How is "free trade" fair competition?

[Capitalist023]

Hey everyone, I've been a fan of this forum for a long time and I decided I'd start contributing.

First of all, a little about my political views so you know where I'm coming from. I consider myself a conservative-libertarian, in that I hold traditional conservative views but I don't think it is the role of the government to promote those views. For example, I am personally against gay marriage, but I do not feel that it is the role of government to have any say in a private contract such as marriage. If an institution does not want to do gay marriage, they shouldn't have to. If it wants to do only gay marriage, it should be allowed to. I wouldn't belong to a church that allowed it, but that doesn't mean I should be able to stop them. Economically, I best identify with the Austrian school. I also think we need a strong military to protect our country, but it should be used in a limited defense capacity as envisioned by the Founders.

So, onto my topic. I've recently been struggling with the concept of free trade. I absolutely agree with the theory of it because it is obviously beneficial to have competition. However, in the present-day world, I can't see how it really is competitive. China is able to manufacture goods for a fraction of the price it would take in America because their businesses are not restrained by hours regulations, high taxes, product regulation, etc. So is it really free trade if the best business in America can manufacture a good for $10.00 when a mediocre business in China can do it for $1.00? I know the best solution is to decrease regulation in America, but even then, do you guys believe we should allow sweatshops in order to match international competition? What do you say to American business owner who has to compete with a foreign corporation that doesn't have to play by the same rules that he does? What is Congressman Paul's stance on this?

Many thanks,
Jim

[sailor]

The aggregate result of import tarrifs is the same as the aggregate result of export tarrifs would be. Jet no one ever pushes for export tarrifs knowing that they would be harmful to ourselves first and foremost. It is the same thing with import tarrifs.

If an American consumer spends 1 dollar for an imported product it would have otherwise cost him 10 dollars he is now 9 dollars richer and can take this new wealth of his to other American buisinesses that he could otherwise not afford to. Also the foreign producer that now has 1 dollar can not spend this dollar at home, because it is not legal tender there. He can only spend it in the US, thus they can only use it to import a different US product to their country, meaning ultimately all 10 dollars will be spent in America same as if there were no import tarrifs.

Thus the only difference being the increase of the standard of living of the American consumer and the American buisinesses he choses to patronise with his new greater purchasing power (in relative terms).

[Brassmouth]

China is able to manufacture goods for a fraction of the price it would take in America because their businesses are not restrained by hours regulations, high taxes, product regulation, etc.

Like you said, that's our problem, not theirs. We shouldn't have those regulations. You'll also find that the reason China's prices/wages are so low is because their currency isn't allowed to appreciate against the dollar as it should. In a free market scenario we'd be able to compete without resorting to "sweatshops" (not that there's anything wrong with them).

[sailor]

You'll also find that the reason China's prices/wages are so low is because their currency isn't allowed to appreciate against the dollar as it should.

Which is a great thing for America. In essence it is the Chineese government subsidising the American consumer. You go and buy a new umbrella and it is like you pay 1 dollar and the Chineese government chipps in additional 50 cents, so you get an umbrella 33% off.

They do not sell any more stuff in monetary terms because of this. They just shipp more stuff for the same amount of money they could have gotten out of their American exports anyway.

It is a policy that only hurts themselves.

[Krugerrand]

He can only spend it in the US, thus they can only use it to import a different US product to their country, meaning ultimately all 10 dollars will be spent in America same as if there were no import tarrifs.

or use the money to increase ownership stake in country of currency.

[sailor]

or use the money to increase ownership stake in country of currency.

Indeed, of course that is just another way of saying to "use the money to invest into buisinesses in the country of currency".

[Derek Johnson]

Hey everyone, I've been a fan of this forum for a long time and I decided I'd start contributing.

First of all, a little about my political views so you know where I'm coming from. I consider myself a conservative-libertarian, in that I hold traditional conservative views but I don't think it is the role of the government to promote those views. For example, I am personally against gay marriage, but I do not feel that it is the role of government to have any say in a private contract such as marriage. If an institution does not want to do gay marriage, they shouldn't have to. If it wants to do only gay marriage, it should be allowed to. I wouldn't belong to a church that allowed it, but that doesn't mean I should be able to stop them. Economically, I best identify with the Austrian school. I also think we need a strong military to protect our country, but it should be used in a limited defense capacity as envisioned by the Founders.

So, onto my topic. I've recently been struggling with the concept of free trade. I absolutely agree with the theory of it because it is obviously beneficial to have competition. However, in the present-day world, I can't see how it really is competitive. China is able to manufacture goods for a fraction of the price it would take in America because their businesses are not restrained by hours regulations, high taxes, product regulation, etc. So is it really free trade if the best business in America can manufacture a good for $10.00 when a mediocre business in China can do it for $1.00? I know the best solution is to decrease regulation in America, but even then, do you guys believe we should allow sweatshops in order to match international competition? What do you say to American business owner who has to compete with a foreign corporation that doesn't have to play by the same rules that he does? What is Congressman Paul's stance on this?

Many thanks,
Jim

Jim,

Free trade and peace go together; protectionism is the handmaiden of war. Lowering import tarriffs to their lowest possible will encourage our own exports....which will remain strong in many sectors.

Study the Morrill Tariff and the real causes of the Civil War, to name one example of the horror of protectionalist trade policy.

The way out of the China "slave labor stealing all of our great our ideas" problem is:

1. lowering/eliminating tarriffs
2. lowering/eliminating regulations
3. lowering/eliminating taxes
4. buying more American [www.buyamerican.com]
5. ever more innovation in market need
6. ever more efficiency in the workings of business, production, logistics, and management

Instead of going to Wall Mart, contact your represented officials and demand a better business and entrepreneurial climate for American mfg and service or else....then seek a more expensive American version [if it has or should have steel or moving parts] on the thing you [really] need, it will likely last a lifetime, while your Chinese made crap will break.

[Andrew-Austin]

Welcome to the forum.

Sweatshops are basically what happens when industry and free trade have just been allowed in a under developed country, and the people there are just glad to be employed. The division of labor does not know what the imaginary lines that make up nation states are, but Americans are not "threatened" by cheaper overseas goods. Like Sailor was saying cheaper prices allow Americans to spend/invest the rest of their money with American businesses.

But say an American shoe factory is feeling the heat from foreign competitors who can sell their shoes for less. Implementing some protectionist policy to protect the American factory would be uneconomic, simply allowing them to go under would allow their resources to be used elsewhere in the American market where they are more needed.

Today we're all concerned about job loss here at home, but it has nothing to do with foreigners providing cheap goods, it has everything to do with the government and Federal Reserve's policies.

[BenIsForRon]

Capitalist123, just so you know, many people on these forums don't believe in environmental regulations. I disagree with them on this, because thousands of people die in Shanghai every year from disease related to air pollution. You will hear people proclaim, "Private property rights will take care of pollution", but they fail to take into account the fact that we have to allow some pollution, otherwise just about every industry except organic farming would fall off the face of the country.

[sratiug]

Hey everyone, I've been a fan of this forum for a long time and I decided I'd start contributing.

First of all, a little about my political views so you know where I'm coming from. I consider myself a conservative-libertarian, in that I hold traditional conservative views but I don't think it is the role of the government to promote those views. For example, I am personally against gay marriage, but I do not feel that it is the role of government to have any say in a private contract such as marriage. If an institution does not want to do gay marriage, they shouldn't have to. If it wants to do only gay marriage, it should be allowed to. I wouldn't belong to a church that allowed it, but that doesn't mean I should be able to stop them. Economically, I best identify with the Austrian school. I also think we need a strong military to protect our country, but it should be used in a limited defense capacity as envisioned by the Founders.

So, onto my topic. I've recently been struggling with the concept of free trade. I absolutely agree with the theory of it because it is obviously beneficial to have competition. However, in the present-day world, I can't see how it really is competitive. China is able to manufacture goods for a fraction of the price it would take in America because their businesses are not restrained by hours regulations, high taxes, product regulation, etc. So is it really free trade if the best business in America can manufacture a good for $10.00 when a mediocre business in China can do it for $1.00? I know the best solution is to decrease regulation in America, but even then, do you guys believe we should allow sweatshops in order to match international competition? What do you say to American business owner who has to compete with a foreign corporation that doesn't have to play by the same rules that he does? What is Congressman Paul's stance on this?

Many thanks,
Jim

All internal federal taxes subsidize imports. The only way to ensure free trade is to eiminate all internal federal taxes and replace them with a double flat tariff. Then the tariff can be lowered by cutting government spending.

The free trade of all Americans is hindered by all internal taxes. Anyone arguing for eliminating tariffs while we have internal taxes needs to think again.

[Epic]

What do you say to American business owner who has to compete with a foreign corporation that doesn't have to play by the same rules that he does?

Intellectually, Ron Paul agrees with the Austrians that free trade is morally correct and economically beneficial. He dislikes NAFTA because it's not pure free trade.

To answer your question, I would answer the same way I would to someone who lost their job to a robot - "Sorry, but it's uneconomic for you to continue doing this task - it's wasted labor. The same job can be performed for society at a much lower cost. And now your labor is freed up to do more important things."

If someone has a problem with outsourcing/free trade, they likely have a problem with technological innovation and automated machinery/robots replacing people's jobs. Sure, it might be bad for the one individual. But for society, it's a huge plus.

From an economic angle, the benefit of free trade to domestic consumers is always greater than the harm to domestic producers. See wikipedia or Austrian literature for an explanation. Another point to think about: If someone supports protectionist policy for their nation, why not for their state? Why not for their locality? One more perspective: in every voluntary trade both sides gain, otherwise they wouldn't do it. Hence, you want to maximize transactions, which is free trade.

From a moral angle, it would be immoral (a violent, coercive act) to intervene in a voluntary commercial transaction between two people - even if they live in different places.

Free trade should be approached from an economic/moral angle, not an emotional one.

P.S. when goods don't cross borders, soldiers do.

[KenInMontiMN]

Free trade should be free to the extent that a nation maintains a reasonable trade balance overall, over time. Any nation that can't maintain that the majority of the time goes broke, and the insanity in the way of allowing this country to wander completely off the path of economic solvency like we have from '97 forward, is a very significant part of the reason our economy is where it is.

Most of the posts above reflect a more anarcho-capitalist stand that prefers no borders and no tariffs; those aren't Paul positions- as to the question of what Dr. Paul supports, his '08 campaign website advocated for reasonable across the board tariffs, and an intense support for US sovereignty (and that of other nations) across all issues.

[ChaosControl]

Capitalist123, just so you know, many people on these forums don't believe in environmental regulations. I disagree with them on this, because thousands of people die in Shanghai every year from disease related to air pollution. You will hear people proclaim, "Private property rights will take care of pollution", but they fail to take into account the fact that we have to allow some pollution, otherwise just about every industry except organic farming would fall off the face of the country.

That wouldn't necessarily be a bad thing. :P

[sailor]

Free trade should be free to the extent that a nation maintains a reasonable trade balance overall, over time. Any nation that can't maintain that the majority of the time goes broke, and the insanity in the way of allowing this country to wander completely off the path of economic solvency like we have from '97 forward, is a very significant part of the reason our economy is where it is.

Not true. In normal conditions it is impossible for a country to maintain a trade deficit over any length of time. You can only fund imports with exports, there is no way around it.

The US, having its currency as the reserve currency of the world, has found away around it by printing money and going into debt, but that is a problem created by the federal reserve not by a lack of trade restrictions and is fixed through elimination of the federal reserves not by constructing trade restrictions.



Most of the posts above reflect a more anarcho-capitalist stand that prefers no borders and no tariffs; those aren't Paul positions- as to the question of what Dr. Paul supports, his '08 campaign website advocated for reasonable across the board tariffs, and an intense support for US sovereignty (and that of other nations) across all issues.

Not really. Dr. Paul does not speak in favour of tariffs from an economic perspective. He is only in favour of tariffs as a fairly unobtrusive form of taxation that is for that reason more adequate source of government revenue than for example the income tax.



All internal federal taxes subsidize imports. The only way to ensure free trade is to eiminate all internal federal taxes and replace them with a double flat tariff. Then the tariff can be lowered by cutting government spending.

The free trade of all Americans is hindered by all internal taxes. Anyone arguing for eliminating tariffs while we have internal taxes needs to think again.

So lets say the taxation and regulation of farmers reaches such proportions that crop yields are halved and there is nowhere enough food grown in the US to feed all Americans.

Do you therefore raise tariffs on food products because otherwise you would be subsidising them and let people starve, or do you lower tarrifs on food imports to enable people to survive?

The anwser is obvious. And what is true in this hypothetical extreme example, works in a less extreme one. The basic mechanics are the same.

Tarrifs are just another tax. You do not fix the ailments of taxation with more taxation.

____

Ultimately there is no way of going around what Epic brought up. Any voluntary exchange happens only if both parties will gain, otherwise they wouldn`t do it. No third party has the right to put restrictions on their exchange or demand a cut for itself. So only free trade can be fair trade.

[Krugerrand]

"Protectionist" is often an unfair label. Simply eliminating tarriffs does not make for free international trade.

Toyota USA builds cars in the US with parts bought from Toyota Japan. Toyota Japan over charges Toyota USA for the parts. When Toyota USA sells their car, the profit margin on the car is reduced because of buying the parts from Toyota Japan. The US manufacturer is at a competitive disadvantage.

When GM sells Opals in Europe, they have to buy the parts from European manufacturers.

Letting your industries get fleeced in the name (and name only) of free trade is no good.

[sailor]

Toyota USA builds cars in the US with parts bought from Toyota Japan. Toyota Japan over charges Toyota USA for the parts. When Toyota USA sells their car, the profit margin on the car is reduced because of buying the parts from Toyota Japan. The US manufacturer is at a competitive disadvantage.

Why exactly should we care what the profit margin of Toyota USA is?

[moostraks]

Why exactly should we care what the profit margin of Toyota USA is?

Maybe because at this point any business employing an american is one less group of people eligible for welfare (at least in totality)???

[sailor]

Maybe because at this point any business employing an american is one less group of people eligible for welfare (at least in totality)???

So, we should also care about GM`s profit margin I take it?


If Toyota USA is burdened by a delivery contract that is disadventageous to them then that is their own freaking problem. The same as if GM is burdened by a union collective contract that is disadventageous to them then that is their own freaking problem. If it is such a problem to them they can go bankrupt and the capital that is currently taken up by them can be taken over by companies that stayed out of such disadventageous contracts.

There is no excuse to make cars more expensive for the American citizen for the sake of Toyota USA.

Profits do not create employment. In a situation without taxation and other restrictions, full employment would ensue of its own. Profits only tell us where, in what sectors and what companies the workers should be employed. If a company has trouble staying profitable (or if bigger profits could be realised in an another sector) it is a sign that workers shouldn`t be employed there!

[KenInMontiMN]

Recognizing that the ideal of free trade never has existed and will never exist, and that it isn't our business to meddle in other countries affairs trying to force them to be as open as we have been- because that militarized meddling is very costly and unproductive- tariffs are the way to address huge imbalances.

I don't disagree that those imbalances will moderate if we can return to a commodity-backed currency. But even then, even if our overall balance of trade is in reasonable balance- it makes no sense to allow any nation to gather a sizable percentage of our currency/debt obligation, especially if that nation has the potential due to sheer size, to completely overwhelm us economically/militarily if we continue to bolster their economy with wild trade imbalances that are offset by trade surpluses elsewhere.

Nor does it make much sense to go across the board with tariffs IMO, since that penalizes equal trading partners for no justifiable reason. Tariffs should be targeted at particular nations in a nonpartisan fashion, simple flow regulation intended to achieve balances within defined tolerances. All complex systems require regulation to achieve desired ends- they don't exist to run wild in order to satisfy some theoretician ideals.

Considering the state of affairs around the world and the nation today, tariffs are the only form of additional revenue generation that should be on the table for discussion. And I have no problem whatsoever with eventually replacing the income tax with a return to tariffs- but the debt does need to be reduced to a much more manageable level first, that's more important. But reduction in govt size must account for the lions share of any debt reduction plan, in a contracted economy.

[moostraks]

Welcome to the forum.

Sweatshops are basically what happens when industry and free trade have just been allowed in a under developed country, and the people there are just glad to be employed. The division of labor does not know what the imaginary lines that make up nation states are, but Americans are not "threatened" by cheaper overseas goods. Like Sailor was saying cheaper prices allow Americans to spend/invest the rest of their money with American businesses.

But say an American shoe factory is feeling the heat from foreign competitors who can sell their shoes for less. Implementing some protectionist policy to protect the American factory would be uneconomic, simply allowing them to go under would allow their resources to be used elsewhere in the American market where they are more needed.

Today we're all concerned about job loss here at home, but it has nothing to do with foreigners providing cheap goods, it has everything to do with the government and Federal Reserve's policies.

Curious here running with your scenario...THe shoemaker owner is only skilled in the area of shoes, he was fabulous at making them, and his quality was phenomenal, but he could not compete with a foreign company which was subsidized by their government. So now after years of struggle to compete broke and bitter he mulls over his choices: a) to offshore his business to reap a higher profit margin, b) retire and enjoy his dwindling funds paying an accountant to protect his interests by exploiting any and all loopholes, c)retrain himself in his twilight years to learn a new trade in the hospitality industry as it is the only job not done for less within his country's borders. Which do you think he will chose?

Meanwhile all those who lost employment or settled for less pay as your shoemaker struggled to compete-due to not so fair trade practices we cannot control of the foreign countries we are currently competing with-are now on the dole. Furthermore, due to the stress of running his business he decided he no longer wants to run a business to compete with foreign countries so he is now an employee instead of an employer (he chose route c since he has a balloon payment on his mortgage due and his wife will desert him if they lose the house too;)) So he just became more competition for the unemployed workers displaced by the savings which were made on those imported shoes.

Too bad that they will pass a national sales tax now since the shoemaker owner is out of business and the country is now supporting formerly employed folks in shoe related industries that also went out of business and the country is in hock up to its eyeballs. Shoemaker owner nor the public thought that one out...

So who benefited here with cheap shoes??? What money became reinvested into the society?

[sailor]

Recognizing that the ideal of free trade never has existed and will never exist, and that it isn't our business to meddle in other countries affairs trying to force them to be as open as we have been- because that militarized meddling is very costly and unproductive-

Thats why you have unilateral free trade.

[moostraks]

So, we should also care about GM`s profit margin I take it?


If Toyota USA is burdened by a delivery contract that is disadventageous to them then that is their own freaking problem. The same as if GM is burdened by a union collective contract that is disadventageous to them then that is their own freaking problem. If it is such a problem to them they can go bankrupt and the capital that is currently taken up by them can be taken over by companies that stayed out of such disadventageous contracts.

There is no excuse to make cars more expensive for the American citizen for the sake of Toyota USA.

Profits do not create employment. In a situation without taxation and other restrictions, full employment would ensue of its own. Profits only tell us where, in what sectors and what companies the workers should be employed. If a company has trouble staying profitable (or if bigger profits could be realised in an another sector) it is a sign that workers shouldn`t be employed there!

If a company cannot make it here then we no longer benefit from the rewards of its employment. What will happen when there is no form of employment available anymore on our shores? The rewards saved from cheap purchases are chickens finally coming home to roost...

[misterx]

Free trade is a utopian fantasy every bit as unrealistic as anything Marx conceived.

[KenInMontiMN]

A vibrant economy requires a vibrant consumer class. The unilateral free market foisted on Americans has all but destroyed that vibrant consumer class, and threatens to destroy most of the country's domestic businesses, tax base- our whole way of life is tottering today because of that failed notion that we could ship all domestic production elsewhere and still have a nation of consumers and taxpayers. Those still pushing those ideas- you are the front line troops of the globalist corporate industrialists, and either realize that and are happy to be that, or you're wearing some sort of self-serving blinders.

[sailor]

Curious here running with your scenario...THe shoemaker owner is only skilled in the area of shoes, he was fabulous at making them, and his quality was phenomenal, but he could not compete with a foreign company which was subsidized by their government. So now after years of struggle to compete broke and bitter he mulls over his choices: a) to offshore his business to reap a higher profit margin, b) retire and enjoy his dwindling funds paying an accountant to protect his interests by exploiting any and all loopholes, c)retrain himself in his twilight years to learn a new trade in the hospitality industry as it is the only job not done for less within his country's borders. Which do you think he will chose?

Meanwhile all those who lost employment or settled for less pay as your shoemaker struggled to compete-due to not so fair trade practices we cannot control of the foreign countries we are currently competing with-are now on the dole. Furthermore, due to the stress of running his business he decided he no longer wants to run a business to compete with foreign countries so he is now an employee instead of an employer (he chose route c since he has a balloon payment on his mortgage due and his wife will desert him if they lose the house too;)) So he just became more competition for the unemployed workers displaced by the savings which were made on those imported shoes.

Too bad that they will pass a national sales tax now since the shoemaker owner is out of business and the country is now supporting formerly employed folks in shoe related industries that also went out of business and the country is in hock up to its eyeballs. Shoemaker owner nor the public thought that one out...

So who benefited here with cheap shoes??? What money became reinvested into the society?

What a contrieved scenario. You make far too many assumptions that have no leg to stand one. Who benefited with the cheap shoes were obviously the people who bought the cheap shoes. Even the people in the shoemaking buisiness benfited as they could now get shoes cheaper. After they went out of buisiness they would have started a different buisiness since everyone was wealthier and had more money to spend on other things having saved on foreign subsidised shoes. They would have no reason to be on the dole.

I guess you are still moaning about the people in the typewritters buisiness going out of buisiness when computers came around. :rolleyes: How come they didn`t go straight to the dole? :rolleyes:

[sailor]

If a company cannot make it here then we no longer benefit from the rewards of its employment. What will happen when there is no form of employment available anymore on our shores?

I`ve adressed this already plenty of times. I do not intend to repeat myself further.

What a ridicilous statement. Exact same statements were being made in support of the automaker`s bailouts jet Ron Paul was in arms over that one.

You obviously know nothing about economy and all too easily fall prey to lazy thinking. Why don`t your read some of the books Ron Paul recommends regularly.

[torchbearer]

Um, wtf is up with this "fair competition" business?
Is this a right now?

[sailor]

A vibrant economy requires a vibrant consumer class. The unilateral free market foisted on Americans has all but destroyed that vibrant consumer class, and threatens to destroy most of the country's domestic businesses, tax base- our whole way of life is tottering today because of that failed notion that we could ship all domestic production elsewhere and still have a nation of consumers and taxpayers.Those still pushing those ideas- you are the front line troops of the globalist corporate industrialists, and either realize that and are happy to be that, or you're wearing some sort of self-serving blinders.

LOL. Maybe you ought to school Dr.Paul and Peter Schiff on this one. So it was the free market that ruined US manufacturing base? :eek:

Those that peddle such nonsense must be Socialists and I have no idea what are they doing on a Ron Paul Board.

[sailor]

Um, wtf is up with this "fair competition" business?
Is this a right now?

Only at the Special Olympics. ;)

[KenInMontiMN]

Peter Schiff has sounded off more than once about the depravity of allowing our productive industrial economy to vanish in favor of the mirage of a service economy- I do believe he was the first I heard use the word 'mirage' regarding the debt-growth-based imaginary service economy replacing real production.

[KenInMontiMN]

Um, wtf is up with this "fair competition" business?
Is this a right now?

The 'right' to economic survival and stability, if you're wise enough to implement it. I could care less about particulars as to what might be fair or unfair- it's the trade balance bottom line that is either sustainable or its not. If you ignore the unsustainable, then the national economy is headed over a cliff.

[jsu718]

Federal regulation is exactly what causes us to be unable to compete with foreign industry... namely the minimum wage. Someone in a "sweatshop" in Malaysia might be making $1 a day working, but they can live on that. Their cost of living is much much lower than ours, even considering minimal living. However if you remove these obstructions like minimum wage, import tariffs, etc, companies would make everything as cheap as they could, import goods from other places if it was cheaper there, and give the end consumer the lowest possible price on goods. Of course the concern with this is always "what about the wages". In a free market, people are paid based on the type and value of work they do. Can't get a job making $30 an hour? Well then, they would have to find something paying less and get by on that. The goods are cheaper then so they can. What about those making $1 a day? If it isn't enough I am sure they would find a job paying more. Companies that couldn't afford to hire 10 people at minimum wage would be able to hire more at a lower wage. Unemployment would be less, as would overall wages, but with a cheaper cost of living it would balance out. Nobody forces people into jobs that pay less than minimum wage, and if companies don't pay what the market requires nobody takes the job. Regulation of this is completely unnecessary.

[Capitalist023]

Um, wtf is up with this "fair competition" business?
Is this a right now?


No, but is it right for our government to support producers who play by different rules than domestic producers do?


I like Moonstraks' example: The shoemaker owner is only skilled in the area of shoes, he was fabulous at making them, and his quality was phenomenal, but he could not compete with a foreign company which was subsidized by their government.


The shoemaker did everything right in a "free-market" but because foreign producers, which were created in an un-free market, were allowed to compete with him, he was forced out. What about that is right? Isn't this the same thing as government-run health care "competing" with private health care?

[sratiug]

Not true. In normal conditions it is impossible for a country to maintain a trade deficit over any length of time. You can only fund imports with exports, there is no way around it.

The US, having its currency as the reserve currency of the world, has found away around it by printing money and going into debt, but that is a problem created by the federal reserve not by a lack of trade restrictions and is fixed through elimination of the federal reserves not by constructing trade restrictions.




Not really. Dr. Paul does not speak in favour of tariffs from an economic perspective. He is only in favour of tariffs as a fairly unobtrusive form of taxation that is for that reason more adequate source of government revenue than for example the income tax.




So lets say the taxation and regulation of farmers reaches such proportions that crop yields are halved and there is nowhere enough food grown in the US to feed all Americans.

Do you therefore raise tariffs on food products because otherwise you would be subsidising them and let people starve, or do you lower tarrifs on food imports to enable people to survive?

The anwser is obvious. And what is true in this hypothetical extreme example, works in a less extreme one. The basic mechanics are the same.

Tarrifs are just another tax. You do not fix the ailments of taxation with more taxation.

____

Ultimately there is no way of going around what Epic brought up. Any voluntary exchange happens only if both parties will gain, otherwise they wouldn`t do it. No third party has the right to put restrictions on their exchange or demand a cut for itself. So only free trade can be fair trade.

My argument was for eliminating internal taxes and replacing them with a double flat tariff. Your rebuttal has nothing to do with my argument.

Why should we tax internally and hinder the free trade among Americans instead of using a tariff that will affect all equally is the question. Any argument that tariffs are destructive can be doubled for internal taxation because it subsidizes imports.

[KenInMontiMN]

Free Trade myth-builders have taken our economy into the abyss; little patience here for those tall tales any longer. Those global marketplace/free trade myths are the economics of bankruptcy, and their source is those who have no trouble with bankrupting nations to destroy their sovereignty and building a new global order.

To frustrate those globalists- the ledger can have its ups and downs but long term avg's must balance or we are bleeding out economically, and amassing ever greater debt. Free trade notions can only be allowed to prevail unchecked so long as the big picture of debt amassment is level, stable and within reasonable tolerance of balance.

[Imperial]

Which is a great thing for America. In essence it is the Chineese government subsidising the American consumer. You go and buy a new umbrella and it is like you pay 1 dollar and the Chineese government chipps in additional 50 cents, so you get an umbrella 33% off.

They do not sell any more stuff in monetary terms because of this. They just shipp more stuff for the same amount of money they could have gotten out of their American exports anyway.

It is a policy that only hurts themselves.

They have to incentivize the US to trade somehow. We would have to start competing if their currency would appreciate properly.

[KenInMontiMN]

http://www.idealtaxes.com/tradingaway/10.html

"Relatively balanced trade is a necessary precondition for the full benefits of free trade. When trade is in balance, the gains of those in the export industries plus the gains that consumers get from lower prices exceed the losses of those in the industries adversely affected by imports. Workers who lose jobs in low-wage industries that compete with imports find better-paying jobs in expanding export-oriented industries. But when a country experiences growing and chronic trade deficits as the United States has done for three decades, good jobs and rising wages are created in the exporting countries while in the United States manufacturing workers lose their jobs and are forced to seek jobs in the service sector, putting downward pressure on wages. The damage done by the deficits is not that they caused unemployment but that they caused wages to stagnate and made the distribution of income more unequal. Had exports increased in proportion to imports, the workers who lost jobs in low-wage industries like textiles and shoes would have found more productive and better paying jobs in expanding export-oriented companies like Deere and Boeing."

"There are substantial and real advantages to free trade, but mercantilist or strategic trade policies can benefit US trading partners while hurting the US economy. If strategic/mercantilist policies were succeeding, we would observe precisely what we are observing: large chronic trade deficits and the destruction of US competitive advantage in industry after industry."

"When US policy makers belief in free trade induces many to maintain that all is well, we risk undermining the conditions under which free trade can succeed. In an analysis of the strategic trade model, David Collie demonstrated that free trade can be sustained under only some assumptions about relative competitiveness, and in these circumstances free trade is sustained with the threat of a trade war."

"Other studies affirm this point in models that overcome the original theoretical conflicts of the strategic trade literature concerning Cournot versus Bertrand competition. Efforts to distort the terms of trade strategically can succeed in boosting national income only when other nations do not respond. Beggaring thy neighbor can work, but only if the neighbor is passive."

"By ignoring strategic manipulation of the terms of trade by our more mercantilist trading partners, the United States may create conditions in which strategic trade and mercantilism rather than free trade are in equilibrium for those countries. We are trading away our future for a mess of mercantilist produced pottage!"

cliffnotes version - free trade only benefits all parties when trade is in reasonable balance. Dollar mercantilism will otherwise prevail and destroy the possibility for mutually beneficial free trade.

[shenlu54]

Hey everyone, I've been a fan of this forum for a long time and I decided I'd start contributing.

China is able to manufacture goods for a fraction of the price it would take in America because their businesses are not restrained by hours regulations, high taxes, product regulation, etc. So is it really free trade if the best business in America can manufacture a good for $10.00 when a mediocre business in China can do it for $1.00?

Many thanks,
Jim

Since we are talking about free trade,why does no one ever mention the exchange rates between Yuan and dollar?

Why Chinese goods are so cheap?Because one USD can trade 7 Yuan. That's why everyone all over the world imports goods from China.

But who set the exchange rates?It's the government,not the market,so since the beginning it's not free trade at all ! It's the government intervention in free trade.

If we had free trade, the Yuan against the USD rate would become 2:1,or even 1:10.who knows,let the market decide.But I'm pretty sure that American won't feel that Chinese goods are cheaper any more if we have a true free trade economic system. That also means American have to produce most goods by themselves by that time.:)

(In free trade,all currencies are 100% backed by gold,not issued by Central bank.That means the government can not have a monopoly on money)

[Imperial]

(In free trade,all currencies are 100% backed by gold,not issued by Central bank.That means the government can not have a monopoly on money)

The currency could be anything, not necessarily gold. Gold too brings negative consequences to some actors, particularly primary producers. But I figure the market can decide that currency.

[moostraks]

Since we are talking about free trade,why does no one ever mention the exchange rates between Yuan and dollar?

Why Chinese goods are so cheap?Because one USD can trade 7 Yuan. That's why everyone all over the world imports goods from China.

But who set the exchange rates?It's the government,not the market,so since the beginning it's not free trade at all ! It's the government intervention in free trade.

If we had free trade, the Yuan against the USD rate would become 2:1,or even 1:10.who knows,let the market decide.But I'm pretty sure that American won't feel that Chinese goods are cheaper any more if we have a true free trade economic system. That also means American have to produce most goods by themselves by that time.:)

(In free trade,all currencies are 100% backed by gold,not issued by Central bank.That means the government can not have a monopoly on money)

I wasn't ignoring this issue...it is part of what I interpret as foreign government subsidies for their businesses. Direct or indirect it all amounts for the same thing. Thanks for taking the time to spell it out for others, but you will probably be dismissed.(My patience for discussing this issue with others who ignore this factor is waning thin lately :))

[Krugerrand]

Why exactly should we care what the profit margin of Toyota USA is?

Because the current structure put GM, Ford, and Chrysler at a competitive disadvantage. This is why other countries do not allow what we allow.

[KenInMontiMN]

To whatever extent our liberty candidates can break away from the overly-simplistic free trade absolutist message and deliver a free trade within the confines of invariably balanced trade message, we offer something neither party's mainstream candidates offer, and we offer real solutions. Its the difference between a message of hope and a message of more of the same, and it really has great potential to take off and turn this movement into something much larger than a fringe 5-10%. Its our future, if we want a successful future.

[Epic]

To whatever extent our liberty candidates can break away from the overly-simplistic free trade absolutist message and deliver a free trade within the confines of invariably balanced trade message, we offer something neither party's mainstream candidates offer, and we offer real solutions. Its the difference between a message of hope and a message of more of the same, and it really has great potential to take off and turn this movement into something much larger than a fringe 5-10%. Its our future, if we want a successful future.

So let me get this straight - to whatever extent we can break away from economic freedom and Austrian economics, we can forge a message distinct from the two parties? I mean, we could just join the socialist party and be done with it.

Oh yeah, and trade imbalance doesn't really matter. My house has a trade balance. So does my community. And city. And state. And nation. There is Austrian literature on the subject.

And we haven't had pure free trade. So it can't be "more of the same".

[sailor]

They have to incentivize the US to trade somehow. We would have to start competing if their currency would appreciate properly.

Nobody wants to work for the sake of work. You want to work only to be able to reap the benefits. Right now the non-Chineese are reaping the benefits of the work done by the Chineese. Why would we want to change that?

Do we feel sorry for the Chineese and so badly want them to have some stuff that we make? Of course not.

The only function of exports is to be able to import. Nobody sane would export when he doesn`t have to. It`s much nicer to consume what you would otherwise export, by yourself. So lets be happy China is subsidising its exports, allowing us to be able to fund them with less exports than would otherwise be necessary. (That is in case of Europe, Americans get them free of charge anyway.)


You don`t want to compete for the sake of competition. We already get the benefits we would, if we managed to compete on an equal footing.

Subsidies are a double edged sword for the Chineese. On one hand their products are more alluring, but on the other hand their companies get less money in for a unit affecting their profits, worker wages and capital formation. To be able to fund their expansion they must sell many more units than it would otherwise be needed.

[sratiug]

So let me get this straight - to whatever extent we can break away from economic freedom and Austrian economics, we can forge a message distinct from the two parties? I mean, we could just join the socialist party and be done with it.

Oh yeah, and trade imbalance doesn't really matter. My house has a trade balance. So does my community. And city. And state. And nation. There is Austrian literature on the subject.

And we haven't had pure free trade. So it can't be "more of the same".

How is it that a tariff high enough to collect all necessary federal revenue is more destructive to the free trade of Americans than the federal taxes it would replace? The tariff would need to be probably more than 100% currently. But those taxes are being paid internally now. So explain how it is more free market to have a thousand internal taxes imposed on us and not on foreign competitors.

[Stary Hickory]

The solution is quite simple. Do not allow trade imbalances with China and do not "borrow" from China. This effectvely limits what we can import, unless we offer and acceptable trade to China.

If the Chinese are willing to terrifically discount their labor, then we should benefit from this and concentrate on developing other areas of our economy. I mean cheap Chinese labor is a benefit to us. However us swapping debt for Chinese goods is an awful idea.

Is it logical to get upset that air is free? I mean if we could produce air and sell it to each other that would be more jobs, I mean we would all be much richer right? The why worry about cheap goods? If they want to gift us with cheap goods it's a benefit to us. We can produce other things.....the problems only arise when we go into debt to buy this stuff.

This has been a major problem for us, we give them IOUs. And the Chinese have amassed a fortune of IOUs(Dollars). We should have never done this, instead we could have simply said we have nothing to trade you for your items. And if they were willing to discount it so be it. IF not, we would make it for ourselves.

I am not arguing that we should not deregulate and get rid of laws. But the problem is not with the cheap labor of the Chinese. If they will sell their labor so cheaply, we should buy as much as possible. But never EVER go into debt.

[NYgs23]

I just think proposing protectionism to correct those imbalances piles more interferences on top of others, which is not uncommon in the modus operandi of the government. Better to concentrate on getting rid of regulations, controls, etc.

[sailor]

The solution is quite simple. Do not allow trade imbalances with China and do not "borrow" from China. This effectvely limits what we can import, unless we offer and acceptable trade to China.

If the Chinese are willing to terrifically discount their labor, then we should benefit from this and concentrate on developing other areas of our economy. I mean cheap Chinese labor is a benefit to us. However us swapping debt for Chinese goods is an awful idea.

Is it logical to get upset that air is free? I mean if we could produce air and sell it to each other that would be more jobs, I mean we would all be much richer right? The why worry about cheap goods? If they want to gift us with cheap goods it's a benefit to us. We can produce other things.....the problems only arise when we go into debt to buy this stuff.

This has been a major problem for us, we give them IOUs. And the Chinese have amassed a fortune of IOUs(Dollars). We should have never done this, instead we could have simply said we have nothing to trade you for your items. And if they were willing to discount it so be it. IF not, we would make it for ourselves.

I am not arguing that we should not deregulate and get rid of laws. But the problem is not with the cheap labor of the Chinese. If they will sell their labor so cheaply, we should buy as much as possible. But never EVER go into debt.

Nicely said.

[KenInMontiMN]

So let me get this straight - to whatever extent we can break away from economic freedom and Austrian economics, we can forge a message distinct from the two parties? I mean, we could just join the socialist party and be done with it.

Oh yeah, and trade imbalance doesn't really matter. My house has a trade balance. So does my community. And city. And state. And nation. There is Austrian literature on the subject.

And we haven't had pure free trade. So it can't be "more of the same".

If we want to field fringe candidates, have them go sell that message on the streets.

There is a huge mother lode of hunger across America, hunger for 'pure free trade' that actually is mutually beneficial, free trade kept in the confines of reasonable trade balance instead of the present abomination in play. Something we have grown further and further away from especially since '97. That is a message capable of creating a real majority groundswell, from both the right and the left- and its completely innocuous to the Austrian ideology in that to whatever extent those Austrian ideas get implemented and are successful in eliminating massive imbalance as the free market sets currency valuations- tariffs are unnecessary. They would only kick in whenever and wherever the new system came up well short of that goal (as they should).

The big difference, of course, is that selling/educating in Austrian economics might get you the real attention of ~5% of the voters. Selling its effects in assured fashion, on the other hand- in the way of guarantees of an end to massive imbalance that people clearly understand and are clearly and constitutionally sound- now you've got the attention of the majority of the voters.

So do you want to sell Austrian economics from some lonely soapbox to a few hundred people, or implement them from positions in elected office? That's the real question in play here.