking about replacing a blanket subsidy with a targeted one. In addition Malaysia is a fairly prosperous industrial country where a fairly average person owns a car. This is not the case in Ethiopia or Egypt.

You mention Indonesia, but not what exactly the bad thing about it is. So what concerns you?

I spent years getting out of it's slums ‘export processing zones’. Pretty much everything about it gives me cause for concern.

* Lack of effective law enforcement against foreign investors, and governmental culture that gives foreign companies neigh on free reign to rape the country and it's people as much as they want
* Corporate culture of complete and utter irresponsibility on part of said foreign investors
* Corruption oiled by foreign investment
* Irresponsible agricultural practises imposed by IMF - Soil erosion, chronic deforestation, water contamination, food price inflation.
* Cash cropping
* The very disconcerting levels of chemical waste from textile plant dumped in my old neighbourhood's only water supply. Gives funny skin rashes that leaves permanent scarring, fuck knows what it does to your innards.
* The genuine belief by some that this was for our own good.
* The local area in question used to produce rice, and also some cattle. The factory produces many things, including profit, but not for Indonesia. Indonesia just gets funky coloured water, dead animals, funny rashes, and $2 a day, but no rice. I never felt any benefit in that place, nor did I see how it was going to get better. The only reason that factory was (well, IS) there isn't because Indonesia has any "natural advantage" in producing textiles over any number of countries. It's just that the leaders will pimp the country for less than others will, and let them rape it any way they see fit in return for a kickback and window tinting job on their merc.

Investment will be cut by governments who think they can decide what is and isn't good trade.

Do you mean they knowingly, or inadvertently cut it? Not all investment is beneficial, BTW.

They tend to impose rules and build regulations that force investors to benefit the country they're investing in rather than themselves.

Well, yeah, that's kind of the point. Investment not an end in and of itself. It's intention is to obtain something. We invest money in digging a canal because we want to water some fields, not because we like digging canals.

How much employment would it be worth to see three or four times higher energy prices in Britain? Because that's the range we must be talking about here, when we compare the tiny British suppliers with BNP, Rio or Vale.

Are we talking costs of production, or market costs here? There is a big difference between the two.

No, it would be subject to spikes in local energy prices. Rather than demand in China moving about prices, it'll be demand in Manchester. The situation doesn't change...unless the local supply is less flexible in suddenly raising quantities than purchases on the world market might be. In that case, expect the spikes to be considerably more severe.

Domestic demand is a lot more predictable, however. We don't know what the Chinese are planning, or if another nation is going to start industrialising. We do know what's going on in Manchester. In addition we have a degree of control over demand. We don’t have that with Chinese consumers. In addition we always have the option to bring in extra fuel if we need it. Again, you can't be over rigid in any position.

They never are in "your" hands. They're in the hands of the owners, and it doesn't matter what passport those owners hold.

They are if you own them, or if those who own them are under your influence.

That's not doing both, that's import substitution. Export focused strategies aim at producing for export first and foremost, to get the money and investors into the country, provide jobs and development and let that feed through the domestic economy.

Fair enough. What I was saying was I wouldn't’t preclude export orientated industries developing, provided domestic demand was met. Once there is enough to keep the country working effectively, growing or making something for export is fair enough, particularly if it’s something in great demand.

Actually, it didn't. Disgusted with its lack of success, it gave up some time in the 90s and has been going different paths since then. Nonetheless, it's growth rates are significantly lower than those of other developing countries, and much less than they could be.

Though most tf India’s success now is based on the capacity for it's own development and research it undertook then. The "boom" now is just parasitical growth based on the hard work a lot of people in the past to make the country able to stand on it's own. Agricultural equipment manufacture, fertiliser, transport equipment, mining, medicine, shipbuilding and aerospace were all industries built up domestically. The success companies are enjoying now is mostly freeloading on that back of that capacity. The hard work has already been done.

Yeah. On the plus side, there are many fewer people living in abject poverty in China than in India, and they are becoming fewer more rapidly as well. And of course export-driven economies are vulnerable to changes in demand in export markets - but even a worst case scenario would still leave the US with much more solid demand than China or India could have domestically.

They are also extremely vulnerable to an embargo, or closing down of joint ventures... Then the “great strides” they have made turn out to be nothing more than a mirage.

China's gonna get into trouble some time soon. There's a lot of loose lending going on, a bit of overcapacity and kinda frothy real estate markets. That's part of the story, and it happens from time to time, regardless of your development strategy, or even how developed you are.

Then why not regulate it to generate a controlled landing rather than waiting for it to burst and say "yeah, we pretty much saw that one coming"

But that doesn't change the fact that China's economic policy has been vastly superior in producing outcomes for its people than India's.

For the time being. It's hardly stable, though.

So then why don't you accept that trade is not a fundamentally good thing? If it leaves everybody better off on aggregate, wouldn't any objection be based purely on picking certain groups within the economy and declaring their interests more important than those of others?

No, I don't think trade is fundamentally good. It can be used for good, and it can also be used as a weapon. We've seen both. UK-China Opium trade. I don't see how China really benefited from this.

Economies only serve one end: the happiness of the people who participate in it. Economics can only care about that, even if it has to use proxies for it.

Economies can serve any number of ends. North Koreas serves it's military forces. South Korea serves it's conglomerates.

Those certain people happen to be the government of Iran. As soon as it involves the government, it's not free trade anymore.

If it were private buyers, would it be OK then?

That being said, as long as a proper regulatory framework for such dangerous materials exists, I'm not opposed to private people being able to buy them. Ultimately what goes for cars, guns and fertilisers should probably go for uranium too.

That’s the point. There are regulations concerning it, and should be. Not anyone should be allowed to buy and sell anything in a totally ungoverned way. And regulations come from the government. My view is that since regulation do well in preventing the worst excesses of free trade (Mr Laden wants a bomb and I’ve got one, so I’m going to sell it to him, and you can’t tell me not to) it can also help in other areas.