On Tue, 14 Oct 2003 05:14:11 GMT, "Ed Huntress" wrote:
"Gary Coffman" wrote in message
.. .
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.

Lets look:

bottle of beer $2.30
6 slices of bread $2.00
Butter 200g $3.10
Coke $1.20
pack cigarettes $2.50
Big Mac $2.80
Oranges (6) $5.00
Dominos Pizza $30.00
Rice 5 kg bag $17.50
Movie ticket $18.00
Gasoline liter $1.00

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 economics, you're always balancing capital costs against labor costs
and raw materials costs to achieve the most efficient combination. When
labor it cheap, its usage is maximized while the others are minimized.
That's efficient use of available resources.

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.

Indeed, as I said, "net movement of value from the less efficient nations
to the more efficient ones." Of course that means the dollar will drop in
value. It also means we won't be able to afford as many Chinese products.
That'll knock that old trade deficit right down.

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.

Despite what nation states may try to do, the multinational corporations
are opening up the world to free trade, by the back door if not the front.

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.

Well, the US Army says it will need 1.2 million recruits over the next two
years to fill the losses of retention due to the invasions and occupations
of Iraq and Afganistan (probably Syria and Iran too by then). So they could
join the Army. The People's Army is where those Chinese workers would be
if they couldn't get jobs making things for export.

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.

Well, I'll tell them one thing they won't be doing if they sit around wringing
their hands. That's buying a new car. So the Chinese won't be selling any
cars to them. The Chinese will have to look elsewhere for customers.

If the gloom and doom you and Jim have been spouting is right, no one
in the US will be able to buy a new car. But somehow I doubt that will be
the case. So those workers will just have to retrain to get jobs like those
of people who *can* afford a new car. For example, they could become
product liability lawyers. There's always room for another multimillion
dollar class action law suit.

Gary