3 ms·

How exactly has free trade benefitted the majority of the population of the U.S. again? I see the microeconomic benefits to individual companies: lower costs

How exactly has free trade benefitted the majority of the population of the U.S. again? I see the microeconomic benefits to individual companies: lower costs equals higher margins. Lower prices? You, mister CEO, are fired! Every econ freshman knows to calculate marginal profit times units sold to find the best price in terms of total profit, and the cost of the inputs often has little to do with it, except when elasticity of demand is very high. By and large, you charge what the market will bear, and pass the savings along to the shareowners (and the board and execs, of course) Having every company outsource and import destroys "the commons" of a nation. Regardless of which other nation the money is going to.

joe_the_user 16y ago
Moreover, We've had free trade with countries that have rather specific development plans and policies around industrial development - we know China does. But more significantly, one might well argue Germany's private-public cooperation/policy has been a big part of it remaining an honest-to-God industrialized nation.
danteembermage 16y ago
You're talking from the perspective of a pseudo-monopolist, which makes sense when we're talking about iPhones, but all it takes is one entrant charging lower prices and your "best price in terms of total profit" calculation goes down the tubes as consumers switch over to the cheaper alternative. So you're right, a monopolist does not care at all what the costs of the inputs are but with competition the result is cheaper consumer goods (which has its own vices but that's a different issue...) Think about it; would you really want to live in a U.S. where every good was made in house? Your cashews would be very, very, very expensive.
guelo 16y ago
I believe the "neo-liberal" solution to this (the reason that Democrats since Clinton embraced free trade) was supposed to be that you make up for the job loss by taxing the rich and then use the proceeds to provide better social services for everyone else. Unfortunately since Clinton they've forgotten the tax the rich part and all we've gotten is the rich getting richer, the decimation of manufacturing industries and an enormous inequality gap.
deleted 16y ago
[deleted]

joe_the_user 16y ago

Moreover, We've had free trade with countries that have rather specific development plans and policies around industrial development - we know China does. But more significantly, one might well argue Germany's private-public cooperation/policy has been a big part of it remaining an honest-to-God industrialized nation.

danteembermage 16y ago

You're talking from the perspective of a pseudo-monopolist, which makes sense when we're talking about iPhones, but all it takes is one entrant charging lower prices and your "best price in terms of total profit" calculation goes down the tubes as consumers switch over to the cheaper alternative. So you're right, a monopolist does not care at all what the costs of the inputs are but with competition the result is cheaper consumer goods (which has its own vices but that's a different issue...) Think about it; would you really want to live in a U.S. where every good was made in house? Your cashews would be very, very, very expensive.

guelo 16y ago

I believe the "neo-liberal" solution to this (the reason that Democrats since Clinton embraced free trade) was supposed to be that you make up for the job loss by taxing the rich and then use the proceeds to provide better social services for everyone else. Unfortunately since Clinton they've forgotten the tax the rich part and all we've gotten is the rich getting richer, the decimation of manufacturing industries and an enormous inequality gap.

deleted 16y ago

[deleted]