Free Trade, TPP, and Jobs

Discussion in 'Politics, Religion, Social Issues' started by jnpy!$4g3cwk, May 13, 2015.

  1. jnpy!$4g3cwk macrumors 65816

    jnpy!$4g3cwk

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    #1
    The kerfuffle over TPP has me once again considering what we know about "Free Trade", or, just, trade. Anybody who took Econ 1A has seen the "proof" that trade benefits both countries. But, the "proof" doesn't say anything about who in those countries benefits.

    My hypothesis is this: trade between a rich country and a poor country generally benefits lower income workers in the poor country and hurts lower income people in the rich country. I don't have any proof of my hypothesis, other than that is generally what has happened in the U.S. in recent decades. But, the software revolution also happened, and, that also has hurt a lot of lower income people.

    My worry about TPP is that it is going to tie the hands of policymakers who want to boost employment and wages for lower-skilled jobs. That is a big deal to me. Lower income wages have been sliding for decades, and, even so, there is still a shortage of lower-skilled jobs.
     
  2. vrDrew macrumors 65816

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    #2
    In very broad terms your hypothesis is correct - in the shortest terms, and for a fairly small segment of low-wage workers. But in any sort of longer term, reductions in tariffs and other barriers to trade generally boost incomes across the board.

    It may surprise you to know that there are still quite high tariffs on imported shoes. This might make sense if you were talking about $3000 handmade John Lobb's from London, or $965 Manolo Blahniks sold at Saks Fifth Avenue . But on a $35 pair of Nike or Reebok shoes sold at Wal-Mart?

    Those import tariffs on imported shoes end up costing lower-income people a lot more, on a percentage of their income basis, than they do wealthy people.

    The reality is, it simply doesn't make economic sense to be hand-assembling shoes in the United States any more. Most of the tariffs still in place don't really protect workers. And they don't raise that much revenue.

    Far better to open up trade, and let the wealth that arises from exporting Microsoft software and Boeing airplanes to Asian countries flow to workers in Washington State - rather than pretend that Nike is ever going to open up huge factories to assemble Air Jordans in the Wenatchee Valley.
     
  3. jkcerda macrumors 6502

    jkcerda

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    #3
    There is more to it than that, manufacturing in the U.S is pretty bad. Lowering import tariffs makes it so you can't at all compete
    CO I worked for made Heat exchangers, our cost was $80 just to fabricate it, imported from China by the boatload was $16 delivered. Our welders $20-35 per hour (TIG certified). Chinese? 60 CENTS per hour. Tell me his do you pay someone a "living wage" when you can't even afford to compete? all we had left was short production runs and small orders that did not make sense to order by the boatload.
     
  4. Sydde macrumors 68020

    Sydde

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    #4
    I kind of suspect that these trade agreements are something other than what they purport to be. For instance, eff says that the IP provisions in the (leaked version of the) TPP are more draconian than US IP law – and they were proposed by the US. This, to me, sounds a bit like someone trying to make an end-run around democratic sovereignty. Most likely, when we are able to actually see the content of the treaty, it will probably reveal itself as the work of multinationals, in their efforts to bring the countries they operate in to heel. If that were the case, economic theory would be inconsequential.
     
  5. jnpy!$4g3cwk thread starter macrumors 65816

    jnpy!$4g3cwk

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    #5
    ^
    I don't believe that this || follows from this ||
    V
    The difference is that in one case people are working, however inefficiently. You can argue all you want about efficiency, but, psychologically, people feel very differently about someone inefficiently producing shoes, and, let's say, receiving a negative income tax subsidy. People receiving the subsidy, and, other people who are paying for it either way, in taxes or more expensive shoes. As a matter of social policy, people need meaningful work.

    There has to be a way to provide meaningful manual work for those who want and/or need that, and provide a living wage for those people. Increasing the overall per capita income, consumed by those Microsoft and Boeing engineers, doesn't help people who are below average.
     
  6. vrDrew macrumors 65816

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    #6
    In order to remain competitive, by means of import tariffs, you'd need to put a 600% tariff on such goods. While that might, theoretically, save a few jobs in one sector, it would end up costing the rest of the US population far, far more.

    Starting with the fact that raises the cost for every domestic purchaser of such good dramatically. Which means they have less money to spend elsewhere in the economy. Then you have the fact that foreign Governments raise their tariffs in retaliation - which means US exporters (of things like airplanes and agricultural goods) find their export sale decline.

    Wages, and demand, for certified welders are still pretty strong here in the USA. Fields like construction; oil and gas; and civil engineering. And other sectors where they can put their valuable skills to the highest economic use.
     
  7. VulchR macrumors 68020

    VulchR

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    #7
    I am all for free trade, for countries that trader together rarely get into wars. However, there must be assurances about the working conditions in all the signature sates, including enforcement mechanisms. Otherwise, TPP and other agreements like it will simply be a race to the bottom.
     
  8. Happybunny macrumors 68000

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    #8
    This is not the only trade agreement that is going to run into real trouble.

    TTIP is coming under far more scrutiny from the various EU states and they DON'T like what they see.:cool:
     
  9. aaronvan Suspended

    aaronvan

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    #9
    Free trade doesn't work, the global economy is a myth, and the U.S. has been duped during trade negotiations for the past 40 years and as a result our major export is American jobs. Fortunately, people are beginning to understand that fact. It's time for a new nationalist U.S. trade policy.
     
  10. jkcerda macrumors 6502

    jkcerda

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    #10
    manufacturing in general has declined in the U.S dramatically. plenty of sheet metal shops are simply gone, can't compete at all. the market took a nasty turn for the worse after NAFTA thanks to Clinton and the republicans who pushed it.

    http://en.wikipedia.org/wiki/Tariffs_in_United_States_history
     
  11. snberk103 macrumors 603

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    #11
    I'm from Canada - and we signed the FTA with the US which later morphed into the NAFTA. Some of our industries were wiped out by cheaper US imports. The US has the benefit of economies of scale - an industry that was producing for 300 million people can scale up to 330 million (Canada & US - just leaving out Mexico for the moment) without trouble. But the smaller Canadian industry producing for 30 million people has a serious challenge to scale up to take advantage of the economies of scale of a market that has exploded in size.

    It can be done however, but you have to concentrate on either quality or the most modern manufacturing processes. And you have to streamline your tax codes. (More on that later).

    British Columbia loggers survived and thrived by investing in modernizing their lumber mills, and by consolidating their operations. We could out-complete on price because so many US plants were still small and labour intensive operations who didn't invest in modern technologies while the BC plants became huge and automated. By the time the US plants caught up the BC plants had established market share and we now compete on an equal footing.

    Conversely - our wine industry concentrated on quality. We don't really export to the US much, but by creating and promoting the VQA (a certification of quality) our wineries took back their domestic market. Again - it required an initial investment to upgrade their vines and operations - but the investment has paid off and there are more wineries now than before NAFTA.

    There have been failures as well in industries that didn't invest in their operations. But the ones who are successful basically decided to be "more American than the Americans"... to market, to promote, to make it better, to make the operation better, to risk the investment in technology.

    Tax Code. I don't mean the tax rate ... I mean the multiplicity of taxing authorities. In Washington State a store that sells in a city has to pay sales taxes to potentially 3 different levels. State, County, and City. Across the line in BC it is Federal and Provincial. In BC a store in any city pays the same two taxes, with a few exceptions in Vancouver. In Washington each new branch store has to potentially pay a different County and City sales tax, with different things taxed at different rates. A chain of 10 stores in BC has two sales tax forms to fill in, because they can combine all sales. A chain of 10 stores in Washington could have as many as 30 tax forms to fill in... because each jurisdiction might be taxing different items. This is an extreme example, but it does show the inherent problem. These hidden costs can and do add up. If the US wants to compete globally then it seems to me that it might be a good thing to do something about these hidden costs.
     
  12. vrDrew macrumors 65816

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    #12
    That simply is not true.

    In the entire economic history of the world protectionism has never worked. All it means is that consumers end up paying much, much higher prices.

    Granted - the dropping of trade barriers can lead to worker dislocation. Which is why a progressive economy combines open trade borders with extensive worker training, a decent social welfare system, and a Government commitment to investment in infrastructure.

    Look at Germany: A high wage-cost society, which is the biggest exporter in the world. And the United States is not far behind. Even in manufactured goods.

    This is not the place for a primer on international macroeconomics. But all that tariffs do is prop up, temporarily industries that are failing.

    Labor groups should support free trade. But they should also press for the US Govt. to increase its investment in infrastructure. We'll all come out far richer as a result.
     
  13. aaronvan Suspended

    aaronvan

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    #13
    Protectionism worked just fine when noted free-trader Ronald Reagan ordered a 10x increase in imported motorcycles tariffs and saved Harley-Davidson from certain bankruptcy. A few year later when H-D was back on it's feet, Reagan lifted the tariff.

    Consumers should pay a little more if it keeps jobs in the United States.

    Free trade is a suckers game and we've been playing it for far too long. The American rust belt bears mute witness to that sad reality.
     
  14. chown33 macrumors 604

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    #14
  15. noodlemanc macrumors regular

    noodlemanc

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    #15
    If free trade is "bad" then shouldn't there also be restrictions on trade between states? If you live in Texas then using your logic wouldn't it be better for the local economy for most things to be produced in Texas rather than be imported from other states? Doesn't matter if the products are inferior and/or more expensive, as long as they are made locally, right?
     
  16. Happybunny macrumors 68000

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    #16
    So when a US president enacts a law to stop a foreign company who innovated taking market share it is good.

    What's your take on when the world responds, lets say a 50% hike in prices.

    The rust belt was caused by the lack of innovation by Detroit, for years gas guzzlers, 1973 Gas shortage, Japan economy cars.

    The Reagan years the economy was based on lets go to the MALL on our CREDIT card, pay for it later.

    LATER
    2015, 17 trillion debt.
     
  17. aaronvan Suspended

    aaronvan

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    #17
    I agree to purchase a hundredweight of your dubbel zoute drop every year. In return, you agree to import all tulips, windmills, wooden shoes and salted herring from me.

    Sound like a fair deal? That’s free trade.
     
  18. Happybunny macrumors 68000

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    #18
    Joking a side you still haven't answered the question. from Post #13.

    In the anti EU thread you posted you had critique about lack of innovation.

    But in your post #13 you praise a US president who put tariffs on Japanese companies who had innovated.

    The rust belt was caused by Detroit not innovating and losing sales to Japanese cars who were economical as opposed to the gas guzzlers from Detroit during the fuel storage of the 1970's.

    The plain fact was that the Reagan economic miracle was "Lets got to the MALL and spend on our CREDIT card, pay later."

    Later

    17 Trillion in debt.
     
  19. aaronvan Suspended

    aaronvan

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    #19
    Yes, that was the correct course of action because it saved American jobs.

    Actually, it was Bush, Jr, who said go to the mall.
     
  20. Happybunny macrumors 68000

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    #20
    So if the EU take action to save jobs in the EU that OK with you? (Google)


    Going to the Mall was an 1980's thing, Bush was so out of touch, everything was online by then.

    But be that as it may, the debt of 17 trillion that's real. I bet your great great grandchildren will sing your praise.:p
     
  21. aaronvan Suspended

    aaronvan

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    #21
    Sure, the E.U. should levy a one Euro tariff on every Google, Bing, and Yahoo! search query. Go for it.
     
  22. Happybunny macrumors 68000

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    #22
    So your position has changed, you do think that the EU should cap Google because of innovation.

    The EU fine against Google is going to be a little more an one Euro, more likely 10% of 6 billion. But hey a US president also pushed legislation against an innovating (motor cycle company) and you found that good.
     
  23. noodlemanc macrumors regular

    noodlemanc

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    #23
    Ah, but you see... The innovate motorcycle companies weren't American whereas Google is ;)
     
  24. aaronvan Suspended

    aaronvan

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    #24
    I said levy a one Euro tariff for every internet search using Google, Yahoo!, Bing, or any other American search engine.

    Meanwhile, for every F-16 your guys purchase, we'll purchase a bag of dubbel zoute drop.
     
  25. Happybunny, May 14, 2015
    Last edited: May 14, 2015

    Happybunny macrumors 68000

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    #25
    Oh my God and there was me thinking that it was about fair trade, and all the while it was about hypocrisy, lies and double standards, and all of this from the bastion of the free world.

    ----------

    But you are still 17 trillion in debt so how will you ever pay us???

    This just balance of payments.

    Surplus in Billion US-Dollar
    Rank Country Surplus:)

    1. Saudi Arabia 252.756
    2. Germany 219.938
    3. Russia 198.760
    4. China 155.142
    5. UAE 80.000
    6. Kuwait 72.800
    7. Qatar 72.000
    8. Norway 67.982
    9. Nigeria 64.000
    10. Netherlands 63.145

    Deficit in Billion US-Dollar
    Rank Country Deficit:(

    1. USA -784.775
    2. UK -162.973
    3. India -154.401
    4. France -117.676
    5. Turkey -105.862
    6. Spain -64.691
    7. Hong Kong -55.630
    8. Italy -33.872
    9. Japan -31.593
    10. Egypt -28.375


    http://en.wikipedia.org/wiki/List_of_sovereign_states_by_current_account_balance
     

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