Conservatives and the Free Trade Straw Man

[A Son of Liberty]

I may just step out myself. Basically having the exact same discussion all over again that I already had with you.

That's why I jumped out.

Why is it such a difficult concept to grasp, that a consumer transaction (with anybody) is a transfer of wealth? This, to me, seems like a statement of fact yet 6 out of the last 7 pages is me trying to explain this concept.

It's fine to disagree about what such a fact means to the economy more broadly... but to deny it altogether, is just nonsensical

Wealth is a subjective measure of value, not measured in dollars. Sometimes I want $20, and sometimes I want a lawn chair. I get that you and a few others here think this is funny. But that's how wealth and value works.

[A Son of Liberty]

"The term 'wealth' has a special meaning in Economics. In the ordinary language, by 'wealth', we mean money, but in economics, wealth refers to those goods which satisfy human wants. But we should remember all goods which satisfy human wants are not wealth. For example, air and sunlight are essential for us. We cannot live without them. But they are not regarded as wealth because they are available in abundance and unlimited in supply. We consider only those goods which are relatively scarce and have money value as wealth." - Adam Smith

You must spread some Reputation around before giving it to CCTelander again.

//

[TheTexan]

Strangely the people of the United States keep getting wealthier and wealthier all the while running a trade deficit.

If the US has indeed gotten wealthier over the past few decades (debatable), it is despite the bad policies of this country.

By your argument, the Federal Reserve must be awesome because the people of the US keep getting wealthier and wealthier.

[TheTexan]

Wealth is a subjective measure of value, not measured in dollars. Sometimes I want $20, and sometimes I want a lawn chair. I get that you and a few others here think this is funny. But that's how wealth and value works.

This, again, is just semantics. Why can't we even agree to use a common definition? I have provided mine: wealth is "an asset that contributes to the long-term economic security of the person who owns it". A lawn chair, by this definition, is most definitely not "wealth".

If you know of a better word I should be using.... then tell me....

Otherwise, your rebuttal, and CCTelander's, is based entirely on semantics.... which is not a good foundation for any kind of debate.

[Krugminator2]

If the US has indeed gotten wealthier over the past few decades (debatable), it is despite the bad policies of this country.

By your argument, the Federal Reserve must be awesome because the people of the US keep getting wealthier and wealthier.

I think trade policy has made the US wealthier than it otherwise would have been. It isn't even close to debatable that the United States is much wealthier the past few decades. Real GDP has been higher than 0%. Pretty safe to say.

Printing money doesn't create wealth but bad monetary policy can destroy wealth either with purposeful deflation like the Great Depression which causes unnecessary bankruptcies or inflation in the 70s which causes people to shift money away from investment toward insurance like useless cubes of gold.

[A Son of Liberty]

This, again, is just semantics. Why can't we even agree to use a common definition? I have provided mine: wealth is "an asset that contributes to the long-term economic security of the person who owns it"

Let me ask you this, in all sincerity - for what?

[TheTexan]

Let me ask you this, in all sincerity - for what?

I don't understand the question.

[Krugminator2]

I don't understand the question.

He's asking what are you going to use the asset for? It only has utility if it can be spent for something, which is what this whole conversation is about. More stuff you can buy equals more wealth.

The Indians had all the land they could ever want. Big open space. Lots of real estate that you would consider a bankable asset. Were they rich relative to people today? Did Squanto have a private jet or something? Did he have access to life saving medical procedures. Or did he live like a savage and die at 37?

Wealth is ultimately only what you are able to consume. That's why I put the cube of gold dig with the inflationary monetary thing above. Gold isn't worth $#@! if you don't have stuff to consume. If you were stranded on a desert island like in Castaway, gold would have no value. Spanish Conquisidors might have gotten plenty of gold but were they wealthier than a person welfare today? The person on welfare today has the internet, iPhones, Ramen Noodles. Everything you could want. The Consquistidor had lots of gold and a lifespan of 35 years old.

[TheTexan]

"The term 'wealth' has a special meaning in Economics. In the ordinary language, by 'wealth', we mean money, but in economics, wealth refers to those goods which satisfy human wants. But we should remember all goods which satisfy human wants are not wealth. For example, air and sunlight are essential for us. We cannot live without them. But they are not regarded as wealth because they are available in abundance and unlimited in supply. We consider only those goods which are relatively scarce and have money value as wealth." - Adam Smith

Not that it matters, because I don't really care how Adam Smith defines the word, but even he seems to agree with me on the definition of wealth.

"We consider only those goods which are relatively scarce and have money value as wealth."

A lawn chair is neither "relatively scarce" nor does it have "money value"

[TheTexan]

He's asking what are you going to use the asset for? It only has utility if it can be spent for something, which is what this whole conversation is about. More stuff you can buy equals more wealth.

If that's the question, then it's not yet relevant to the discussion. It may later become relevant. At this point I'm simply trying to establish a foundation we can debate upon.

At this point I am simply trying to establish that consumer transactions (in general) are a transfer of wealth. If that cannot be agreed upon, there is no point in pursuing further debate.

[A Son of Liberty]

I don't understand the question.

For what good is the accumulation of money?

[TheTexan]

Gold isn't worth $#@! if you don't have stuff to consume.

By the same token, if Mercedes cars were extremely cheap due to automation and only cost $1000 a piece,

you would not be considered "wealthy" if you didn't even have the money or means to afford such a low price.

[Krugminator2]

If that's the question, then it's not yet relevant to the discussion. It may later become relevant. At this point I'm simply trying to establish a foundation we can debate upon.

At this point I am simply trying to establish that consumer transactions (in general) are a transfer of wealth. If that cannot be agreed upon, there is no point in pursuing further debate.

The thread is about free trade and your assertion is free trade is making the country poorer somehow.

And the response from the capitalists in this thread is people can now consume more stuff which means they are wealthier. And the reason they can is in part because goods are produced more efficiently and that is demonstrated by the idea of comparative advantage.

[A Son of Liberty]

The thread is about free trade and your assertion is free trade is making the country poorer somehow.

And the response from the capitalists in this thread is people can now consume more stuff which means they are wealthier. And the reason they can is in part because goods are produced more efficiently and that is demonstrated by the idea of comparative advantage.

You must spread some Reputation around before giving it to Krugminator2 again.

//

[Krugminator2]

By the same token, if Mercedes cars were extremely cheap due to automation and only cost $1000 a piece,

you would not be considered "wealthy" if you didn't even have the money or means to afford such a low price.

I would consider that person wealthy but that is because I view the world rationally and look at things in absolute wealth.

You can now get one Mercedes for the old price of 70 Mercedes cars. A person might lose their job screwing lug nuts in but they are now free to do something more productive. The world is wealthier because of that increased efficiency. Everyone used to be a farmer. Now 2% of people feed. The world now gets all the crops and whatever else people who used to be farmers are now able to be produced. More good produced means more wealth.

[TheTexan]

For what good is the accumulation of money?

Money? Or wealth more broadly? As we both agree - wealth is more than just money. I would much rather have productive factories than cash under a mattress, but both are wealth.

The "good" of accumulation of money... is just a store of value, to be later spent. Which is fine and laudable.

The "good" of accumulation of wealth... has the benefit of both being a store of value, and a productive asset, which generates more wealth. So the "good" of accumulation of wealth, is that it accumulates more wealth.

[TheTexan]

The thread is about free trade and your assertion is free trade is making the country poorer somehow.

And the response from the capitalists in this thread is people can now consume more stuff which means they are wealthier. And the reason they can is in part because goods are produced more efficiently and that is demonstrated by the idea of comparative advantage.

Yet none of you will address any of my points directly, preferring to delve into semantic rabbit holes and knocking down straw men.

What's really funny too, is the semantic circle jerk with Adam Smith, because even Adam Smith would agree that a lawn chair is not $#@!ing wealth. To say otherwise is to grossly misinterpret his writings.

[A Son of Liberty]

Money? Or wealth more broadly? As we both agree - wealth is more than just money. I would much rather have productive factories than cash under a mattress, but both are wealth.

The "good" of accumulation of money... is just a store of value, to be later spent. Which is fine and laudable.

The "good" of accumulation of wealth... has the benefit of both being a store of value, and a productive asset, which generates more wealth. So the "good" of accumulation of wealth, is that it accumulates more wealth.

Well that's a really good and better stated definition of wealth than anything I've understood you to present as to yet.

That said, I'm not sure that I would agree that wealth can be so narrowly defined. As I've mentioned earlier in the thread - and here's where we're going to start talking over each other again - I think there are various ways which we can distribute our wealth. We're not all just shipping our wealth (as you define it) to China, full stop.

[TheTexan]

I would consider that person wealthy but that is because I view the world rationally and look at things in absolute wealth.

However you want to define wealth is fine.

If you want to define wealth as living in a cabin and being free with nature and being happy with a dog and a wife and kids - that's great.

But, as I have explained, that is a semantic circle jerk, and is no foundation for any kind of debate. When I say "wealthy" think more "Jeff Bezos" and less "health-conscious hipster who happily lives with his dog"

[A Son of Liberty]

because even Adam Smith would agree that a lawn chair is not $#@!ing wealth

A lawn chair is, again, absolutely wealth. How do you acquire a lawn chair, @TheTexan?

[TheTexan]

That said, I'm not sure that I would agree that wealth can be so narrowly defined. As I've mentioned earlier in the thread - and here's where we're going to start talking over each other again - I think there are various ways which we can distribute our wealth. We're not all just shipping our wealth (as you define it) to China, full stop.

If we can agree that buying a lawn chair, on an individual transaction level, is a wealth transfer to China, then that's a starting point.

I understand that not every transaction is going to be a "lawn chair".

There are companies who buy industrial equipment from China. If you're purchasing a means of production from China, then great, that's great for everyone. But machinery and other means of production are but a small fraction of the imports from China. Most of the imports from China are raw materials and consumer goods, which is economically equivalent to lawn chairs.

[TheTexan]

A lawn chair is, again, absolutely wealth. How do you acquire a lawn chair, @TheTexan?

I acquire a lawn chair by having a renewable supply of timber and power tools to build it. (wealth)

How many lawn chairs can you acquire, when your only assets are lawn chairs?

[A Son of Liberty]

@TheTexan

You have a lawn chair. I want a lawn chair. I have 20 bucks. You want 20 bucks.

Where is the problem?

[TheTexan]

@TheTexan

You have a lawn chair. I want a lawn chair. I have 20 bucks. You want 20 bucks.

Where is the problem?

Ok, sure, let's see how this plays out:

I have a lawn chair. You want a lawn chair. I want 20 bucks. You have 20 bucks.

Ka-ching! I have 20 bucks. You have 80 bucks left in your bank account.

I have a plastic dildo. You want a plastic dildo. I want 20 bucks. You have 20 bucks.

Ka-ching! I have 40 bucks. You have 60 bucks left in your bank account.

I have a funny electric talking fish mounted on plywood. You want a funny electric fish mounted on plywood. I want 20 bucks. You have 20 bucks.

Ka-ching! I have 60 bucks. You have 40 bucks left in your bank account.

I have a set of nice steak knives. You want a set of nice steak knives. I want 20 bucks. You have 20 bucks.

Ka-ching! I have 80 bucks. You have 20 bucks left in your bank account.

I have a set of Egyptian cotton sheets. You want a set of Egyptian cotton sheets. I want 20 bucks. You have 20 bucks.

Ka-ching! I have 100 bucks. You have 0 bucks left in your bank account.

I have a set of power tools. You want a set of power tools. I want 20 bucks.

You don't have 20 bucks. You're out of money.

I have 100 bucks. I want a CNC milling machine. Sin-hua Jing-son has a CNC milling machine. He wants 100 bucks.

Ka-ching! I have a CNC milling machine. Sin-hua has 100 bucks.

I use my CNC milling machine to build a lawn chair. I sell it to some random dude in America for 20 bucks.

Ka-ching! I have a CNC milling machine and 20 bucks.

I use my CNC milling machine to build another lawn chair. I sell it to some random dude in America for 20 bucks.

Ka-ching! I have a CNC milling machine and 40 bucks.

I use my CNC milling machine to build another lawn chair. I sell it to some random dude in America for 20 bucks.

Ka-ching! I have a CNC milling machine and 60 bucks.

I use my CNC milling machine to build another lawn chair. I sell it to some random dude in America for 20 bucks.

Ka-ching! I have a CNC milling machine and 80 bucks.

I use my CNC milling machine to build another lawn chair. I sell it to some random dude in America for 20 bucks.

Ka-ching! I have a CNC milling machine and 100 bucks.

x10,000,000,000,000

I use my CNC milling machine to build my 10,000,000,000,000 lawn chair. I sell it to some random dude in America for 20 bucks.

Ka-ching! I have a CNC milling machine and 1,000,000,000,000,000 bucks. America has 0 bucks.

Mohammed Abdul Jabeeb has 30 nuclear missiles. I want 30 nuclear missiles.

Ka-ching. I have a CNC milling machine and 999,999,000,000,000 bucks and 30 nuclear missiles.

You have a plastic dildo. Russia has anti-nuclear-missile technology. Russia wants 30 billion dollars. You have a plastic dildo.

Do you see yet where this is going?

[A Son of Liberty]

Ok, sure, let's see how this plays out:

I have a lawn chair. You want a lawn chair. I want 20 bucks. You have 20 bucks.

Ka-ching! I have 20 bucks. You have 80 bucks left in your bank account.

No, I have $80 and a $20 lawn chair.

I have a plastic dildo. You want a plastic dildo. I want 20 bucks. You have 20 bucks.

Ka-ching! I have 40 bucks. You have 60 bucks left in your bank account.

Okay... so, I guess I have a plastic dildo and $60 bucks.

And now you're assuming that the MONEY in my account is constant. I've provided value elsewhere... let's say that I'm a ditch laborer, and my company pays me $20/HR.

Do you have a recommendation as to what I should do with my $1600/WK?

I have a funny electric talking fish mounted on plywood. You want a funny electric fish mounted on plywood. I want 20 bucks. You have 20 bucks.

Ka-ching! I have 60 bucks. You have 40 bucks left in your bank account.

Well, I could have paid $50 for it, if it would have been made by some chump who was making $20/HR in the US (WHOOORAY!! USA!!), but instead, I only paid $20 bucks for it from you. So I'm up $30 bucks, still making $20/HR fixing your roads.

I have a set of nice steak knives. You want a set of nice steak knives. I want 20 bucks. You have 20 bucks.

Ka-ching! I have 80 bucks. You have 20 bucks left in your bank account.

I have a set of Egyptian cotton sheets. You want a set of Egyptian cotton sheets. I want 20 bucks. You have 20 bucks.

Ka-ching! I have 100 bucks. You have 0 bucks left in your bank account.

I have a set of power tools. You want a set of power tools. I want 20 bucks.

You don't have 20 bucks. You're out of money.

I have 100 bucks. I want a CNC milling machine. Sin-hua Jing-son has a CNC milling machine. He wants 100 bucks.

Ka-ching! I have a CNC milling machine. Sin-hua has 100 bucks.

I use my CNC milling machine to build a lawn chair. I sell it to some random dude in America for 20 bucks.

Ka-ching! I have a CNC milling machine and 20 bucks.

I use my CNC milling machine to build another lawn chair. I sell it to some random dude in America for 20 bucks.

Ka-ching! I have a CNC milling machine and 40 bucks.

I use my CNC milling machine to build another lawn chair. I sell it to some random dude in America for 20 bucks.

Ka-ching! I have a CNC milling machine and 60 bucks.

I use my CNC milling machine to build another lawn chair. I sell it to some random dude in America for 20 bucks.

Ka-ching! I have a CNC milling machine and 80 bucks.

I use my CNC milling machine to build another lawn chair. I sell it to some random dude in America for 20 bucks.

Ka-ching! I have a CNC milling machine and 100 bucks.

x10,000,000,000,000

I use my CNC milling machine to build my 10,000,000,000,000 lawn chair. I sell it to some random dude in America for 20 bucks.

Ka-ching! I have a CNC milling machine and 1,000,000,000,000,000 bucks. America has 0 bucks.

Mohammed Abdul Jabeeb has 30 nuclear missiles. I want 30 nuclear missiles.

Ka-ching. I have a CNC milling machine and 999,999,000,000,000 bucks and 30 nuclear missiles.

You have a plastic dildo. Russia has anti-nuclear-missile technology. Russia wants 30 billion dollars. You have a plastic dildo.

Do you see yet where this is going?

NO, I don't see where this is going, because you're presuming this is a zero sum game, and it's not.

Neither of us are right, in this simplistic scenario.

And the biggest problem we're having is that you're still not getting what the definition of 'value' is...

[Krugminator2]

But, as I have explained, that is a semantic circle jerk, and is no foundation for any kind of debate. When I say "wealthy" think more "Jeff Bezos" and less "health-conscious hipster who happily lives with his dog"

But ugh, Jeff Bezos is wealthy because of what he can buy with is wealth. Under your system he would have green squares that he could use to purchase fewer things than he can buy now.

Jeff Bezos would be poorer if you had your way.

[TheTexan]

Well, I could have paid $50 for it, if it would have been made by some chump who was making $20/HR in the US (WHOOORAY!! USA!!), but instead, I only paid $20 bucks for it from you. So I'm up $30 bucks, still making $20/HR fixing your roads.

The fact that you can buy it cheaper from China does not change the fact that its still a wealth transfer.

Lets say a lawn chair from America costs $40. The same exact lawn chair from China costs $30.

You buy the lawn chair from China. You lost $30 and gained a lawn chair. China gained $30 and lost a lawn chair. The fact that there was a $40 alternative does not change this equation. It is still a wealth transfer, from you, to China.

NO, I don't see where this is going, because you're presuming this is a zero sum game, and it's not. Neither of us are right, in this simplistic scenario.

Sure, there's a lot of factors, and that's a debate worth having, but as I've said previously, there's no point in going down any rabbit holes if we can't even agree to use the same definition of wealth.

Perhaps a more confusing, recursive definition of wealth would help clarify: "Wealth is any asset that can be used to acquire wealth". (which certainly excludes lawn chairs I hope?)

[TheTexan]

But ugh, Jeff Bezos is wealthy because of what he can buy with is wealth. Under your system he would have green squares that he could use to purchase fewer things than he can buy now.

I do not fundamentally disagree with anything you just said but it's more complicated than that. We cannot however go into the details of that debate if we can't agree on the below assertion:

"Consumer transactions are a transfer of wealth"

As I've said before, the above statement is as true to me as 1+1=2, so if we can't agree on the above statement, there is no point in further debate.

[CCTelander]

I do not fundamentally disagree with anything you just said but it's more complicated than that. We cannot however go into the details of that debate if we can't agree on the below assertion:

"Consumer transactions are a transfer of wealth"

As I've said before, the above statement is as true to me as 1+1=2, so if we can't agree on the above statement, there is no point in further debate.

This is precisely the point of contention. Consumer transactions are not TRANSFERS of wealth. They are EXCHANGES of wealth. They would not occur otherwise.

[TheTexan]

This is precisely the point of contention. Consumer transactions are not TRANSFERS of wealth. They are EXCHANGES of wealth. They would not occur otherwise.

To avoid the semantic circle jerk, can you provide a word for me to use besides wealth?

I am defining wealth as generally "an asset that is used as a store of value (for later exchange) or a means of production". Clearly, you, Krug, and SOL do not like nor approve of using the word "wealth" to meet this definition.

Can you either:
1) Provide an alternate word for "wealth" that I can use to mean "an asset that is used as a store of value (for later exchange) or a means of production",
or,
2) Agree to use the above definition of "wealth" for the purpose of this discussion,
or
3) Tell me with a straight face that a lawn chair is "an asset that is used as a store of value (for later exchange) or a means of production"