4 ms·

I don't think I ever implied that free trade is always harmful. Just that at times tariffs and protectionism may be beneficial. The onus is on the other side w

I don't think I ever implied that free trade is always harmful. Just that at times tariffs and protectionism may be beneficial. The onus is on the other side which claims that free trade is always beneficial, and any tariffs or protectionism is harmful. Their analysis seems to work with the assumption that every participant in the economy practices free trade. That the effect of 10$ spent in USA is equal to 10$ in china, so that they don't have to take money circulation in their model. I find that assumption very false. 10$ that go to your local country is largely spent as tax to the country, rent, food, and healthcare services in the local economy. If you send 10$ to China, they won't be spending it on American restaurants, housing, or healthcare. Clearly USA should have some preference to say 10.1$ being spent in USA vs 10$ in china. It is fairly easy to see what I mean, and why "free trade is always good" is only true for the whole system, not individuals or groups of individuals (countries).

hackeraccount 8y ago
What happens to $10 sent to China? It's dollars after all. Do they use it to buy Chinese goods? They need Yuan for that so they'd have to exchange it for Yuan from someone with dollars. At some point that money would come back to the U.S. in exchange for good because ultimately that's what dollars are for - purchasing U.S. stuff. To some extent the dollar is a reserve currency; people are willing to use it in place of their own currency so in some sense it will never come back to the U.S. To the degree this happens it's the equivalent of people taking paper from the U.S. and giving goods in return - which is to say, it's hard to understand how the U.S. loses on that deal.
- rohit2412 8y ago
  I'm not talking about the currency, but it's monetary value. As such, you can imagine australia and China trading in us dollars. Is free trade always beneficial for Australians? If you still want to consider only usd and USA and China trade. Then usd is not just for purchasing us stuff. It is also a reserve currency that china holds. It wasn't a question of currency at all, any wealth/money sent in a different economy is a loss to the original economy. A sizable gain in efficiency can offset that, but not every gain in free trade is of the required size, which is why tariffs should be desirable.

hackeraccount 8y ago

What happens to $10 sent to China? It's dollars after all. Do they use it to buy Chinese goods? They need Yuan for that so they'd have to exchange it for Yuan from someone with dollars. At some point that money would come back to the U.S. in exchange for good because ultimately that's what dollars are for - purchasing U.S. stuff. To some extent the dollar is a reserve currency; people are willing to use it in place of their own currency so in some sense it will never come back to the U.S. To the degree this happens it's the equivalent of people taking paper from the U.S. and giving goods in return - which is to say, it's hard to understand how the U.S. loses on that deal.

rohit2412 8y ago
I'm not talking about the currency, but it's monetary value. As such, you can imagine australia and China trading in us dollars. Is free trade always beneficial for Australians? If you still want to consider only usd and USA and China trade. Then usd is not just for purchasing us stuff. It is also a reserve currency that china holds. It wasn't a question of currency at all, any wealth/money sent in a different economy is a loss to the original economy. A sizable gain in efficiency can offset that, but not every gain in free trade is of the required size, which is why tariffs should be desirable.