Balance of trade, globalization, and unemployment

national and global economies are influenced by a large number of factors.... sort of like the climate. And, similar to the climate, we often only look at the impact of certain factors, while ignoring others.

I was thinking recently about globalization. Some people see globalization as an unalloyed good, while others see the results a nearly pure evil. What’s going on that yields such diametrically opposed views?

Let’s consider an example case and see how it can work: simple trade with Mexico

Before globalization, an army of Mexican peasants farmed small plots to grow corn
And in the USA we had American workers with factory manufacturing jobs building products for Americans.

After NAFTA, highly industrialized American farms grew cheap corn that they sold in Mexico. This was good for American farmers, and resulted in lower cost corn for the people of Mexico
Sounds good so far, right!

And in the USA, our corporations utilized cheaper Mexican labor for manufacturing. This resulted in higher corporate profits and comparatively lower consumer prices. Once again it sound great, right?

Further, even the balance of trade works out well since the money sent to pay workers in Mexico is balanced by the money sent to the USA to buy corn. Once again it looks like a win-win situation.

But of course, there are also down sides. Suddenly lots omanufacturing jobs in the USA have disappeared... and those workers have no comparable good paying alternative jobs. And in Mexico, those peasant corn farmers are also screwed since they cannot compete with highly efficient industrialized corn farmers from the USA.

So actually most people are better off because of the reduced prices they pay. And American farmers and corporations are also very happy... and so they will pay lobbiests to promote the benefits of free trade. But lost in the background, an unable to hire lobbiests are the unemployed people of Mexico and American factories.

The lobbiests will contend that there isn’t really increased unemployment since new jobs are created by increased demand for exports. But is that really true?

Well, yeah we sell more corn. But how many unemployed factory workers get new good jobs working on a farm to meet increased corn demand? Almost none. Those factory workers remain screwed by globalization

How about Mexico? Well they would have some new and relatively well paid manufacturing jobs. But does this help the unemployed peasant farmer?
In order to get those new jobs, a peasant farmer would have to leave his land and move his family away from the community that was his family home. And even then, there are not nearly so many of those new jobs as peasant farmers who lost their jobs. So is it any surprise that many of these farmers will seek new farming jobs where they are available... in the USA.

But there is more... maybe after they are in the USA for a while they, or their children start looking for non-farm related jobs... and so erode the job market for citizens.

Basically, globalization is good for corporations, and sort of good for consumers.... but very bad for some workers. And if tariffs sucessfully recover some jobs (which is not by any means a sure thing) , still there will be a cost in the prices we pay, and maybe a trade war, and maybe some lower corporate profits (along with lower stock prices)

I am not arguing for what we should do. Only pointing out that there will be collateral impacts from whatever we do.

 

It is a matter of fact that the best way for Detroit to protect jobs for Americans who build cars is to buy component parts that come from Mexico.

In that manner, the cars remain "affordable" and therefore "saleable", without which Americans would buy cheaper Far East products. (Some Honda cars are manufactured in the US with parts made Not-In-the-US to a great extent.)

What Trump must do now is to protect American industry by forcing China to pay royalties on American engineering patents - which not only have they refused to do in the past, but America has also refused to bring them before the World Intellectual Property Organization (WIPO).

Why? Because that would hurt trade with China? Who cares*?

China will not react until it is forced to do so legally ...

*I am left to wonder if American companies understand that an American patent protects products in the US, but not in the world. For the latter protection to be engaged, the patent must be also registered at the WIPO.

 

This isn't quite true! The impact of globalisation depends on the type of trade. With intra-industry trade, for example, we would expect both capital and labour to benefit. It is inter-industry trade where there can be redistribution between labour and capital. Thus, in a capital abundant country labour losses.

Does inter-industry trade provide a justification for tariffs? Nope. Overall economic activity increases. Gains outweigh any losses. The problem is therefore not about trade, but right wing political structures which are incapable of redistributing the gains. Indeed, there is no clear anti-trade argument from the Left. For example, free trade provides a means to eliminate problems associated with socialist calculation.

 

very simple, liberals simply lack the IQ to understand global capitalism.

Golden Rule: The more with whom you trade the richer you get whether they are across the street or across the globe. The fewer with whom you trade the poorer you get. Imagine how poor you'd be if you had to trade with 1000 people only, or, imagine if there was no trade and you had to make everything yourself. This is Econ 101 class one day one.

 

Golden Rule: The more with whom you trade the richer the Wall Street/donor/"job creator" class gets whether they are across the street or across the globe.

 

Wall street and main street get rich from free trade. Imagine how poor you'd be if you had to make everything yourself. Do you get it now?

 

Trade since time immemorial has been beneficial to the entire population. It actually creates and saves jobs. It also forces companies that cannot compete to shut down manufacturing in higher cost countries.

There's good and bad done to international trade. But the end-result on the whole is one of goodness.

Why Donald Dork wants to insist upon the matter, along with his asinine "Great Wall", is due to the fact that he's ignorant of the benefits of trade. Mind you, the French also elected a dork-president 6-years ago at the beginning of the Great Recession that was imported from the US. Six long wasted years of no job-growth and only now is the French economy showing signs of growth that have activated employment and reduced unemployment levels.

Have Americans learned that they should never ever take any political election for granted? Given one the worst voting rates of any developed nation on earth, I don't think so. See here: U.S. trails most developed countries in voter turnout

And cry - find the US is at the bottom of the list ...

 

What the amerian public has learned is that regardless of electoral outcomes, a cabal of Goldman Sachs execs is always in the white house, the public will bail out the Wall Street/donor/"job creator" class with socialism, and working class and underclass americans will fare worse over time economically.

 

Still waiting for Lafayette to get just one thing right. Trump is not a protectionist don’t know how many times you have to see evidence of that before it begins to sink in. Keep trying we are waiting for you to get just one thing right

 

Obviously if we were faring worse we will not have 220 million automobiles 167 million homes and 120, million smart phones. Republican capitalism is a huge success the likes of which the world never imagined

 

Of course, america has always been about material possessions and hording. That might explain a lot right there.

 

Globalization is an option; either we buy/sell outside of the USA or we do not.

Balance of trade; demand is driven by consumers so as long as consumers demand fresh fruit in the US winter, it will be imported. If US manufacturers cannot compete globally without tariffs/subsidies, I suggest they have the wrong business model.

Unemployment; When a coal mine is closed and coal miners lose their jobs, if they can't find employment within a couple of months, is this the fault of the coal mine or the job seeker?

For those who salivate over the ball cap motto 'Make America Great Again'...well...hoping for closed coal mines to open again is not the answer...hoping for US tariffs is not the answer...

 

Forgetting all of the empirical definitions, isn't globalisation more support for an ideology? We either support free trade or we're against it. Its an interesting one for me, as it isn't left or right wing orientated. Socialism encompasses support for free trade, but there is also natural concerns over protecting labour outcomes. Right wingers naturally want to support free trade, but their nationalism tends to de-bollock

 

its also been about religion, and???????????

 

Yes, we shouldn't forget your argument that God created America!

 

not really since free trade gets outside of libcommie govt control. Socialism is govt control, free trade is market control. Now you have the basics down.

 

more accurately God identified the individual as suited for freedom and love. That led to individual liberty and eventually to the founding of America, a country which was to free most of the planet from central govt control. Now do you understand?

 

Repetition for "God created America!". Are you allowed to have weapons by chance?

 

who do you think created America and who set the world free from central govt??

 

Yes it is in Bill of Rights, part of our Constitution!!!! Always happy to help a liberal with basics!!

 

I liked the Welsh documentary that said they created America. There's someone to blame!

 

A fifteen dollar an hour minimum wage!

 

translation: I have no idea about the origin of individual liberty

 

That Jaysus created individual liberty and therefore America? Crikey, I've heard more realistic comment from ISIS

 

Today the word 'globalization' has become political for a certain group in the US to mean evil. We demand exports and love the benefits of imports in our self-serving behaviors then in politics speak about how evil globalization is for the country. Sure it's self-serving and ignorant but many people today love to pound their chests in support of Trump policies while I'm guessing 95% of them don't even know what they're talking about. One would think each of the issues of globalization would not be left/right but why do baseball/football fans continue to rabidly support a team that hasn't won anything for decades? It's the same mentality IMO and today it's this mentality, or lack of, that is running the USA...