Rick Santorum apparently doesn't understand what comparative advantage is

[MooCowzRock]

Sorry, I have to go on a little rant:

During the debate tonight, Rick Santorum responded to the jobs question by replying how he would give tax breaks to businesses that have local manufacturing jobs.

What he didn't seem to grasp, which Ron Paul made sure to bring up himself, was that such actions are subsidies. Policy like this is government getting involved in the economy, betting on the winner, essentially giving money to these businesses to hopefully create jobs. It is a form of protectionism, that gives those businesses an advantage over their competition overseas at the cost of every other taxpayer, and more importantly, at the cost of efficiency.

If China does it cheaper, and better, and more efficiently, why not let them do it? Thats the whole point of comparative advantage, thats the entire point of trade. You trade when it benefits both parties, you trade when someone else does it better and cheaper and it saves you money.

What does it matter if they get American dollars from it? It only matters, as Ron Paul again perfectly pointed out, when they spend that money on our debt to them, and make even more money off of that interest, to fund our wasteful spending, or to fund our consumption. Eventually as they continue to accrue American dollars, they are going to want to truly invest it, we will make that money back, but with as much as we are paying them in interest, it is costing us more than it should.

What we NEED to do, it stop letting them make free money off of us with interest on loans we never should have taken, and the trade-off wouldn't hurt us so much.

All in all, if China does manufacturing better, we should let them do it. As Ron pointed out, you could force manufacturing jobs back into the US, but there is a reason we are paying a few hundred for computers instead of a few thousand, and thats because consumers benefit from trade. Subsidizing manufacturing jobs is only going to cost us taxpayer money, make things more expensive for consumers, and do nothing to help the fact that China is still profiting off of our debt to them.

And mainly, it is not how a free market works. That is how a government planned economy works. How is it that Republicans don't understand this?

[TIMB0B]

Please run for office. That was a nice rant.

[MooCowzRock]

Please run for office. That was a nice rant.

LOL thank you, but its nothing that every single business, finance, economics major shouldn't understand completely, its entry level economics! Business management major here at NC State...;P

[QWDC]

Isn't that what they teach you day 1 in any econ class? It is better for living standards if we let the country that has the comparative advantage in producing something produce it, while we evolve our workforce to do what we do best (probably high-tech things), then we all trade and profit/benefit.

[BuddyRey]

Santorum is economically clueless. Don't know how he has such a reputation as a great conservative thinker.


http://www.youtube.com/watch?v=J6a10UuQFOM&lc=AqA-liwKtCJVrNfq45NniYpjlW5uSM-r6mN63QKphBk&context=G2ed1f2aFAAAAAAAAHAA&feature=g-all-c

[dfalken]

Yes these are very basic economic principles and just make logical sense. I've always thought that liberals are just plain dumb as they argue against such simple logical processes...but I guess many Republicans also qualify as just plain dumb.

[MooCowzRock]

Isn't that what they teach you day 1 in any econ class? It is better for living standards if we let the country that has the comparative advantage in producing something produce it, while we evolve our workforce to do what we do best (probably high-tech things), then we all trade and profit/benefit.

Exactly, either Rick Santorum doesn't understand this concept, or actually prefers liberal-style government planned economies that fund what it thinks are good investments.

[HOLLYWOOD]

http://www.fitsnews.com/2012/01/18/rick-santorum-hitler-image-sends-sparks-flying/

Rick Santorum “Hitler” Image Sends Sparks Flying
By fitsnews (http://www.fitsnews.com/author/fitsnews/) • on January 18, 2012



http://fitsnews.com/wp-content/uploads/2012/01/santorum-hitler.jpg

[happyphilter]

I don't know how someone with presidential aspirations doesn't understand basic trade economics.

[VanBummel]

I don't know how someone with presidential aspirations doesn't understand basic trade economics.
http://www.vancouversun.com/news/5633162.bin?size=620x400

[Orwell]

Because basic economics sounds bad. All candidates (excluding Paul of course) form their message to what the people want to hear, but not what the truth is. I have a hard time believing they, and all their staff, are really that stupid. Anyone that's taken economics knows that Paul was right, but it sure sounds better to talk up the working middle class, manufacturing, the "American Dream"...

[kpitcher]

It may make economic sense but for a lot of people there are many concerns (Stories of horrible working conditions, bad press about heavy metals in happy meal toys, no environmental protection like in the US for factory waste or pesticides on foods), let alone the feel good 'made in america' stamp.

So while I don't agree with Frothy's statements, I can see how they have appeal to the Average Joe. With that said I think Ron's answer was clear and succinct enough to sink in why Trade is important and may help wake up a lot of people.

[Muttley]

It may make economic sense but for a lot of people there are many concerns (Stories of horrible working conditions, bad press about heavy metals in happy meal toys, no environmental protection like in the US for factory waste or pesticides on foods), let alone the feel good 'made in america' stamp.


This is why CONSUMERS regulate the market best! When we get happy meal toys laden with lead, we stop buying them. They change their products or go out of business.

[Orwell]

This is why CONSUMERS regulate the market best! When we get happy meal toys laden with lead, we stop buying them. They change their products or go out of business.

The argument would be that we wouldn't know that until it's too late. How many children need to get lead poisoning first? If I'm honest, it's a pretty good argument for federal regulation from at least a safety perspective. Some of the products being made were pretty bad back in the day.

[unknown]

http://www.fitsnews.com/2012/01/18/rick-santorum-hitler-image-sends-sparks-flying/

Rick Santorum “Hitler” Image Sends Sparks Flying
By fitsnews (http://www.fitsnews.com/author/fitsnews/) • on January 18, 2012

http://fitsnews.com/wp-content/uploads/2012/01/santorum-hitler.jpg

Have you seen this one?

http://i950.photobucket.com/albums/ad346/jakesteel1/Pics%20and%20Gifs/9005f055.jpg

[Dsylexic]

The argument would be that we wouldn't know that until it's too late. How many children need to get lead poisoning first? If I'm honest, it's a pretty good argument for federal regulation from at least a safety perspective. Some of the products being made were pretty bad back in the day.

false.Federal regulation didnt improve safety.private entities like the Underwriter Labs were established way before the feds even thought of regulation.while i agree that safety has improved today,this is in no way proof of a need for FEDERAL govt safety regulations. what made the consumer aware was a)trial and error and b)competition .followed up by studies and reports in the news and academics.most of all,safety improved because the consumer started paying more importance to it.

Let me give you an example: Haiti had an earthquake ,millions died. Chile had a worse earthquake ,fewer died. why?
govt lovers would say: um,because chile had better building safety regulations. which misses the point entirely.
if haiti govt had enforced those regulations,chances are more haitians would be homeless.people constantly make value and risk judgements in their lives.what is risky to you might be ordinary life to the poor or the oil rig worker.
you cant legislate how people make their tradeoffs. there is no 100% foolproof safety measure for anything in life.
wealthier people/prosperous societies are willing to pay more for safety while poor people might WANT the safety,but dont value the safety aspect as much as the convenience value.

if some horrible toy maker wanted to poison your kid,the Fed regulation will be unable to stop it,IF ,you the parent ,are careless in the first place.
once you have federal regulations,you can be sure,it will be captured by entrenched businesses who will make regulations to ensure competition is reduced

[CaptainAmerica]

Rick Santorum and Pawlenty are socialists who want regulations from statements made by them in the 1st debate. I recognized Rick Santorum as a socialist right away when he spoke of regulations and the "right to work" he voted against.

[Fr0m_3ur0pe]

There is no use for economics if no-one knows anything about it. Economics should be number 1. subject in schools.

[Dary]

I have a hard time believing they, and all their staff, are really that stupid.
It is difficult to believe. But I gotta tell ya, when Ron was talking about state's rights, Fro.... I mean “the overly sensitive one”(TOSO), while up on the split screen, had a look of utter clueless-ness on his face. It was as if he had never heard of these concepts before or more like Ron was just talking right over his head.

[The_Ruffneck]

Sorry but cutting taxes that are far too high to begin with does not equal protectionism.
Anyway going back to the point i made briefly the other day - China has made the electronic components inside US military hardware since the Clinton administration.You guys think there is no conflict of interest there?

[Paulitics 2011]

Comparative advantage doesn't make as good of a sound bite as "Dey Took 'Er Jobs". Either he's clueless or he was trying to pander, and Ron called him out on it and explained the concept.

[Dsylexic]

Sorry but cutting taxes that are far too high to begin with does not equal protectionism.
Anyway going back to the point i made briefly the other day - China has made the electronic components inside US military hardware since the Clinton administration.You guys think there is no conflict of interest there?

there is none considering,the US govt is essentially depending on chinese borrowing to fund its budgets.the electronic components may be made in china,but the weapon maker exists in the US.so unless you dont trust lockheed or general dynamics or raytheon to test those electronic components which are essentially commodities and not specific weapons themselves,you are overreacting.

[MooCowzRock]

Sorry but cutting taxes that are far too high to begin with does not equal protectionism.
Anyway going back to the point i made briefly the other day - China has made the electronic components inside US military hardware since the Clinton administration.You guys think there is no conflict of interest there?

When you cut taxes specifically for one industry and not another, that is protectionism, that is a subsidy. That is the same thing as charging them the same tax and writing the other industry a check with that tax money, like we do with farm subsidies and direct payments today. That is a basic factor in protectionist policies that are bad for taxpayers and bad for the economy. We should drop ALL of their taxes to zero over time, not try and pick and choose winners as per what Santorum thinks are winners. Let the market decide.

[The_Ruffneck]

I'm still failing to see where this is bad for taxpayers.Bringing alot of those manufacturing jobs back by dropping the tax to 0% means the people on food stamps and government assistance now would be employed and paying income taxes and sales taxes (buying more goods).

[icon124]

Isn't that what they teach you day 1 in any econ class? It is better for living standards if we let the country that has the comparative advantage in producing something produce it, while we evolve our workforce to do what we do best (probably high-tech things), then we all trade and profit/benefit.

yea econ 101, but we know they don't practice what they preach....took a ton of econ policy and trade classes and everyone knows the right answer...people sometimes just don't care.