4 ms·

Can you explain the connection between free trade, covid/russian agression, and the economy? It's not obvious to me

by cowpig 4y ago

metabagel 4y ago
That's not what parent is saying. They are saying there is a connection between Covid and the Russian war in Ukraine; and supply shocks and inflation. They are saying that free trade policies are unrelated and won't solve the current supply shocks and inflation. I agree.
- beebmam 4y ago
  It's just an opinion. There's no serious argument being made in the comment everyone is replying to. It's just apriori reasoning, not based in evidence, about how the world works. It's fun to read, but it's not founded on reality (evidence), and people should not take it seriously, just like virtually all comments on social media sites.
metabagel 4y ago
The other argument which I think is being made is that free trade has led to supply chains which lack redundancy and are susceptible to shocks.
corrral 4y ago
Free trade—if it results in greater reliance on foreign suppliers, which it pretty much always does—comes at some national security risk, since you're depending on sources beyond your control for the supply of more goods and resources. To illustrate by extreme example: that your country has realized its greatest Ricardoan(?) comparative advantage potential and has efficiently converted its entire productive capacity to making teacups is not great if there's a global food shortage and you don't produce any food. Shocks to supply and to the economy (so, things like Covid or Russia invading a neighbor) can cause that risk to be realized as harm, or at least cause the risk to be more evident.
idontpost 4y ago
Free trade results in most production moving to its most inexpensive location. That's the whole point. Then when bad things happen in that location, you lose that production. The result is that you can't get what you need at any price.
ren_engineer 4y ago
1. Optimization like outsourcing sacrifices resiliency in the name of maximizing profit. In the software world trying to save money by keeping no backups or not allocating additional server capacity in the name of maximizing profits would be seen as insane but that's how US manufacturing has been managed. 2. Economists in general don't account for any externalities or 2nd order effects when it comes to free trade. In theory comparative advantage makes sense, but it doesn't account for how outsourcing cheap manufacturing to China eventually allows them to build up an economic base that threatens the US militarily Basically for the US economy to work requires the system to be completely perfect, anything like a war or pandemic that throws even a minor wrench in an extremely complicated system causes disaster. If we put economists in charge they'd have outsourced all food production because cheaper labor in other countries would be more "efficient". Which would be fine until some sort of famine, then those countries would just keep the food and we'd be stuck with "high value" products while starving
- ch4s3 4y ago
  > If we put economists in charge they'd have outsourced all food production because cheaper labor in other countries This shows great ignorance of both farming and economics. For cereal crops, labor barely registers as an input.
- naravara 4y ago
  > Economists in general don't account for any externalities or 2nd order effects when it comes to free trade. Many do. They just don't get hired as lobbyists so their impact on the conversation is limited. The economics that gets done in economics departments is often quite different from the economics that percolates out into popular consciousness. But a lot of it involves math. . .
- rossdavidh 4y ago
  Analogy to not paying for backups or additional server capacity, is excellent.
  - closeparen 4y ago
csa 4y ago
> Can you explain the connection between free trade, covid/russian agression, and the economy? It's not obvious to me Negative externalities can happen such that access to your trading partners is severely reduced or eliminated. In terms of COVID and China, the biggest trading center and very large (largest?) shipping port in China largely came to a grinding halt as the entire city was locked down for covid. Massive amounts of cargo ships were just stuck outside the port with nothing to do. This gummed up the entire inner workings of the international trade system and international shipping system, and this negatively impacted many economies due to lack of goods and increased cost of good that were available due to limited supply. In terms of Russian aggression, the main issue has been restricted access to Russian oil. Energy drives economies. If energy prices go up and/or supply goes down, it slows the economy.

Can you explain the connection between free trade, covid/russian agression, and the economy? It's not obvious to me

by cowpig 4y ago

Can you explain the connection between free trade, covid/russian agression, and the economy? It's not obvious to me

That's not what parent is saying. They are saying there is a connection between Covid and the Russian war in Ukraine; and supply shocks and inflation. They are saying that free trade policies are unrelated and won't solve the current supply shocks and inflation. I agree.

beebmam 4y ago
It's just an opinion. There's no serious argument being made in the comment everyone is replying to. It's just apriori reasoning, not based in evidence, about how the world works. It's fun to read, but it's not founded on reality (evidence), and people should not take it seriously, just like virtually all comments on social media sites.

metabagel 4y ago

The other argument which I think is being made is that free trade has led to supply chains which lack redundancy and are susceptible to shocks.

corrral 4y ago

Free trade—if it results in greater reliance on foreign suppliers, which it pretty much always does—comes at some national security risk, since you're depending on sources beyond your control for the supply of more goods and resources. To illustrate by extreme example: that your country has realized its greatest Ricardoan(?) comparative advantage potential and has efficiently converted its entire productive capacity to making teacups is not great if there's a global food shortage and you don't produce any food. Shocks to supply and to the economy (so, things like Covid or Russia invading a neighbor) can cause that risk to be realized as harm, or at least cause the risk to be more evident.

idontpost 4y ago

Free trade results in most production moving to its most inexpensive location. That's the whole point. Then when bad things happen in that location, you lose that production. The result is that you can't get what you need at any price.

ren_engineer 4y ago

1. Optimization like outsourcing sacrifices resiliency in the name of maximizing profit. In the software world trying to save money by keeping no backups or not allocating additional server capacity in the name of maximizing profits would be seen as insane but that's how US manufacturing has been managed. 2. Economists in general don't account for any externalities or 2nd order effects when it comes to free trade. In theory comparative advantage makes sense, but it doesn't account for how outsourcing cheap manufacturing to China eventually allows them to build up an economic base that threatens the US militarily Basically for the US economy to work requires the system to be completely perfect, anything like a war or pandemic that throws even a minor wrench in an extremely complicated system causes disaster. If we put economists in charge they'd have outsourced all food production because cheaper labor in other countries would be more "efficient". Which would be fine until some sort of famine, then those countries would just keep the food and we'd be stuck with "high value" products while starving

ch4s3 4y ago
> If we put economists in charge they'd have outsourced all food production because cheaper labor in other countries This shows great ignorance of both farming and economics. For cereal crops, labor barely registers as an input.
naravara 4y ago
> Economists in general don't account for any externalities or 2nd order effects when it comes to free trade. Many do. They just don't get hired as lobbyists so their impact on the conversation is limited. The economics that gets done in economics departments is often quite different from the economics that percolates out into popular consciousness. But a lot of it involves math. . .
rossdavidh 4y ago
Analogy to not paying for backups or additional server capacity, is excellent.
- closeparen 4y ago

csa 4y ago

> Can you explain the connection between free trade, covid/russian agression, and the economy? It's not obvious to me Negative externalities can happen such that access to your trading partners is severely reduced or eliminated. In terms of COVID and China, the biggest trading center and very large (largest?) shipping port in China largely came to a grinding halt as the entire city was locked down for covid. Massive amounts of cargo ships were just stuck outside the port with nothing to do. This gummed up the entire inner workings of the international trade system and international shipping system, and this negatively impacted many economies due to lack of goods and increased cost of good that were available due to limited supply. In terms of Russian aggression, the main issue has been restricted access to Russian oil. Energy drives economies. If energy prices go up and/or supply goes down, it slows the economy.