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Free trade is good for the collective world, but has negative effects locally and regionally. That's why free trade agreements are so hard to negotiate, they s

by socrates1998 11y ago

Free trade is good for the collective world, but has negative effects locally and regionally. That's why free trade agreements are so hard to negotiate, they screw people in one place while benefiting others in another place. China, and the world, are better off, but tell that to the guy who has to feed his family but he lost his job as a manager at a factory in New Jersey. Not exactly easy to do.

mc32 11y ago
Yep, this is the cause of people bemoaning the demise of the blue collar middle class. The one borne by Henry Ford and the idea workers earn enough to buy into the middle class which existed up to the sixties in the US and Europe but declined with the ascent of Japan and other regions which had lagged for various reasons ( there was a lot of parity in the early XX century, Mexico, Norway, Cuba, Poland were not far from ach other economically). But you still hear the reverberations of people wondering where the blue collar middle class went. It went to other countries and made the desperately poor there into local middle class. Still globalization is demonized when it has lifted millions of people from poverty. On the other hand economically mature nations have not prepared their workforce for these transitions by providing training and "insurance" during the decades long transition, as sectors change.
CWuestefeld 11y ago
In the general case, most of America is better off too. The downside would be very localized. The research being cited here is very specific to the current situation with China, and they recognize that themselves. The key difference (they believe) is that the China is so huge and has transformed so rapidly. In normal circumstances, things would have happened slower, and the employees of affected industries would have had more time to seek alternatives, or to retrain, and so the impact on them would have been less negative. This whole thing should make you ask why America was at a disadvantage because of the speed of Chinese transformation. In particular, what is it that's slowing America's ability to pivot? I don't have specific evidence to answer this question, but I believe the answer can be found by looking at our regulatory load, and how the difficulty of jumping through regulatory hoops is always increasing - compared to the Chinese, who in this respect have additional degrees of freedom.
- ConfuciusSay 11y ago
  This paper shows how there's negative affects from free trade with China, and your conclusion is "oh it was negative with China, but all those other free trade deals were positive"? Sorry, but NAFTA was a massive job killer. Just ask anyone in Detroit. Also, the idea that China has no regulation on business is ridiculous. Obviously you've never worked there!
  - CWuestefeld 11y ago
    but all those other free trade deals were positive In economics, "free trade creates additional wealth for all involved" is closer to consensus among economists than is "the Earth is warming" is among climatologists. The paper [1] that the OP references does itself say that their conclusion is peculiar to the circumstances of China: "While these results do not at all suggest that international trade is in the aggregate harmful to nations--indeed, China's unprecedented rise from widespread poverty bears testimony to trade's transformative economic power--it makes clear that trade not only has benefits but also significant costs." but NAFTA was a massive job killer As it happens, Don Boudreaux [2] just published something relating directly to this: "since NAFTA took effect Mexicans have invested more – 59 percent more, to be precise – in manufacturing activities in the U.S. than Americans have invested in manufacturing activities in Mexico." Quoting Confucius again: Obviously you've never worked there! No, I haven't. But I've been there many times, and know many people who do work there. What I've observed myself is that for the average person on the street in Shanghai - say, someone making and selling pork buns, or a farmer bringing in a cart of vegetables from the country - there seems to be a significant laissez-faire attitude. At a larger scale - what we're talking about for international trade - my perception is that while China may have many barriers, knowing the right people and being able to "grease the wheels", makes things proceed relatively easily. In America our regulations are taken much more seriously - we don't have anything like their degree of corruption, but we also don't have that as a means to get around onerous rules. [1] http://www.ddorn.net/papers/Autor-Dorn-Hanson-ChinaShock.pdf http://www.ddorn.net/papers/Autor-Dorn-Hanson-ChinaShock.pdf [2] http://cafehayek.com/2016/01/which-way-flow-the-equity-investments-in-manufacturing.html http://cafehayek.com/2016/01/which-way-flow-the-equity-inves... EDIT: formatting

mc32 11y ago

Yep, this is the cause of people bemoaning the demise of the blue collar middle class. The one borne by Henry Ford and the idea workers earn enough to buy into the middle class which existed up to the sixties in the US and Europe but declined with the ascent of Japan and other regions which had lagged for various reasons ( there was a lot of parity in the early XX century, Mexico, Norway, Cuba, Poland were not far from ach other economically). But you still hear the reverberations of people wondering where the blue collar middle class went. It went to other countries and made the desperately poor there into local middle class. Still globalization is demonized when it has lifted millions of people from poverty. On the other hand economically mature nations have not prepared their workforce for these transitions by providing training and "insurance" during the decades long transition, as sectors change.

CWuestefeld 11y ago

In the general case, most of America is better off too. The downside would be very localized. The research being cited here is very specific to the current situation with China, and they recognize that themselves. The key difference (they believe) is that the China is so huge and has transformed so rapidly. In normal circumstances, things would have happened slower, and the employees of affected industries would have had more time to seek alternatives, or to retrain, and so the impact on them would have been less negative. This whole thing should make you ask why America was at a disadvantage because of the speed of Chinese transformation. In particular, what is it that's slowing America's ability to pivot? I don't have specific evidence to answer this question, but I believe the answer can be found by looking at our regulatory load, and how the difficulty of jumping through regulatory hoops is always increasing - compared to the Chinese, who in this respect have additional degrees of freedom.

ConfuciusSay 11y ago
This paper shows how there's negative affects from free trade with China, and your conclusion is "oh it was negative with China, but all those other free trade deals were positive"? Sorry, but NAFTA was a massive job killer. Just ask anyone in Detroit. Also, the idea that China has no regulation on business is ridiculous. Obviously you've never worked there!
- CWuestefeld 11y ago
  but all those other free trade deals were positive In economics, "free trade creates additional wealth for all involved" is closer to consensus among economists than is "the Earth is warming" is among climatologists. The paper [1] that the OP references does itself say that their conclusion is peculiar to the circumstances of China: "While these results do not at all suggest that international trade is in the aggregate harmful to nations--indeed, China's unprecedented rise from widespread poverty bears testimony to trade's transformative economic power--it makes clear that trade not only has benefits but also significant costs." but NAFTA was a massive job killer As it happens, Don Boudreaux [2] just published something relating directly to this: "since NAFTA took effect Mexicans have invested more – 59 percent more, to be precise – in manufacturing activities in the U.S. than Americans have invested in manufacturing activities in Mexico." Quoting Confucius again: Obviously you've never worked there! No, I haven't. But I've been there many times, and know many people who do work there. What I've observed myself is that for the average person on the street in Shanghai - say, someone making and selling pork buns, or a farmer bringing in a cart of vegetables from the country - there seems to be a significant laissez-faire attitude. At a larger scale - what we're talking about for international trade - my perception is that while China may have many barriers, knowing the right people and being able to "grease the wheels", makes things proceed relatively easily. In America our regulations are taken much more seriously - we don't have anything like their degree of corruption, but we also don't have that as a means to get around onerous rules. [1] http://www.ddorn.net/papers/Autor-Dorn-Hanson-ChinaShock.pdf http://www.ddorn.net/papers/Autor-Dorn-Hanson-ChinaShock.pdf [2] http://cafehayek.com/2016/01/which-way-flow-the-equity-investments-in-manufacturing.html http://cafehayek.com/2016/01/which-way-flow-the-equity-inves... EDIT: formatting