7 ms·

There's no doubt that free trade is a big net positive for the US. But one of the major oversights of the last few decades of public policy is the failure to r

by nugget 11y ago

There's no doubt that free trade is a big net positive for the US. But one of the major oversights of the last few decades of public policy is the failure to reallocate some of the net benefits of free trade more directly to the losers, e.g. lower middle class working people in the US. Maybe they figured these people would never organize or vote in serious numbers. Bernie Sanders and Donald Trump might prove otherwise.

bjshepard 11y ago
"Free trade" is a misnomer for what is, in practice, freedom of capital to cross borders in search of lower labor. The dynamic certainly helped transform the lives of many people here in China for the better -- many people made rich from creating basically widjets for walmart, but in the US, many working class people lost both their jobs and their entire communities when Capital left.
- marcoperaza 11y ago
  It's not a misnomer. The free movement of capital leading to more efficient allocation of labor is one aspect of free trade. But it is not the totality of it. For example, no country has as much incoming foreign direct investment as the United States.
  - jordanb 11y ago
    In recent years free trade can better be seen as regulatory arbitrage: companies close down worksites in places with strong environmental and labor protections and move work to places that have neither. We've seen talks about CO2 emissions and the resistance of Asian countries against agreeing to a framework that puts the same restrictions in place for them as for the west. They clearly understand that a comparative lack of emission controls puts them at a competitive advantage. Wage arbitrage is absolutely also a factor and the western world's working class absolutely have reason to resist that because they will not come out better off in that exchange.
    - mattmanser 11y ago
      To be fair to those countries, all the developed ones already went through their major pollution fuelled growth spurt and now want to deny other countries that growth spurt. The developed countries should be disproportionately paying the cost of pollution as they caused it in the first place. I totally understand we need to stop, but it's a lot more complicated than you're presenting.
      - jordanb 11y ago
        That's a ontogeny recapitulates phylogeny style argument: technology is different than it was 100 years ago; there's no reason to "follow the same path" as the original creators of that technology along with all the miss-steps. If you mean that Asian countries want a "growth spurt" by encouraging western corporations to build facilities where they can ignore modern pollution controls, then we are in agreement. But it's a beggar-thy-neighbor policy and one that hurts our entire planet and is abetted by free-trade agreements.
        astrostl 11y ago
        “Poor Faulkner. Does he really think big emotions come from big words? He thinks I don't know the ten-dollar words. I know them all right. But there are older and simpler and better words, and those are the ones I use.” - Ernest Hemingway
  - eli_gottlieb 11y ago
    >For example, no country has as much incoming foreign direct investment as the United States. And has that increased the rate of new businesses being founded, decreased the price of borrowing for existing businesses, or been poured into rent-seeking asset bubbles in markets like real-estate?
- Shivetya 11y ago
  Free trade benefits all people. Yes there are those who also lose a bit for it too but overall it benefits all it touches either directly or indirectly. It brings the standard of living up in export countries, lower costs in import countries, and stimulates other countries to get into the act. Not all industries are viable long term. Just like milk delivery faded in many areas so will some textile jobs. There are plenty of examples of widgets being made in the US alone from companies very young. It all comes down to this, do you look only for the negative? I do know one thing is true. Any candidate campaigning on trade sanctions or the like is a loser and will make us losers too
  - crdoconnor 11y ago
    >Any candidate campaigning on trade sanctions or the like is a loser Yeah, just look at Trump trail in the polls.
  - Vlaix 11y ago
    >Free trade benefits all people. At this point it's not economy, it's religion.
dclowd9901 11y ago
>There's no doubt that free trade is a big net positive for the US. Eh, I'm not so sure that cow's so sacred. Is free trade positive for the American economy? Yes, of course. It moves our country toward a richer, more intellectually-based economy, which should lead to greater quality of life for everyone: fewer shitty jobs building stuff, being hurt by industrial processes, working really really hard to make little money. I guess I'm going to parrot you a bit here, because I agree with the rest of your point, but what's happening is the second part of that equation, the benefit for the workers and the individuals, is not being met. Our economy is flourishing, but workers who have been displaced are not being supported. Our rich, rich economy should be able to either 1) train up people who were formerly doing the blue collar work to succeed in an intellectually based economy or 2) provide them with a standard of living given their inability to find good work (the standard income idea). We are not even attempting to do either. College costs a fucking shitload and social programs are drying up left and right. Our kids are getting dumber, relatively speaking, so they will be less competitive in a global workplace. So no, that is not what I would consider a "net positive" as a net positive, in my mind, means that what's happening is good for most people. Clearly, it is not. We shouldn't make it a platitude, because then we don't get to say, "Free trade is clearly good, but if and only if..."
- ricw 11y ago
  +1 The real problem in the US is that costs are prohibitive, particularly with regards to education. Add to that crazy housing costs (SF/NYC/etc) as well as health care prices and you've got a recipe for disaster..
  - fidget 11y ago
    The places that are currently the most anti free trade are not SF/NYC/etc.
    - ethbro 11y ago
      That's because trickle-down does work to some extent (which isn't to say it's not still a socially regressive economic idea). A larger share of the global economy going to someone in your town raises all boats. But in towns where parent's trade-exported jobs predominated, there's only pain without the benefit. Hence the resentment of the policy. Which is good. People getting pissed off about that and making political choices based on that fact should be happening due to the fact that we haven't allocated the increased wealth due to trade around fairly. ... Honestly, we're essentially running knowledge/tech trickle-down economic policies now. In that if you aren't one of that class, then hopefully some of that wealth might get down to you... eventually...
dnautics 11y ago
There should have been no need to do so. "One would almost expect in this day in age of miraculous digital enhancements to everything we do, and the related improvements in the efficiency of production... That prices in the absence of [The Fed's] monetary exertions would fall, so I suppose that a little bit of inflation is itself an anomaly... One ought to have seen kind of a dividend for the working guy in the form of everyday lower prices." The failure of improved trade and technology to be the rising tide that lifts all boats is not a failure of policy to redistribute, but rather a consequence of interventionary monetary policy. The even scarier thing is that these policies are enacted by an unelected government organization (the Fed) on behalf of the people (I'm sure the Fed thinks that what it is doing is good for all of us). The net result: Despite his agitation for Fed transparency, Bernie is so clueless about economics, that it's likely that he will listen to cheerleaders like Robert Reich who stump for lowering interest rates and make the upward redistribution of wealth worse - and Donald Trump - well who knows what the hell he will do. If you don't believe that the fed stoking inflation is bad for the little guy, consider 1) if inflation weren't bad for the little guy, we wouldn't have to raise the minimum wage periodically, and 2) http://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/?_r=0 http://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hig... "When you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis." Read that carefully, and between the lines. One of the policy justifications for inflation is that it cheats the working class out of the value of their earnings, in the name of "employment". Finally, consider the words of Keynes, who is one of the advocates of monetary intervention to control the animal spirits (although even he would go pale seeing the one-sidedeness of the interventions that we've been doing in the past 40 years): "By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become “profiteers,” who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat." I think this is a perfect prediction of what has happened to our system of "capitalism".
SixSigma 11y ago
> There's no doubt that free trade is a big net positive for the US You need to add : in the short term or change "is a" to "has been"
bko 11y ago
The net benefits are allocated to everyone through lower prices and greater consumer choices. This affects many more people, albeit not as dramatically, as those negatively affected. The fact that imported goods well in US is proof that many people value the goods higher than the alternatives. If you go down the road of easing all competitive displacements of human capital, the eventual result would be lifetime job guarantees, protected cartels and a stagnant society.
- eli_gottlieb 11y ago
  >If you go down the road of easing all competitive displacements of human capital, the eventual result would be lifetime job guarantees, protected cartels and a stagnant society. We already have protected cartels and a stagnant society -- for capital-owners!
  - bko 11y ago
    Over 50% of Americans own stocks (capital) [0]. Through competition for low-cost ETFs you too can join this prestigious class of capital owners for $7 and 0.7% annual fee. [0]http://www.gallup.com/poll/182816/little-change-percentage-americans-invested-market.aspx http://www.gallup.com/poll/182816/little-change-percentage-a...
- collyw 11y ago
  Stagnant sound better than the growing inequality that I see.
  - bko 11y ago
    By giving all consumers less choices as to what goods they can purchase and from whom, do you think you're really making those consumers better off? All in order to benefit a few that happen to be in those industries for which the US no longer holds a competitive advantage
    - hiram112 11y ago
      What? Consumers in the USA before could have purchased Carrier air conditioners made here. Now they can purchase the same air conditioner made in Mexico. And we know that prices won't go down. That's not why Wall Street pushes companies to relocate.
nickik 11y ago
The are not really loser, they just benefited less. They also buy tons of electronics from China, also food and everything else. Im also not convinced that this narritive is true. Other countries with free trade don't always see the same outcomes.
dpweb 11y ago
Maybe people are realizing, when you're living in an import country, sometimes its better to have higher prices and a job, than lower prices and no job.
tdaltonc 11y ago
Two policies could fix this. A negative income tax (with UBI) and a state backed insurance policy that either pays out as free retraining, or as wage insurance.
- hiram112 11y ago
  Read my comment from above. There are no jobs in which a assembly line worker can easily retrain. No company on Earth would ensure these types of workers, in the same vein as insurance companies didn't ensure people with expensive pre existing conditions until forced by the gov. If it's subsidized, then just call it what it is: another tax. Unfortunately, the government already runs a massive deficit, so not sure how it can be afforded...

by nugget 11y ago

bjshepard 11y ago

"Free trade" is a misnomer for what is, in practice, freedom of capital to cross borders in search of lower labor. The dynamic certainly helped transform the lives of many people here in China for the better -- many people made rich from creating basically widjets for walmart, but in the US, many working class people lost both their jobs and their entire communities when Capital left.

marcoperaza 11y ago
It's not a misnomer. The free movement of capital leading to more efficient allocation of labor is one aspect of free trade. But it is not the totality of it. For example, no country has as much incoming foreign direct investment as the United States.
- jordanb 11y ago
  In recent years free trade can better be seen as regulatory arbitrage: companies close down worksites in places with strong environmental and labor protections and move work to places that have neither. We've seen talks about CO2 emissions and the resistance of Asian countries against agreeing to a framework that puts the same restrictions in place for them as for the west. They clearly understand that a comparative lack of emission controls puts them at a competitive advantage. Wage arbitrage is absolutely also a factor and the western world's working class absolutely have reason to resist that because they will not come out better off in that exchange.
  - mattmanser 11y ago
    To be fair to those countries, all the developed ones already went through their major pollution fuelled growth spurt and now want to deny other countries that growth spurt. The developed countries should be disproportionately paying the cost of pollution as they caused it in the first place. I totally understand we need to stop, but it's a lot more complicated than you're presenting.
    - jordanb 11y ago
      That's a ontogeny recapitulates phylogeny style argument: technology is different than it was 100 years ago; there's no reason to "follow the same path" as the original creators of that technology along with all the miss-steps. If you mean that Asian countries want a "growth spurt" by encouraging western corporations to build facilities where they can ignore modern pollution controls, then we are in agreement. But it's a beggar-thy-neighbor policy and one that hurts our entire planet and is abetted by free-trade agreements.
      - astrostl 11y ago
        “Poor Faulkner. Does he really think big emotions come from big words? He thinks I don't know the ten-dollar words. I know them all right. But there are older and simpler and better words, and those are the ones I use.” - Ernest Hemingway
- eli_gottlieb 11y ago
  >For example, no country has as much incoming foreign direct investment as the United States. And has that increased the rate of new businesses being founded, decreased the price of borrowing for existing businesses, or been poured into rent-seeking asset bubbles in markets like real-estate?
Shivetya 11y ago
Free trade benefits all people. Yes there are those who also lose a bit for it too but overall it benefits all it touches either directly or indirectly. It brings the standard of living up in export countries, lower costs in import countries, and stimulates other countries to get into the act. Not all industries are viable long term. Just like milk delivery faded in many areas so will some textile jobs. There are plenty of examples of widgets being made in the US alone from companies very young. It all comes down to this, do you look only for the negative? I do know one thing is true. Any candidate campaigning on trade sanctions or the like is a loser and will make us losers too
- crdoconnor 11y ago
  >Any candidate campaigning on trade sanctions or the like is a loser Yeah, just look at Trump trail in the polls.
- Vlaix 11y ago
  >Free trade benefits all people. At this point it's not economy, it's religion.

dclowd9901 11y ago

>There's no doubt that free trade is a big net positive for the US. Eh, I'm not so sure that cow's so sacred. Is free trade positive for the American economy? Yes, of course. It moves our country toward a richer, more intellectually-based economy, which should lead to greater quality of life for everyone: fewer shitty jobs building stuff, being hurt by industrial processes, working really really hard to make little money. I guess I'm going to parrot you a bit here, because I agree with the rest of your point, but what's happening is the second part of that equation, the benefit for the workers and the individuals, is not being met. Our economy is flourishing, but workers who have been displaced are not being supported. Our rich, rich economy should be able to either 1) train up people who were formerly doing the blue collar work to succeed in an intellectually based economy or 2) provide them with a standard of living given their inability to find good work (the standard income idea). We are not even attempting to do either. College costs a fucking shitload and social programs are drying up left and right. Our kids are getting dumber, relatively speaking, so they will be less competitive in a global workplace. So no, that is not what I would consider a "net positive" as a net positive, in my mind, means that what's happening is good for most people. Clearly, it is not. We shouldn't make it a platitude, because then we don't get to say, "Free trade is clearly good, but if and only if..."

ricw 11y ago
+1 The real problem in the US is that costs are prohibitive, particularly with regards to education. Add to that crazy housing costs (SF/NYC/etc) as well as health care prices and you've got a recipe for disaster..
- fidget 11y ago
  The places that are currently the most anti free trade are not SF/NYC/etc.
  - ethbro 11y ago
    That's because trickle-down does work to some extent (which isn't to say it's not still a socially regressive economic idea). A larger share of the global economy going to someone in your town raises all boats. But in towns where parent's trade-exported jobs predominated, there's only pain without the benefit. Hence the resentment of the policy. Which is good. People getting pissed off about that and making political choices based on that fact should be happening due to the fact that we haven't allocated the increased wealth due to trade around fairly. ... Honestly, we're essentially running knowledge/tech trickle-down economic policies now. In that if you aren't one of that class, then hopefully some of that wealth might get down to you... eventually...

dnautics 11y ago

There should have been no need to do so. "One would almost expect in this day in age of miraculous digital enhancements to everything we do, and the related improvements in the efficiency of production... That prices in the absence of [The Fed's] monetary exertions would fall, so I suppose that a little bit of inflation is itself an anomaly... One ought to have seen kind of a dividend for the working guy in the form of everyday lower prices." The failure of improved trade and technology to be the rising tide that lifts all boats is not a failure of policy to redistribute, but rather a consequence of interventionary monetary policy. The even scarier thing is that these policies are enacted by an unelected government organization (the Fed) on behalf of the people (I'm sure the Fed thinks that what it is doing is good for all of us). The net result: Despite his agitation for Fed transparency, Bernie is so clueless about economics, that it's likely that he will listen to cheerleaders like Robert Reich who stump for lowering interest rates and make the upward redistribution of wealth worse - and Donald Trump - well who knows what the hell he will do. If you don't believe that the fed stoking inflation is bad for the little guy, consider 1) if inflation weren't bad for the little guy, we wouldn't have to raise the minimum wage periodically, and 2) http://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/?_r=0 http://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hig... "When you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis." Read that carefully, and between the lines. One of the policy justifications for inflation is that it cheats the working class out of the value of their earnings, in the name of "employment". Finally, consider the words of Keynes, who is one of the advocates of monetary intervention to control the animal spirits (although even he would go pale seeing the one-sidedeness of the interventions that we've been doing in the past 40 years): "By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become “profiteers,” who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat." I think this is a perfect prediction of what has happened to our system of "capitalism".

SixSigma 11y ago

> There's no doubt that free trade is a big net positive for the US You need to add : in the short term or change "is a" to "has been"

bko 11y ago

The net benefits are allocated to everyone through lower prices and greater consumer choices. This affects many more people, albeit not as dramatically, as those negatively affected. The fact that imported goods well in US is proof that many people value the goods higher than the alternatives. If you go down the road of easing all competitive displacements of human capital, the eventual result would be lifetime job guarantees, protected cartels and a stagnant society.

eli_gottlieb 11y ago
>If you go down the road of easing all competitive displacements of human capital, the eventual result would be lifetime job guarantees, protected cartels and a stagnant society. We already have protected cartels and a stagnant society -- for capital-owners!
- bko 11y ago
  Over 50% of Americans own stocks (capital) [0]. Through competition for low-cost ETFs you too can join this prestigious class of capital owners for $7 and 0.7% annual fee. [0]http://www.gallup.com/poll/182816/little-change-percentage-americans-invested-market.aspx http://www.gallup.com/poll/182816/little-change-percentage-a...
collyw 11y ago
Stagnant sound better than the growing inequality that I see.
- bko 11y ago
  By giving all consumers less choices as to what goods they can purchase and from whom, do you think you're really making those consumers better off? All in order to benefit a few that happen to be in those industries for which the US no longer holds a competitive advantage
  - hiram112 11y ago
    What? Consumers in the USA before could have purchased Carrier air conditioners made here. Now they can purchase the same air conditioner made in Mexico. And we know that prices won't go down. That's not why Wall Street pushes companies to relocate.

nickik 11y ago

The are not really loser, they just benefited less. They also buy tons of electronics from China, also food and everything else. Im also not convinced that this narritive is true. Other countries with free trade don't always see the same outcomes.

dpweb 11y ago

Maybe people are realizing, when you're living in an import country, sometimes its better to have higher prices and a job, than lower prices and no job.

tdaltonc 11y ago

Two policies could fix this. A negative income tax (with UBI) and a state backed insurance policy that either pays out as free retraining, or as wage insurance.

hiram112 11y ago
Read my comment from above. There are no jobs in which a assembly line worker can easily retrain. No company on Earth would ensure these types of workers, in the same vein as insurance companies didn't ensure people with expensive pre existing conditions until forced by the gov. If it's subsidized, then just call it what it is: another tax. Unfortunately, the government already runs a massive deficit, so not sure how it can be afforded...