# Yet another &!$% thread about trade with China **URL:** \ **Category:** Great Debates\ **Created:** [May 2, 2011, 6:08pm UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498 "2011-05-02T18:08:53Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Dr.Love](https://avatars.discourse-cdn.com/v4/letter/d/e8c25b/32.png) [@Dr.Love](https://boards.straightdope.com/u/Dr.Love)\ **Post date:** [May 5, 2011, 9:32pm UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/61 "2011-05-05T21:32:04Z")
> [@Wesley\_Clark](#): > > Real wages after adjusting for inflation haven’t increased for 30 years for most people in the US. In the same time period expenses like tertiary education, health care, energy, etc. have gone up. Some other expenses have gone down like food, clothing and transportation though. > > Trade can increase wealth and efficiency but many of the gains have concentrated at the top recently (or in developing nations not only between rich/poor but also between urban/rural), or whatever gains people are seeing (cheaper/better cars, cheaper clothes, cheaper food) are offset by stagnant wages and higher health costs. This is a global problem and nations in Asia, latin america and the west are having to find ways to deal with it. If you can’t fix the uneven distribution of the benefits of higher productivity and efficiency you destroy public support of trade. This is getting a bit off topic I think. Change in US trade policy with China is unlikely to have much effect on the cost of health care, tertiary education or energy prices. It’s difficult to say what might happen to income distribution. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [May 5, 2011, 11:10pm UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/62 "2011-05-05T23:10:14Z")
> [@Wesley\_Clark](#): > > The Chinese are not all pecking at type writers, they are using their trade agreements with western nations to take technology from western companies and use it to start up their own companies, then subsidize those companies to give them advantages in the global marketplace. And there is some corporate pushback because of it because they realize that the short term gains come with long term losses due to it. Frankly, I’m fine with that. At this point in time their “own companies” need the help, think of it like global socialism. Redistribution of wealth from rich countries to poor countries, what’s not to love? As the stats in the other thread show, median income in the US fell $2000 over the past decade, falling from $52k to about $50k. Meanwhile, median income in China went up from $2000 from $200 to $2200. Tell me, who feels that more? Who hurts more losing $2000? A rich American or a poor Chinese labourer? ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [May 6, 2011, 1:04am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/63 "2011-05-06T01:04:28Z")
> [@Dr.Love](#): > > This is getting a bit off topic I think. Change in US trade policy with China is unlikely to have much effect on the cost of health care, tertiary education or energy prices. It’s difficult to say what might happen to income distribution. The point is that many people don’t feel like they are seeing the positives to trade. The lower prices for transportation, food, clothes, electronics, etc provided by improved efficiency and productivity are offset by higher prices on medical care, education, real estate, etc. And income inequality has grown while wages have stagnated so whatever new wealth is created isn’t experienced by most people. So in that kind of environment you are going to get a push back against free trade. Most of latin america took an anti-free trade stance politically over the last 10 years, and the same thing is happening in the US right now. So those issues make trade feel like either a losing or at best neutral experience. **Hellestal** claimed people can always find jobs that pay more than their last jobs. On a long enough timeline, yeah that is true. In 100 years our quality of life will be far better than now, and poor people today live better than middle class people of 80 years ago. But over the last few decades things haven’t worked that way in the west. Also I disagree with the concept that trade is what improves our standard of living. Innovation that leads to higher productivity with less investment of capital and labor is what seems to do that. Crop yields per acre are predicted to double or triple over the next few decades in the US, but that isn’t due to trade that is due to advances in biotechnology. But that is one of the best benefits of global trade IMO, that developing nations eventually get to contribute to global innovation because of their growing wealth. Chinese, Brazilian, Indian, etc. scientists can work on problems of energy, agriculture, medicine, etc. And those benefits will eventually benefit everyone. Several decades ago China was pretty much all rural poor. Now thirty years later they are working on treatments for Alzheimers, HIV vaccines and are leading the global push for making renewable energy affordable and widespread. ---
**Author:** ![Dr.Love](https://avatars.discourse-cdn.com/v4/letter/d/e8c25b/32.png) [@Dr.Love](https://boards.straightdope.com/u/Dr.Love)\ **Post date:** [May 6, 2011, 3:04am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/64 "2011-05-06T03:04:25Z")
> [@Wesley\_Clark](#): > > **Hellestal** claimed people can always find jobs that pay more than their last jobs. On a long enough timeline, yeah that is true. In 100 years our quality of life will be far better than now, and poor people today live better than middle class people of 80 years ago. But over the last few decades things haven’t worked that way in the west. **Hellestal** acknowledged the long timeline requirement. That requirement is why he seems to support a safety net. > [@](#): > > Also I disagree with the concept that trade is what improves our standard of living. Innovation that leads to higher productivity with less investment of capital and labor is what seems to do that. Crop yields per acre are predicted to double or triple over the next few decades in the US, but that isn’t due to trade that is due to advances in biotechnology. I don’t think anyone is arguing that there is only one thing that improves our standard of living. Of course innovation and technological advancement are important, but the specialization of labor supported by trade–trade between individuals, cities, states, or nations–is a necessary component of innovation. One of the fundamental points of the free trade argument is that trade between two individuals in different nations is not economically different that trade between neighbors. Another basic point: efficiency gains from comparative advantage are just as good as efficiency gains from technological innovation. You make a similar point in your next paragraph. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [May 6, 2011, 5:11am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/65 "2011-05-06T05:11:55Z")
[QUOTE=Wesley Clark] The point is that many people don’t feel like they are seeing the positives to trade. [/QUOTE] ‘Many people’ think that universal health care is socialism, or will doom the US to eternal poverty. ‘Many people’ believe that 9/11 was a US government conspiracy. ‘Many people’ think a lot of things. That doesn’t mean they are right. People who don’t see positives from trade are, sadly, ignorant. > [@](#): > > The lower prices for transportation, food, clothes, electronics, etc provided by improved efficiency and productivity are offset by higher prices on medical care, education, real estate, etc. Let’s pretend for a moment that we didn’t have any trade. We made everything ourselves. What do you suppose the costs would be for all of the goods and services you regularly buy? Do you think they would be higher or lower if they were all produced in the US, but good, solid working class Americans? If all of the raw materials came from only our own resources, mined again by those good, solid working class Americans? Leave aside all the millions of Americans who would be out of jobs that are either directly or indirectly associated with trade…no sense in complicating things. Ok. Now, how would that affect the price of higher medical care? Why would it affect it? Leaving aside the fact that a lot of that medical equipment would now have to be all built locally and that it would cost a lot more, how would medical care get cheaper without trade? How about education? Why would education be cheaper because we didn’t have trade? Ok, next up is real estate…why would real estate be cheaper without trade? How would a lack of trade possibly make real estate CHEAPER?? So…throwing away all of those benefits you mentioned (and all of the ones having to do with the millions of jobs Americans have due to trade), I don’t see those other costs as coming down if we didn’t have trade. ISTM that we’d STILL have to pay the same or more for all those negatives you mentioned, and then we’d have to pay more for all the positives. Do you still think there aren’t any net positives from trade?? Do you think the folks who are down on trade and don’t see any positives actually understand any of the complexities involved in how trade benefits nations? > [@](#): > > And income inequality has grown while wages have stagnated so whatever new wealth is created isn’t experienced by most people. Certainly income inequality has grown. I don’t see that as a problem, personally, but I can see why it makes some people uneasy or upset. My take on why this has happened is that American business is much more efficient than at any other time in it’s history. And our workers are much more productive on an individual basis. However, they are more productive not because of some innate American-ness, or some unique quality of the hard working American worker, but because the tools and techniques they are using MAKE them more productive. Automation has made it unnecessary for manufacturing businesses to have a large work staff of high page workers with very good benefits. Instead, they can have a few such workers, and leverage their productivity to higher levels by using that automation, expert systems, computer controls and monitoring, etc etc. Then there is the benefits aspect. Wages have been stagnant in the US because the cost per worker to a business has risen. As you noted, healthcare has risen. Insurance has risen. The costs for training have risen. HR department costs overall have risen. All of these costs are reflected in a workers pay. The American worker, in some sectors, has priced him or herself out of the majority of the jobs in those sectors. They cost too much, they expect too much, and with automated systems and expert systems and the like, you just don’t need as many anymore. > [@](#): > > So in that kind of environment you are going to get a push back against free trade. They push back against free trade because they don’t want to think about WHY things are the way they are, or how they contribute to them being that way…and ‘free trade’ and the ignorance about what it is, what it does and how it benefits any country (including the US) is too complex, so it’s easier just to demonize it and heap all our collective problems on it. If someone like Le Jac ever got his way and we basically stopped supporting free trade, we put large tariffs or even embargoes on low wage countries, we forced US flag companies to have to have their plants here in the US, using US workers, it would be a disaster for everyone. Everything would cost more, there would be large shortages of things, and the few things that we managed to produce that consumers expect would be expensive, and since supply and demand would still be in operation you’d have a large demand and small supply…you can work out what that would add to the mix. > [@](#): > > Most of latin america took an anti-free trade stance politically over the last 10 years, and the same thing is happening in the US right now. So those issues make trade feel like either a losing or at best neutral experience. A country that abandons a generally free trade policy for whatever ‘anti-free trade’ means in practice is doomed, if it’s not a country just starting off with trade and in desperate need of protecting home grown industries because they are so weak. Possibly for a small 3rd word country an ‘anti-free trade’ policy, depending on what that actually means, would make sense. For a country like the US it would be a disaster. > [@](#): > > Hellestal claimed people can always find jobs that pay more than their last jobs. On a long enough timeline, yeah that is true. In 100 years our quality of life will be far better than now, and poor people today live better than middle class people of 80 years ago. But over the last few decades things haven’t worked that way in the west. The last few decades? We’ve seen phenomenal growth in our purchasing power in those last few decades. Think of the products, the goods and services available today to the average US citizen, then consider how many of those products, goods and services were available to the average US citizen in the previous 2 decades. As to Hellestal’s point, I think he wasn’t referring to an individual worker there, but to broad categories of workers. Compare telephone operators to, say, housing construction workers today (it’s not an accurate comparison, but it’s late here and my brain isn’t exactly working in top form atm…jet lag). Today a lot of unemployed people come from the building trades, or some vertical job type that supports the building trades. There is a glut of houses on the market in many places in the US, and that’s not likely to change any time soon. So, that’s a lot of workers either completely out of work, or who are working at lower wages and competing with more people for fewer positions. It’s possible that the entire contracting sector could collapse, and maybe a lot fewer houses will be built in the future in the US and indefinitely. If that’s the case, then a lot of those workers are screwed. Their choices would be to retrain to do something else, to try and find work at what they’ve been doing somewhere else (or at lower wages/benefits), or to give up and stay on unemployment as long as they can. A lot of them, individually, will never make again what they were making before. But by the same token, new industries and businesses making products or providing goods or services that don’t exist today might absorb the NUMBERS of folks who lost their jobs due to the turn down in housing and construction. That’s what happened to those telephone operators…they weren’t needed anymore, but new fields that didn’t exist in the 60’s or 70’s (computers, IT, cell phones, etc) have absorbed millions. > [@](#): > > Also I disagree with the concept that trade is what improves our standard of living. Innovation that leads to higher productivity with less investment of capital and labor is what seems to do that. Crop yields per acre are predicted to double or triple over the next few decades in the US, but that isn’t due to trade that is due to advances in biotechnology. Trade absolutely improves all of our standards of living. Not only does it bring in a lot of jobs to US workers (on both the import and export side), but it lowers the costs on goods and services you buy. No…crop yields per acre don’t have much to do with trade, except that some of it is due to new technologies and techniques that aren’t all developed in the US, and some are done to advances in bio-tech, as you mentioned. However, even if you assume all of the advances in bio-tech come exclusively from the US, consider…where did all the machines the people doing that bio-tech research come from? Were they all manufactured right here in the US, with materials mined here in the US? :dubious: Were they all assembled in the US, by US workers? :dubious: What about all of the folks doing that research? All Americans, working for American companies? :dubious: Falling asleep, so going to leave it there. Ado. -XT ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [May 7, 2011, 2:25pm UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/66 "2011-05-07T14:25:11Z")
> [@Dr.Love](#): > > Did you know that [nearly 50% of imports from China (and nearly 60% of imports overall) are capital goods and equipment](http://lincicome.blogspot.com/2010/09/just-who-exactly-pays-when-we-tax.html)? These are goods used by US businesses to make their own products more effectively. If the US government were to increase the price of these capital goods, US businesses would likely become much less competitive in the global market. US businesses occasionally face the threat of being [betrayed](http://williamjholstein.com/blogs/another-reason-ceos-should-rethink-outsourcing-and-offshoring) by their offshore outsourcers-turned-competitors. (As in, nearly put right out of business by intellectual property theft.) But, I suppose, since not every company has been taken down like this, we should just say this can’t happen, eh? > [@](#): > > First, it’s ridiculous to make any economic argument claiming that some country will “always” have a comparative advantage in some field. Second, your article claims that the Chinese government is simply not respecting intellectual property rights. If they keep this policy up, it will eventually come back to haunt them when foreign firms refuse to invest in their economy. Good luck with that happening in any major way any time soon. As poor as you say China is, everyone’s rushing to sell goods to that poor market. American workers, however, are excluded from participating in the jobs that come from serving China’s market. (Economists, of course, imply that they’re better off unemployed than doing that.) > [@](#): > > As a final note: there is almost nothing economically special about national borders. Ah so no wonder labor is as mobile as capital!!! Oh wait, no it isn’t… > [@](#): > > Most trade arguments, either for or against, are as valid when discussing trade across national borders as they are across state borders. If you believe that we ought to curtail trade (and perhaps immigration) between the US and China, should we also curtail trade (and immigration!?) between California and Michigan? Oh jeez, not this again. Next this analogy will move onto the fantasy of checkpoints between states and interstate work permits and… hooboy. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [May 7, 2011, 4:17pm UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/67 "2011-05-07T16:17:14Z")
I guess I like the idea of outsourcing lawyers and government to China-we have a hideously expensive government and legal system. If we could fire all domestic politicians and lawyers, we could save a LOT of money! If Americans contine to by cheap Chinese goods, we will contine to have huge trade deficits with China-its as simple as that. So China has to recycle its earnings somehow-by buying US debt. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [May 8, 2011, 12:47am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/68 "2011-05-08T00:47:58Z")
> [@ralph124c](#): > > I guess I like the idea of outsourcing lawyers and government to China-we have a hideously expensive government and legal system. > If we could fire all domestic politicians and lawyers, we could save a LOT of money! > If Americans contine to by cheap Chinese goods, we will contine to have huge trade deficits with China-its as simple as that. > So China has to recycle its earnings somehow-by buying US debt. Ah, so we can just go into debt forever? Uh, no we can’t. The US dollar will become so worthless that… whoops, suddenly we’re producing goods for them! ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [May 8, 2011, 1:27am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/69 "2011-05-08T01:27:08Z")
> [@xtisme](#): > > ‘Many people’ think that universal health care is socialism, or will doom the US to eternal poverty. ‘Many people’ believe that 9/11 was a US government conspiracy. ‘Many people’ think a lot of things. That doesn’t mean they are right. People who don’t see positives from trade are, sadly, ignorant. > > Let’s pretend for a moment that we didn’t have any trade. We made everything ourselves. What do you suppose the costs would be for all of the goods and services you regularly buy? Do you think they would be higher or lower if they were all produced in the US, but good, solid working class Americans? If all of the raw materials came from only our own resources, mined again by those good, solid working class Americans? Leave aside all the millions of Americans who would be out of jobs that are either directly or indirectly associated with trade…no sense in complicating things. > > Ok. Now, how would that affect the price of higher medical care? Why would it affect it? Leaving aside the fact that a lot of that medical equipment would now have to be all built locally and that it would cost a lot more, how would medical care get cheaper without trade? How about education? Why would education be cheaper because we didn’t have trade? Ok, next up is real estate…why would real estate be cheaper without trade? How would a lack of trade possibly make real estate CHEAPER?? > > So…throwing away all of those benefits you mentioned (and all of the ones having to do with the millions of jobs Americans have due to trade), I don’t see those other costs as coming down if we didn’t have trade. ISTM that we’d STILL have to pay the same or more for all those negatives you mentioned, and then we’d have to pay more for all the positives. > > Do you still think there aren’t any net positives from trade?? Do you think the folks who are down on trade and don’t see any positives actually understand any of the complexities involved in how trade benefits nations? > > Certainly income inequality has grown. I don’t see that as a problem, personally, but I can see why it makes some people uneasy or upset. My take on why this has happened is that American business is much more efficient than at any other time in it’s history. And our workers are much more productive on an individual basis. However, they are more productive not because of some innate American-ness, or some unique quality of the hard working American worker, but because the tools and techniques they are using MAKE them more productive. Automation has made it unnecessary for manufacturing businesses to have a large work staff of high page workers with very good benefits. Instead, they can have a few such workers, and leverage their productivity to higher levels by using that automation, expert systems, computer controls and monitoring, etc etc. > > Then there is the benefits aspect. Wages have been stagnant in the US because the cost per worker to a business has risen. As you noted, healthcare has risen. Insurance has risen. The costs for training have risen. HR department costs overall have risen. All of these costs are reflected in a workers pay. The American worker, in some sectors, has priced him or herself out of the majority of the jobs in those sectors. They cost too much, they expect too much, and with automated systems and expert systems and the like, you just don’t need as many anymore. > > They push back against free trade because they don’t want to think about WHY things are the way they are, or how they contribute to them being that way…and ‘free trade’ and the ignorance about what it is, what it does and how it benefits any country (including the US) is too complex, so it’s easier just to demonize it and heap all our collective problems on it. If someone like Le Jac ever got his way and we basically stopped supporting free trade, we put large tariffs or even embargoes on low wage countries, we forced US flag companies to have to have their plants here in the US, using US workers, it would be a disaster for everyone. Everything would cost more, there would be large shortages of things, and the few things that we managed to produce that consumers expect would be expensive, and since supply and demand would still be in operation you’d have a large demand and small supply…you can work out what that would add to the mix. > > A country that abandons a generally free trade policy for whatever ‘anti-free trade’ means in practice is doomed, if it’s not a country just starting off with trade and in desperate need of protecting home grown industries because they are so weak. Possibly for a small 3rd word country an ‘anti-free trade’ policy, depending on what that actually means, would make sense. For a country like the US it would be a disaster. > > The last few decades? We’ve seen phenomenal growth in our purchasing power in those last few decades. Think of the products, the goods and services available today to the average US citizen, then consider how many of those products, goods and services were available to the average US citizen in the previous 2 decades. > > As to Hellestal’s point, I think he wasn’t referring to an individual worker there, but to broad categories of workers. Compare telephone operators to, say, housing construction workers today (it’s not an accurate comparison, but it’s late here and my brain isn’t exactly working in top form atm…jet lag). Today a lot of unemployed people come from the building trades, or some vertical job type that supports the building trades. There is a glut of houses on the market in many places in the US, and that’s not likely to change any time soon. So, that’s a lot of workers either completely out of work, or who are working at lower wages and competing with more people for fewer positions. It’s possible that the entire contracting sector could collapse, and maybe a lot fewer houses will be built in the future in the US and indefinitely. If that’s the case, then a lot of those workers are screwed. Their choices would be to retrain to do something else, to try and find work at what they’ve been doing somewhere else (or at lower wages/benefits), or to give up and stay on unemployment as long as they can. A lot of them, individually, will never make again what they were making before. > > But by the same token, new industries and businesses making products or providing goods or services that don’t exist today might absorb the NUMBERS of folks who lost their jobs due to the turn down in housing and construction. That’s what happened to those telephone operators…they weren’t needed anymore, but new fields that didn’t exist in the 60’s or 70’s (computers, IT, cell phones, etc) have absorbed millions. > > Trade absolutely improves all of our standards of living. Not only does it bring in a lot of jobs to US workers (on both the import and export side), but it lowers the costs on goods and services you buy. > > No…crop yields per acre don’t have much to do with trade, except that some of it is due to new technologies and techniques that aren’t all developed in the US, and some are done to advances in bio-tech, as you mentioned. However, even if you assume all of the advances in bio-tech come exclusively from the US, consider…where did all the machines the people doing that bio-tech research come from? Were they all manufactured right here in the US, with materials mined here in the US? :dubious: Were they all assembled in the US, by US workers? :dubious: What about all of the folks doing that research? All Americans, working for American companies? :dubious: > > Falling asleep, so going to leave it there. Ado. > > -XT I’m not opposed to trade. What I am opposed to, among other things, is asking the US to engage in neoliberal free market trading while nations like China engage in manipulations (subsidies, currency manipulations, tariffs, intellectual property theft, etc). That seems to put us at a disadvantage. The article in the OP talks about one business saying China’s finished products cost less than his own raw materials due to all these behaviors. I want fair trade over free trade. I don’t think you understand my post. My point was that the lower cost seen in some areas like clothing, food, etc. that is in part due to global trade (as well as increased productivity which I’m sure is more important) is negated by the increased costs in real estate or medical care. So you can buy a shirt for $5 which is pretty cheap, and part of that cheapness is due to it being made overseas. But when housing is 3x more expensive, you don’t really see the benefits in your day to day life, you are still broke. You’d be more broke if the shirt was $15 though. Either way, innovation is what improves our standard of living. I think global trade is good for developing nations in the short and long term (although in the short term you also have more pollution, etc to contend with) and good for everyone in the long term. But in the short term in the developed world it is a mixed blessing. You get lower cost goods and services, and the savings can (but no guarantee they will be) be used to improve standards of living or business efficiency. Fine and good. But the labor surplus global trade opens does seem to drive down wages in the west. And it isn’t just manufacturing, professional careers are now starting to see the role outsourcing can play in lowering wages, benefits and job security. Engineering is no longer a degree that can offer the benefits it once did, neither is IT. Jobs that offer a living wage, benefits and a modicum of security are disappearing. And even if the economy and average per capita income grows, who cares. All the benefits go to the top 10% and corporate profits over the last few decades. In many ways people are seeing the negatives of trade (stagnant wages, insecure careers). Anti-free trade means endorsing regulated, progressive fair trade instead, which some Latin American nations are trying to do. A bank to compete with the IMF and world bank was created recently by several latin american nations. Several latin american nations are working on combatting poverty and putting basement regulations in, which is good. Your statement about income inequality doesn’t address the fact that automation has gone up in other OECD nations, but the US is the only one that has seen a massive growth in income inequality. Canada, France, Germany, etc. have also seen improvements in productivity and automation, but they do not have the income inequality that we do. Also wages have stagnated in labor intensive fields like service work too. So automation cannot explain it all. And health care costs have risen, but the costs were mostly passed onto employees. I believe in 1993 about 75% of jobs offered health care. Now it is closer to 50%. And the health care may not be as good. Higher deductibles, only covers the employee and not the family, etc. Service sector jobs generally don’t offer benefits like health care anyway. That doesn’t explain US workers being more expensive. A family health care plan is about 12k a year. Of that, I’d assume a worker pays on average 3-4k a year of that 12k. So 8k a year in health care benefits, and that is for a good plan where the costs are distributed pretty fairly. ---
**Author:** ![MichaelEmouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/michaelemouse/32/101_2.png) [@MichaelEmouse](https://boards.straightdope.com/u/MichaelEmouse)\ **Post date:** [May 8, 2011, 1:47am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/70 "2011-05-08T01:47:20Z")
> [@Wesley\_Clark](#): > > I’m not opposed to trade. What I am opposed to, among other things, is asking the US to engage in neoliberal free market trading while nations like China engage in manipulations (subsidies, currency manipulations, tariffs, intellectual property theft, etc). That seems to put us at a disadvantage. The article in the OP talks about one business saying China’s finished products cost less than his own raw materials due to all these behaviors. I want fair trade over free trade. > > Your statement about income inequality doesn’t address the fact that automation has gone up in other OECD nations, but the US is the only one that has seen a massive growth in income inequality. Canada, France, Germany, etc. have also seen improvements in productivity and automation, but they do not have the income inequality that we do. It puts particular American individuals and firms at a disadvantage but not the US in the aggregate. China does something stupid when it introduces such distortions and is worse off for it because its its economic actors are not producing goods which they can produce for the least opportunity cost. To put it another way, if Canada wanted to stop importing oranges from California and introduced enough subsidies, it could make Canada the world’s biggest producer of oranges and Canadian oranges would be sold in California. Californian orange producers would be worse off and Canadian orange producers would be better off, but most of all, Canadians in the aggregate would be worse off because the State would have incentivized Canadian economic actors to use resources inefficiently. Asking for what you call fair trade seems to be about matching one inefficient distortion in China with another in the US, which doesn’t improve anything but just makes economic activity more inefficient. I can speak for Canada on the issue of trade and automation. Trade is pretty free; most of the cheap manufactured stuff comes from China, yet as you say, there hasn’t been the same increase in income inequality. So maybe the problem’s not mainly about trade but rather internal policies. Tax more and distribute it by, say, increasing the EITC. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [May 8, 2011, 4:46am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/71 "2011-05-08T04:46:08Z")
> [@Wesley\_Clark](#): > > I’m not opposed to trade. What I am opposed to, among other things, is asking the US to engage in neoliberal free market trading while nations like China engage in manipulations (subsidies, currency manipulations, tariffs, intellectual property theft, etc). That seems to put us at a disadvantage. No, and this is the point you can’t seem to grasp. China is still a piss poor country where median income is barely over $2000 per year. That means America is at a huge advantage. US companies have a long and distinguished career going in and destroying countries. Before that it was the British with things like East India Company. Before that it was the Romans. Part of growing up in Canada was watching how the US can use it’s size and power to push smaller countries around. Tariffs on soft wood, restrictions on beef and potatoes. And locally people would joke that Canada should retaliate, but when the US was essentially our only trade partner we were pretty much screwed. When you realize how powerful the US is on a global scale, you’ll switch your tune and start to demand China increase protectionist policies. ---
**Author:** ![Dr.Love](https://avatars.discourse-cdn.com/v4/letter/d/e8c25b/32.png) [@Dr.Love](https://boards.straightdope.com/u/Dr.Love)\ **Post date:** [May 8, 2011, 5:24am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/72 "2011-05-08T05:24:36Z")
I’ve found some timely articles for this thread. First, a new study shows that [more trade leads to less long-term unemployment in developed countries](http://lincicome.blogspot.com/2011/05/new-study-more-trade-more-jobs.html). From the abstract: > [@](#): > > Our benchmark specification suggests that a 10 percentage point increase in total trade openness reduces aggregate unemployment by about three quarters of one percentage point. “Trade openness” = ( Imports + Exports) / GDP. Second, an article in Foreign Policy discusses how China’s development path has been similar to Japan’s, and [the perils of moving from an export-based economy to a consumption-based economy](http://www.foreignpolicy.com/articles/2010/09/30/the_japan_syndrome). The concluding paragraphs: > [@](#): > > History has given China this moment to do what Japan could not. The Japanese did not seriously attempt to rebalance until their economy was well-developed, ossified, and allergic to change. So when the jig was up on their longstanding economic model, rather than rebalance, Japan unraveled. In this sense, the global financial crisis was serendipitous for China. By reminding China’s leadership that relying on exports means depending on unreliable foreigners, the crisis put the pain of rebalancing in perspective. It is not out of altruism that we have seen renminbi appreciation accompanying Chinese wage hikes and other rebalancing measures. A slight loosening of controls over media and finance could be in the offing. Deregulating the service sector might be a frightening political proposition, but perhaps less so than not having one when the exports dry up. > > Like a (very) large Kamaishi, China risks having nothing to turn to when the industrial boom runs its course. But history need not repeat itself, and China’s leaders seem determined to steer the country onto a more sustainable path. All that remains is for them to do it. > [@Wesley\_Clark](#): > > I’m not opposed to trade. What I am opposed to, among other things, is asking the US to engage in neoliberal free market trading while nations like China engage in manipulations (subsidies, currency manipulations, tariffs, intellectual property theft, etc). That seems to put us at a disadvantage. The article in the OP talks about one business saying China’s finished products cost less than his own raw materials due to all these behaviors. I want fair trade over free trade. Imagine that there were a magic machine that does exactly that: you put in some raw materials, and it spits out a finished product, along with (say) some energy that you sell to the local power company, allowing you to sell the final product for cheaper than the raw materials. Wouldn’t this be heralded as a major innovation, unambiguously making our lives better? Why does this change when you discover that the machine is full of Han people, who are so committed to the illusion of magic that they’re willing to sacrifice their own meager incomes to maintain it? > [@](#): > > I don’t think you understand my post. My point was that the lower cost seen in some areas like clothing, food, etc. that is in part due to global trade (as well as increased productivity which I’m sure is more important) is negated by the increased costs in real estate or medical care. So you can buy a shirt for $5 which is pretty cheap, and part of that cheapness is due to it being made overseas. But when housing is 3x more expensive, you don’t really see the benefits in your day to day life, you are still broke. You’d be more broke if the shirt was $15 though. Either way, innovation is what improves our standard of living. I think you don’t understand the point. No one is arguing that trade is the only thing that affects living standards. However, trade–exchange of goods and services between people–is necessary for innovation to take place. More trade means more specialization, which gives more potential of innovation. Aside from that, comparative advantage is all about how trade increases economic output, and thus standard of living. Surely you’re aware of comparative advantage? > [@](#): > > I think global trade is good for developing nations in the short and long term (although in the short term you also have more pollution, etc to contend with) and good for everyone in the long term. But in the short term in the developed world it is a mixed blessing. You get lower cost goods and services, and the savings can (but no guarantee they will be) be used to improve standards of living or business efficiency. Fine and good. But the labor surplus global trade opens does seem to drive down wages in the west. And it isn’t just manufacturing, professional careers are now starting to see the role outsourcing can play in lowering wages, benefits and job security. Engineering is no longer a degree that can offer the benefits it once did, neither is IT. Jobs that offer a living wage, benefits and a modicum of security are disappearing. And even if the economy and average per capita income grows, who cares. All the benefits go to the top 10% and corporate profits over the last few decades. In many ways people are seeing the negatives of trade (stagnant wages, insecure careers). Imagine, for a moment, that the situation was reversed. Imagine that the top 10% had seen stagnant wages for decades, while the bottom 90% of the US has largely seen increasing prosperity. Imagine that the top 10% started lobbying Congress for regulations that, they believed, would slow the income growth of the bottom 90% in favor of giving themselves more money. What would you think of this hypothetical top 10%? Realize that Americans, globally speaking, are the rich. [Most Americans are in the top 10% of global income](http://economix.blogs.nytimes.com/2011/01/31/the-haves-and-the-have-nots/). And yet, you advocate policies that you believe, by your own admission, will slow the income growth of the world’s poor in favor of some of the world’s richest. Explain why the things you thought about the hypothetical top 10% don’t apply to you. > [@](#): > > Your statement about income inequality doesn’t address the fact that automation has gone up in other OECD nations, but the US is the only one that has seen a massive growth in income inequality. Canada, France, Germany, etc. have also seen improvements in productivity and automation, but they do not have the income inequality that we do. This is false. A [recent OECD report](http://www.npr.org/blogs/money/2011/05/04/135984006/the-gap-between-rich-and-poor-is-increasing-everywhere-why) shows that inequality is growing in a wide variety of countries. Eyeballing the graph, countries that had their Gini coefficients grow by at least as much as the United States from the 1980s to 2000s include Isreal, New Zealand, Germany, Finland and Sweden. ---
**Author:** ![Dr.Love](https://avatars.discourse-cdn.com/v4/letter/d/e8c25b/32.png) [@Dr.Love](https://boards.straightdope.com/u/Dr.Love)\ **Post date:** [May 8, 2011, 5:33am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/73 "2011-05-08T05:33:42Z")
> [@Wesley\_Clark](#): > > I don’t think you understand my post. My point was that the lower cost seen in some areas like clothing, food, etc. that is in part due to global trade (as well as increased productivity which I’m sure is more important) is negated by the increased costs in real estate or medical care. So you can buy a shirt for $5 which is pretty cheap, and part of that cheapness is due to it being made overseas. But when housing is 3x more expensive, you don’t really see the benefits in your day to day life, you are still broke. You’d be more broke if the shirt was $15 though. Either way, innovation is what improves our standard of living. I’ll make one more point about this: Unless you can demonstrate that the increased cost of medical care or real estate or whatever is caused–or at least exacerbated–by open international trade, you’re argument is invalid. If you find a $100 bill on the sidewalk, then find a $100 parking ticket on your car, it’s ridiculous to claim that finding the money wasn’t a positive event. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [May 9, 2011, 1:46am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/74 "2011-05-09T01:46:17Z")
> [@Dr.Love](#): > > Aside from that, comparative advantage is all about how trade increases economic output, and thus standard of living. Surely you’re aware of comparative advantage? Yes, but that’s not what we’ve got going on here. This is not about “we do this while you do that”, it’s more like “you do that while we sit at home jobless, or sit outside homeless”. Any increase in economic output is going to the top 1% of the country, not the bottom 99%. Workers wages are dropping but the cost of living isn’t. > [@](#): > > Realize that Americans, globally speaking, are the rich. [Most Americans are in the top 10% of global income](http://economix.blogs.nytimes.com/2011/01/31/the-haves-and-the-have-nots/). And yet, you advocate policies that you believe, by your own admission, will slow the income growth of the world’s poor in favor of some of the world’s richest. Now you’re comparing wealth between nations and wealth between the citizens of a nation. That comparison is invalid, unless you’re arguing for a one-world Government. These trade deficits are not the biggest contributor to our national debt and devauled dollar, but they are big contributors. What will happen to the income growth of the world’s poor when the US dollar loses its value and we’re no longer buying those imports? > [@](#): > > I’ll make one more point about this: Unless you can demonstrate that the increased cost of medical care or real estate or whatever is caused–or at least exacerbated–by open international trade, you’re argument is invalid. If you find a $100 bill on the sidewalk, then find a $100 parking ticket on your car, it’s ridiculous to claim that finding the money wasn’t a positive event. His point is that wages are not keeping up with inflation. This has been true for over a decade, and it is really not true now. Open trade with mercantilist, currency-cheating nations like China are why wages are not keeping up with inflation. NOT the recession. The wage stagnation has been going on long before the recession. China has an effective 25% tariff against the United States. It is outright hypocrisy to say we cannot have at least the same against them. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [May 9, 2011, 1:53am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/75 "2011-05-09T01:53:57Z")
> [@MichaelEmouse](#): > > To put it another way, if Canada wanted to stop importing oranges from California and introduced enough subsidies, it could make Canada the world’s biggest producer of oranges and Canadian oranges would be sold in California. Californian orange producers would be worse off and Canadian orange producers would be better off, but most of all, Canadians in the aggregate would be worse off because the State would have incentivized Canadian economic actors to use resources inefficiently. 1. What is it that actually makes Canadian oranges inefficient under this scenario? > [@](#): > > Asking for what you call fair trade seems to be about matching one inefficient distortion in China with another in the US, which doesn’t improve anything but just makes economic activity more inefficient. Not anything nearly inefficient as taking a bunch of American manufacturing workers earning $30 an hour and putting them into the unemployment line earning $0\*, or marginally better, putting them in low paying service jobs that pay $minimum wage, or draining money from the unemployment fund. How many people who lose their jobs in manufacturing are going into higher-value jobs? How many higher-value-than-manufacturing jobs do we have out there? How many unemployed do we have? Compare. Discuss. You’d be the first person who’d ever answer this directly. Where are most Americans going who lose their jobs in manufacturing? > [@](#): > > I can speak for Canada on the issue of trade and automation. Trade is pretty free; most of the cheap manufactured stuff comes from China, yet as you say, there hasn’t been the same increase in income inequality. So maybe the problem’s not mainly about trade but rather internal policies. Tax more and distribute it by, say, increasing the EITC. Please discuss the effects of increasing the EITC and how this offsets the jobs lost in manufacturing. - Yes, we all know that pro-offshoring people here think that being unemployed is the greatest thing in the world and that it earns you a trip to Spain. If you’ve taken a trip to Spain upon becoming unemployed, please raise your hand. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [May 9, 2011, 2:51am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/76 "2011-05-09T02:51:11Z")
I was watching Ha-Joon Chang the economist today talking about the economic myths. Myth 1. He says there is no free market. Not because of the governments, but because the private sector wants it that way. 2. Companies should not be run exclusively for the benefit of the owners. He says even Jack Welsh has come to the conclusion that long term success requires taking everybody seriously, that includes employees, suppliers, customers, and plant communities. That is counter to the American corporate mantra. 3. Free markets rarely make poor countries richer. Every developed nation got that way through protectionism and state industrial policy. It was not free markets. 4. We do not live in a post industrial age. That myth has resulted in the neglect of our industries. Countries like Germany and Japan have been competitive in spite of paying decent wages. 5. America does not have the highest standard of living. Our average wage is 8th in the world when considering purchasing parity. 6. Making rich people richer doesn’t make the rest of us richer. Trickle down does not work because it actually trickles up. That is why the rich keep getting richer. 7. US manager are way over priced. We do not have the best performing companies, yet we have by far the highest paid executives. 8. Entrepreneurship will save the poor. You can open up a lemonade stand if you want. That will not support your family. 9. Corporations don’t need regulation. Dumb. International corporations will treat any country like a cheap motel. 10. Big government allows people to take risks.Many of the dhe dreaded welfare states are doing quite well . America is borrowing money from Sweden. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [May 9, 2011, 3:00am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/77 "2011-05-09T03:00:37Z")
> [@Le\_Jacquelope](#): > > - Yes, we all know that pro-offshoring people here think that being unemployed is the greatest thing in the world and that it earns you a trip to Spain. If you’ve taken a trip to Spain upon becoming unemployed, please raise your hand. o/ If my wife had gotten laid off this year we would have gone to Brazil. Now we have to wait until the next round of layoffs. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [May 9, 2011, 3:20am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/78 "2011-05-09T03:20:32Z")
> [@gonzomax](#): > > 1. Free markets rarely make poor countries richer. Every developed nation got that way through protectionism and state industrial policy. It was not free markets. Kaboom. > [@](#): > > 1. America does not have the highest standard of living. Our average wage is 8th in the world when considering purchasing parity. Ouch. > [@](#): > > 1. Making rich people richer doesn’t make the rest of us richer. Trickle down does not work because it actually trickles up. That is why the rich keep getting richer. Obvious stuff. Such incredibly obvious stuff. > [@](#): > > 1. US manager are way over priced. We do not have the best performing companies, yet we have by far the highest paid executives. And they’re the next to be outsourced. Betcha Corporate America changes its tune when this happens. > [@](#): > > 1. Entrepreneurship will save the poor. You can open up a lemonade stand if you want. That will not support your family. This is the only thing I disagree with, in part. Open something better than a lemonade stand. I run a successful business. But I also agree with him in that I feel that not everyone else can do this. > [@](#): > > 1. Big government allows people to take risks. Oh, now that one is an epic truth. No risk equals no gain. America’s welfare system has eliminated the binary coin-flipping of success-or-death. Here if you fail and are wiped out, the welfare system lets you try again. Few people ever succeed on their first try, which can be an expensive venture for the inexperienced. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [May 11, 2011, 3:31am UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/79 "2011-05-11T03:31:31Z")
If anyone wants to see jobs created by offshoring, GM now sells more to China than it does domestically. \*“Huangzhong villagers are part of a larger swath of people in less developed parts of China **becoming rich enough to buy a no-frills car**. Their growing demand for cheap yet sturdy vehicles is at the heart of GM’s strategy to double its sales in China to around five million units by 2015 from about 2.35 million in 2010.” “But it did even better in China, selling 2.35 million vehicles there, **up 29 percent as an expanding middle class gained wealth** , making it the world’s largest car market. The showing in China was about 136,000 more than what GM sold in the U.S. Toyota, meanwhile, sold just 846,000 vehicles in China.” “The 2,000-yuan-a-year job—about $310—wasn’t high-paying, but the 41-year-old didn’t want to go back to his 500-yuan-a-year life as a full-time wheat farmer.”\* And the result of all this: \*“Separately, GM said Monday it will add a third shift to a pickup truck assembly plant in Flint, Mich., to meet demand for heavy-duty pickups.” “General Motors Co plans to invest $2 billion at plants in eight states, including at a plant in Toledo, Ohio, that makes transmissions for small cars,”\* Because of trade with China, and because GM makes cars that people in China want, the company has emerged from the brink of bankruptcy to once again be a healthy and vibrant company that is expanding and [re]hiring. [http://finance.yahoo.com/news/GMs-China-sales-pass-US-for-apf-2185790564.html?x=0](http://finance.yahoo.com/news/GMs-China-sales-pass-US-for-apf-2185790564.html?x=0) > **[GM China Shifts Focus to Rural Demand for No-Frills Vehicles](https://www.wsj.com/articles/SB10001424052748704740204576272291963926476)** > > General Motors is revamping its China strategy, shifting its focus inland to rural markets where consumer demand for no-frills cars and microvans is key to achieving its goal of doubling its annual vehicle sales in China. > **[GM Sales in China Rise 29% to Top Two Million Vehicles](https://www.wsj.com/articles/SB10001424052748704723104576061300353475660)** > > GM's sales rose 29% in China last year, making the company the first foreign auto maker to surpass the two-million-unit mark. Toyota's China sales increased 19%. [http://www.cnbc.com/id/42965326](http://www.cnbc.com/id/42965326) ---
**Author:** ![Throatwarbler\_Mangrove](https://avatars.discourse-cdn.com/v4/letter/t/8c91f0/32.png) [@Throatwarbler\_Mangrove](https://boards.straightdope.com/u/Throatwarbler_Mangrove)\ **Post date:** [May 11, 2011, 4:27pm UTC](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498/80 "2011-05-11T16:27:56Z")
I guess you mean “on the brink of Chapter 7 bankruptcy”, because GM actually did go bankrupt. [Previous page](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498.md?page=3) [Next page](https://boards.straightdope.com/t/yet-another-thread-about-trade-with-china/580498.md?page=5)