We were unable to load Disqus. If you are a moderator please see our troubleshooting guide.
I don't want to trade with high priced Americans that make 5 to 20 times more than I do . I sell on the world market and I want to buy on the world market .
Correct. The so called "free markets & trade" worked in conditions after WWII, when US goverment used it's military and political influence to set up favorable economic & trade conditions for US. It's an utopian vision, that has nothing to do with real world.
That has nothing to with it, even though we did use our influence to get favorable conditions and used our military in the third world. But the real advantage is that we had the only advanced economy left operating in the world. That was our real advantage. The real flaw in the trade with China is that what were called "Chinese companies" were just American companies operating in China and using Chinese low paid, unprotected workers to replace Americans. That was not a side effect. It was the entire enterprise.
It's important to recognize that it's not realistic to do all manufacturing in America, at least in the short term. We consume too much. Before the virus, we were already running on all cylinders as employment was concerned and have been for a few years.
There is a significant difference however in our trade dependencies being on China, versus Japan, Mexico, Vietnam, or India. The former is a geopolitical rival, the latter are not. In fact, laying groundwork to move more of our trade to the latter builds up China's regional rivals at the expense of China, and at comparatively less expense to us.
It's not healthy for a future multipolar world for such a capable power projector as China to be so disproportionately profiting from declining hegemon America.
Easiest way I can think of to set our foreign and trade policy is to do business with other democracies. There is a pretty clear list of them, and it is more than large enough so that a globalized economy of scale can work. Let the China's, Russia's, and Saudi's of the world do business with themselves. Leave us democracies alone. Our elites in democratic nations just end up rigging the system in their favors whenever we trade with non-democracies. It's pretty simple and nobody can accuse us of being "racists" that way. Name one product or service that could not be made or found in a democratic country around the world. This way, when our President claims to be "the leader of the free world," he (or maybe someday, she) will actually be the leader (or one of them, at least) of the people around the world who are "free to vote."
If you think the hallowing of the US economy with it increasing wage inequalities, outsized wealth allocation to financial sectors, increasingly political divisions, etc. is because CHINA BAD, then you are no different than the other corporate profiteers who dug us in this hole in the first place. This is how the corporatists are trying to avoid blame for their fundamentalist policies over the past four decades. They lash out, "It's only the BAD Chinese, everything will be better if we just move it to Vietnam/Bangladesh/Ethiopia."
They lie, they don't say they will move it to Vietnam/Bangladesh/Ethiopia but that they will move it back to US.
You ascribe things to me that have nothing to do with what I said. The Chinese are not bad, just a competitor, and China is not responsible for America's own choices.
You're just replacing one utopian thinking about free trade, with another about economic protectionism. The world doesn't fit neatly around ideological dogma.
Until you square America's overconsumption you have to tolerate trade deficits. You can make strategic choices about where they come from at least. Free traders were not honest about impacts on domestic industry. Domestic protectionism is not being honest about the fact that for it to succeed, consumption of imported goods, and some domestic, to free up capacity to import substitute, has to tank, without the prospect of enough domestic production happening to replace them, and certainly not at anything like the price levels that exist currently.
In the long run overconsumption should be attacked. Strategic, mutually beneficial trade relationships will still exist. In the short run we should be more careful about the source of trade deficits. Overconsumption will not be solved overnight. But that's not a neat campaign slogan.
I don't disagree with the problems of an over-consumption reliant economy, which prefers we purchase new TVs every 3 years, smartphones every 2 years, and 3 new winter coats every season. But it's a huge fallacy to imagine that reallocating production to Vietnam or Bangladesh will reduce China's power. Who will be creating those factories? Sorry, Chinese investment. Where will the logistics chain need to connect? Sorry, all roads will lead to China - both for its 1.4 billion consumer and their ability to control the higher end of the manufacturing. When will they demand China's inclusion in a grouping like TPP? Sorry, within 1-2 years of signing that supposed "Keep China Out" agreement. Guess whose economies will be even more reliant on China? You guessed it, all those supposed U.S. allies who want no part in global decoupling.
I agree that while us closing China is in our interest, it wouldn't be in anyone else's. Yet I don't see why that's a problem. The bargaining power of China's trade partners relative to China increases. China is more dependent on them, they less on China. Countries are not charities. As many countries badly in need of Chinese market access and investment know right now.
The idea that China would not lose if all of our overconsumption was fulfilled by its regional competitors instead is like saying America will not lose if our own manufacturing is done outside of America. Still needs American tech, American capital, America exploits cheap goods etc. The effects take time but we know well from our own experience that idea isn't right.
American capital to build up China was no prohibitor of massive gains over time to China, and building up of its own capital and expertise. Why wouldn't Vietnam or others want to break in to lucrative higher tech work when it could have an instant price edge over a tariffed China. Or even just go back to original joints Japan/Korea. Chinese companies could very well start to sell out their own country's manufacturing base in an America redux.
The point of this is not to make America great again. That ain't happening. It's to sell off the empire to everyone but China, since China's concentration of power would be extremely dangerous for a weakened America. Vietnam, Bangladesh, etc not really, plus they would start to check China on their own if they got sturdy enough. Unlike all of the right's Trump wishlist, none of which can happen and amounts to shouting in front of a locomotive of long term trends, all this amounts to is changing the track at a junction, with huge impact later on down the road.
Geopolitically this is like Britain seeing the writing on the wall and deciding that it'd rather have its empire in American hands, than German. Of course it'd rather not sell it at all, but history often feeds poison pills. It didn't have the power to hold the empire any longer. But fully within Britain's agency still was the outcome of the concert of rising powers and the shape the future would take.
What you want with trade is to keep it somewhat balanced, and watch employment. To continue the example Japan exports roughly twice to us what we export to them. Ideally that'd be more even, but who is going to make more products to export to Japan, or produce Japanese products here? You'll have to fight for workers already being employed elsewhere. And many on the right probably would not like the idea of more immigrants to help staff production, or to free up Americans to staff it.
America does suck up too many talented people into well paid jobs that do little to advance us, but certainly not enough to correct the trade imbalances of every country we trade with. Probably not even Japan whose imbalance is a tiny fraction of China's.
America's trade imbalances are a collaboration between foreign producers seeing opportunities, domestic elites seeing major profit, but most importantly Americans themselves whose consumption impulses are so, so lucrative. Americans cannot make all the stuff that Americans want right now. Enter immigrants. Enter outsourcing. Enter major trade deficits. People profit on the exchange, but this is a setup that America collectively has voted for with its wallet, over and over again.
Also America makes/made products that other people don't want. From 2 by 4 lumber in inches and feet, when the rest of the world is in metric system, to oversize fridges and pick-up trucks that do not fit in the European or Japanese size houses and roads.
It is some times important to bust the unions before they bust the company .. There is a constant battle between good and evil no matter where you go . Evil is in the USA as well as China .
"Deliver a good product at a price and quality acceptable to the customer."
LOL. Obviously a failed businessman. The purpose is to put your customer's money in your pocket. If your customer is making a profit off of your product, raise the price. If the customer balks and buys from a different vendor, buy all the vendors. Create a monopoly. Once you have a monopoly, stop paying whiney American workers who expect decent pay and respect, and have Chinese slaves make your product. The purpose of the "Free Market" is not about price. It's about maximizing shareholder value. It's not about creating good jobs, America or any of that other nostalgia from the pre-Free Market days.
It's about liberty. The liberty of the property and capital owning class to keep their wealth (their wealth is the same thing as your labor), in their hands and away from you and your stupid government's grubby, unwashed hands.
The ideal market conditions result in happy customers and profitable businesses. Its true that ideal market conditions often don't prevail when a monopoly is created. But what makes it even worse is when government enables those conglomerates to become even larger by making it impossible for small businesses to compete due to onerous regulations and gobbletygook tax loopholes gained by conglomerate lobbyists.
I believe the economic policies based on the dominant economic theory in Germany is the best approach for a solid, competitive economy. That theory is Ordo-liberalism, which allows government to make sure a proper legal environment for the economy exists to maintain a healthy level of competition through measures that adhere to market principles.
The Ordo-liberalists believe if the state does not take active measures to foster competition, firms with monopoly power will emerge, which will not only subvert the advantages offered by the market economy, but also possibly undermine good government, since strong economic power can be transformed into political power. We have seen this happen in the US and it is BIPARTISAN. In fact some of the worst examples of unholy alliances between corporations and government come from the Dem side of the aisle.
All true (and Germany's done quite well from itself starting from ruins in 1945), but the USA has very, very different attitudes to authority than Germany does. Germans follow orders, for good and bad. When things go down, they will put the workers on shorter schedules with decreased pay temporarily, and the workers don't jump ship. America--well, we can't even get people to wear masks when there's a pandemic because we managed to make it a red-blue thing.
I think the smartest thing to do to fight free-market fundamentalism is exactly what the TAC boys are doing and create 'red' justifications for trade restrictions that are in the national interest. Then toss in a higher minimum wage and go on about oppression of Uighurs and Tibetans to bring the 'blue's on board...and make sure to mention it's the chinese *government* (as they do here) to avoid charges of racism. (The Left is obsessed with it.)
Ideal market conditions do not exist. That's why they are called ideal. And market condiitons can go South in emergency situations, such as we are living. We need a more robust system that can take a lot of punishment and keep going.
Now principled conservatives see who it was that they went to bed with. And how so many Americans who would have been conservatives have joined the Left who does not worship at the Free Market.
This is what comes from believing that Free Markets are a conservative cause
The open markets, open borders policy has been good for the elite but detrimental for the US. Millions of immigrants were let in as the jobs they could perform were outsourced to China and Asia in general. Consumer electronics,textiles,steel, appliances, automotive and manufacturing of all sorts were allowed to leave. Not everyone can be a coder, work on Wall Street, for the Government or Academia. This same elite is aghast at the rise of Trump, what else could anyone have reasonably expected?
The problem is Milton Friedman was wrong about central planning. Adam Smith's Wealth of Nations was written when communication systems were poor, so localized information was better. With modern data collection, "big data" analysis, AI and other such tools central planning exists and works. We call the winners in that planning world companies like Walmart and Amazon. We also know that central planning in the US worked with less than perfect data. The War Production Board in the US in WWII did allocate production of all those things necessary to manufacture Milton Friedman's needle (or more likely a cotter pin). There were imperfections but we let those run over into the consumer segment of goods. Flash forward to today, the "free market" is the myth used to convince average American to allow hedge funds, private equity, and companies like Bain Captial ship their jobs overseas. Especially as we move to robots, there is no reason to import any manufactured goods. Likewise, those pesky environmental rules we have? There is no reason we don't apply those rules to things people seek to sell in the US market--meaning we could make an importer prove goods were manufactured according to US standards. Health and safety standards are not sources of "comparative advantage" in free market theories.
And this is why the Chinese, Russians, Indians, Iranians, Japanese, Europeans, Koreans, don't want their economies run from Wall Street and carefully control the shares owned by outsiders.
With all due respect George you need to free yourself of the libertarian legacy. Mises has very little to offer- sure central planning a la the Soviet model doesn't work all that well in the end, but every mainstream and most fringe economic schools recognize that. There is very little correct (less still serious) in "Austrian" economics: the only thing this represents is a cranky burden that conservatives need to purge from their psyche post haste.
How about all the externalities that an unregulated free-market tends to forget?
Yes, interesting article. I liked how quickly in the article it started talking about risk and the important role government has in mitigating that risk.
What is also missing from this entire discussion about free markets, which is essential and it is eschewed or pooh-pooed or entirely not acknowledged by libertarians and conservatives alike (not that progressive / liberals talk about it), is what is the role of representative democracy in steering how economy (which is a means to an end, not an end to itself) should work, what is the role of government, and who's really the sovereign (We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.....).
Is the government by the people and for the people or it isn't? Are there proper mechanisms in place to oversee how well operations are conducted by government, according to approved budgets? Is government supposed to do forecasting and crystal balling solely by using think tank reports or should have internal professional and knowledgeable analysts doing this work (I swear on the constitution of the US to serve, etc., etc, etc.).
All this rabbit hole over which libertarians and conservatives starting with Reagan have been pooping on. Nixon nowadays, or Eisenhower wouldn't be accepted by Republicans, nor FDR by Democrats... And talking about free markets and democracy, it is puzzling to have just a duopoly entrenched in the marketplace of political ideas in the US. Everything else is literally killed.
Planning versus the market is a spectrum, not a binary choice. Even many of the communist states relied on markets to some degree, and most capitalist countries used some degree of planning.
It's called industrial policy, and America needs one desperately.
It's too easy to just blame corrupt elites and therefore let the system itself completely off the hook. Any system that allows for a small number of private entities to twist everything to their personal advantage is a system with major structural flaws. The essential core of the problem is that any system pursued too rigidly and ideologically will lead to short-sighted decisions that ultimately lead to perverse and absurd outcomes.Offshoring most of our manufacturing wasn't a corrupt decision made by a small cabal of villains. It was a logical, yet ultimately destructive, result of blind and unthinking pursuit of pure "free trade."
Imagine a society (like the U.S.) to be like an organism with a heart, lungs, brain, limbs, etc. Now imagine that each part of the body is told to maximize its own benefit without any concern for the organism as a whole.
Those in charge of the brain say "We function better with more blood flow, so let's block off blood flow to the arms and legs so that we get more. Great idea!" Now the organism's brain is doing great, but its arms and legs wither and die.
"We are benefiting from the increased blood flow too," says the lungs, "but the heart just isn't producing enough for us to really flourish." What if we outsource blood pumping to an external entity that promises us more volume? So now the heart dies and what is left of the organism is now hooked to an external machine to keep it alive.
"Why do we have to rely on an inefficient mouth and teeth to give us our source material?" chimes the stomach. "How about a feeding tube to give us cheaper and faster raw materials?" Etc etc etc.
On and on it goes with some parts doing great from their perspective, but with the overall organism being hollowed out and weakened.
The best type of economic system in a country is a mixed one that blends together capitalism with some degree of central thinking and planning (egads, heresy!) about how decisions could adversely affect the long term health of the country as a whole.
Great post, but I somewhat disagree with this:
Offshoring most of our manufacturing wasn't a corrupt decision made by a small cabal of villains. It was a logical, yet ultimately destructive, result of blind and unthinking pursuit of pure "free trade."
I think it may have been both. The architects of the financialization of America had to know that many working families would either lose their income or see their income greatly reduced. I realize that some union workers were overcompensated in the 1970s and 80s, but there may have been a great callousness about the de-industrialization of America, i.e. those workers deserve it. Let them flip burgers.
Nice comparison. Are you letting us think and believe that one part of the body ends up thinking that is in fact totally independent and can leave all the rest wither and die? With deep psychopathic tendencies, that filters all the stimuli and the information received from the body, except its own?
No wonder revolutions happen...
"Libertarianism" was never about liberty: it's just swapping the dictatorship of the state for the dictatorship of the market.
Libertarianism: Let me smoke my weed, have my gay sex, and don't make me pay any taxes.
So conservatism must mean switching dictatorships of the state.
That first paragraph would have been insightful 25 years ago, now it has the sound of 'Gee, maybe there isn't a Santa Claus".
The communists had said that capitalism would sell the seeds of its own destruction. Our elites came up with free trade but chose to ignore that free trade was merely a facade to export jobs and import goods with them skimming the profit. They chose to ignore all the financial (and political) machinations like currency rigging, state subsidies, forced state sharing or ownership of technology when off shored to China, they choise to ignore prison labor and others. This isnt about free trade or free markets because there is no such thing. Every nation has a different social welfare system, medical system, tax system, copyright and patent system, system of legal bribery and payoff, etc and each is meant to tip the scales of free markets and free trade to their advantage (and in the case of China a technological and monopolistic and militaristic advantage). We are now at a point where the game and the cards have been revealed though the Democrats have been profiting for so long that they want to keep the game going with the Chinese and other foreign nations (its easy money to line their pockets and their campaign funds since they dont have to listen to their constituents diverse views...they just need to manage them and listen to Chinese demands). Id say the american citizenry is boiling mad and arent far away from boiling over but we shall see where it goes or if it goes anywhere. To date Trumps restrictions on immigration and his trade deals are better than the nonexistent policies of the democrats but they are will woefully catering to the elites and lacking in spine and substance to do as Trump promised.
I think prison labour is more relevant and widespread in the US rather than China. China has all the political interest to provide work for all the free multitudes teaming in their cities and countryside, why to give that to prisoners?
Same as the story with the Uighur camps. Just seen recently a Reuters article on the Russian vessel arriving in Germany to finish laying down the NS2 pipeline, with satellite pictures, etc. Just a ship. However, there was no picture provided to the world to show the massive developments required to house 1 million people, not one, and I looked.
Sorry, just a pet peeve of mine to see statements that don't stand close scrutiny.
O'Neill, eh? I believe it possible that you had a Catholic upbringing, as did I. I have long suspected that there is something about people being raised Catholic that they seem to have more of a sense of fairness and justice, and more about what is good for the community more than the cult of the individual. A lot of the union membership in the 1940s and 50s were Irish, Polish, and Italian Catholics.
I can't think of a good reason why social conservatives let their values be bundled with free market economics. I knew 30 years ago that it would be to their detriment. And so many still cling to it despite the evidence, possible because they have so much of their identity wrapped up in it, and have been clinging to it so long that they are afraid if they let it go their whole conservative ball of yarn will come unrolled. A lot of it can be traced back to Regan, of course, but come of it goes back all the way to the Red Scare and Nativism scare of the 1920s.
You will have to get a large slice of population to take their faces out of a phone or lay down a game controller or other easy electronic comfort to care. Caesar has placated many of the populace into a general sense of meh or worse to blame someone other than who is at fault - themselves.
Blame the immigrant is a funny game indeed when it's the industries heavily staffed with immigrants (tech, agriculture) that are some of the only chips on our side of the trade table.
America overconsumes for what it produces but that equation looks even worse when you take out the immigrant factor.
The thing Americans are best at exporting is probably death. We're still unmatched as an arms producer and force deployer.
If you sell products, it is hard to make money if you blame your customers for their problems. You need to give them someone else to blame - preferably a group they already dislike. Newspapers, tv content producers and web sites need their customers. Blaming them is not a winning strategy. Commercialism is awful. But we have seen the alternatives. They are worse.
The fundamental problem is the kind of animal we as compared to the kind of animal we imagine we are. Homo Sapiens is a misnomer.
How is deciding , where good are manufactured, not Central planning? Is Bernie Sanders a ghost writer for this piece?
True conservatives, ever concerend about displaced American workers, did their utmost to support the Party who was a champion of such displacement in the first place, and still are.
Decades ago General Motors decided that "partnering" with China was the future. Just last year the NBA kowtowed very publicly to China. Somehow this devolves to a Vice-President's son? The author's straining to fit this into an otherwise thoughtful piece is really pretty pathetic.
Selling political influence through family members is THE legal form of corruption. Hunter Biden and Christopher Heinz' BHR Capital, with no experience in China or any track record of success, quickly raised up to $1.5 billion from the Bank of China shortly after Hunter Biden's trip aboard Air Force 2 to China with his father. While this isn't a case of outsourcing U.S. manufacturing, it is a present-day reminder of how the political and economic elites in both China and the U.S. collude together for their own financial gains.
Sure but then, why ignore the much more recent examples like the Trump girl being granted trademarks by China after her father became President? After.
My point is that the author only detracts from an somewhat informative article by showing his partisan biases.
The idea that one political party in the U.S. has been less deferential to China than the other is laughable. When there is a buck to be made, that buck will be made.
btw, one thing that helped to destroy the Detroit auto industry was right-to-work legislation, that incentivized auto manufacturers to relocate even their U.S. production to states that were hostile to unions.
The Price Mechanism Theory only works well when there is honest and accurate information to understand the true costs […]
You're conflating the economic with the political. There is nothing wrong with Mises' work on prices and how they coordinate an advanced, widely distributed, division-of-labor economy. It works in the "macro" as well as the "micro"—because that is an artificial distinction (something Mises could tell you about, too).
The fallacy is imagining that economic theory is the be-all-end-all. When people think that, they ignore political considerations and consequences, to the detriment of society at large. The bottom line is there is nothing wrong with free trade among free countries in a peaceful world. The political situation of the present world, however, demands a somewhat more modified approach. If these are the "true costs" you're talking about, fine. But you've expressed it in such a way as to muddy the waters of what is an honest and accurate economic theory.