I probably wouldn’t agree with Renob on the color of the sky at midnight, but here, he is quite right. The free trade consensus is all but universal. Exactly how much “free trade” and under what circumstances is still debated, of course. but then again, do we really know how much iron should be in your diet?
The above is not really a fair way to characterize either economics or any other science. First, there is a great deal of consensus in economics about a large number of topics. The consensus is so vast I almost do not even know where to begin. The fact that there is a great deal of dispute on key questions invalidates economics no more than the lack of unity between classical and quantum mechanics undermines physics.
Economics is a science because it is a field of inquiry that strictly follows the scientific method. Theory. Hypothesis. Test, either classical or Bayesian.
The “Laffer Curve” is a neat little model. Reagan loved it because, well, you could draw it on a napkin. It was simple, it can be communicated easily to the masses, and it requires no more than 8th grade math to prove, let alone understand cursorily. It is a logical illustration. Its limitations are well known and well understood. The fact that it drove policy is a function of the administration that latched onto it like an anemic urchin on a DD tit.
OK, so what does happen to your American company when the Canadian one sets up its factory in China and then sells competitive products at a much cheaper price? What good is it to create jobs if your products aren’t selling?
My point is that the idea of targeted tax breaks sounds good on the surface, but I question whether they actually work. And I think that the only way to make them work is to take other steps to ensure that they do, like taxing imports to protect domestic industries that aren’t market competitive.
Deficit spending is supposed to be short term stimulus to create enough demand to utilize our production capacity, its not supposed to be an economic policy. Long term our productive capacity is what causes long term economic growth. Deficit spending during a healthy economy is idiocy.
The shift has been precipitous. There is a lot of displacement. Automation increases productivity it doesn;t shift production overseas.
Its not that we don’t understand the concept of comparative advantage, I just wish it were a it more gradual. Everyone knows that protectionism doesn’t work in the long run (unless the rest of the world lets you get away with it). It would also help if we had a Republican party that believed in science a bit more and voodoo economics a bit less.
As Maeglin said, there is wide agreement by economists on a huge number of issues. The disagreements tend to crop up when you start talking specific policy - because interactions in a modern economy are mind-bogglingly complex, and because policy mixes economics with ‘justice’, you can have two economists who agree on fundamentals disagree about the application of economic principles to the actual economy. But even here, there are areas where most economists agree about policy, and free trade is one of them. You can find a few dissenters among economists, but it’s generally not because they disagree about the economics of the policy. They disagree with the policy for other reasons, such as believing that ‘social justice’ trumps economics in some cases.
Also, because real-world interactions are complex, you can create logical chains of thought that that lead to differing conclusions from the same starting assumptions. For example, one economist might believe that trade should be free because economic fundamentals tell him that it will be better for the country as a whole. Another might disagree with free trade because, while he agrees that it’s technically better economically in a ‘pure’ environment, open borders will cause enough social problems that the economic gain is not worth it, or that through some complex interaction the simple case does not hold in the real world.
Another aspect that causes disagreement is that not all aspects of social policy involve economics. For example, an economist might believe that free trade is good for the economy, but bad for the environment. He’s not trained as an environmental scientist, so he’s swayed by people who tell him this is so.
It’s like the old story about how Velikovsky managed to convince so many people that “Worlds in Collision” was a serious book. He wrapped so many different disciplines into it that very few people could tell that it was all garbage. A scientist reading it would say, “Well, of course the science is garbage, but he really impressed me with the depth of his historical knowledge. That’s compelling.” An historian would read it and say, “Of course the history part is garbage, but I found the science to be very compelling.”
Pretty much an example of what I’m talking about. At its very basic level, the Laffer Curve is obviously true. If tax revenue is 0 at 0% taxation, and 0 at 100% taxation, there must be at least one maxima of the curve at some tax level between 0% and 100%. Raise the taxes above that level, and you will lower revenue. You can get pretty widespread agreement on that. The trick comes in figuring out exactly where that tax level is and what the shape of the curve is. And there’s enough ambiguity that people with various biases can come up with an analysis to support the own pre-conceived notions.
Automation tends to create far more displacement, far more rapidly, than do trade issues. If you don’t believe me, ask former telephone switchboard operators. Or typesetters. Or livery hands. Or saddle makers and blacksmiths. Or pump jockeys.
How many mom-and-pop bookstores has Amazon put out of business? The rise of the internet has caused a massive shift in the economy, displacing millions of workers (but creating even more jobs in new industries).
We tax all income earned within our borders whether it is generated by a US corporation or not so to the extent that production costs here are comparable to costs elsewhere, the tax rate may not be as big a deal as things like production costs.
We still have a large population of unskilled labor and unless we are ready to have them live on the wages paid to Chinese workers we have to at least think about opening the doors to free trade a bit slower.
We are at about 5% unemployment. A $15 minimum wage isn’t going to have as much of an effect on the labor supply as it will on the demand for labor, but at least you have a viselike grip on economic principles.
We do? What will happen if we don’t, and why is that worse then opening the doors quicker? I think it’s a fools errand to try an compete with the Chinese on price. We can’t win that race.
Do you have a cite to back this up because it seems counter intuitive. If I replace every worker in my factory with robots how is it different than if I build a manufacturing plant in, say, the Pacific Rim? The only real difference I see is that there is at least an outside chance that the workers in the Pacific Rim, making more money, might actually be able to buy goods and services at some point…maybe even from companies in the US. While the robots are unlikely to buy anything.
Other than that I’m seeing no real difference here.
National association of manufacturers
the oil lobby
the insurance lobby
the real estate lobby
the banking lobby
the every other fr1kking lobby except for the regular people lobby.
Not even close. They are motivated solely by profit. For profit they will lie about the addicitive carcinogenic properties of smoking. For profit they will lie about global warming. There’s not much they won’t do if we let them.
Well…yeah. You make it sound as if this is a bad thing. Companies are in business to make money.
You can always vote with your pocket book. Don’t like what some company does or the products they make? Don’t buy them. Even the cigarette companies aren’t holding a gun to your head MAKING you smoke. And of course, this is also why we have regulations, no?
Economics is not designed to screw over little people, its not really designed to do anything. Its a soft science, it get abused by Republicans to push their agenda but pure economics isn’t “designed”
And yeah our government is bought and paid for. You can buy donate $2300 per election cycle so for about 5 million dollars, you can max out your contribution to every incument in Washington DC. (2.5 million for the primary period and 2.5 million for the general election). It sounds like a lot of money but these people control a budget worth between 2 and 3 trillion dollars every year, they also levy about 2 trillion dollars of taxes every year. 5 million is a bargain.
The ones that signed on to it the way the Republicans portray it aren’t exactly mainstream. How many reputable economists think that a tax rate cut in the present environment would increase tax receipts?
It kinda takes a lot of the enlightened out of the “enlightened self interest” without the human factor. They are kind of unidimensional, they don’t balance efficient markets with social equity.
I just don’t subscribe to all this free market worship. I’m not about to stop using gas just because the oil companies lie about global warming. I’m just saying that the market doesn’t regulate itself.