Fascinating.
“It is lucky for rulers that men do not think.” — Adolf Hitler
Free trade, in the long run, increases wages and the number of jobs available in all countries that cooperate. Local industries can be decimated (the U.S. television industry is nonexistant, and the U.S. auto industry took a big hit in the 70’s), but only because free trade brought better, cheaper products to the citizens of a country than the local industry could provide. The net benefit, however, is always positive.
Competition through trade is exactly the same as competition through innovation or improvement in technology. The auto industry destroyed the blacksmith industry. The transistor switch wiped out an entire industry of female telephone switchboard operators. But would we be better off without the transistor or the automobile? No, because in each case the productivity gains from them made us richer, and in the end created even more jobs.
Trade is the same thing. You can think of a country like Japan as a black-box. We send it X dollars, and some mysterious force creates a new Lexus and sends it back, cheaper or better than we can make a Lexus here (or we wouldn’t do it). So, we spend fewer dollars on a Lexus than we otherwise would have to, and can invest the surplus in other areas. So instead of our country just having one extra Lexus, we have an extra Lexus PLUS the resources left over. A big win. Of course, the local Lexus builders may be pissed, but too bad. Such is the price of innovation or trade.
There is widespread political disagreement about the value of free trade, but almost none in professional economist circles. The value of free trade is one of the most universally agreed-upon principles in modern economics.
This might be a good opportunity to dispel a certain myth that libertarianism, in supporting free trade, supports robber baron capitalism. In fact, free means, in the libertarian sense, the absence of coercion. Therefore, there can be neither robber nor baron; else the trade is definitively not free.
“It is lucky for rulers that men do not think.” — Adolf Hitler
The way that it has been described to me is that the major complaint is that the WTO can override national laws. IIRC, we (the US) had prohibited the importation of tiger shrimp from Indonesia as they were being harvested using a method that was killing an endangered species, namely the sea turtle (which explains why you may see protesters in those goofy sea turtle costumes). The WTO said that the US could not prohibit the importation of tiger shrimp as it would be an unfair burden on free trade, thereby overriding laws that the US passed. The reason why the French are so peeved is that they want genetically engineered products imported from the US o be labelled as such. We do not want to comply and the WTO is siding with the US, forcing France to import unlabelled products against their wishes.
Another issue is who is in charge of the WTO and how they’re in charge. If I disagree with the endangered species protection act, I (and others like me) can band to elect a different person to cahnge these laws. There is no similar mechanism in the WTO.
What this has to do with trashing a Starbucks, I really don’t know.
And for those of you who say “if you don’t like it, buy elsewhere”- I would love to buy a pair of American-made running or basketball shoes. Know where I can get some?
Maybe if they could find a decent job like your father or grandfather could, they might be able to afford the good stuff.
That same force in that black box refuses to allow us to sell our stuff on an equal basis. Don’t even think about parking your Japanese car in my driveway, however, you’re welcome to park your Europeon or Koreon made car there.
So if the other country won’t reciprocate, we still win. Just not as much. It may be useful to try to get them to open their borders too, but that’s because free trade is GOOD. Cutting off trade in one direction because they won’t allow it in the other is simply stupid. Even one-way free trade is better than no trade at all.
BTW, just what do you think Japan will do with all those U.S. dollars if they won’t buy our goods? The fear in the 80’s was that they would use it to buy all our property and ‘take over’. And actually, they DID buy our property in the U.S. and Canada. At wildly inflated prices, because they had no other use for the dollars. Another BIG win for us. Japan took a huge bath on real estate, and much of the property they bought wound up getting sold back to we citizens at a big profit for the us.
So Japan’s government is stupid. Let’s not be stupid too.
Well, as of last night, the demonstrations took a decidedly nasty tone. Gosh, thanks a lot, you Starbucks-looting rioter-types, now the media has an excuse not to take a multilateral citizen effort to attract attention to their cause seriously.
“That’s entertainment!” —Vlad the Impaler
Mojo sez: “And for those of you who say “if you don’t like it, buy elsewhere”- I would love to buy a pair of American-made running or basketball shoes. Know where I can get some?”
try http://www.madeinusa.org
it’s got a bunch of clothing related links, among others. there looked to be a few shoe companies, dunno if any had basketball or running shoes. you also might want to try red wings. i don’t know if they make athletic shoes (but i think they might)
dhanson…you make a good point and I probably let my passion for fair trade get the better of me. You would have to admit that Japan is the ultimate protectionist, and it has served them well most of the time. It took 2 years of bad crops to force them to buy US rice awhile ago. Their argument is that it is against their culture to import foreign goods. How nice.
Ubermensch, I am aware of Redwings. As far as I know they are the only manufacturer of non-custom made shoes. Unfortunately, they only make workboots and some (ugly) quasi-dress shoes.
Excuse me- The only U.S. manufacturer.
I can’t remember the fellow’s name but he was an 18th(?) century French economist. He made a case for free trade by proposing some protectionist policies about like Jonathan Swift’s solution to world hunger.
The two examples I remember were, first, the abolition of windows, since the sunlight coming into houses for free robbed the lamp makers of their livelihood. Just think of the prosperity that would abound if we had to purchase light rather than having it pour in at no cost. The second was requiring workers to use dull axes, since sharp tools work more effectively and rob the worker of work. If the axes were unsharpened a worker might get paid for fifty strokes what he used to get paid for five.
As Oblio might say, “He’s got a point there!”
“If ignorance were corn flakes, you’d be General Mills.”
Cecil Adams
The Straight Dope
The WTO is a convenient target for all sorts of people. Opposition thereto isn’t necessarily a luddite or protectionist thing - many people are simply asking why this deal seems to end up with the US imposing punitive tariffs on EU goods because Europeans have made it very clear that they don’t want their meat pumped full of nontherapeutic antibiotics. Why did that happen? That wasn’t meant to happen. Why do we have to import shrimp harvested in a way that needlessly kills sea turtles? Why? Why are the US top bananas (Dole & Chiquita) using the agreement to torpedo the humane arrangement that the EU has with some of its members’ former colonies? Do we really want to sacrifice national sovereignty, environmental protection and fair trade practices with poor countries on the altar of free trade? Was that the point - to make the head honchoes at Dole richer at the expense of a farmer in Martinique?
The days of simple protectionist tariffing are over. Free trade has won the day. However, is free trade itself an article of faith, something that is pure and noble and good by definition and therefore needs to be protected against all else, or is free trade merely a way to get things done that is usually the best way, but with qualifications?
There are no certainties, there are no perfect, simple solutions that aren’t wrong, and unquestioning devotion to the abstract principles of capitalism is as misguided as thinking that everything can be solved by reading Das Kapital, or the Bible.
There are many people inside the WTO negotiations whose faith in privatisation, deregulation, IMF austerity packages and open markets is absolute. If thousands of people on the streets make it clear to them that not everyone thinks that way, and that ordinary people have priorities which the movers and shakers are going to be forced to listen to, instead of doing secret deals informed by one overarching, abstract principle.
ben
Pluto: The economic ‘father’ of free trade was David Ricardo, who formulated the theory of comparative advantage.