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Lou’s Blues
Tuesday, February 17th, 2004James Glassman wants to start the “The Dobbs Rogue Fund,” consisting of companies Dobbs has singled out for scorn for outsourcing overseas.
I’ll bet the fund would do pretty darned well.
39 Responses to “Lou’s Blues”
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If your job and way of life were threatened, could you at least muster an ounce of sympathy for the structurally unemployed. Particular engineers and others, who worked hard for years, went to college, enjoyed upward mobility, only to get squeezed into oblivion by competing with the third-world wages of India and the literal slaves of China.
Doctors, Lawyers, Writers–most of these service jobs are not really threatened by immigration or by third-world outsourcing. But if they were, I’m sure lots of caviler free-marketers would at least consider some modest adjustment to their come-hell-or-highwater ideological faith in free markets, that even Adam Smith did not endorse.
The fund might do very well…such enterprises often do well.
But would the principle behind that fund, if maximized, do the American people well?
Let’s be Kantians for a moment and imagine that the maxim of our action was to be made universal law.
The maxim at issue here is roughly this:
Lowering labor costs by shipping jobs overseas to increase productivity and profits is preferrable to having higher labor costs associated with more domestic employment.
Do libertarian free-traders consider themselves Americans? I assume so. And if they do, do they consider the welfare of the people?
That is what is at issue.
Lou Dobbs is precisely on target on this issue. Glassman is yet another penny-a-dozen apologist.
Consider this: Henry Ford created the middle class by paying wages high enough to allow his workers to buy his products.
Now when IBM outsources its programming positions. Can those programmers who have been laid off and are now working at convenience stores, afford to buy new IBM products? They cannot.
This is an overly broad generalization I realize but I am sure you all see the basic logic. We cannot all work at Wal-Mart wages and expect to buy anything more expensive than Wal-Mart prices: which of course includes automobiles, major appliances, homes, and so forth.
Outsourcing is poison to the economy and this WILL be a major issue in the election.
what, no disclosure?
A Kantian universal law would take into account everyone, not just Americans.
Further, even ignoring the benefits free trade gives to people in other countries, you didn’t mention the lower prices consumers enjoy as a result or lower labor costs. If we are taking into account all Americans, and not just those who lose their jobs, then free trade in this respect is a net benefit for us.
But taking your Kantian proposal seriously, let’s turn it on its head. Suppose our universal law is “place tariffs or other import restrictions on foreign goods.” While individual tariffs and import restrictions may benefit one particular industry, they make the rest of us worse off. But if we make this a universal rule and apply it to all industries, what have we done? Completely eliminated (or at least severely restricted) trade with other countries. American industries no longer have to worry about competition with other countries and can raise prices accordingly. Now the price of everything rises and we were all worse off than before.
Kantianism doesn’t help your argument.
Oh but it does Micha. Lets take your argument paragraph by paragraph:
Paragraph 1: of course, but irrelevant. We are specifically limiting the universe of application here to America and that is strongly implied by my 2nd and 6th paragraphs. You deliberately go off track.
Paragraph 2: again, not talking about global effects here. Of course we are taking into account ALL Americans in our argument. Economies are complex entanglements of interlocked forces, if we drive wages down here, purchasing power also drops. BUT NOT ALL PRICES DROP micha. This is the point. WE cannot drive wages down and think the whole economy is going to obediently about face and revert back to similar scaling say as in 1952 when the price for a paper was such and such and the average wage was such and such. Why is that you may wonder, why can’t we wave a magic wand and all the 12,000 dollar a year workers be able to buy the new 17,000 dollar homes? Well, for one thing resource prices are not necessarily indexed to labor of extraction costs. And so forth micha, you need to think more deeply of the way the economy is articulated.
Your next paragraph hangs on a mistake in logic you made.
Your maxim under proposal to be universalized is, and I quote you: “place tariffs or import restrictions on foreign goods” But recall your Kant: what he is talking about are principles of action: not the simple actions themselves. What you give is an action. Please restate the last paragraph so that the MAXIM of that action is put on the table. Then we can see if we want to universalize it.
“Can those programmers who have been laid off and are now working at convenience stores, afford to buy new IBM products? They cannot.”
Well boo-hoo, ain’t life a biyatch.
Funny, no one ever promised me I’d never have to take a paycut.
Lowering labor costs by shipping jobs overseas to increase productivity and profits is preferrable to having higher labor costs associated with more domestic employment.
False dichotomy. There is absolutely no historical evidence that more domestic employment is the result of free trade. Jobs have been “shipping” overseas for decades. It’s the reason our engineers are making routers instead of textile machinery; it’s the reason the quarter of the US population that used to be farmers are today accountants, businessmen, and small business owners.
Do libertarian free-traders consider themselves Americans?
I consider myself an individual first and foremost. Beyond that, yes, I consider myself an American in the sense that the Founders did – an individual that believes in the rights of life, liberty, and the pursuit of happiness. Geography and citizenship are meaningless to me.
I assume so. And if they do, do they consider the welfare of the people?
If by “people”, you mean consumers, then yes, libertarians do believe in the rights of individuals to buy goods from whomever they please. If by “people” you mean industry workers who wish to hold a gun to my head to protect their positions through special privileges, then no, the welfare of those people has not my interest. I regard them as common thieves. If by “people” you mean those people who through ignorance of economics buy in to the protectionist arguments that were disproven by Adam Smith and David Ricardo hundreds of years ago, then no, the welfare of those people is not my concern. I regard them as common fools.
If you are truly concerned about “the people” then you would continue to support the division of labor that raises the standard of living of “the people” as it has been doing since the beginning of civilization. Supporting Lou Dobbs is akin to supporting the Cuban embargo or Iraqi sanctions on the US. Do you consider yourself an American? Do you consider the welfare of “the people”?
Consider this: Henry Ford created the middle class by paying wages high enough to allow his workers to buy his products.
Henry Ford displaced hundreds of workers when he introduced the assembly line. Luckily for the middle class and the poor, the cheaper cost of cars made them accessible to the common man, rather than only being affordable to the rich. The displaced workers saw unfortunate circumstances at the time, and everyone values job security over an uncertain future to a certain degree, but they moved on and got better jobs, and they could afford cars. History is a steady progression of displaced workers; yet umployment is still around 5% +/- a point or two. From your arguments, you’d think that there would be mounds and stacks of unemployed people everywhere you looked. There aren’t because any technological change that brings increases in productivity displaces workers which enables them to raise themselves up to more productive and higher paying jobs, while lowering costs of goods for consumers.
Well titus, if the free-traders have their way I think we can safely guarantee you a paycut and maybe a layoff thrown in for good measure. But thats okay with you I assume because you have the courage of your convictions.
I admire such consistency. Such toughness!
So you want to be a free libertarian, running around in rags and sleeping under bridges in the free-trade utopia- so long as the “principle” is upheld?
Okay by me, but really titus..DO YOU REALLY?
I don’t know if you are acquainted with him but have you ever read Rawls?
Perhaps micha ghertner has…
I hate to have to unpack such lengthy arguments as you have made but no faulty argument will go unpunished as long as I stay here:
so with a smile here we go:
“false dichotomy” Well that maxim is taken from the opposition’s point. Are you saying your own position (I assume you oppose Dobbs) is defective?
“no evidence..” Yes! precisely so. I agree completely.
“jobs shipping overseas for decades” So true and the economy has adjusted. THAT was the core of Glassman’s argument. But that argument is plainly defective: there is no GUARANTEE the economy just keeps adjusting. Just because gas furnace companies replaced steam radiator companies does not imply that nuclear furnace companies will replace the latter. Just because there is a chain of implicatives doesn’t mean that there is never a final end.
“I consider myself an individual first…”
Well thats a relief. But what do you consider your obligations to be as a CITIZEN of this country?
“fools” “common thieves” Strong language for your fellow Americans. I shan’t debate emotives with you. I would just enjoin on you a little more tolerance than the rather austere Roman censoriousness of that paragraph.
“David Ricardo” “Adam Smith” Do you really consider them the final authorities…really? (btw: I deeply admire both but with caveats of course)
“Division of labor” I lost you here. I am not sure what you are referring to.
“Lou Dobbs…Iraq sanctions” ?? and yes I am an American and do indeed consider the welfare of our country.
Wrong about Henry Ford and displacement. He created far more jobs than he displaced. AND he paid higher wages…that’s the point isnt it?
“History is a steady progression…”
I think this is the best part of your argument here. But consider this, postwar America has had the enviable structural advantage of being the center of a global economy. There have been great imbalances operating in trade that quite frankly favored the American consumer and kept prices low here. This “protectionism” you so fear is part of the reason you grew up in a house and not in an apartment somewhere and why you have a car and are not driving a bicycle (or so I assume) Now you free-traders think you can by fiat do away with those imbalances and keep your houses and cars. Well maybe you can. But what about your grandchildren? The optimism in your final four lines is simply that: optimism. THERE IS NO IRON LAW OF ECONOMICS THAT SAYS THOSE HAPPY OUTCOMES WILL BE REALIZED. And I am very loath to bet my childrens’ futures on an optimistic theory.
Look at it this way John. Demographics indicate that America’s population will continue to increase over the next 2 decades. We have to factor in immigration from the South into that equation as well. Classical Adam Smithian forces dictate that the increasing population will exert a downward force on wages unless jobs increase as well. Now we have seen our manufacturing base severely eroded and currently the IT field is being hit also. Now I ask you: where is the job expansion going to be? Not in agriculture we are agreed. Not in heavy industry we are sorrowfully agreed. Not in the “knowledge industry”-thats going to India, China, etc. What does that leave us?
Micha, I am eagerly awaiting to hear from you, but its late and I’m retiring for the evening.
Best wishes to all….
Mr. Wanderer, take a Xanax. No one will be any more likely to find themselves ditch-bound.
If everything is cheaper because of trade of goods and labor with impoverished countries, I’d gladly take a paycut.
I can’t see a reason to think the jobs lost won’t be replaced. Americans have easier access to information than anywhere else (if we don’t, we should). We’re able to learn new skills to make ourselves employable. Just like we learn new skills to make our lives more enjoyable.
Of course, in a Free Market, you could certainly try to convince people to only ‘buy American.’ There certainly seems to be a market for it.
The difference is in a Free Market, you can’t force others to adhere to your beliefs.
I’m confident that Americans can be just as creative and adaptable as anyone else.
Paragraph 1: of course, but irrelevant. We are specifically limiting the universe of application here to America and that is strongly implied by my 2nd and 6th paragraphs. You deliberately go off track.
No. You cannot have it both ways. If you are going to use Kantian universal laws, then you must include non-Americans in your moral calculus. That is the very essence of a universal law. It violates fundamental human dignity to value the lives of Americans over non-Americans.
Paragraph 2: again, not talking about global effects here. Of course we are taking into account ALL Americans in our argument. Economies are complex entanglements of interlocked forces, if we drive wages down here, purchasing power also drops. BUT NOT ALL PRICES DROP micha. This is the point. WE cannot drive wages down and think the whole economy is going to obediently about face and revert back to similar scaling say as in 1952 when the price for a paper was such and such and the average wage was such and such. Why is that you may wonder, why can’t we wave a magic wand and all the 12,000 dollar a year workers be able to buy the new 17,000 dollar homes? Well, for one thing resource prices are not necessarily indexed to labor of extraction costs. And so forth micha, you need to think more deeply of the way the economy is articulated.
This a bunch of gobbledygook . Social welfare is measured in the aggregate; that is, even if only some prices drop, while other prices rise, the important question with regards to net social benefits is not the distribution of which prices change, but the total benefit to all Americans.
Here’s an introduction to cost-benefit analysis.
Your maxim under proposal to be universalized is, and I quote you: “place tariffs or import restrictions on foreign goods” But recall your Kant: what he is talking about are principles of action: not the simple actions themselves. What you give is an action. Please restate the last paragraph so that the MAXIM of that action is put on the table. Then we can see if we want to universalize it.
Please. This is a trivial criticism. You can do this yourself, if you are not happy with my formulation. The point remains the same. If the principle is to use protectionism in order to protect a certain industry, Kantian ethics would have us apply this rule to all industries, in which case, whatever benefit each individual industry gets from less international competition is outweighed by the costs to all of us of in increased prices.
Or are you claiming that we would be better off as a country if we simply stopped trading with other countries? Maybe we could take the mercantilist approach and only sell our products to other countries, but purchase nothing from them. What kind of protectionism are you arguing for exactly?
“David Ricardo” “Adam Smith” Do you really consider them the final authorities…really? (btw: I deeply admire both but with caveats of course)
“Division of labor” I lost you here. I am not sure what you are referring to.
Heh. The interplay between these two statements is quite amusing.
Here is an intellectual biography of Adam Smith. You might just learn something about division of labor.
I’m not sure what caveats you have in mind, since one of Smith’s primary targets in The Wealth of Nations was to debunk mercantilism (the predecessor movement to the Lou Dobbs of the world).
And Ricardo and Smith are not authorities in the sense that they were infallible (they got much wrong), but that they were the first to make important economic discoveries, and that these discoveries have held true for hundreds of years after their deaths. To embrace protectionism, which has been and remains rejected by economists for centuries, is the intellectual equivalent of rejecting the Copernican revolution.
THERE IS NO IRON LAW OF ECONOMICS THAT SAYS THOSE HAPPY OUTCOMES WILL BE REALIZED. And I am very loath to bet my childrens’ futures on an optimistic theory.
Okay, great. There is no iron law of economics that says that new jobs will be created. Perhaps we have reached the end of history and there is nothing more that needs to be done. Rejoice!
I’m sure candle makers were saying the same thing one hundred years ago when they were put out of business with the advent of electricity.
Hey! That gives me an idea! Why not petition the government to ban electricity? We could put all those displaced computer programmers right back to work making candles! While we’re at it, let’s ban the sun!
No, there is no guarantee that the future will be at all similar to the past. Even though free trade has always been a net benefit to every country engaging in it, it might just happen to fail on us tomorrow. But if you are going to bet your childrens’ future on something (and you have to choose: either free-trade or protectionism), why be pessimistic rather than optimistic, if optimism has a better track record?
“I’ll bet the fund would do pretty darned well.”
You know what I’d like? A piece of that Chinese slave labor action.
An unmentioned intangible here is that the laborers are not robots. Employee job satisfaction and commitment are important factors in predicting productivity. Labor is not a commodity, and not trade in its typical definition. Rather, labor is human capital, which means you need to take into account emotions. Keep screwing the laborers and you will actually lose competitive advantage. And don’t forget, that laborer is also your customer…or at least was.
Downsizing, outsourcing, etc. has dropped employee loyalty significantly over the past years. The idea of a “career job” is quite foreign to most Americans now. A laborer who just lost his or her job is not concerned with economic principles and only wants a secure job to feed a family. Therefore, in times where there are displaced workers, don’t be surprised when they vote for someone like the Democratic candidates.
I simply don’t see this as being a smart long-term game for employers to play. Perhaps in certain industries, but not in all.
The idea of retraining may sound quite interesting to a new college grad hitting this stale market.
I simply don’t see this as being a smart long-term game for employers to play. Perhaps in certain industries, but not in all.
Usually employers know about their business better than other people do. They might very well be wrong in what is best for their business, but if they are the market will punish them for it.
Are you proposing to force them to stop outsourcing because you think it doesn’t promote employee loyalty?
If you think Henry Ford acted out of anything but self interest, you need to do some studying.
He was not attempting to create a “middle class” nor was he otherwise trying to benefit mankind by raising the wage of his workers. He was trying to stabilize a crippling turnover problem. He took remarkable advantage of those people as a condition of the higher wage, enforcing his cultural and religious beliefs on them.
Ford was no altruist, to be sure.
DougB-
No one said he was acting out of anything but self-interest.
Jonathan Wilde-
No not forcing them. Merely providing some incentives/disincentives to discourage the practice.
Brady-
Yes you are quite correct in your analysis. The labor pool is the customer base.
Lonewhacko!
;)
Titus-
Your second post was a welcome relief from your first. I like your positive spirit especially in the last sentence.
But I think your optimism leads you to some overly rosy views of this whole issue. Still, thanks for the comments.
Micha-
Well, what do I do with your free-market belief system? Its a little difficult to talk to you on this issue as you seem bound up in your theories to the exclusion of some realistic forecasting. But that is a bit of an ad hominem I supppose. I never want to indict someone for the crime of optimism but it seems that the free marketers have changed faces in the last 50 years.
Do you remember the communists: say of the 1920′s? They had a wonderful system of beliefs that they were just certain going to work out. The worker’s utopia. Yes. And they probably couldn’t be argued out of it along pragmatic lines because their constant recourse was “don’t look at it as it is now, look at what it will be in the future”
What does that have to do with you Misha?
Well I am arguing primarily along pragmatic supply/demand cost/price lines and you are answering from your theoretical perch and there is quite a disconnect.
Now before you start your talmudic line by line parsing of these lines. Please answer me these questions (if you choose to) for if you can answer them I will in all honesty accept your thinking in part if not in main.
1. Assuming that America experiences population growth and a larger labor pool and that the present trend of outsourcing jobs continues: then in what sectors of the economy are we likely to see enough job-creation to take up the slack? Are you really willing to accept a structural unemployment rate in the 7-14% range?
2. As you doubtless know, the current trade imbalance is increasing. When a local tv station in my area sent a camera crew into a local Wal-Mart before Christmas, they were unable to find, even with the Manager’s assistance, more than 4 items in the store with “Made in USA” tags on them.
If that survey had been done 15 years ago the domestically produced items would have been at least 50% But lets not get off on a tangent about WalMart. The point I am making is that you know as well as I that consumer items are increasingly of offshore origin. Hence the trade imbalance. Now the question:
What items can the US export competitively in the brave new world of the free market? What can we make here that others cannot make cheaper? Are you reconciled to permanent trade imbalances?
3. Finally, if we accept your position of universalizing the maxim producing global benefits (and I agree with you here that there will be a tendency to raise wages abroad caveated by the distorting effects of local govt’l systems)then as you doubtless know there are economists such as Thurow who have been preaching for decades now, that the net result will be an inevitible lowering of our own standard of living here. Do you agree with them and are you reconciled to that as fall-out from global wage equalization?
Thanks for your thoughts on these issues.
No not forcing them. Merely providing some incentives/disincentives to discourage the practice.
In what form?
Michael,
The rift here boils down to those who see the glass half full, and those who see it half empty (sorry for being cliche). You seem to be pessimistic about the future (or at the very least not very confident in it), while Micha and the other free marketers are very optimistic and confident in the future, in the ability for people to adapt and evolve. Your first two questions are asking something that can only be answered by the next great genius’ of our time.
We may now know what the next new technology will be, or what new industry Americans will find a need for, but we are confident that it will be found.
“Your second post was a welcome relief from your first.”
Yes, well, I guess I’m cantankerously optimistic.
Although I don’t think life will ever be ‘rosy.’ Making a living, for most of us, is and will always be a pain in the ass.
I’m not an economist, but let me take a stab at your questions for Micha.
1. You ask where will jobs come from with population growth. I’d imagine human resources – those people have to buy food, clothes, fun stuff, etc. Therefore, I see no reason to expect greater unemployment. If free trade has worked out ‘for the best for the most’ before, why should that change now?
2. So what if items are not certifiably ‘Made In America?’ Plenty of Americans are employed for the very purpose of getting these ‘foreign’ items to the shelves.
Americans make gazillions of dollars working in one form or another for NIKE. If Americans were employed to construct the shoes at American wages, NIKEs would be even more expensive. Fewer would be sold. Ergo, fewer people working for NIKE than they would be with free trade.
‘Made In America’ means one of two things. Either it was made by a small business that can’t yet afford to use international labor, or American jobs were lost in the effort to save American jobs. Kind of like trying to put out a fire with gasoline.
3. Decreased standard of living? Depends on your definition. I think everyone will get richer and live better lives. However, the gap between us and the poorer countries we trade with will close. So if you define ‘standard of living’ by how much better off we are compared to the rest of the world, then yes, your right. Things will be worse.
If you define standard of living by freedom to live life the best you know how, with efficient access to ever improving technologies, then us free-traders are right.
Jonathan Wilde:
I’m really not speaking of politics, but rather analyzing the business practice. An argument for outsourcing jobs, is of course that it leads to a rise in stockholder wealth. I’m simply curious if that is true in the long-term.
Hello Titus!
I really must apologize to all here on this blog for my insufferably snarky bargeing into your community.
It is not usually my style.
I think Micha, Jonathan, and you Titus, all have made good points and carried your side of the dialogue with grace and logic.
Please suffer me my bumptiousness, its just that I am really concerned about the economy and it made me more intemperate than my usual placid academic manner.
If you like, I will wander off into the sunset!
I think of countries as big homeowners association. And while I think free trade and free markets generally advance countries and their peoples, there is no good reason for a country to endorse those policies when it hurts their people.
Micha’s suicidal notions of justice are akin to a corporation saying that it will buy from an outside vendor, even when it’s cheaper and more efficient to buy something inhouse. Corporations exist to make profits. And countries exist to advance the interests of their citizens, not those of other countries based on abstract notions of humnan dignity.
I am glad to see the emperor has no clothes and free traders are so ideological they don’t even feel the need to make obeissnace to the notion that free trade is in the long run interest of the country. They obviously don’t care, and thus everything they say should be considered suspect. If you really think it’s moral–without regard to its effect on our country–why should we listen to you when you say “The US should do this or that.”
No one’s trying to shut down the debate…After all, what fun would that be?
Wanderer:
I’m only starting to understand the basics of economics, so I’m enjoying this thread. No need to wander off into the sunset (unless you’re heading to Asia to work for NIKE… ha ha).
Roach:
I don’t understand your post, but you are right about one thing (insofar as much I understand it) – trade does not exist to serve the country. The country doesn’t exist as an entity to be served – people are served. The more restrictions on trade, the fewer # of people benefit.
Answer me this, and maybe I’ll understand the protectionist ideology better:
What’s the difference between a textile worker losing his job to someone overseas and a water provider losing his job because of an end of a draught?
Micha’s suicidal notions of justice are akin to a corporation saying that it will buy from an outside vendor, even when it’s cheaper and more efficient to buy something inhouse. Corporations exist to make profits. And countries exist to advance the interests of their citizens, not those of other countries based on abstract notions of humnan dignity.
Do you really believe that politicians advance the interests of their citizens?
I am glad to see the emperor has no clothes and free traders are so ideological they don’t even feel the need to make obeissnace to the notion that free trade is in the long run interest of the country. They obviously don’t care, and thus everything they say should be considered suspect. If you really think it’s moral–without regard to its effect on our country–why should we listen to you when you say “The US should do this or that.”
I’m not sure how else to get the point across: country don’t do. Individuals do.
When you say, “the US should not be allowed to hire Indian programmers,” what you are really saying is, “XYZ corporation should not be able to hire Indian programs, and American individuals should not be able to be able to enjoy the higher standard of living that comes with decreased prices of goods.”
I bet half the stuff in your house including most of the clothes you wear, the food you eat, and the appliances you use are built by foreign workers. If you were consistent in your views, you would throw out all that stuff and buy replacements at many multiples the price.
This isn’t an argument about the “long term”; it is about the benefits that come with a higher standard of living here and now.
[b]This isn’t an argument about the “long term”[/b]
So, you are saying that corporate managers are not concerned with the long-term profitability of their company? Hogwash. And if they don’t, their perspective BoD needs to get rid of them.
Remember, this debate really doesn’t exist without a business case for outsourcing employment. Without it, this is just unrealistic politcal banter.
Regardless, I would hope that not only our business leaders, but also our government leaders aren’t leading to short-term rewards without considering long-term effects. Their ideas should not only improve the lives of people today, but also the lives of our ancestors.
Perhaps you need to visit The Long Now Foundation
Countries are as real an entity as a corporation, with interests defined as the aggregate interests of its citizens. Denying the interests of these natural and organic entities, and denying that the aggregate interests of one country might differ from another is simply burying your head in the sand.
Politicians sometimes do and sometimes don’t advance those interests; when the people understand their interests and fight for them, in a system of democratic controls like the US the interests of the people can be advanced, as a matter of first approximation.
As for the draught example, I’d say the difference is that open borders, free trade (or for that matter protectionism) are public policy choices that can be changed, unlike the weather. I don’t think as a general matter economic policy should pick winners and losers as between a country’s citizens, but I do believe that a government should advance its citizens interest, at the expense of the aggregate interests of foreign countries if need be.
Have any of you ever worked at a company where you had to think about the “company’s” interests. If you think it’s just about “individuals,” then I don’t see how you could make sense of that experience, particularly when the boss says stay late “for the good of the company.” You may have a long term interest in appearing altrustic and as a team-player, but then the notion of individual self-interest loses its analytical value and we’re back where we started.
‘As for the draught example, I’d say the difference is that open borders, free trade (or for that matter protectionism) are public policy choices that can be changed, unlike the weather.’
What if you could change the weather? Would you continue the draught just so water providers can continue to earn the wages they’re used to? Isn’t that essentially what protectionism is?
No I wouldn’t Titus, but I think the analogy is inapposite . . . a classic “broken window fallacy.” |
Protectionism–or in this case the accounting and tax code’s indifference to outsourcing–has both wealth creation and wealth distributive effects. If the distributive effects flow in one way, if we exercise our monopsony power, or if for some other reason the facts support a departure from the free trade presumption, I think we should consider it and do it.
The problem with your view is that it is immune to the facts; it’s like a religious faith. Even Smith acknowledged some limits of free trade, I think different eras will necessarily have diferent exceptions.
Roach,
I think of countries as big homeowners association.
This has nothing to do with the issue of free trade, but I object anyway. The key difference between a government and an HOA is that people explicitly consent to the join and live by the rules of an HOA, whereas people are forced to live by the rules of a government.
Micha’s suicidal notions of justice are akin to a corporation saying that it will buy from an outside vendor, even when it’s cheaper and more efficient to buy something inhouse. Corporations exist to make profits. And countries exist to advance the interests of their citizens, not those of other countries based on abstract notions of humnan dignity.
This is exactly backwards. It is cheaper and more efficient for those American companies who outsource to purchase labor from an outside vendor, else why would they willingly choose to outsource?
Also, my comment about human dignity was a tongue-in-cheek reference to Kantianism, which Michael introduced in his argument.
I am glad to see the emperor has no clothes and free traders are so ideological they don’t even feel the need to make obeissnace to the notion that free trade is in the long run interest of the country. They obviously don’t care, and thus everything they say should be considered suspect. If you really think it’s moral–without regard to its effect on our country–why should we listen to you when you say “The US should do this or that.”
I never said that free trade wasn’t in the long run interest of the country. Rather, I said that even if it was the case that free trade benefited foreigners at the expense of Americans, we should still support it. Why? Because morality does not stop at our borders, no one has a right to a job, and no one has a right to a given level standard of living.
If America would benefit if we invaded Canada to steal their bacon and moose, would you recommend we do so?
Smith acknowledged some limits of free trade
Yeah, you know which limits he supported? Retaliatory tariffs against countries which practiced protectionism. Not quite an argument which supports your position, is it?
Some quiet thoughts on these issues. It is been enjoyable visiting this web site and seeing the viewpoints presented here. I enjoyed this thread particularly, even if, as I noted above, I was somewhat intemperate in my remarks. Condescension is infuriating and I was guilty of it.
But beyond the transitory pleasures of upholding one’s side in a debate are the lasting worries we all share. I think all of us, as Americans, are concerned with the economy. Some of us extend our concerns to a wider community than just our nation and wish for the economic uplift of the whole world. There need not be a conflict between maximizing our economic potential here in the western hemisphere and supporting global uplift.
Hence free trade.
But as you all know, even the most fiery of you, the devil is in the details. My worries were in my three points to Micha, but there were some more technical issues I didn’t address concerning the functioning of free trade systems in business cycle fluctuations, under-development, etc. I didn’t bring them up, because I think they can be worked through. We just have to be aware that they are there.
The major thrust of my anxiety is the medium term adjustments here at home. Micha, to his credit, is willing to bite the bullet and say downward wage pressure is okay and we may see higher unemployment. What we are likely to get in the medium term is both higher unemployment and higher under-employment both. The so-called service economy. I am concerned about the ever increasing trade imbalance and will continue to be.
I think there is a lot of potential in this issue for politicians to step in and do their usual demagogic things.
Probably we will see a lot of it not only this year and 2008, but even more exaggeratedly about 12 years down the road when the effects I foresee take hold. But I may be wrong and I hope I am.
The real concern for the nationalists among us is China. We’ll just have to see what kind of Fabian tactics the West’s economies adopt to meet the challenge. Let’s hope for a happy and benign full integration into what is rapidly becoming a tri-polar world order.
I have enjoyed being here with you and wish you all the very best in your endeavors.
Regarding trade deficits, from this website:
Current and Capital Accounts
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