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Why is free trade good?

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guest-aaawwwmj

Honshu wrote:
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A personal story: this morning, I was forced to transfer $3.95, genuine greenback, for a cup of bitter unknown liquid mixed with fake milk powder. You think it's fair?
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You need to go to a coffee/espresso shot where the cashiers are not armed, forcing you to buy their product.
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Or did they - armed - drag you out of bed in the early morning and force you to their shop and forced that purchase on you?
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You should go to a Social Moron coffee shop and get wine.
The whine there is free.
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I think this is a well known story...
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There's this guy on TE who willingly overpays for items and then posts that he was forced into the transactions.
(Must have learned that via the Social Moron sites.)
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NSFTL
Regards

Houshu

I think this is a well known story:
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A young man went to market and after some bargaining bought a basket for 10 coins. But when he showed to his father, a seasoned trader, of his purchasing, he was berated for paying too much. Discouraged, the young man went back to the market and again, after some bargaining, sold the same basket for 10 coins. But when he proudly showed his father, a shrewd trader, of his selling, he was again berated for selling too cheap.
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The moral of the story: there is no such thing as 'fair trade'. The other side always, without exception, gets a better deal. The seller always felt his beautiful product/valuable trade secret/high technology were basically stolen, and the buyer always felt that his hard-earned cash was basically robbed.
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A personal story: this morning, I was forced to transfer $3.95, genuine greenback, for a cup of bitter unknown liquid mixed with fake milk powder. You think it's fair?
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A modern twist of the original story: the said father then claimed that his objection to his son's trade was based on a high moral principles: because the seller's bad labor practice, his product was not kosher. 'What am I to do?' asked the son, 'with the pitiful allowance I can not afford a customer-designed basket!'
'OK' said the father, 'if for every basket he sells to you, he gives me one for free, let's called it 'tariff', then I will approve your trade".
"But, father', said the son 'the basket is still not kosher!'
"oh, kosher shmosher, f**k it!" was the answer.
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hehehe....

Realize

Instead of speculating about what's going to happen, let it happen. Unfair trade is the issue here. Not fair trade. Slave labour by China, Korea, Japan, and Vietnam where the Company has the right to kill the worker, needs to be factored in the discussion. Japanese screaming that Americans are lazy from the 1980's , to condemning Blacks and Hispanics for poor American quality has got to hurt the Yankees. Indians smirking that their knowledge coolies and STEM professionals are smarter, better educated Engineers, and harder working than Yankees has got to hurt too. The truth is that there has been too much cheating by India in the H1B visas, and by Japan over the decades. China has stolen technology, and produced better stuff cheap. What is making so many Whites MAD, is UNFAIR TRADE, in the name of free trade. Trump can't go in Toyota and make sure that the Company doesn't work its workers and staff to death in Japan can he? He can't do the same thing in China either. He can't prevent them from stealing from other foreign companies that manufacture there. He can't see to it that Indian software coolies don't work for 14 hours a day can he? Tariff barriers all over Asia in the name of protecting their own home grown champions! The greatest problem is that a lot of White Westerners refuse to do anything about such horrifying unfair trade tactics, and scream free trade instead in the name of promoting prosperity. In SPORTS will this be tolerated. A lot of people better educated and informed than TE and all Christian Whites, can see the unfair tactics and are boiling mad. These people of JESUS himself, see a duty to allow unfair trade tactics, and admire Japanese for being so hardworking and praising Indians for being so brilliant vis a vis their own Engineers and Scientists. They feel guilty about the whole colonisation and slavery business, and are now making amends, which unfortunately upset evil people like Trump, who feel that Americans are hardworking, and that their Engineers are good. He probably is so evil that he thinks Americans need a work life balance, and that slave labour of Asia should not be tolerated. This is a White problem between the forces of Jesus and the evil Trump. Fair Trade or Free Trade?

Houshu

Free trade, by definition, is good, but only for the seller and the buyer. Free trade, by definition, is bad, sometimes very bad, for others tried to sell, and others tried to buy.

ProgsCon

Free trade is good IF both sides use the same economic rules.
The US does not use the same 'rules' as Canada or Mexico or China or Germany. We all have our own internal subsidies for various industries which skews costs - giving ourselves advantages.

Instead of the dead-head way of using tariffs, the Great Orange One should do something more intelligent and start discussions about how to create and overall 'fair' playing field.
But ,frankly, that involves thinking and thinking is something the Great One does find to be important.

MrR.Fox

"... if two parties want to swap something with each other, no government should stop them."
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The key word here is - 'swap'.
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The term refers to the giving of something in exchange for the getting of something else, then and there. Like all advocates of free trade, Adam Smith assumed - without actually saying so - that international trade is always in overall balance ... and at the time he was writing it necessarily was. For, all currencies were backed by gold - goods were exchanged for either other goods or for gold. And when a country ran out of precious metal - as the UK did in the run-up to the Opium War - it stops buying anything from abroad. The general introduction of fiat currencies in 1913 changed everything ...
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Countries never run out of their own fiat currency ... and if other countries (for varous reasons) are willing to accept and retain that fiat rather than buying an equivalent amount of goods from abroad, then trade becomes un-balanced - surplus-states accumulate fiat, and deficit-states accumulate debt ... and unemployment - think Greece.
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One Mr. John Maynard Keynes - an economist of at least equal stature to Smith, and more contemporary too - appreciated the problem, and proposed the right solution to it - creditor-states must be compelled to bring their trade into balance on penalty of having their accumulated credits erased, forcibly if necessary. The fact that Keynes was correct in his analysis didn't prevent his proposal from being rejected at Bretton Woods ... but time and financial-physics are on his side. We'll get there. Trump is on the right track, sort of.

ChiefAlien

We are used to having Presidents who have no experience in economics, finance, or business. We never had an actual Buffoon who has failed over and over in his business career....but made a lot of money by having others do all the work for him because he had enough money to bribe them too.

No one will talk about what happened in the US. Which is that CEOs were allowed to ship production over seas just for cheap labor...then allowed to import the products and still sell them to the same people they put out of work. The C-Suite made bank and fleeced America (legally) while the average worker saw their ability to get ahead pretty much destroyed. But that was the point....poor people in debt to banks and in need of work make the best indentured servants possible...just like King Trump and the GOP have wanted all along.

Just remember how many Kings and Czars and Governments found themselves hanging from trees because they pushed the peasants into such destitution the lashed out.....this could easily happen in the US since the same Rulers armed us all....and that proves just how stupid the GOP is. Arming the people who will come for their heads.

Reg_fhjfjhfhjfhj

Look up the Hyde Park agreement between Canada and the US (www.thecanadianencyclopedia.ca/en/article/economic-canadian-american-rel...).

At the start of WW2, the Canadian economy nearly collapsed when their main customer Britain was blockaded by the Nazis. At the time, Canada had a major deficit with the US. Rather than see their ally become a failed state during a major war, the Americans created this pact to share war time production. It seems those times of brotherhood have passed.

outsidethebox

This is not just an economic decision but a national security one as well. Can the US be a superpower in the world without a healthy steel and aluminium industry? Which is, by the way, where President Trump gets his authority to make this decision.

WT Economist

It's not trade, it's not technology. It's debt.
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Our productive capacity has diminished, not increased, and our imports are paid for with borrowing, not labor or robots. And then, well all the money is going to service the debts, our impoverishment will reveal itself.
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https://larrylittlefield.wordpress.com/2014/03/09/debt-and-inequality-go...
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The U.S. and U.K. have paid for imports not with exports but with promises to live vastly poorer in the future to pay the exporters back for having lived more richly in the past. Or having prior generations live more richly in the past.
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Three trade supporters need a model that incorporates what has actually happened, rather than simply assuming imports are paid for with exports and drawing conclusions from there.

Pen's Mightier

The distribution of labour or the efficient distribution of labour according to skill or specialization has taken a back seat in the discussion circles with the issue of in/equality which means that labour could move from unproductive to productive uses or sectors of the economy, the sectors that have a capacity or excess capacity to increase supply and lower the general price level... The objective of trade could not be different, to increase productivity and competitiveness by increasing allocation of the excess capacity in the labour market to the sectors that are overheating or protected due to lower lower domestic production and supply and high demand, but only if there is unemployment in the economy and there is scope of efficient distribution of labour in the economy to contain demand and the general price level, but after full employment international trade would help increase domestic competitiveness and increase productivity by lowering the prices in the economy by increasing international supply... The WTO support tariffs to protect employment... Nonetheless, there is another dimension to the argument that trade or import at a higher cost when we could produce at a lower cost also improves competitiveness of the economy... Generally, importing is costlier than domestic imports due to higher transport costs.... Trade that increases real wages and incomes or domestic demand by lowering the prices would also lower borrowing cost and increase internal depreciation or devaluation (means lower domestic prices relative to the exchange rate or constant exchange rate) and expectations would also increase exports....

ReiBread

While some jobs in manufacturing have been lost to cheap foreign imports, many more have been lost due to technology and automation. Yet for some reason supporters of free trade don't tell this side of the story. We grant to the opponents of free trade the myth that manufacturing jobs are in decline due to competition from China. The US has a trade surplus in agricultural products, yet less that 2% of Americans work in agricultural. This decline in agricultural employment is almost entirely due to improvements in technology, not competition from foreign products. The decline in employment in manufacturing is also primarily due to technology, not trade. Supporters of free trade not only have to make this point, but they have to propose real solutions for those that have lost their jobs to technology.

WT Economist

FYI: glad the comment field is back but I can't save edits to correct my typos. Americans have benefitted from imports, but instead of paying for them with exports, they have sold off their individual and collective futures. In the end those with current account surpluses will suffer too, as their biggest customer goes bankrupt.

WT Economist

"We swap the proceeds of our labours, and both profit by doing so."
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The problem is, that isn't what has happened. American has benefitted from other people's labor in the short run via imports. But it has paid for a huge share of them by going deeper and deeper into debt, selling off its individual collective future.
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The failure to recognize and respond to that difference is the key failure to understand the problem of trade. It is a debt for consumption problem.
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As a result, more and more of the future labor of future Americans is pledged to those from elsewhere, net of any future revenues from investments abroad. Foreigners now own more than half the U.S. Treasury market, and that means that at a more normal interest rate of 4.0% (the rate required to make it somewhat less likely that all the pensions fund go broke) 2.0% of GDP would flow out of the country for federal debt alone, crushing domestic consumption and demand. Even as the population ages and their senior benefit needs rise.
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And that is just the federal debt. All kids of U.S. utilities are now being cash-cowed by foreign owners. It isn't that foreign investment is necessarily a problem. It is that the U.S. has run a balance of payments deficit for decades and is $trillions in the hole.
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In the end the producer countries will suffer too, as their biggest customer faces an economic collapse -- or monetizes that debt and wipes out their investments via hyper-inflation. We face disaster, the cause is debt, not free trade as such.
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And yet what we get is the orthodoxy that assumes that we are swapping our labor for their labor. That isn't true, and hasn't been true since 1980! Doesn't that matter? We are given a choice between mercantilism and willfull blindness.

Rohan Laghate

Really liked the Adam Smith analogy here. Such a practical explanation of the far reaching effects that are possible because of the surprising moves related to trade wars.

guest-aaawwwmj

Free trade is good...
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but Fair Trade is better.
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PETER NAVARRO:
Do me a favor. Play Dan Slane’s clip in my “Death by China” movie. It’s priceless.
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PAUL SOLMAN:
Slane was a plywood manufacturer in Bowling Green, Kentucky, whose competitors moved to China.
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DAN SLANE, Business Owner:
And I opened up three factories in China and delivered to the customer in the United States 50 percent cheaper than I could make it in Bowling Green.
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PETER NAVARRO:
He winds up selling product back here into the U.S. at cost. How did he make his money?
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DAN SLANE:
Every month, the Chinese government would send me a check for 17 percent of my exports, and that was my net margin and my profit.
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PAUL SOLMAN:
So, is Donald Trump getting checks from the Chinese government?
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PETER NAVARRO:
That’s how the game works.
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http://www.pbs.org/newshour/show/trump-china-heart-u-s-economic-problems
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NSFTL
Regards

guest-aaolmini

but the argument of free trade should be based on highly similar world in the perspective of ideology and country's mutual benefits.

for USA and its another alliance,it works. But it can't work well in the global market.