"Gary Coffman" wrote in message
...
On Mon, 13 Oct 2003 17:15:47 GMT, "Ed Huntress"
wrote:
"Gary Coffman" wrote in message
.. .
Actually, Ed has proposed zero sum trade, and that is a form
of protectionism.

Where did you get that idea, Gary?

Because the only way you can achieve zero sum trade in
the short term is if the government artificially interferes with
commerce and restricts imports so that they exactly match
exports in dollar value. That is protectionism.

If it makes you happy, call it protectionism. Most people would say it's
protectionism only if it limits imports in some way. Offsets don't limit
imports. They just require an equal amount of imports at the other end.

BTW, the 100% figure probably wouldn't be necessary. Just enough to take the
edge off of the enormous trade deficit probably would do the job -- maybe
50 - 70%, tops. This is in contrast to the offsets we face when we sell
airplanes abroad. We often have to take OVER 100% offsets on those deals.

An interesting aside: those offsets never show up in our trade balance
figures for aircraft. They show up somewhere else, in the categories in
which we had to take the offset trade -- it can be steel, or cars, or
consumer electronics, or whatever. So the supposed "beneficial" trade
balance we get from aircraft sales is a crock of bull. We actually wind up
running a trade deficit as a result of nearly every airplane that Boeing
sells.


The net effect is that higher price domestic producers have
less competition in the domestic market, and can gouge
domestic consumers to their heart's content. That's always
the result of protectionism.

Not true. You should look into the way the Japanese market worked during the
'60s through the mid-'90s. They were heavily protected from imports, but,
domestically, their companies competed like cats and dogs. That's how they
developed products for export, in fact. They were honed in the domestic
market first, and all of the fat was squeezed out of the costs before they
made their export assaults. Until their crony banking system and cultural
aversion to consumer spending bit them in the rear, they used that system to
wrench themselves from peasantry to world domination in many categories of
manufactured goods, in just a few decades.


OTOH, free trade allows the consumer to seek out the best
value, wherever it may be, and maximize the value received
for dollars spent. That rewards efficient producers and
penalizes inefficient ones.

No, efficiency has nothing whatsoever to do with it when you have workers
who earn 80 cents/hour. Then it's just cost, not efficiency. Don't confuse
the two. You can be the low-cost producer even if your efficiency sucks,
when you pay your workers less than a dollar an hour.



In the long term, this also results in balanced trade, because
in a free trade situation goods and value seek their own levels.
But it does so naturally via the net movement of value from the
less efficient nations to the more efficient ones.

This is unmitigated bull****. Even the most sanguine of the free-traders,
Milton Friedman, says you have to let the dollar float downward to make the
adjustment. That's how goods and value "seek their own levels." In the case
of China (a situation old Milton never anticipated when he wrote the modern
free-trade theories that have our policy makers so entranced), that would
mean the utter collapse of our capital account, and an almost certain
economic depression. Work out the numbers and see for yourself.


Economics is the study of allocation of resources. Trading
systems are judged good if they maximize value, bad to the
degree that they impede maximization of value. Thus
protectionism is bad, free trade is good, because it allocates
resources in the most efficient manner.

They've really got you well trained, Gary. g To quote former U.S. Trade
Representative Mickey Kantor again, there is no such thing as free trade.
You're building your ideas on a myth that never existed and that probably
never will.


Of course there is another thing, called political economy,
which tries to devise systems which allocate resources for
political purposes, ie narrow national advantage, rather than
for economic efficiency. This is warfare by another name.
Protectionism (and dumping) are its chief weapons.

When you start talking about protectionist policies, you're
talking about warfare systems instead of purely economic
systems. Such warfare is also called economic imperialism.
That's a generally discredited policy, known to lead eventually
to warfare of the actual shooting kind.

Come on down out of the clouds and tell us what the 500,000 - 800,000
workers who have already been "displaced" (what a nice metaphor for "thrown
out of work") by trade deficits should do about it. Then tell them and a
couple of million others what they'll be doing when Ford and GM increase
their imports of Chinese auto parts from $2.3 billion this year, to around
$25 billion by 2007 and $30 billion by 2010. That's what they're planning to
do, openly and explicitly.

Ed Huntress