So much for Obama’s rhetoric about free trade. This was a bone thrown to the United Steelworkers. American car buyers and tire buyers will pay the price.
And China is enraged about this. Expect some form of retaliation, which will do further economic damage. China has an awful lot of levers it can pull on the American economy, since it is a main supplier of goods and a main holder of American debt.
Would anyone like to defend this particular brand of idiocy?
Essentially this isn’t defensible, period. It seems that it probably complies with an existing trade agreement that China had to sign with the United States to become part of the WTO so most likely this won’t result in a WTO ruling against us. However that doesn’t stop China from taking retaliatory action.
Ultimately it does virtually nothing to help American consumers or workers. The companies that chose to move their factories to China have already made a significant capital investment. This is a temporary tariff–no sane company is going to relocate production over a tariff that will most likely be gone in 3-4 years. Factory building and location decisions don’t happen in that sort of time frame and once you’ve invested in building one it would require a more or less permanent (or very long term) change in conditions.
Why is this bad? Don’t we already get enough of our crap from China? Isn’t encouraging business to buy American a good thing? You seem to be arguing against the standard GOP line of supporting USA, but for the standard GOP line of saving money by hoking giant holes in our economy so the money can flow to foreign countries. I guess when two things conflict, you default to the one that involves bashing Obama.
Are you kidding? What could possibly make you say that?
Trade protectionism is one of the most destructive things you can do to an economy. The Smoot-Hawley tariff helped create the Great Depression. The one bright spot in this recession so far had been that governments had generally stayed away from protectionism. But now there’s a ‘buy American’ clause in the stimulus bill, and now a 35% tariff on Chinese tires. If this keeps up, expect to see the economy take another dive.
I have always been against protectionism in any form. I criticized Bush heavily for his steel tariffs. Eventually he repealed them. This is not partisan for me - I consider free trade to be one of the most important principles of the modern economy, and screwing with it is foolhardy and dangerous.
No, it’s not. If goods are available elsewhere at lower cost, forcing people to buy American simply hurts the economy. And if this kicks off a trade war with China, the damage will be extensive.
The value of free trade is one of the most settled concepts in economics. You’ll find economists from Milton Friedman to Paul Krugman in agreement on this.
All this does is protect unionized American workers at the expense of every American who buys tires. It’s a wealth transfer, with an economic loss associated with it because it makes the economy less efficient overall.
This is a ridiculous point. I have never agreed with the ‘supporting USA’ thrust of any politician. I’m not even American. And free trade doesn’t cause money to flow to other countries.
I agree about free trade, but at first glance it seems like it could never work without limitations, because there will always be countries that can do things cheaper with sweat shops or general lower standards of living. Every industry in US could probably be done by China or India for cheaper, but not better. Since cheaper usually trumps better, absolutely every facet of our economy could be dumped upon China and India until we get to a point where we don’t actually do anything.
And we’re already pretty close to that, aren’t we? Wasn’t the large part of the recent financial collapse because the bulk of our economy is based upon moving debt around? We’ve got no manufacturing or industry to fall back on.
Naturally, problems come up when domestic industries get lazy. The reason the US automakers almost vanished is because they failed to keep up with foreign makers, or to pay attention to public demands. That seems like more of an econ 101 failure than a trade matter, though. There’s not any tariffs on foreign cars to encourage buying American, in fact the foreign cars are often cheaper than the US ones. In that case it was just the US companies being horrible at their jobs.
That’s about the limit of my knowledge of tree trade, and as far as I can argue any specific point.
What a pathetic excuse for a counter point. I can guarantee if you search through my posting history you’ll not find a single post of mine that supports protectionism, and you’ll most likely find several that speak out against it.
In a free market it isn’t the government’s job to help American companies sell their product, that is the job of entrepreneurs. It means sometimes things end up being made somewhere other than the United States.
If you look at my post here (link) you’ll see I said this during 2008:
Note that I blasted both Obama’s protectionist bent as well as Bush’s idiotic steel tariffs.
Maybe, just maybe, people like Captain Carrot should recognize that some people actually do have genuine political opinions that aren’t solely shaped by some sort of desire to oppose everything Obama does out of “evil Republican” groupthink.
So far off it is virtually indescribable how wrong you are. The United States manufacturing sector is the largest in the world by value of goods sold. In 2007 for every $1 of goods manufactured in China $2.50 worth of goods were manufactured in the United States. We actually generate 2.5x as much value as the Chinese.
The idea that “we don’t make anything here” is one of the most persistent and most stupid ideas that has ever reached the mainstream. Not only do we still make a lot of stuff here, we have generally be increasing the amount of stuff we make over the years, not decreasing.
“Then why doesn’t everything say ‘Made in the U.S.A.’?”, because most of the stuff we manufacture isn’t cheap electronic garbage that has little labels stamped in the plastic case.
You want a gas turbine for a power plant, aircraft, heavy farming or mining equipment? Then there’s a good chance you’re going to be buying American.
American manufacturing is becoming more sophisticated and ever more focused on the highest of high tech products.
Now, we are indeed losing manufacturing jobs and will continue to lose manufacturing jobs. Why? Because amongst the manufacturing tasks we probably won’t outsource (because of the need for trained professionals like engineers to have direct oversight), we are always making the process of physical construction more and more complex and less and less manpower intensive.
However equating a loss of manufacturing jobs to “not making anything” is akin to saying we don’t grow food anymore because something like 1% of the workforce is involved in agriculture. We grow more food than we could have ever imagined back in the 18th and 19th century when agriculture was the field the majority of humans (both in the U.S. and the world) worked in, we just take less than 1/100th the number of people to do it.
A modern economy like that of the United States requires an educated workforce, and this is not a trend that is likely to change. Essentially if your manufacturing job can be outsourced to another country for 1/3rd of what it cost to employ you (or less) then you were being overpaid for a task that did not require a great deal of expertise.
Who the hell gives a crap about tires? Is that like a profession? Tiresmith? A bunch of low-wage lever-pullers got laid off, why make an issue of it? It’s probably the couple pigs who actually owned the factories that are raising the fuss…
Except that couldn’t work, since if we don’t sell anything ourselves to earn foreign currency, we’ll run out of money to pay china and india. China “makes” everything because we here in America are busy making and selling something else. Dreams.
I found absolutely everything in your post interesting except the above quote. I don’t know if you’re aware of this, but flinging righteous insults is not an effective way to engage in a conversation. Had you not done that, I would have considered your points and would have had some questions or comments for specific points, and I wouldn’t have disagreed with you on anything.
Except, you began the whole thing with an extended middle finger, which makes me discount everything you say and not want to interact with someone such as yourself any further.
A problem I’m detecting a lot of lately is that every damn thing has to be an argument. “Honey Comb cereal is delicious.” “No it isn’t, you asshole, fuck you!” Does this provide anything meaningful for anybody? Is the time spent reading and writing that an efficient use of our limited capacity for neuroelectrical activity? No. It is a waste of everybody’s everything. It makes everybody involved the worser for having processed the words.
Not everybody here is an expert on protectionism. In fact, I’d bet a few people (like myself) weren’t actively aware of the word before now. I’m sure a lot of people (like myself) would be interested to hear the details about the various opinions on the subject without having to deal with someone’s sensitive ego. By entering this thread with pistols drawn, you have turned any hope of civil discourse into gruel.
I submit that you, and everybody reading this needs to calm the fuck down about everything. Some people just want to talk and learn, and aren’t looking to wag their dicks around.
In summary, I officially no longer give a shit about protectionism and won’t be subscribing to your newsletter.
ETA: FTR: Sam Stone did a very good job of explaining his position without losing his bananas. I’m putting a check-plus on his permanent record.
Where economists disagree however, is when the concept of fair trade comes in. Friedman’s brand of free trade at any cost isn’t universally supported. When you have a trading ‘partner’ that so flagrantly violates the rules, the benefits from the exchange are altered.
What Friedman’s view requires, essentially, is perfect contestability. And that is a pipe dream. China routinely ignores agreements; steals IP; places prison produced goods contrary to international agreement into commerce; etc etc. Now I honestly don’t know if they have violated a tire agreement, but I would think it likely that they have. If that is the case, then a tariff might be the correct answer.
Folks, you’re just wrong about this particular case.
I’m not a fan of Sam Stone’s posts (warning: old pit thread), but this claim simply isn’t true. You would never find him defending trade protectionism. There are a lot of knee-jerk partisans on this board, but Sam is different. It’s his arguments that are suspect, not his core beliefs. And he is exactly right that you’ll find even liberal economists like Paul Krugman acknowledging the value of free trade (although there are still complex questions on the topic to be sorted out, especially with respect to who benefits most).
And I also agree with Martin Hyde about the parallel to the Bush steel tariffs. It was a dumb idea then, and it’s a dumb idea now. Having a new president doesn’t change the economic fundamentals.
While I agree with your support of the principle of free trade, the fact is that ideally competitive global markets, in which free trade invariably produces the optimally efficient result, don’t exist. In present-day reality, there is no true “free trade” to screw with: protectionism, tariffs and subsidies are ubiquitous in modern economies.
So I think that for free-market absolutists to reflexively label any tariff whatsoever as “idiocy”, just because it’s a tariff and they feel that tariffs are by definition bad, is kind of shortsighted. It’s like a committed pacifist automatically calling the development of any new weapons system “idiocy” just because it’s a weapons system.
I do agree that even in an imperfectly competitive world there are some tariffs that are counterproductive and undesirable, but I don’t know enough about the international tire trade to know whether this one falls into that category. On the one hand, the OP expresses a very negative opinion of it, which is supported by some of the statements in the OP’s linked article. On the other hand, the article also contains statements presenting different perspectives, as follows:
Emphasis added. So, ironically, it may be that this protectionist move is intended partly to weaken protectionist sentiment and defuse a potential strengthening of public opposition to more wide-ranging trade liberalization policies. Ain’t politics a hoot?
If you think being told that you are wrong is an “insult” then you aren’t someone who is capable of debate. If you look over my post you will note the only manner in which I referenced you personally was to say that you were wrong.
Kimstu is correct we don’t have a “perfectly” competitive global market. However even with that fundamental truism I still am not aware of any modern economist who has put forth any meaningful support for the idea that a protective tariff is ever a good idea.