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

This is a very ignorant statement. Neo-liberalism has been part of western capitalist policy (from the destruction of African development to the frenzied deregulation of the financial sector), but the damage generated has been understood within modern economics for some time

Rationality, with individualism at its core, is indeed a minority approach. Bit of a shame that!

 

You keep trying to tell me what free-trade is...I know what it is. I've said multiple times that this country is a free-trade Capitalistic country. I'm not saying that every country that uses a free-trade system is using Capitalism. And you yet again fill your post with opinions and try to pass them as facts. They're opinions and there is no proof, no sources, not even a name you can give as to something that will back up your left-wing nut job claims.

 

And nothing to say about the rest of his post?

 

Actually you've hid from comments about trade analysis. Do you even understand comparative advantage?

Capitalistic is a meaningless expression. And, as we've already mentioned, the US has actively pursued a policy that has damaged specialisation according to dynamic comparative advantage. It therefore has actively harmed the volume of trade. Calling it free trade, given that reality, is just a little cretinous!

 

Free? For who? Ever taken a look at the sugar industry in this country? Hell we can't even buy stogies from Cuba.

Free? What a frick'n joke.

We can't buy certain cheeses, unpasteurized milk and you want to sit there and tell us that there's anything free about it? You have a very strange definition for the word apparently.

 

There will never be a 100% completely free anything. This goes for the market as well.

Have you ever taken a look at other market systems around the world? By comparison, I'd say we're free.

 

Its of no surprise that the 2 knowledge deficient dogmas being advertised on the thread are united by economic nationalism and an innate ignorance of economic reality

 

You mean 'free market economist'. They'd have to argue that output can be understood simply by referring to isoquant and isocost analysis (i.e. firms can be understood in terms of a blueprint set of technical relationships). They'd have to argue that perfect competition exists (as imperfect competition will necessarily lead to an understanding of multiple equilibria with market power harming efficient specialisation). They'd have to ignore all of the technical progress literature. They'd have to avoid all empirical evidence and assume an Econ 101 textbook is sufficient to understand actual trade patterns.

Don't get me wrong now. A free market economist might indeed try and do all of that. It may, however, encourage just a little laughter!

 

You and your buzz words.

Isoquant and isocost analysis (another way to say, multiple equilibria).

http://personal.ashland.edu/jgarcia...hap010a Isocost Iquant analisis.ppt#283,11,An Isoquant Map

A little light reading on technical progress:

http://dspace.mit.edu/bitstream/handle/1721.1/50139/28596042.pdf?sequence=1

You define all the conditions as being too complicated for free market types (how Austrian of you). But, these can be easily managed by slack jawed government bureaucrats (with your consulting help no doubt).

The free market has no requirement for perfect competition, for perfect knowledge - that will never exist. "Free market" just means the ability to react when a profit opportunity exists.

The point you miss is the free market, like nature, doesn't rely on a plan. It relys on the grazing principle, which makes periodic breakthroughs, the planners could never envision.

One definition of entrepreneur is someone too stupid to realize you can't do a thing, and does it.

 

Does that lack of freedom come from the market, or from government?

Government, that got that power by promising to protect the "childern" (no matter how old they are).

Yet, the oil spills, the e-coli outbreaks, lead tainted toys from China, are corrected by the market much faster than by the government. We gave away our freedom seeking security, and have neither.

 

Basic error! Isoquant and isocost analysis is used to suggest that cost minimisation (and/or production maximisation) can be understood in purely technical terms. It suggests ultimately a single equilibrium result, with the choice of factors of production dependent on relative factor prices and the marginal rate of transformation. Its simple stuff, but vital for a 'free market economist'. As we move away from a mathematical approach we necessarily move to an institutionalist approach. Its that approach which derives the notion of multiple equilibria (and how the market can regularly be stuck on an inferior outcome)

I refer to the obvious. Once we factor in technical progress market failure will be the norm. We've seen that summed up with the notion of first mover advantage. An equilibrium based on static comparative advantage can ultimately be particularly inefficient.

Free markets do not and cannot exist in capitalism. The analysis is based on the sham of 'free market economics'. That delivered neo-liberalism which, by definition, leads to an understanding of coercion. We wouldn't have trade liberalisation reducing economic well-being otherwise!

 

?!? Who moves away from the mathamatical approach? Every company I have ever worked for, from $10M in sales to $100B in sales, constantly evaluates production costs and makes changes accordingly.

A company caught in an institutionalist approach is quickly outpaced by it's competition.

Explain.

The "market" strategy of Taiwan, then China, was to be a fast follower, selecting the high volume products introduced by a first mover.

First movers are driven by time to market, not cost competitiveness. Their "advantage" is short lived. The two first movers I worked for in the past, are no more.

 

This is a very ignorant response. The issue is what determines firm behaviour. Isoquant/isocost and such malarkey is firmly based around the notion of maximisation behaviour. You won't find one firm that draws a marginal cost curve!

Another very ignorant response. Institutionalism is about understanding firm behaviour. The orthodox approach to the firm, by taking a technical blueprint approach to product maximisation/cost minimisation, essentially assumes that the firm can be simply replicated. Institutionalism, in contrast, considers how a firm's organisation evolves and how there is no universal 'truth' in behavioural responses (e.g. new institutionalism, shifting an understanding of the firm as a means to reduce transaction costs, will adopt a case study approach that tries to explain the boundaries of the firm and why those boundaries differ substantially in apparently 'similar' companies)

We're referring to the infant industry hypothesis. First mover advantages refers to how economies of scale reflect accumulated output levels. Tiger economies have typically adopted industrial policies designed to ensure those economies of scale do not represent a barrier to entry. This of course includes protectionism as a means to shift from one equilibrium to another

 

Not one firm? What an ignorant response!

Not only is marginal cost evaluated, it is used to determine when a product will go from hand assembled, to versitile automation (quick set up time, but low throughput), to volume production.

Where do you get your definitions?

in·sti·tu·tion·al·ism (nst-tsh-n-lzm, -ty-)

1. Adherence to or belief in established forms, especially belief in organized religion.
2. Use of public institutions for the care of people who are physically or mentally disabled, criminally delinquent, or incapable of independent living.
3. The system of or belief in institutions
4. the system of institutions or organized societies devoted to public, political, or charitable, or similar purposes.
5. a strong attachment to established institutions, as political systems or religions. — institutionalist, n.

Economies of scale?

Where do you get this stuff?

Please re-read what I wrote about Taiwan and China. I have worked in Asia, for Asian companies. Economies of scale, combined with copying the market winners, and selling at lower prices (less R&D and shorter time to market, when you Chinese copy), are their industrial policy.

 

Absolute nonsense! Your understanding of orthodox economics is obviously next to zero. The marginal cost curve is a hypothetical cost curve based on a non-existent production function. Firms will typically adopt a cost-plus system. This of course reflects the irrelevance of marginal cost pricing.

Unlike you I've bothered to understand the economic concepts before using them! Institutionalism separates into the original heterodox approaches (which are very much anti-neoclassical in nature) to the new form based on attempting to find a theory of the firm compatible with neoclassical theory (given, without transaction costs, the Coasian firm will not exist and, when confronted with economies of scale and/or scope, we should simply see co-operative behaviour between entrepreneurs)

Are you being serious? You're commenting in an economic forum and you don't even know secondary school concepts?

Knowledge of economics! You made an error (reflecting your innocence) that only advertised the importance of what I said: tiger economy success has shown the distinction between static and dynamic comparative advantage, with extra-market interference a crucial aspect for shifting to a superior equilibrium.

Nonsense. Its not possible to refer to the tiger economies without referring to industrial policy (and interventionism that has since been restricted by the likes of the WTO)

Tony Fu-Lai Yu (2000) in the journal 'International Journal of Social Economics sums it up nicely:

[The government] possesses some unique features that distinguish it from the firm. Such features allows the government to regulate competition, reduce uncertainty and provide a relatively stable exchange environment. Specifically, in the area of industrial policy, the government can help private enterprises tackle uncertainty in the following ways: first, locating the focal point by initiating projects; providing assurance and guarantees to the large investment project; and facilitating the exchange of information; second, reducing excessive competition by granting exclusive rights; and third, facilitating learning and diffusion of technologies, and assisting infant industry firms to build up competence. The history of developmental success indicates that the market and the state are not opposed forms of social organisation, but interactively linked (Rodrik, 1997, p. 437). In the prospering and dynamic nations, public-private coordination tends to prevail. Dynamic private enterprises assisted by government coordination explain the successful economic performances in the post-war Japan and the Asian newly industrialising economies. It is their governments' consistent and coordinated attentiveness to the economic problems that differentiates the entrepreneurial states (Yu, 1997) from the predatory states (Boaz and Polak, 1997).

 

Your problem is you trust what your read - and have no real world experience. If you did, you wouldn't belive such rubbish.

 

Most amusing given my career

Note that you haven't been able to offer any critique. Probably a good idea! Suggesting that firms do indeed draw hypothetical marginal cost curves was one of the silliest things I've seen on here

 

Not really, you only consult for those that believe your sales pitch - not the smart companies.

Of course it is silly to you, your customers don't know enough to do it, so they are in enough trouble to need a consultant.

 

We shouldn't underestimate the stupidity of the employer. However, they do tend to know some economics and they wouldn't ask "draw me a hypothetical marginal cost curve next to the unicorn called Dave". A little clued!

Those in trouble couldn't afford us.

 

If your track record was good, they could borrow the money.

 

They could, but our magic is typically taking a successful company and making it even more successful. One cannot make a silk purse out of a sow's ear. However, this conversation is boring me. Haven't you thought up a critique of the previous economic content yet?

 

There are a lot of turn around teams that can turn a failure into a success, I guess that isn't your skill set.

What exactly do you do for these already successful companies.

Easily bored are we?

You keep asking for this, but refuse to put up any of your own. Your turn.....

 

The problem is that you haven't made any economic comment. The closest you've come has been crass error (such as the marginal cost silliness and the inability to understand institutionalism in economics). I'd love to have an economics conversation with you. However, until you make economic comment, that isn't possible. Put that right! Start with the following...

Krugman and co, generating a 'new trade theory', present an understanding of intra-industry trade that apparently supports free trade as the first best outcome. To what extent is this true? (i.e. given the impact on our understanding of comparative advantage- and the limitations of the Ricardian approach- to what extent is there a support for short term protectionism?)

 

All he will do is report you to a moderator when he gets backed up into a corner. Be careful with Reiver, lol.

 

So this is what you consider an economic statement _ROTFL.

Here is a nice write up on the new trade theory (notice how easy it is to read, like the author was secure in his grasp of economics):

http://marginalrevolution.com/marginalrevolution/2008/10/what-is-new-tra.html

In short, the larger the market, the greater the variety of affordable products. The comments below the writeup indicate Krugman no longer supports this position, politics and economics, what a wonderful combination.

As far as Ricardo, his explanation of comparitive advantage was effective in that era. That comparitive advantage evolved with global commerce, is no surprise

As far as your question "to what extent is there a support for short term protectionism?" there isn't enough information. Support by who, for what product, and for what reason?