The ideology of "Free trade" is Killing America's Economy

Lets just say you are more impressed with your personal proclamatins than I am. Referring to the evidence is not presenting evidence. At this point it would seem you cant be trusted to accurately portray the contents of what you refer to. Thats why I asked for the evidence and you still havent got around to presenting it.

 

I've referred directly to the evidence that rejects the law of one price. You can read it in more depth here (but I remain amused that you didn't know any of this)

 

But no one is disputing "the law of one price". Thats just one of the many tangents you run to seeking refuge from the topics of discussion. We are still looking for evidence of positive employment effects of raising the minimum wage. And the only evidence you have presented so far

doesnt support your assertion. They conclude that any negative effects are small. Does nothing for your claim of positive effects.

 

Crikey, you haven't caught up yet? If monopsony isn't the norm then the law of one price will hold. By admitting the law doesn't hold you've put your foot in it again!

You've already been given that evidence, with the positive elasticity measure showing that very result. You're being terribly slow today!

The positive elasticity certainly means positive employment effects. And go back to my original statement: I predicted those small effects. It wouldn't be cunning, for example, to suggest that the minimum wage can solve unemployment! It is the case, however, that positive employment effects occur and that is quite consistent with monopsony being the norm (i.e. if it wasn't we'd expect significant negative effects, as predicted by the standard supply & demand model)

 

What an absurd claim. The law of one price holds only in a theoretical model in an imaginary universe where competition is as perfect as we can imagine it to be. Law of one price doesnt hold the moment you step outside of that theoretical model, silly.

You dont have a clue silly parrot.

 

free trade is the killer...what you do is simultaneously raise tariffs on imports, raise taxes on the rich scum and use that to loan to individuals who want to create jobs here making stuff here

 

So you want to raise prices and thereby harm domestic consumers? Why would you want to do that?

 

Because it will raise wages much more than it will raise prices. What good are cheap clothes and electronics when you cannot get a decent paying job?

If we only focus on the consumer and not the worker, it will cause huge problems.
Just like there will be problems if we only focus on the worker and not the consumer.

Neo-liberal free market economists claim that outsourcing will create more jobs because, since imports are cheaper, prices will be lower and people can buy more. But what they neglect to consider is what these people will do with this money they saved. Will it go to creating more jobs, or just go into speculative investments and bidding up the cost of land, making housing less affordable for everyone else? And not only that, but you are taking money out of the system, because all those Chinese workers and businesses have to be paid.

 

Outsourcing increases wages. This isn't surprising as resources are more skewed towards high skilled labour. The only problem is the extent that neo-liberalism, imposing labour market flexibility that encourages production with low income elasticity, creates a low skilled equilibrium. Trade can then accentuate income divides. However, it would be cretinous to use that against free trade and capital mobility. It merely informs us that there is an internal structural flaw created by market failure

 

ARE THEY?!!

What exactly are all these developing countries buying from us that creates good paying jobs???

Because it seems that the USA is outsourcing far more than it exports. Exactly how many jobs providing "financial services" for the Chinese and jobs in the "creative industries" are actually created for Americans? Because the Chinese have their own financial services for themselves, their own internet providers, their own film industry. They really do not need Americans for anything, other than to keep buying more of their shoddy manufactured products.

 

An ignorant reply with nothing worth quoting. The increase in wages reflects a further shift towards capital intensive product reliant on skilled labour. Its the height of stupidity to think a developed country should maintain an abundance of low wage labour

 

Except when there is a high rate of un- and underemployment, like there is now. You are advocating getting rid of all those lower level jobs, but those jobs are much better than nothing when there are not any other realistic options for all these people. Your notion that all these unemployed can just shift into "skilled labor" is just completely unrealistic; there simply is not adequate place for all of them in the economy.

But in fact, most of the jobs being created in our new "service economy" are low wage jobs, not the good paying skilled jobs that were promised by those touting free trade and the wonders of "comparative advantage".

I absolutely agree, but I think there needs to be more focus on increasing the wages of the jobs we already have. Making our laborers compete with laborers in the third world does just the opposite, driving down wages and slashing benefits.

All your outsourcing may have lowered the prices of clothes, appliances, and electronics, but it has not "grown the pie".
Not counting the skyrocketing cost of land, debt-fueled inflation, and all the additional people the USA has taken on from the outside, the real economy of the USA has been in decline for some time.

 

Do you buy your clothes from a store? Does the store owner come to your house and buy stuff from you? No?

OMG TRADE DEFICIT!!!

 

If wages were higher, I wouldn't have to buy Chinese-made clothes, which are often low quality btw. I don't like supporting sweatshops and poor worker treatment.

 

If you can do it so much better then by all means, there is absolutely nothing stopping you. You're reaping the benefits of trade in one hand and cursing it in the other, it's a little silly to watch.

So the answer is to stop buying from them? Wouldn't the answer to be to buy MORE from them so they can escape that poverty? Of course it is, not to mention that these "sweat shops" beat the pants off of the jobs (or lack thereof) many of them had before.

 

The answer is to ensure they are being paid decent wages. If they still can't compete, at least it will mean more decent wage jobs for low-skilled workers in my country.

 

The existence of underpayment is typically a hidden form of unemployment more typical in Anglo-Saxon economy. This again reflects a demand-side market flaw. It has nothing to do with trade.

Advocating? No. Just referring to economic reality. Heckscher-Ohlin informs us that comparative advantage will reflect factor abundance and factor intensity. The criticisms of the approach, such as the Leontief Paradox, actually reflects the complex nature of factors of production such as labour. By referring to the skills set we can see that the specialisation process will be towards skilled labour (and therefore there are wage gains to be had).

Your position is based on taking economic phenomena and bogusly applying it to trade. Its crass and nonsensical. We can refer to deindustrialisation. See, for example, Britain's monetarist experiment that engineered a quadrupling of unemployment. That had nothing to do with trade. Indeed, alien to the nature of competition, it was the more productive firms that went to the wall.

The abundance of low wage labour reflects structural flaws independent of trade. Compare, for example, trade intensity rates and % of workforce on minimum wages. You'll find no relationship.

Standard zero sum game cobblers! The whole point is that there isn't competition: there is an efficiency gain through specialisation away from production more suited to lesser skilled labour abundance.

It has. You merely inform us that you still don't understand comparative advantage and the wedge it drives between domestic production potential and consumption reality

 

It is only economic reality because the government has been listening to economists like you and have made it economic reality.
Economic reality does not have to be whatever the international free market dictates if the government does not want it that way.

Yes, but it does not say that the factors on both sides will be labor, in which case the people in one of the countries may likely get screwed.

No we don't. We only see that the specialisation process could potentially be towards skilled labor.

Yes, there would be gains to be had if the specialisation process actually was towards skilled labor. I say it is not.

Trade is part of the structure. And what exactly are these structural flaws you refer to? I have already made it clear in numerous other threads that I do not agree with your notion that lack of university/technical education is the problem.

The relationship is that trade took away jobs, including good ones that were indirectly related to manufacturing (such as engineers, managers). All these people (or the next generation of children they had) were left with bad jobs in the service sector. Of course, immigration had plenty to do with it also, but that is another long topic.

It seems rather incredible to believe that international trade could add more than just a small degree of efficiency to the economy. And in any case, even if it did, it should still be possible to maintain a good standard of living even in the complete absence of international trade. If we really needed international trade to keep the economy healthy, it would mean there was something else fundamentally wrong.

That's the same argument free market economists have been trying to use to get rid of the minimum wage and worker protections. Get rid of the minimum wage, they say, and all those unemployed will be able to work. Then there will (suppossedly) be gains through specialisation. The problem, of course, is this undermines the wages and working conditions of the working class.

No, I understand it perfectly well. I have just been saying it is only one of the factors that need to be considered in international trade. And I have also been questioning how much such comparative advantage actually directly contributes to the economy, and how much it takes away from the economy through lower wages and thus lower consumer demand for products of human labor.

 

You're not making any sense.

The reference was to the market. The behaviour of the market is inconsistent with your nationalistic tosh. That inconsistency ensures that you cannot refer to economic reality.

Just more incoherency! Heckscher-Ohlin informs us of the origins of comparative advantage. The only issue, which you've been repeatedly told, is the difference between static and dynamic comparative advantage. None of that can be embedded in the non-economic prattle associated with neo-mercantilism.

Rubbish! We know that specialisation is towards skilled labour. That has been confirmed by empirical evidence, from the reaction to the Leontief Paradox to analysis into wage effects.

A mere tantrum where you ignore economic reality.

We know that the abundance of low wage labour reflects structural flaws independent of trade. Compare, for example, trade as % of GDP in Germany and in the US. Low wage abundance is a domestic demand-led issue, typically accentuated through a labour market flexibility which encourages short term profiteering (rather than investment in the skills set through upskilling).

Given specialisation increases economic activity, it makes no sense talking about reduced employment. Of course you also give your right wing infliction away with the reference to immigration.

Again you show nothing more than ignorance of trade analysis. Inter-industry trade increases overall economic activity. That's the nature of opportunity costs for you! Intra-industry trade then magnifies the efficiency gains. One just have to refer to market power and monopolistic competition.

Rubbish! The reference to minimum wages is focused on supply and demand, with the belief that the minimum wage will create a disequilibrium associated with disemployment. That approach is out-dated as it ignores the nature of monopsony and how monopsonistic power necessarily creates an inefficient outcome. Zero to do with trade (except perhaps to the reference to market power and how trade, like the minimum wage, reduces the inefficiencies associated with market power)

You don't understand comparative advantage. If you did you would necessarily have to reject economic nationalism for the cretinous right wing drivel that it represents

 

Right wing? What types of groups do you think are the ones in all those anti-WTO protests? I would hardly call environmentalists and labor unions "right wing", not to mention Communists and leftist anarchists that rally against the trade agreements.

Not necessarily. Again, you make the mistake in assuming that additional comparative advantage will always result in a net increase in economic activity. Making such an assumption reveals that you only understand the basics of comparative advantage theory.

Yes, comparative advantage results in increased economic activity, at least directly. But for several reasons, such increases in economic activity tend to be accompanied by lower wages, not higher. The owners of capital are the main benefactors of such gains.

 

I haven't referred to anti-WTO protects. And, if one bothered to construct anti-WTO comment, is would fall into two camps: First, those whinging about exploitation despite trade reducing absolute poverty. Second, those with sense that will remark that the WTO is not correctly structured and helps reinforce North-South divides (rather than assisting the generation of dynamic comparative advantage)

I have referred to your ridiculous right wing nationalism and how it ensures a stance incompatible with economic sense.

You again show ignorance of trade analysis. Comparative advantage destroys the notion of trade as a zero sum game. And how does it do that? By increasing economic activity (given the nature of opportunity costs). Its easily shown within the context of Heckscher-Ohlin, where there is a distinction between the production possibility frontier and the trade possibility frontier.

Wrong again! Once we take into account the impact on the skills set (with specialisation according to capital intensive product with demand for highly skilled labour), we only have reductions in low skilled wages (which will be necessarily limited by minimum wages). High skilled wages will increase.

 

That is the debate — the debate that never entered the public sphere — Whether of not trade actually reduces poverty, or whether it leads to more poverty — both in the USA and the third world. Remember, the benefits accrue accrue to consumers and the owners of capital, not necessarily to workers.

And even if it does reduce poverty in China (which is debatable since it has driven up the price of housing and land, making things less affordable), it could still be driving down wages in the USA and contributing to the rising rate of unemployment and homelessness in that country.

Right wing? I suppose that depends on your perspective. And nationalism makes perfect economic sense if one cares about safe guarding the environment and a good standard of living for your nation's people from unfair competition and survival-level wages in the third world.

The USA is a big country - with plenty of poor and unemployed people I might add. It already has plenty of "comparative advantage" without needing to open itself up to survival-level wages from China.

Comparative advantage can be a negetive sum game too, if it drives down wages and causes the level of economic activity to contract. If it was merely just a zero sum game, we wouldn't see so many labor unions in the third world being against the trade agreements with the USA.

Free trade (unfair trade) can also reduce economic activity in other ways. What exactly are the full macroeconomic opportunity costs of sending away jobs to countries with lower wages, lower taxes, and lack of protections? Why are you only considering the costs of consumers?

I thought we already made it clear that comparative advantage does not always involve labor on both sides, in which case there would be no high skilled jobs created (or not very many of them).

 

It isn't a debate. Its whinge'n'whine based on nothing more than a myth about trade.

Absolute rubbish! China's wages increase, wage reductions in the US will be skewed towards low wages (which themselves are controlled by the minimum wage). The size of the pie increases and, due to specialisation in capital intensive product, skilled labour wages increase.

No it doesn't. Your right wing nationalism is appallingly predictable.

You again show no understanding of comparative advantage. The US is capital abundant and therefore has a comparative advantage is capital intensive product. It will therefore necessarily gain from trade with labour abundant country.

It cannot, by definition.

This is just repetition of bogus comment. Economic activity increases, with intra- reinforcing inter-industry trade gains.

This is nonsensical.

 

The real myth is that more trade always makes things better for everyone. It does not, for numerous different reasons.

You keep repeating this over and over again, while completely dismissing my claim that America's "comparative advantage" is NOT skilled labor, but rather a steady draining away of its ownership of capital, and an ever increasing debt burden, financed in large part by the US Treasury and Federal Reserve Bank.

One of the few things America does actually have to export to Asia is soy beans. But I doubt this creates many decent American jobs, most of the profits just go to the big agricultural corporations.

 

The only significant case where free trade is detrimental is when it harms infant industries. That has nothing to do, with the nationalist prattle though.

You don't have a claim. You have a cretinous abuse of what comparative advantage entails. The US is capital abundant. Its comparative advantage is therefore in capital intensive product. It doesn't take a genius to remark that such product requires skilled labour.