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Down with Free Trade!

The theory goes like this: if trade barriers are imposed to protect American industries, then foreign countries will retaliate, closing off markets for American products, thereby harming the American economy which depends on exports. Keep those foreign markets open, and American industry will flourish. Besides, if American companies can't compete with foreign companies, they don't deserve to survive anyway. "Free trade" has been the reigning orthodoxy since the presidency of Ronald Reagan, whose economic acolytes effectively won the argument. So far as I can tell, there has been a decades-long consensus in American politics on this point. American liberals like the openness to all things foreign; neo-conservatives like a system where money is the highest good; and everybody's happy.

Turns out that free trade theory hasn't worked out so well. Turns out that "free trade" is just another term meaning "cheap is all that matters":

Spoons and forks, the metal flatware that everyone uses, are no longer made in the United States. The last factory in an industry stretching back to colonial times closed eight months ago in Sherrill, N.Y., a small community in the foothills of the Adirondacks, and 80 employees lost their jobs ...

Losing an industry or ceasing to manufacture a particular product, in this case stainless steel flatware, has indeed become a fairly frequent event. Just in the last few years, the last sardine cannery, in Maine, closed its doors. Stainless steel rebars, the sturdy rods that reinforce concrete in all kinds of construction, are now no longer made in America. Neither are vending machines or incandescent light bulbs or cellphones or laptop computers.

I can't be too hard on the free traders. I was one of them for a very long time. Any country needs an economic philosophy, and global democratic capitalism had some brilliant minds behind it. But here's the thing: foreign trade has tremendous potential to both enrich and impoverish nations. It can impoverish a nation by creating economic dependency and vulnerability, ruining a peoples' ability to do necessary things for themselves. That's precisely what is happening to us. Trade on that level is not merely a private exchange with a few externalities: it's a public act with far-reaching social consequences, and must therefore be regulated for the public good.

Even if you don't believe that free trade has anything to do with our economic woes, surely you will admit that full exposure to the tender mercies of predatory global capitalism is probably a bad idea until we begin to recover our manufacturing base.

Comments (187)

Jeff,

You may be interested in these (pasting the links to hopefully avoid the spam filter)

http://www.wnd.com/index.php?fa=PAGE.view&pageId=311501

http://www.wnd.com/?pageId=310377

http://www.wnd.com/index.php?pageId=85279

Ian Fletcher and Vox Day make a good Capitalist case that free trade theory doesn't work in practice.

Jeff,

I posted a comment with several good links backing up your theory. It got eaten by the spam filter.

Free trade without freedom of labor movement leads inherently to the exploitation of labor. Freedom of labor movement leads to the destruction of nations and makes a case for global government to oversee the new global economy.

It should give Capitalists pause that the first group to demand true free trade were the Marxists, the consummate anti-nationalist globalist totalitarians.

Free trade without freedom of labor movement leads inherently to the exploitation of labor.

Absolutely true, Mike. And this leads, in turn, to highly inequitable market conditions which can hardly be characterized as "free".

This is the best take I've seen yet on the problems with Capitalist theory. Capitalism, like Socialism, creates a false intellectual model of human nature. When man doesn't live according to that model, most doctrinaire Capitalists whine instead of adjusting their theory.

A limited, but truly sustainable freedom is infinitely preferable to a maximized, short-lived freedom.

Free trade wouldn't be so bad if it existed. What we have instead is free trade for me and protectionism for thee. Hence, you have China practicing blatant currency manipulation to emulate a tariff.

Oh dear. While I find myself in mild sympathy to some anti-globalist rhetoric (mainly around the free movement of labor), I can't say I find much to agree with in that piece that Jeff C. linked to (and I especially find Ian Fletcher to be intellectually shallow). My favorite part of that article is the correction the Times ran at the end:

The Everybody’s Business column last Sunday, about the effect of factory closures on innovation, referred incorrectly to the production of minivans in the United States. Although no American automakers now make them here, some foreign companies do produce them in their American plants.

Yes, we wouldn't want the free flow of capital to allow foreigners to open up manufacturing plants here in the U.S. to employ thousands of American workers now would we?

Anyway, for more on the problems with Fletcher and arguments on his ilk, the go to blog is "Cafe Hayek":

http://cafehayek.com/?s=fletcher


You mean like this:

You trot out in the Huffington Post the tired argument that whenever the World Trade Organization (WTO) rules against the United States, U.S. sovereignty is violated (“WTO Sides With Chinese State Capitalism Against the U.S.,” March 14).

Nonsense. Uncle Sam has the Constitutionally granted power to enter into treaties with other governments. The WTO is nothing more than the creation of a treaty – to which Uncle Sam voluntarily agreed – that has among its provisions a mechanism for settling disputes that arise under that treaty. Abiding by the rulings of the WTO’s dispute-resolution panel no more reflects (as you darkly describe it) the U.S. government having “signed over the right to rule on the legitimacy of our policies” than does, say, your agreement to abide by the rulings of your homeowners’ association reflect your having signed over to a third-party the right to rule on the legitimacy of your actions. In both cases, the anticipated benefits of contracting with others outweigh the anticipated costs, and in neither case is any party obliged to remain a party to the contract.

More to the point, if you’re so concerned about sovereignty, why do you champion government using force to strip each American of his individual sovereignty to spend his money as he wishes? Frankly, the sovereignty that matters to me isn’t the sovereignty of the state – which so often is used to violate the sovereignty of individuals – but, rather, my personal sovereignty as a free human being. Protectionism is a frontal and obnoxious assault on that sovereignty.

The 13 original states thought that about the union. It was, after all, "just a treaty" in the beginning. Then this little thing called the Civil War came along and suddenly the supranational structure proved a mite more resilient to their sovereignty than previously imagined.

Bordeaux is an idiot if he thinks that US sovereignty and individual American sovereignty aren't linked. You can't undermine the former without hitting the latter.

Yes, we wouldn't want the free flow of capital to allow foreigners to open up manufacturing plants here in the U.S. to employ thousands of American workers now would we?

No, Jeff, we wouldn't. At least not while this country is hemorrhaging manufacturing jobs. In point of fact, American companies employ twice as many foreigners (10.3 million) as foreign companies do Americans (5.3 million). Thank you, free flow of capital!

No, Jeff, we wouldn't.

Why not?

I'll take seriously the anti-free-traders when they denounce the NLRB in voices loud enough to be heard all the way from Washington State to South Carolina,

http://www.whatswrongwiththeworld.net/2011/06/this_is_wrong.html

call for it to be eliminated by an act of Congress, and support right-to-work laws in every state.

Then maybe we can begin talking seriously about stopping the hemorrhage of American manufacturing jobs.

Lydia, part of the problem is that most of the foreign factories in the US are mainly assembly shops. Most of the parts are shipped from overseas and the engineering is mainly done there as well. They create jobs but don't develop as much human capital (ie how to make things from start to finish).

Even just foreign ownership is a problem. Look at Daimler when they bought out Chrysler. They simply raided Chrysler for ideas and technology that was incorporated into their own vehicles. Most countries are far more careful with how they handle foreign plants and purchases. The free traders in this country seem to be oblivious to the problems.

Mike, I liked the post about the free trade economy and envy. Although, I don't know if envy is the correct term. It seems more to be anger at being jilted. But, from talking with libertarians, it is obvious that they are oblivious to human nature and worship at the alter of economic efficiency.

Most of the parts are shipped from overseas and the engineering is mainly done there as well. They create jobs but don't develop as much human capital (ie how to make things from start to finish).

Well, Chris, when I see a statement like this, I'm usually willing for the sake of the argument to grant its truth (it might well be true, for all I know), and then I get curious about root causes.

I ask myself, for example: Suppose that it would actually _work_ to redevelop the manufacturing base in the U.S. if we were to do all sorts of radical right-wing things like union-busting (yeah, I used that word, so sue me), enormous amounts of red-tape cutting, putting many bureaucrats out of a job, eliminating tons from the regulatory burden. Basically, both at the federal and at the state level blatantly _courting_ manufacturing jobs with plans designed (by, say, free market think-tanks galore) to appeal to the manufacturers themselves--to management, investors, and stock-holders. What then? What if that would work?

Would the anti-free-traders support such a plan?

I've got to tell you, I doubt that a majority of them would.

There are too many who want to fix the problem of a shrinking manufacturing base, problems with the development of human capital, etc., but who will not do it by way of carrots but only by way of sticks and only in ways that, let's face it, the labor left will approve of. The assumption is that the above plan is either intrinsically or by automatic consequence wicked and unjust, that those corporations who go abroad are just bad, greedy, and disloyal, and that we must directly disincentivize free trade rather than making domestic manufacture attractive in positive ways.

Speaking for myself, I think part of the problem is indeed greed. Just not the same greed that's usually pointed at. If you receive my meaning.

Indeed. Just like we can all agree that this country is full of racism, but we're not all agreed on which direction it's pointing.

The Elephant

I ask myself, for example: Suppose that it would actually _work_ to redevelop the manufacturing base in the U.S. if we were to do all sorts of radical right-wing things like union-busting (yeah, I used that word, so sue me), enormous amounts of red-tape cutting, putting many bureaucrats out of a job, eliminating tons from the regulatory burden. Basically, both at the federal and at the state level blatantly _courting_ manufacturing jobs with plans designed (by, say, free market think-tanks galore) to appeal to the manufacturers themselves--to management, investors, and stock-holders. What then? What if that would work?

First, I support those items in general (although I wouldn't go for union busting, just no public employee unions and a lot more limitation of public unions) and don't believe that the free trade paradigm is the entire problem, but the misnamed free trade is part of the problem.

In answer to your question, it would help but it is not going to solve the problem that China, et al are going to still manipulate their trade so that we are uncompetitive. Complaining about the other items doesn't address the fact that the entire trade paradigm is flawed. China uses trade as a foreign policy instrument. It is stupid to not understand that and act accordingly.

The Chinese and many other countries are doing what we did through most of our history.

As I said earlier, the problem with free trade is that it doesn't exist. If it did it wouldn't necessarily be a problem. The states do ok with it. And for what it's worth, you can bust every union (they're almost all worthless by this point) and throw out every bureaucrat you find and I won't complain.

I think you can't get around using both sticks and carrots to solve this issue. Given enough carrots, most employers would gladly move back out of a basic sense of patriotism. However, we must not rule out the use of sticks like tariffs. Tariffs worked quite well in the 19th century. It should be noted that the best strategy we have found is low domestic taxes and regulations coupled with a protectionist tariff.

As for the NLRB, the damn thing isn't even constitutional. Happy?

The states do ok with it.

The states also have to allow labor to follow the trade.

neo-conservatives like a system where money is the highest good

Yeah, Daniel Bell ("The Cultural Contradictions of Capitalism"), Irving Kristol ("Two Cheers for Capitalism"), Leo Strauss (Lockean acquisitiveness is "the joyless quest for joy"), and the rest of those darn neocons really want a system where money is the highest good.

surely you will admit that full exposure to the tender mercies of predatory global capitalism is probably a bad idea until we begin to recover our manufacturing base.

No, I won't admit that because it's not clear that our manufacturing base is in such terrible shape.

Walter Williams:

"In each of the past 60 years, U.S. manufacturing output growth has averaged 4 percent and productivity growth has averaged 3 percent. Manufacturing is going through the same process as agriculture. In 1900, 41 percent of American workers were employed in agriculture; today, only 2 percent are, and agricultural output is greater. In 1940, 35 percent of workers were employed in manufacturing jobs; today, it's about 10 percent. Again, because of huge productivity gains, manufacturing output is greater.

The decline in manufacturing employment is not limited to the U.S. Since 2000, China has lost over 4.5 million manufacturing jobs. In fact, nine of the top 10 manufacturing countries, which produce 75 percent of the world's manufacturing output (the U.S., Japan, Germany, China, Britain, France, Italy, Korea, Canada and Mexico), have lost manufacturing jobs, but their manufacturing output has risen."

(http://www.wnd.com/index.php?pageId=81967)


See also:

http://midwest.chicagofedblogs.org/archives/2010/08/bill_strauss_mf.html

Perseus, the problem with US manufacturing numbers is that they seem to hide how much is produced in the US. Let's say you produce a gizmo in the US and sell it for $100. Now, the product is made up of two components, one which Gizmo, Inc. produces itself for $50 and one that is buys from overseas for $25. When the manufacturing GDP numbers are used, Gizmo, Inc. added $100 to GDP for each gizmo sold. The problem is it was really $75. In one of the articles Mike posted, it talks about how the percentage of foreign components in US products has been going up.

The next problem is a chunk of those manufacturing GDP numbers are made up of big ticket items like airplanes. Meanwhile, the smaller component manufacturers are getting killed.

The problem isn't that automation has replaced some jobs. The problem is that there are entire manufacturing sectors that have ceased to exist in this country. How bad is it when we can't even have one company produce silverware?

Money may not be neo-cons highest good, but economic efficiency is.

We are Esau, begging for our soup now and selling our birthright.

As I said earlier, the problem with free trade is that it doesn't exist.

Trade between nations is never totally 'free' in the sense of being protected from all interference which might arise from the national interest of the nations engaged in it.

What's in dispute is to what extent a government ought to permit free trade while safeguarding the interests of its citizens, and what methods should be used to restrain the harmful economic effects of a (theoretical) free market.

Tariffs worked quite well in the 19th century.

Wellll. That's a big claim. I can think of some protectionist disasters, like the Corn Laws in England followed by the Irish Potato famine. And the Smoot Hawley Tariff wasn't exactly a brilliant idea in the U.S.

Chris, on China: I've always been willing to cut what used to be called Most Favored Nation status on China for entirely non-economic reasons--that is, to punish them for their egregious human rights abuses. I used to think that this put me in something like the same camp as some of the anti-free-traders. That was a long time ago that I thought that. More recently I've realized that it doesn't. For one thing, it's only in a really egregious case like China's that I would support it, and for another thing I just don't accept most of the other anti-free-traders' arguments and approach. For another, other thing, I've been told that my reason isn't the right reason anyway. In fact, many paleos are positively _annoyed_ at the idea of taking other countries' horrible human rights abuses into account in any foreign policy matters. That's "interfering." We're supposed to be neutral about their evils, be protectionist in general to stop our own Evil Capitalists from their nefarious attempts to make money by opening shop elsewhere, and no other motives will do.

But for what it's worth, I would be willing in principle to use trade sanctions against China for a different set of reasons.

Chris, when you say you wouldn't go for the union-busting, does that mean you oppose right-to-work laws such as are advocated by the Mackinac Institute? (These are called "union-busting" by union advocates. In fact, in my thread, linked earlier, commentators referred to Boeing's mere decision to open a new plant in a different state, partly [gasp] motivated by the strikes in Washington State, as "union-busting.")

http://www.mackinac.org/8945

What about secret-ballot vs. card-check?

http://www.mackinac.org/8220

Yes, I do know that the SHT was in the 20th century. Sorry if that was unclear.

Mike T, if this is true:

Given enough carrots, most employers would gladly move back out of a basic sense of patriotism.

then why is this necessary?


However, we must not rule out the use of sticks like tariffs.

then why is this necessary?

There are things which are strategically important to coerce companies into making in the US. The Chinese government has the ability to compromise the firmware of all sorts of devices such as routers and switches. Huawei was blocked from creating a LTE network in the US for that very reason; a Chinese electronics company with close ties to the PLA building a large extension to our telecom system? Uh yeah, you won't even have the pretense of Cisco periodically spot-checking some of the products sent to the US in that scenario.

Three cheers for Perseus!

You recent posts remind me of this quote I just stumbled across:

“The proper role of a healthily functioning economy is to destroy jobs and put labor to better use elsewhere. Despite this simple truth, layoffs and firings will still always sting, as if the invisible hand of free enterprise has slapped workers in the face. Unsettling by nature, capitalism’s churn gives rise to a labor movement designed to protect workers from job loss. That movement is fed emotionally by displaced workers and others who blame the capitalist system for their troubles, but it is led psychologically by a whole other type of person—the intellectual. Intellectuals—with little to do owing to the success of the capitalist economic system but with an intense desire to be seen as caretakers of society’s general well-being—anoint themselves as leaders of the labor movement. They object to capitalism on moralistic grounds and seek its destruction and replacement by another system—socialism—which places them center stage.” — Analysis of Schumpeter by the Dallas Fed http://goo.gl/gHTc2

Look, if Maximos was still around, I'm sure we'd all be treated to a long and somewhat tedious essay about how ultimately we are all arguing about how to deal with the folks who feel the "sting". And my own misgivings about totally free trade have to do with this subject as I worry about those on the left-hand side of the bell-curve will have gainful employment if all the cheap-labor jobs go overseas.

BUT, I think Lydia basically nailed the free-market solution on the head in this thread -- let's deal with the problems of an over-regulated and over-taxed American economy first and America should do just fine in globally competitive marketplace. Just this morning I heard about a huge natural gas find in Ohio of all places thanks to American ingenuity (fracking) and if we tell the EPA to get out of the way then between coal, oil and natural gas -- America can employ millions of blue-collar folks and at the same time meet our energy needs while helping us rely less on Middle-Eastern oil. A win-win for all (except for crazed environmentalists).

Finally, I'm all for trade barriers to protect our national security -- given our massive lead when it comes to defense weaponry (who else can build and deploy drones?) we don't want that technology getting around. But even here I think we could do more for Americans by selling our weapons to allies (hello Taiwan and Israel!) and continuing to invest in our defensive capabilities so we maintain our lead well into the foreseable future. Interestingly enough, free-market economist Martin Feldstein thought that if we were going to do a stimulus back in 2009, we should have focused on defense given its high-payoff with respect to jobs and maintaining American know-how.

I also find it fascinating, just a matter of intellectual history, that those who call for tariff today are the same folks who are generally sympathetic to the concerns of Southerners and/or southern states before the Civil War, who in turn, were adamantly opposed to tariffs! Why? Because they were really good at growing food and wanted to sell their food around the world (by the way, the U.S. is still good at growing food and we still export plenty of it!) Anyway, I thought it might be fun, given how often we hear about how well American did under tariffs in the 19th century (just remember kids, correlation does not equal causation) to pull this bit of history on the U.S. tariff from La Wik (so read with caution):

After the war, high tariffs remained as the Republican Party remained in office and the Southern Democrats were restricted from office. Advocates insisted that tariffs brought prosperity to the nation as a whole and no one was really injured. As industrialization proceeded apace throughout the Northeast, some Democrats, especially Pennsylvanians, became high tariff advocates. The Republican high tariff advocates appealed to farmers with the theme that high-wage factory workers would pay premium prices for foodstuffs. This was the "home market" idea, and it won over most farmers in the Northeast, but it had little relevance to the southern and western farmers who exported most of their cotton, tobacco and wheat. In the late 1860s the wool manufacturers (based near Boston and Philadelphia) formed the first national lobby, and cut deals with wool-growing farmers in several states. Their challenge was that fastidious wool producers in Britain and Australia marketed a higher quality fleece than the careless Americans, and that British manufacturers had costs as low as the American mills. The result was a wool tariff that helped the farmers by a high rate on imported wool—a tariff the American manufacturers had to pay—together with a high tariff on finished woolens and worsted goods.[22] Apart from wool and woolens, American industry and agriculture—and industrial workers—had become the most efficient in the world by the 1880s as they took the lead in the world wide Industrial Revolution. They were not at risk from cheap imports. No other country had the industrial capacity, large market, the high efficiency and low costs, or the complex distribution system needed to compete in the vast American market. Indeed, it was the British who watched in stunned horror as cheaper American products flooded their home islands. Wailed the London Daily Mail in 1900,

"We have lost to the American manufacturer electrical machinery, locomotives, steel rails, sugar-producing and agricultural machinery, and latterly even stationary engines, the pride and backbone of the British engineering industry."

Nevertheless some American manufacturers and union workers demanded the high tariff be maintained. The tariff represented a complex balance of forces. Railroads, for example, consumed vast quantities of steel. To the extent tariffs raised steel prices, they felt injured. The Republicans became masters of negotiating exceedingly complex arrangements so that inside each of their congressional districts there were more satisfied "winners" than disgruntled "losers." The tariff after 1880 was an ideological relic with no longer any economic rationale.[22]

Democratic President Grover Cleveland redefined the issue in 1887, with his stunning attack on the tariff as inherently corrupt, opposed to true republicanism, and inefficient to boot: "When we consider that the theory of our institutions guarantees to every citizen the full enjoyment of all the fruits of his industry and enterprise... it is plain that the exaction of more than [minimal taxes] is indefensible extortion and a culpable betrayal of American fairness and justice." The election of 1888 was fought primarily over the tariff issue, and Cleveland lost.[23] Republican Congressman William McKinley argued,

"Free foreign trade gives our money, our manufactures, and our markets to other nations to the injury of our labor, our tradespeople, and our farmers. Protection keeps money, markets, and manufactures at home for the benefit of our own people."

Democrats campaigned energetically against the high McKinley tariff of 1890, and scored sweeping gains that year; they restored Cleveland to the White House in 1892. The severe depression that started in 1893 destroyed the Democratic party. Cleveland and the Bourbon Democrats insisted on a much lower tariff. His problem was that Democratic electoral successes had brought in Democratic congressmen from industrial districts who were willing to raise rates to benefit their districts. The Wilson-Gorman Tariff Act of 1894 did lower overall rates from 50 percent to 42 percent, but contained so many concessions to protectionism that Cleveland refused to sign it. McKinley campaigned heavily in 1896 on the tariff as a positive solution to depression. Promising protection and prosperity to every economic sector, he won a smashing victory. The Republicans rushed through the Dingley tariff in 1897, boosting rates back to the 50 percent level. Democrats responded that the high rates created government sponsored "trusts" (monopolies) and led to higher consumer prices. McKinley won reelection by an even bigger landslide and started talking about a post-tariff era of reciprocal trade agreements. Reciprocity went nowhere; McKinley's vision was a half century too early.[24]


The South was against tariffs because while the burden was primarily falling on it as a largely agriculture-based economy, the revenues generated were flowing North. In other words, the South wasn't agains tariffs per se, but against tariffs which inequitably helped the North at its expense.

"the U.S. is still good at growing food and we still export plenty of it"

Yep, and we also dump our excess on various countries, undercutting their own agriculture and causing them to become dependent on ours.

And my own misgivings about totally free trade have to do with this subject as I worry about those on the left-hand side of the bell-curve will have gainful employment if all the cheap-labor jobs go overseas.

A similar thing has happened with sex. Conservatives and liberals tend to focus on how women are treated in the dating scene, rather than the more important question of whether or not ordinary men are still finding good wives. Men who are simultaneously biologically disadvantage out of good jobs and who face a dating scene dominated by a minority of men who are disproportionately drawing the attention and affection of women are not going to invest in the future of this country.

ESR has a good take on this where he (a prominent atheist libertarian) admits that liberty and equality in some areas might actually militate against human reproductive instincts in ways that are unavoidable and detrimental to social stability.

Finally, I'm all for trade barriers to protect our national security -- given our massive lead when it comes to defense weaponry (who else can build and deploy drones?) we don't want that technology getting around.

Do you want your bank using routers made in China? As for drones, a number of countries, actually.

But even here I think we could do more for Americans by selling our weapons to allies (hello Taiwan and Israel!) and continuing to invest in our defensive capabilities so we maintain our lead well into the foreseable future.

We already have a healthy flow of weapon systems to our allies. Makes us good money when the feds allow it. In addition, it means that if we ever have to militarily intervene in the Middle East we're fighting armies whose weapons we know intimately. I also wouldn't be surprised if we've done to them what the Chinese do to us from time to time; it's all fun and games until your foreign-made tank's targeting system software "just so happens" to have a few easter eggs in it (like a triggerable divide-by-zero error or the embedded system's equivalent of jmp ffff:0000).

Interestingly enough, free-market economist Martin Feldstein thought that if we were going to do a stimulus back in 2009, we should have focused on defense given its high-payoff with respect to jobs and maintaining American know-how.

That wouldn't help us much. The MIC is very good at keeping enough capacity available to meet the actual needs of the military and building new capacity would be both very specialized and hard to repurpose later. We have many shipyards, but only a handful that have the knowhow and infrastructure to work on nuclear-powered warships, let alone build a new class like the Zumwalt class destroyer or the next generation aircraft carriers. The only stimulus plan that would work is offering a basket of carrots to manufacturers to make them move capacity back to the US.

On a related note, one of the reasons the NLRB shouldn't have intervened on behalf of the Boeing union is that a significant amount of the KC-X contract is being done on the West Coast. I find it hard to believe that the union and Boeing couldn't have put their heads together to cover the union workers under KC-X.

Yep, and we also dump our excess on various countries, undercutting their own agriculture and causing them to become dependent on ours.

This always just kills me. The corporations are *always bad*. Somehow. If they give stuff to people at low cost, they are "dumping" it, "undercutting" native agriculture, and "making them dependent." Talk about a no-win situation.

Reminds me of the La Leche zealots who will tell you with a tremble of fury in their voices about the formula corporations who actually have the gall to *give free formula* to starving women in third-world countries. Why, if they use this free stuff, that allows their own milk supply to dry up.

All this American corporate generosity is obviously a plot and should be stopped immediately, by force if necessary.

I just heard that Big Pharma has developed a malaria vaccine and is going to sell it at only a fraction above production cost in the developing world, plowing the proceeds back into additional tropical disease research.

I'm trying to imagine being a paleo-leftist, going back and forth mentally trying to decide whether to bill the tiny amount of profit here as price-gouging, greedy corporations, etc., etc., or whether to say that they are "undercutting" local medical research and making the Africans "dependent" on ours by "dumping" malaria vaccine on them. I suppose it'll be the former, though, since the latter is so particularly silly in that specific case.

"Somehow. If they give stuff to people at low cost, they are 'dumping" it'"

Yet we bitch and moan when other countries dump steel or whatever on us and we become dependent on them. Funny how dependency is fine, as long as it's other folks who are dependent on us. It's the same mentality that the government has towards the American poor expanded internationally. I guess that when it crosses the water it magically changes from evil to good. American poor dependent on government largesse? Bad! International poor dependent on American corporate pseudo-largesse? Good!

And it's also funny how such "corporate generosity" always somehow manages to fatten up the margins sooner or later!

"I'm trying to imagine being a paleo-leftist"

Never heard of a Rightist critique of capitalism, I take it? You need to expand your horizons. Richard Weaver's a good place to start.

This always just kills me. The corporations are *always bad*. Somehow. If they give stuff to people at low cost, they are "dumping" it, "undercutting" native agriculture, and "making them dependent." Talk about a no-win situation.

End the farm subsidies and the prices will balance out so that our crops aren't substantially cheaper. Then the liberals will complain that you hate our poor because food prices will go up. We need to implant liberals with the V-Chip programmed for words like "poor," "minorities," "women" and "children."

End the farm subsidies and the prices will balance out so that our crops aren't substantially cheaper.

Ending farm subsidies is A-okay with me, as long as we're talking _actual subsidies_. I've run into the cute little (to my mind bizarre) trick of language by which it's a "farm subsidy" for "big agribusiness" if they are simply allowed like any other business in the country to figure the cost of their gas and transportation of their product as an expense and deduct it in figuring net profit! See, they're wicked and evil for transporting products over state lines, because that discourages "buying local," so that shouldn't be treated as a business expense and they should be, to that extent, taxed on gross rather than net profit. Otherwise it's a "farm subsidy."

These kinds of tricks annoy the dickens out of me. But absent that, sure, direct farm subsidies in the ordinary sense of the word: Kill them all.

Yet we bitch and moan when other countries dump steel or whatever on us and we become dependent on them.

I don't, Marmot. You seem to be getting your groups confused. It's not usually we free marketers who are doing that particular "bitching and moaning."

It's a subsidy when cash is flowing from the treasury to them. Calling a tax break a subsidy is like calling the act of letting a slave have a night on the town an emancipation.

Lydia,

Card check is wrong. Also, I leave it up to each state to determine right to work rules, but I would prefer that all states were right to work. And, the NLRB is completely out of line with it's Boeing ruling.

One area where union rulings have gone wrong is allowing them to gain a monopoly on labor in specific industries. For instance, the UAW should never have been able to be the sole union for every automaker in the US. Having one union for all three (now) results in the ludicrous event of one company negotiating a contract and then the other two having to "negotiate" similar contracts.

I believe though that every country has to right to prevent the dumping of products into their economy. Let's say we do nothing and China, South Korea, etc. literally eliminate the steel industry in this country. Is that a good thing? What happens if 10 years later the countries we buy steel from decide not to sell to us? You can't start up a steel industry overnight. It's not just an equipment issue. It's a people and expertise issue as well.

BTW, Intel and AMD are still around because the government actually prevented the dumping of processors by the Japanese in the 80's and 90's.

"You seem to be getting your groups confused. It's not usually we free marketers who are doing that particular 'bitching and moaning.' "

I meant "we" in general, but the remark is telling. I guess to the neo-con cheaper is always better regardless of other consequences.

"It's a subsidy when cash is flowing from the treasury to them. Calling a tax break a subsidy is like calling the act of letting a slave have a night on the town an emancipation."

It amounts to a subsidy when the small farmer has no access to equivalent field-tilting. Monsanto and ADM need tax breaks like Mr. Clean needs a hair stylist.

It amounts to a subsidy when the small farmer has no access to equivalent field-tilting.

NM proves my point.

Let me add that the small farmers also get to deduct their gas and transportation costs. It's true that they have fewer gas and transportation costs, but that hardly makes it "field tilting" to allow someone who, in fact, has higher business expenses to pay tax only on his actual net profit just like any other businessman in the country. To call this "field tilting" is absurd. It isn't even a "tax break," anymore than it is a tax break to allow both businesses to deduct the cost of paying their employees. The bigger businesses (I know this will come as a shock) also employ more people, but this doesn't meant they should be taxed on their gross profits before deducting employee costs (presumably to larn 'em not to be so big or something). And so on and so forth. Ridiculous.

I meant "we" in general, but the remark is telling. I guess to the neo-con cheaper is always better regardless of other consequences.

The point, NM, is that you were presumably accusing me and my ilk of some sort of double standard. You may not like it that we don't bitch and moan about all the same things that you do, but that's a different argument, isn't it? You be consistent in your way (which apparently is that it's bad for anybody to undersell the home-grown product, in any country) and we'll be consistent in ours.

JC: No, Jeff, we wouldn't. At least not while this country is hemorrhaging manufacturing jobs. In point of fact, American companies employ twice as many foreigners (10.3 million) as foreign companies do Americans (5.3 million). Thank you, free flow of capital!

LMG: Why not?

Because the same "free flow of capital" that results in Americans working for foreign companies exports twice as many American jobs overseas. That just isn't smart.

Well, Chris, when I see a statement like this, I'm usually willing for the sake of the argument to grant its truth (it might well be true, for all I know), and then I get curious about root causes.

I ask myself, for example: Suppose that it would actually _work_ to redevelop the manufacturing base in the U.S. if we were to do all sorts of radical right-wing things like union-busting (yeah, I used that word, so sue me), enormous amounts of red-tape cutting, putting many bureaucrats out of a job, eliminating tons from the regulatory burden. Basically, both at the federal and at the state level blatantly _courting_ manufacturing jobs with plans designed (by, say, free market think-tanks galore) to appeal to the manufacturers themselves--to management, investors, and stock-holders. What then? What if that would work?

Would the anti-free-traders support such a plan?

I'd support some of it and oppose some of it, most likely. By all means, let's bust the Teamsters and the Longshoremen and the California Teachers Union, for starters, and I'll swing the hammer, but union-busting is no substitute for a sensible trade policy. Same goes for red tape and regulations. There's lots of room for reducing the regulatory burden on American manufacturers, but I suspect we'd disagree on which regulations to ditch, which ones to keep, and (yes), which ones to add.

All in all I believe you are missing the point. We want some of the same things the unions want, don't we? Decent wages and working conditions for American workers. American companies are unable to provide this while competing directly with wages and working conditions in the developing world - unions or no unions, regulations or no regulations.

You want to explore root causes? Then let's look at Germany, which exports 9% of exported merchandise worldwide, compared to America's 8.5%, with an economy just one quarter the size of ours. What's their secret? No trade unions? Few regulations? Less bureaucracy? Lower wages? C'mon ...

Which is precisely my point -- you're not consistent. You bewail dependency on the one hand and praise it on the other. Why is bad for the American poor to be dependent on government handouts, but perfectly fine for the poor of other countries to be dependent on American faux-handouts?


The American agricultural system has been slanted against the small farmer for many decades. Ever hear of "get big or get out"?

Perseus, the problem with US manufacturing numbers is that they seem to hide how much is produced in the US. Let's say you produce a gizmo in the US and sell it for $100. Now, the product is made up of two components, one which Gizmo, Inc. produces itself for $50 and one that is buys from overseas for $25. When the manufacturing GDP numbers are used, Gizmo, Inc. added $100 to GDP for each gizmo sold. The problem is it was really $75. In one of the articles Mike posted, it talks about how the percentage of foreign components in US products has been going up.

That's the offshoring (of intermediate inputs) bias. But what if that foreign input used by Gizmo, Inc. (an American firm) was produced using American intellectual property? U.S. data on manufacturing may not adequately take that into account or may classify it under services rather than manufacturing. Here's a good summary of these issues, which can bias the numbers in both directions (pp. 4-8):

http://forbes.house.gov/UploadedFiles/CRS_-_Hollowing_Out_in_U_S__Manufacturing.pdf

I still think it's surreal that Americans can't eat American-canned sardines with an American-made fork in America 2011.

"predatory global capitalism"? I would prefer as a catchy phrase "predatory global mercantilism", whereby a State exploits it's own citizens for the Insiders few but influential, who rig the markets, control imports, deprive people of expanded goods and choice, and all for the preferred who have the ears and wallets of a political class ever on the make and selling out whoever they can.
Trade is imperfect, you usually benefit but there are and will be those who don't. Trade wars, the natural consequence of politcial control and favoritism, bribes, finds the opposite result. If poor America is being "ruined", it is grotesque to lay it at the feet of Trade. It wasn't Trade that damaged the American auto industry, it was the very politics and political class that would control imports, that granted powers to favored groups, that in turn negotiated contracts that opened the doors to eventual decline. One example. Even now we have a federal agency telling an airplane manufacturer where they may, or will, manufacture. Should we be prepared to say we no longer can compete in this industry, and need some type of the usual imaginative government action to assist us ? The kindly governemnt hand should be viwed with at least a bit of skepticism, it's & it's actors, do not share our common interests, they have their own.

Why is bad for the American poor to be dependent on government handouts, but perfectly fine for the poor of other countries to be dependent on American faux-handouts?

It's bad for both of them in one sense, but

a) corporate hand-outs aren't extorted from the taxpayer but are, in fact charity,

b) charity will always be necessary at some level, and it's angeringly absurd to blame corporations both for greed and for charity,

c) we have more opportunities in the U.S. actually to develop ways to help the poor help themselves because we can vote on our government but can't vote on the government of Third World countries,

d) related to c, the cause of worldwide poverty is the unequal distribution of capital-ism. As long as these countries have the governments they have, it's going to be darned hard for the people to get out of the mud. In the meanwhile, if giving them some grain cheap keeps some people from starving, I think the people who don't starve will thank you not to sneer at the American corporations that "dumped" the grain.

e) If there are in fact more efficient ways of helping them, I think I'll try to learn them from groups and think-tanks whose economic horse sense I trust, not (sorry, NM) from the paleos, crunchies, self-styled distributists, leftists, and sundry other anti-corporate fury-mongers, whose economic horse sense, I'm afraid, would not fill a large walnut.

Jeff C.,

You say, "You want to explore root causes? Then let's look at Germany, which exports 9% of exported merchandise worldwide, compared to America's 8.5%, with an economy just one quarter the size of ours. What's their secret?"

I say, in answer to your question (channelling the always wise and witty Steve Sailer), hmm, how about the German people?

P.S. Also, Jeff C. -- what's the fetish with manufacturing jobs? Again, I want good jobs for folks to raise a family but there are a lot of jobs in the U.S. for which this goal is possible -- jobs working for Apple, Microsoft, Disney, other Hollywood companies, Google, Continental Resources (oil shale), coal companies, management jobs at Wal-Mart, etc.

"I still think it's surreal that Americans can't eat American-canned sardines with an American-made fork in America 2011."

I live in Pennsylvania. We grow apples. I buy apples weekly, local ones when I can. But why is it that in the two supermarkets where I shop (both local chains) the apples are always from either Chile or New Zealand? Talk about surreal -- NZ is literally on the other side of the world, for gosh sakes. But somehow it makes more sense to ship them from there when there are orchards a half-hour away?

Agridumping is not charity. It is an American company deliberately selling its surplus grain or what-have-you at a price lower (often as a result of subsidies and tax breaks) than the farmers in that country can grow it themselves. This puts the local farmers out of business and at the same time creates dependency on American exports, while the company makes a profit on the grain it sells.
Don't make it sound like the companies are doing it out of the goodness of their hearts. I have no problem with corporate charity when it's actually charity.

"In the meanwhile, if giving them some grain cheap keeps some people from starving, I think the people who don't starve will thank you not to sneer at the American corporations that 'dumped' the grain."

Again, dumping is not giving. I'm not talking about donating food to starving people, which is completely different.

"not (sorry, NM) from the paleos, crunchies, self-styled distributists, leftists, and sundry other anti-corporate fury-mongers, whose economic horse sense, I'm afraid, would not fill a large walnut."

Hey, feel free to continue worshipping at the altar of the market, denying the existence of consumerism, and watching as late modern man evolves more and more into homo oeconomicus. I'm sure buying cheap junk that doesn't last and eating processed food that doesn't nourish will be a great consolation as America turns increasingly into a nation of corporate- and government-dependent suckers.

"I still think it's surreal that Americans can't eat American-canned sardines with an American-made fork in America 2011."

I live in Pennsylvania. We grow apples. I buy apples weekly, local ones when I can. But why is it that in the two supermarkets where I shop (both local chains) the apples are always from either Chile or New Zealand? Talk about surreal -- NZ is literally on the other side of the world, for gosh sakes. But somehow it makes more sense to ship them from there when there are orchards a half-hour away?

Agridumping is not charity. It is an American company deliberately selling its surplus grain or what-have-you at a price lower (often as a result of subsidies and tax breaks) than the farmers in that country can grow it themselves. This puts the local farmers out of business and at the same time creates dependency on American exports, while the company makes a profit on the grain it sells.
Don't make it sound like the companies are doing it out of the goodness of their hearts. I have no problem with corporate charity when it's actually charity.

"In the meanwhile, if giving them some grain cheap keeps some people from starving, I think the people who don't starve will thank you not to sneer at the American corporations that 'dumped' the grain."

Again, dumping is not giving. I'm not talking about donating food to starving people, which is completely different.

"not (sorry, NM) from the paleos, crunchies, self-styled distributists, leftists, and sundry other anti-corporate fury-mongers, whose economic horse sense, I'm afraid, would not fill a large walnut."

Hey, feel free to continue worshipping at the altar of the market, denying the existence of consumerism, and watching as late modern man evolves more and more into homo oeconomicus. I'm sure buying cheap junk that doesn't last and eating processed food that doesn't nourish will be a great consolation as America turns increasingly into a nation of corporate- and government-dependent suckers.

Hey, feel free to continue worshipping at the altar of the market, denying the existence of consumerism, and watching as late modern man evolves more and more into homo oeconomicus.

You must have a gotten a really good deal on those (organic) straw men.

"whose economic horse sense, I'm afraid, would not fill a large walnut."

Which leads me to believe you haven't read much.

"You must have a gotten a really good deal on those (organic) straw men."

A better deal than you'll get on the (free range) crow you may have to eat someday.

How bad is it when we can't even have one company produce silverware?

Of all the things that the U.S. doesn't manufacture any more, you guys pick silverware?!? Well, you can really stick it to China by making your own chopsticks to eat with.

I say, in answer to your question (channelling the always wise and witty Steve Sailer), hmm, how about the German people?

The Germans do much better at vocational training. We, by contrast, believe that everyone must go to college. Of course, a women's studies or environmental policy degree isn't very useful for a manufacturing job. Germany is also benefiting from being a major manufacturer of capital goods/tools and intermediate goods, much of which are sold to developing countries like China. Whether German firms can maintain their market share as those lesser developed countries become more developed is an open question. And even German firms are increasingly outsourcing (or threatening to do so in order to extract labor concessions) their manufacturing (though they are more likely to outsource it to eastern Europe than Asia).

P.S. Also, Jeff C. -- what's the fetish with manufacturing jobs?

Unskilled labor. The dullards have to do something with themselves, and Walmart checker doesn't pay quite enough. You alluded to the left half of the bell curve yourself, so I assume this is not news. Maybe if we one day figure out how to genetically engineer intelligence this will no longer be an issue. The alternatives you named were mostly skilled (tech, management) or locational (oil, coal).

P.S. Also, Jeff C. -- what's the fetish with manufacturing jobs? Again, I want good jobs for folks to raise a family but there are a lot of jobs in the U.S. for which this goal is possible -- jobs working for Apple, Microsoft, Disney, other Hollywood companies, Google, Continental Resources (oil shale), coal companies, management jobs at Wal-Mart, etc.

Jeff S., that you even ask this question indicates that we just aren't on the same page when it comes to economics. Economics, as a discipline, is not an island unto itself. Economic variables have value apart from the dollars assigned to them on supply and demand curves. I would ask you, Lydia, and the other free-traders to maybe think ahead a little, to a time when Americans, due to unforseen conditions, actually need to know how to make things and grow things. An economy of service workers and computer programmers will be of no use in feeding and rebuilding a nation in the aftermath of a disaster - war or otherwise - that devastates the country. For reasons I could never figure out American neo-cons seem to possess an unflappable "it can't happen here" mentality.

Besides, making things and growing things are good in themselves: it is a loss, a deprivation, and a weakness when the people of nation cannot provide certain things for themselves. And yet, the ideology of free trade, which as other commenters have noted is not truly free at all, along with the rule of money (and by extension the worship of "efficiency"), have depleted our national bank of essential skills and the security that goes with it. Quite honestly it is a national security issue as much as an economic issue. Free trade has created a nation of salesmen, contractors and managers - that's about all I'm good for myself - and robbed this country of the ability to rebuild itself when the time comes.

And the time will come. We will be utterly dependent on foreign masters. Let's hope they are friendly.

Jeff S.: P.S. Also, Jeff C. -- what's the fetish with manufacturing jobs?

Matt: Unskilled labor. The dullards have to do something with themselves, and Walmart checker doesn't pay quite enough.

I wouldn't have put it that way, but that's the other half of the equation. A strong economy will have gainful and productive things for ordinary people to do. Instead our economy is rapidly becoming one in which only highly skilled workers are paid a decent wage.

Besides, making things and growing things are good in themselves: it is a loss, a deprivation, and a weakness when the people of nation cannot provide certain things for themselves.

Well said.

Would the free traders here think it would be beneficial to this country if we literally manufactured nothing because we could buy it cheaper from another country?

Free trading our way to slavery.

Of all the things that the U.S. doesn't manufacture any more, you guys pick silverware?!? Well, you can really stick it to China by making your own chopsticks to eat with.

How about most computer components, TV's, pretty much any consumer electronics? But, the point you are obviously missing is the a country of +300 million with abundant resources doesn't have one silverware manufacturer. How does that not point to serious issue? And don't tell me we are going to lead with new technologies. I remember when HDTV was developed in the 90's. People were bragging about how great we were. Of course all of the TV's are produced overseas. In the end it meant nothing. It would be like Edison developing the light bulb and then the Italians making all the lightbulbs.

"I could never figure out American neo-cons seem to possess an unflappable 'it can't happen here' mentality."

Being economic liberals (simply right-liberals as opposed to left-liberals) they are just as vulnerable to the myth of progress as are their leftist counterparts. The notion of the triumph of worldwide democratic capitalism, or at very least the ever-increasing expansion of world markets, fuels the thing just as much as the idea of a future socialist utopia used to fuel the Marxists. The 'it can't happen here' mentality is a by-product of the myth of progress (an idea, by the way, which conservatives used to find highly suspect.)

"Quite honestly it is a national security issue as much as an economic issue."

Yes, as Wendell Berry has been saying for years.

"the point you are obviously missing is the a country of +300 million with abundant resources doesn't have one silverware manufacturer. How does that not point to a serious issue?"

Yes, and consider food production: 3 or 4 huge multinational corporations control over 70% of American food production from the soil (what's left of it) to the table (probably not made in America either). Such a concentration of power/influence earlier conservatives would have found greatly disconcerting. I shudder to think what Kirk, Weaver, or Chambers would have thought of the situation. (And by the way, that's Russell, Richard and Whittaker, not James T., Dennis, and Marilyn)

Jeff C., I'm willing to consider that the general problem you're raising about manufacturing is, in fact, a problem. I think what we saw in our exchange above is that we would be likely to disagree about the best solution. That's exactly what I would have expected and, in fact, predicted. What it does show is that the division needn't be between free traders who think it doesn't matter if America is able to do its own basic manufacturing and anti-free-traders who think it does matter. One could be a free trader who thinks it matters but thinks there are much better ways than punitive tariffs to address the situation.

I would ask you, Lydia, and the other free-traders to maybe think ahead a little, to a time when Americans, due to unforseen conditions, actually need to know how to make things and grow things.An economy of service workers and computer programmers will be of no use in feeding and rebuilding a nation in the aftermath of a disaster - war or otherwise - that devastates the country. For reasons I could never figure out American neo-cons seem to possess an unflappable "it can't happen here" mentality.

To repeat: We DO make and grow lots of things (billions and billions of bushels and widgets each year in fact), just not everything, and we do it with far fewer people. We even subsidize people to make and especially to grow things. Yet people like you decry the government bailing out the "usurers" on Wall Street while ignoring farmers who are dependent on government handouts in virtually every industrialized country. As for the possibility of a disaster on the scale you suggest, it's not that it can't happen here, but that it's devilishly difficult to plan for in a comprehensive way. What's the probability of it happening (especially relative to other bad things happening), how do you identify what are "essential" skills (I don't regard manufacturing silverware as essential), how do you maintain those skills, what will it cost, will interest groups tend to distort and vitiate the policy, will the American people be willing to bear the burden, etc.? Focusing on critical national defense industries is difficult enough, let alone trying to structure a complex economy like ours to try cushion the blow of a possible wide-scale disaster.

It's fine to note that tariffs are not a magic bullet that will fix the matter. Rather, they are part of a comprehensive set of necessary reforms including several things that are part and parcel of the standard "Conservative" view of things. Tariffs get special attention because they are currently the one unmentionable in this matter. As a contrast, it's OK to note that blue collar union workers are paid too much. This is true in many areas, but noting it won't get you disinvited to the parties.

Perseus,

You are a delight!

In response to my somewhat puckish comment about the Germans, you note that:

The Germans do much better at vocational training. We, by contrast, believe that everyone must go to college. Of course, a women's studies or environmental policy degree isn't very useful for a manufacturing job.

Quite right. Or as Charles Murray put it in his last book, Real Education: Ability varies. Half of the children are below average. Too many people are going to college. America's future depends on how we educate the academically gifted.

Murray was focused on the right-side of the bell curve, and we are focused on the left-side (which I would argue is important for other reasons having to do with the common good and human flourishing). Anyway, your last comment speaks to the heart of our disagreement with Jeff C. -- we look around and see an American economy that builds plenty and provides millions of jobs for blue collar folks and could provide a lot more if the government would just get out of the way (the Lydia solution). Jeff looks around and worries about specific items Americans don't produce or looks around and worries that many of us have no connection to farming or manufacturing (or any type of manual labor) and worries that we are losing something important necessary to human flourishing. I disagree for the same reason I don't worry about the fact we no longer produce horse carriages or we all use outhouses or have to dry our laundry on a line. Life for most of us is better in the sense that we are materially much better off than we used to be which is the purpose, philosophically, for me of the economy (to provide goods and services to enrich our material well-being). The rest of our individual human flourishing comes from family, church, friends, the arts, community, etc.

I think Perseus makes an excellent point here:

As for the possibility of a disaster on the scale you suggest, it's not that it can't happen here, but that it's devilishly difficult to plan for in a comprehensive way. What's the probability of it happening (especially relative to other bad things happening), how do you identify what are "essential" skills (I don't regard manufacturing silverware as essential), how do you maintain those skills, what will it cost, will interest groups tend to distort and vitiate the policy, will the American people be willing to bear the burden, etc.? Focusing on critical national defense industries is difficult enough, let alone trying to structure a complex economy like ours to try cushion the blow of a possible wide-scale disaster.

It's a point I'm very sympathetic to--the impossibility of doing a good job by any kind of central planning. Friedman, the pencil, all that.

What I find for myself is a tension between realizing the wisdom in what Perseus says in the above comment and, on the other hand, an intuition of my own that we can tell _something_ about what would be useful to be able to do for the sake of national independence. This leans in the direction of a counter-sympathy for Chris's comment, here:


Would the free traders here think it would be beneficial to this country if we literally manufactured nothing because we could buy it cheaper from another country?

Let's face it: _Some_ free-traders care nothing for national sovereignty and would be quite happy with a single, worldwide economy.

I'm not one of those. I care a lot about national sovereignty, security of borders, and hence national independence. I want it to be possible for us to tell the rest of the world to to to h-e-l-l if necessary and to "do our own thing." If we were a little island, like Britain, that would be darned hard. (Wales had it even worse in the Middle Ages. In its wars with the English, the English could and sometimes did bring Wales to its knees just by cutting off the salt trade.) Being the huge, resource-rich country that we are, it should be quite easy to maintain sovereignty and independence. If we're definitely choosing not to do that, then that should be disturbing.

What to do about that, however, is the question. _Given_ the severe difficulties of planning noted by Perseus, I would suggest that we be cautious about government interventions, that we try as much as possible to encourage U.S. manufacturing only by doing things that are defensible *on other grounds*.

"Life for most of us is better in the sense that we are materially much better off than we used to be which is the purpose, philosophically, for me of the economy (to provide goods and services to enrich our material well-being). The rest of our individual human flourishing comes from family, church, friends, the arts, community, etc."

This is the big conservative blind spot: the failure to see that the way we go about enriching our material well-being has a profound and often deleterious effect on "family, church, friends, the arts, community, etc." Earlier conservatives recognized this. Today's do not.

Let's face it: _Some_ free-traders care nothing for national sovereignty and would be quite happy with a single, worldwide economy.

In practice, it is most, not some. Virtually every single apologist for free trade I've ever seen ha been almost gleeful at the notion of using free trade to abolish the state's ability to restrict who can buy what. They stridently make comments about how the government shouldn't tell any peaceful buyer who he or she cannot buy from.

Unless of course it's buying slaves, but we've already solved that via outsourcing which leaves the buyer guilt-free since he's only buying the slaves' end product. I digress.

These arguments are invariably tied to arguments for the movement of labor across borders.

Lydia, you said that I am naive for thinking the rich could make themselves better received via noblesse oblige. I am going to say that you are equally naive about the motivations of most free traders. Most free traders are either globalist totalitarians (ex. Marxists) or radical libertarians who are willing to throw the entire nation state under the bus so that they can buy and hire whatever and whoever they want.

Unless of course it's buying slaves, but we've already solved that via outsourcing which leaves the buyer guilt-free since he's only buying the slaves' end product. I digress.

And in case you're wondering what I mean by this, I'm referring to libertarians who support open trade with countries like China where your iPad may just as soon as be made by a political prisoner as a worker hungry for a job.

Mike T.,

Believe it or not, I think there is a lot of truth in the idea that many free traders are "radical libertarians who are willing to throw the entire nation state under the bus so that they can buy and hire whatever and whoever they want." They would never support my concerns or policy ideas w/r/t limiting immigration. But, I still think many of their arguments have merit and we need to recognize how international trade has enriched our lives (as well as destroyed the flatware manufacturers of America!)

But, I still think many of their arguments have merit and we need to recognize how international trade has enriched our lives (as well as destroyed the flatware manufacturers of America!)

They may have some merit, but I am skeptical of whether they've analyzed it as a multivariable system factoring in the massive influx of foreign cash and government deficit spending into our economy during the same period in which NAFTA (and similar treaties) allegedly helped us. The elephants in the room are that right as NAFTA was butchering our manufacturing sector, there was a massive influx of foreign cash, government deficit spending and the IT revolution in productivity.

Furthermore, note that you said "international trade," not "free trade." Those two are highly not interchangeable.

We DO make and grow lots of things (billions and billions of bushels and widgets each year in fact), just not everything, and we do it with far fewer people.

And as a lot of people are startng to realize, a lot of industries that are significantly high-tech are completely gone from this country. Not producing silverware might not be a problem if we were making large numbers of motherboards, TV's, etc.

What to do about that, however, is the question. _Given_ the severe difficulties of planning noted by Perseus, I would suggest that we be cautious about government interventions, that we try as much as possible to encourage U.S. manufacturing only by doing things that are defensible *on other grounds*.

I don't think it is about central planning but about a general philosophy. All goods coming into the country should face an X% tariff. No central planning is involved. Proctecing one's own industries is defensible on several levels, many of which have been pointed out above.

But, I still think many of their arguments have merit and we need to recognize how international trade has enriched our lives (as well as destroyed the flatware manufacturers of America!)

Yep, cheaper goods with fewer means to pay for them. The sad part is that the ones advocating this madness will mostly escape its harm.

Yep, cheaper goods with fewer means to pay for them.

The free traders either forgot or maliciously excluded something from the list of things which can't get cheaper from free trade: real estate. They are quick to say that if prices go down with wages, it'll balance out. However, that cannot hold true with land because we can't make more land.

If a worker chooses to practice an austere lifestyle for a few years to save up for a down payment on a house or business location, they'll have to save even longer now to be able to make the same level of down payment because of the lost wages.

"that cannot hold true with land because we can't make more land."

This has a double application to agriculture, since not only can we not make more land, we can't make more topsoil either. "Better Living Through Chemistry!" goes only so far.

"Life for most of us is better in the sense that we are materially much better off than we used to be which is the purpose, philosophically, for me of the economy (to provide goods and services to enrich our material well-being). The rest of our individual human flourishing comes from family, church, friends, the arts, community, etc."

On the contrary -- most if not all pre-Enlightenment thinkers who wrote on these matters understood "economics" to be a humane science, concerned with all aspects of life, not just the material. In fact, the transformation of economics into a "science" which deals primarily with quantity as opposed to quality is a big part of the problem: what was once a humane endeavor has been considerably dehumanized. You can look at Wilhelm Roepke and John D. Mueller, among others, for more on this (No walnut-sized economic horse sense here, I can guarantee):

http://www.isi.org/books/bookdetail.aspx?id=c6f6a31f-ffc0-40a0-9bd7-53fb07f45429

http://www.isi.org/books/bookdetail.aspx?id=60260279-5db7-4061-9549-71356eb6c530


Down with Free Trade!
How right you are! And while we're at it, let's get rid of trade, altogether!

I think the people who point out the health of manufacturing even with fewer people employed in it, should not be flippant. Anything can become a commodity. Here is a review of a recent book called the Great Stagnation. http://www.slate.com/articles/business/moneybox/2011/03/freaks_geeks_and_gdp.html

Here is a scary quote: "The Bureau of Labor Statistics estimates that employment in information technology, for instance, will be lower in 2018 than it was in 1998." An industry considered the life blood of the economy will shrink in employment???? Where are these highly educated people going to go and do?

The Chinese government has the ability to compromise the firmware of all sorts of devices such as routers and switches. . . . Uh yeah, you won't even have the pretense of Cisco periodically spot-checking some of the products sent to the US in that scenario.

Why would someone buy Chinese network gear when the American gear is the best? And Cisco spot-checking? OMG. DO NOT say this around a Cisco employee. They would jump down your throat. They write their own ASICs (the processors that do the main work unique to switches and routers) and they consider this their main strategic advantage. They'll tell you that is what differentiates them from all the rest. And they're right. Rip the cover off any of their gear if you don't believe it and see the "made by Cisco" all over the chips on the motherboard. Central processor is probably Intel or Motorola. Designed in California, though they don't say that. Cisco is the technical leader in their field with 75% of the ethernet switching market (and many others) because of this competitive advantage. Want average performance and features? Get someone else's product because the other guys DO use off-the-shelf components. If you want something done right then you have to do it yourself. Just today I was putting together an order of Cisco gear for our data center and I was salivating at the prospect at the features, performance, and price. No one else is even competitive with their latest. By the time the generic chips can be strung together to do the same thing they'll have even better gear and raise the bar again.

Another company that designs their own chips is Apple. They do it for the same reason. They also write their own software. The Apple story has been told so much now I won't bother. They own the whole widget. Each of their products prominently display the message as you inbox it that says "Designed by Apple in California."

Look, this "decline of manufacturing" is a tired old story flogged by the usual suspects for the usual reasons. In the 80's everyone was sure that Japan was going to be manufacturing everyone, but a funny thing happened on the way to Japanese world domination. Turns out they can't write software worth a darn. Ditto the Chinese. You know why? Well, it turns out "individualistic," self-seeking, fun-loving types have what it takes to make teams that write good software (that would be the Americans,) whereas the communitarian, altruistic, and alleged masters of superior business attitude types don't. Who knew? And the "iPhone will never win over the Japanese" meme? Well, we know how that turned out.

American culture is superior when it comes to making innovative products for the same reason it is superior in other ways. So it turns out we have the best and most independent designers, builders, and entrepreneurs on the planet. China is going to hit the same wall that Japan did, and the funny thing is you can't copy (just to anticipate the response) original things that aren't static. You can only shamelessly copy commodity products. So don't make commodity products. Who would want to do that anyway? (I'm sure the retort "well only the brilliant few can do that will be offered up" as a retort.) Now the makers of commodity PCs such as IBM (sold the a chinese outfit,) HP (wants to do the same,) and now Michael Dell wished they'd listened on that one since they thought you could make money on commodity products forever. Now there is no money in it, but, not to worry, generic products stink anyway so it really doesn't matter.

American manufacturing is alive and well in non-union shops, but more importantly where the rate of change outruns the ability of government to locate something to tax and regulate. That would be technology now. Keep moving and it confuses the government beauracrats. American manufacturing is doing well, but to the extent that it is hurting it is because of government regulations and taxes once a sector gets successful. Dynamism is the only reason these companies are successful because that is what allows them to stay ahead of the government company and sector destroying regulations and taxes. Other industries would still be thriving making more ordinary stuff but the government bureacrats discovered their (profitable) existence. I believe I owe George Gilder on that point.

So obviously I'm on the side of Lydia, Jeff S., and Perseus. And don't even get me started on the Civil War and the "beginning of imperialism meme." :)

And don't even get me started on the Civil War and the "beginning of imperialism meme." :)

Oh why not. The Southerners were imperialists par-excellence. Here is a quote from Joel Williamson, the (presumably retired) professor at UNC-Chapel Hill from the chapter "The Soul is Fled" in the book "Race and Slavery in America".

In truth, Southern leaders had a long and relatively independent history of seizing other people's lands on the bet that they could keep them. They took the Floridas, East and West, almost before the federal government could decently negotiate to accept them virtually as Spanish gifts. Jefferson might have legitimately bought Louisiana, regardless of what the Spanish said about Napoleon's duplicity in selling it, but the same could not be said of Texas or the Mexican cession. In 1853, two southern diplomats in Europe, in the so-called Ostend Manifesto, insisted that the United States either buy Cuba or seize it in order to make secure the southernmost frontier of slavery. For two years in the same decade, Mississippian William Walker, leading a rag-tag cadre of mostly southerners, took possession of the entire country of Nicaragua and as president opened it to slavery. The South was undeniably imperialistic, and it clearly had no compunctions about seizing other people's lands. In a sense it pulled off its most important imperialistic venture in 1861 when it simply seized itself from the United States government by the use of force. It could hardly complain in 1865 when it lost itself the same way.
Crusty old Thad Stevens in Congress argued the case for a Radical Reconstruction precisely upon the ground that the South was conquered territory. "Conquered" meant the conquerers could do with it as they pleased. Ironically, for a few weeks after Appomattox, southerners expected precisely that; more than most Americans they could understand a total expropriation of territory by force. What they could not understand was the North's halting clumsiness. . . .

Anyway, your last comment speaks to the heart of our disagreement with Jeff C. -- we look around and see an American economy that builds plenty and provides millions of jobs for blue collar folks and could provide a lot more if the government would just get out of the way (the Lydia solution). Jeff looks around and worries about specific items Americans don't produce or looks around and worries that many of us have no connection to farming or manufacturing (or any type of manual labor) and worries that we are losing something important necessary to human flourishing.

I don't simply dismiss concerns about the relationship between work and human flourishing (see, for example, Shop Class as Soulcraft), but there's a tendency to wax too nostalgic about the relative decline in those sorts of jobs much like Jefferson did in his fulsome praise of farming and attack on Hamilton's vision of an industrial society (in addition to the practical difficulties we've been discussing about trying to restructure the economy to favor those types of jobs).

Why would someone buy Chinese network gear when the American gear is the best?

That "American gear" is made in China. Do your network engineers reload the firmware from an official, pressed-in-America disk whenever they deploy a new router?

Yeah, didn't think so.

**or reinstall Cisco IOS?

Do you reload your Android or iOS installation from an official build from the vendor's site before using it?

Ex. of one of the many, many things that could happen: http://www.net-security.org/malware_news.php?id=1837

This siren-call of protectionism is in truth the demand that government force -- under threat of violent death -- all of us to subsidize a certain favored few of us.

These protectionists are working/arguing under a number of false premises, prominent among which are:
* the strange idea that the United States engages in trade with (for instance) France (*)
* the related idea that "we" (i.e. all Americans, as citizens/subjects of the USA) have a vested interest in the continued existence of any and all business interests which happen to be located in the US.

But, the US does not engage in trade with (for instance) France; rather, individuals in the US engage in trade with individuals in France. There are any number of reasons these individual choose to engage in trade: some, such as relative cost or price (as see one of the foolish complaints in the OP), being rational and some, such as cachet, being irrational.

Individuals in the US (and in all lands, and all through time) have decided that it is in their better interest to trade for the goods they need or desire with other persons, rather than to themselves manufacture everything they want or need. In times past, many individual Americans decided that it was in their better interest to buy (some of) the goods they need or desire from persons in other States, rather than to buy what other citizens of their own State were offering them.

Presently, individuals in the US have decided that it is in their better interest to buy (some of) the goods they need or desire from persons in foreign lands, rather than to buy what other Americans are offering them.

This never-ending, albeit foolish and irrational and in the end self-defeating, demand for protectionist measures is the demand for protection from the price competition that is inherent in allowing individuals to freely choose from whom they shall buy the goods and services they desire.

Your protectionism demand is the assertion of ownership of me!


(*) States like China are different; for China is one huge slave-labor camp.

What I've never really understood is the dogmatism exerted on the subject of free trade. Ever since I was politically aware publicists on the Right have pleaded for this desideratum with passion and stridency. It's like free trade is identified with virtue and should be pursued for its own sake.

But if I may analogize Machiavelli, this virtue needs some reworking. If free trade is good, I say that the American statesman who who wants to gain prosperity or keep it must learn how not to be good, and use that knowledge, and refrain from using it, as necessity requires.

I do not for a moment deny that there may be times when a policy of free trade is emphatically the best policy for him whose object is the prosperity of America. In these cases free trade should be pursued with relish.

However, even given the truth of the generalized theorems of libertarians (for it is not necessary for me to refute Smith, Ricardo or Friedman to make my point) concerning the tendency of free trade to enrich, only a truly brassbound ideologist would conjecture that there exist no circumstances where free trade would be detrimental to the prosperity of the nation.

So even granting the libertarian arguments about comparative advantage, invisible hands and the like (never dreaming of denying them), still the fact remains that national interest trumps free trade; and still the fact remains that to dogmatize on free trade is to presuppose that the American statesman should elevate his loyalty to the dogma over his loyalty to the nation itself.

Thus to my eyes the stridency of the free trade argument is tens times more damaging than its potential fallacies or weaknesses.

What I've never really understood is the dogmatism exerted on the subject of free trade. Ever since I was politically aware publicists on the Right have pleaded for this desideratum with passion and stridency. It's like free trade is identified with virtue and should be pursued for its own sake.
Well, yes; liberty is always incomprehensible, or at least offensive, to socialists, isn't it?
That "American gear" is made in China. Do your network engineers reload the firmware from an official, pressed-in-America disk whenever they deploy a new router? Yeah, didn't think so.

You're mistaken Mike. You are equivocating on the term "manufacturing," but so do the companies themselves sometimes. At least the phases of design and assembly must be distinguished as I did. Otherwise there can be no coherent discussion.

Cisco designs their chips and their code-pounders develop IOS (these two are the crown jewels that make their gear what it is) with Americans in CA. And you are quite misguided in asserting anything about CD-ROM "pressing." IOS doesn't come that way. A regulatory and documentation CD used to come with their gear, and I don't even remember if it still does. I know that I toss what very little physical media there is in the trash as soon as I unbox one. All software and documentation comes off of cisco.com.

Their equipment is assembled in various places. Mexico, China, and the US are the main ones I've seen. I arrived at work today I looked at the switch nearest me and it's "country of origin" says the US. Apple's country of origin is always China. As I said, all Apple products say "Designed by Apple in CA."

Whatever the merits of assembly jobs, surely the "food chain" idea that I used is valid. The Japanese have always understood this. In a small country they want assembly jobs done by foreigners in foreign lands to clear space for their citizens to be at the top of the food chain as the designers. Now we could argue the merits of assembly work, but is there any doubt that BMWs built in Alabama are German cars? I don't think so. How is a mating designed by Germans in Germany not German? The value of work follows its complexity and difficulty does it not? If not, then surely no non-arbitrary and stable idea of it could be found. There is no doubt that Cisco gear is American, regardless of where it is assembled. There is no doubt that Apple kit is American, no matter where it is assembled. If you want to know where the lion's share of the money goes, follow the food chain to its designers. That said, I believe some foreign car manufacturers do use local designers to some extent. But I don't think that alters the main points of this discussion.

So one can't merely use the term "manufacturing" as a term of convenience, whereby it means assembly sometimes and design at other times in self-serving ways. It has a stable use and meaning by function, and that is the way I use it. Responsibly.

Now look, warnings about the intentions of China are well-taken. I actually expect war with China down the road, if they maintain the course they're on as they will if at all possible. I suspect that in China we are witnessing the first mature fascist state. China eats foolish companies for lunch that march to China seeking profits naively. There is nothing about "free-trade" that says one should do anything other than hold ones potential enemies as such. If Cisco did code IOS in China or with Chinese nationals they'd be idiots. They'd be fools not to know what goes on in China, the lack of respect for copyright laws, and the intentions of the Chinese government. People are right to be suspicious of them, and it worries me when people aren't. But that is a separate question from the questions revolving around the supposed "decline in US manufacturing" topic at hand.

You're mistaken Mike. You are equivocating on the term "manufacturing," but so do the companies themselves sometimes. At least the phases of design and assembly must be distinguished as I did. Otherwise there can be no coherent discussion.

Cisco designs their chips and their code-pounders develop IOS (these two are the crown jewels that make their gear what it is) with Americans in CA. And you are quite misguided in asserting anything about CD-ROM "pressing." IOS doesn't come that way. A regulatory and documentation CD used to come with their gear, and I don't even remember if it still does. I know that I toss what very little physical media there is in the trash as soon as I unbox one. All software and documentation comes off of cisco.com.

Refer to the article link I posted. Computers are coming to the US with rootkits embedded into the BIOS.

But.... but.... I thought everything that mattered was in American hands!

You seriously underestimate the ease by which the Chinese can contaminate these products if their manufacturing is done in the PRC.

(*) States like China are different; for China is one huge slave-labor camp.

Who are you to limit the freedom of individual action of a PLA General to threaten to kill an entire village if they don't make cheap products for export?

Statist, imperialist.

So even granting the libertarian arguments about comparative advantage, invisible hands and the like (never dreaming of denying them), still the fact remains that national interest trumps free trade; and still the fact remains that to dogmatize on free trade is to presuppose that the American statesman should elevate his loyalty to the dogma over his loyalty to the nation itself.

Libertarians don't want to acknowledge that most of the human race cannot even conceive of openly embracing Capitalism, which is why most economies are highly subsidized and regulated. That is, they're highly #$%^ed with by the state. Typically, the state does that to forcefully give advantage to some businesses to enrich the nation (in theory). State-owned businesses and sovereign wealth funds are great examples of things which a Capitalist state should vigorously fight on behalf of its economy.

It seems lost on them that most of our trade partners are rather enthusiastic about using the state to prop up business. Thus our government must do something to counteract that. Restricting trade is less evil by a wide margin than fighting fire with fire.

Paul, I also think being absolutely doctrinaire about free trade is a mistake. Nor is the comparison to making carriages quite right, either, since the products in question are not obsolete. They're things people not only want but actually need, right now. And as I said above, national manufacturing independence and national sovereignty do seem to be intertwined in some important senses.

On the other hand, in practice I think I would probably meet few tariffs I would like. They have definite negative impact, economically, and I see few good options to steer us between, on the one hand, attempted central planning of the economy (in order to be sure to prop up all and only the "really important" manufacturing industries for our nation's independence) and simply crashing the economy by putting some sort of high tariff on everything that comes in. Nor is the latter the way things have ever worked, for reasons both good and bad. Putting in place some sort of tariff-heavy regime is _of course_ asking for tinkering, graft, special treatment of this company or that, and the like.

It seems to me that we need to think more creatively about the reasons why so many jobs are being outsourced and try to address those reasons in economically healthy ways, across the board as much as possible, in order to try to harness the power of the market to solve our problems rather than fighting it. I find it difficult to believe that this general approach would not have a substantial positive effect on bringing a wider variety of jobs back to American soil.

I think it would be only fair for protectionists to admit that no really sweeping attempt has been made in this direction in terms of domestic policy and also that a move now in the direction of major protectionism, supported no doubt by Big Labor and all the Usual Suspects on the left, puts the government hand-in-glove with the very people who will fight hardest _against_ any such attempted free market domestic reforms. In other words, it would be running in precisely the opposite direction. I cannot view this as a good idea.

Putting in place some sort of tariff-heavy regime is _of course_ asking for tinkering, graft, special treatment of this company or that, and the like.

And that strong tendency for abuse is precisely why one may not actually be a "dogmatic" free trader but may nonetheless sound like one.

In a sense it pulled off its most important imperialistic venture in 1861 when it simply seized itself from the United States government by the use of force. It could hardly complain in 1865 when it lost itself the same way.

BS

"States like China are different; for China is one huge slave-labor camp"

True enough. Yet WalMart owes its existence to trade with China. And neo-cons love WalMart; it's the great American (ahem) success story.

Am I missing something?

Go Cisco. I hear they're getting ready for more layoffs.

Down with the Wagner Act:

Hey, let’s cripple the only non-failed U.S. automaker! More Wagner Act jobs magic: The deal between the UAW and Ford is in trouble. UAW members appear to be on the brink of rejecting it. That means a strike is possible. Will the UAW win a strike? I don’t think so, and the UAW leadership apparently doesn’t think so either. Remember that hundreds of thousands of competent American workers would happily perform UAW members jobs for half of UAW pay. A UAW Facebook post warning members that Ford could hire “replacement workers” has been withdrawn, but that doesn’t mean Ford won’t and it doesn’t mean the union hierachy isn’t worried. … P.S.: Whether the UAW strikes or grudgingly accepts the deal, it will be good vibes, cooperation and productivity all around thanks to the adversarial mindset institutionalized by the New Deal Wagner Act. … P.P.S.: Remember that the structured “economic contest” set up by Wagner–in which workers get whatever they can get by physically leaving the plant and trying to prevent their employer from carrying on with business–is morally arbitrary, almost as arbitrary as if they settled the dispute with a boxing match. Unions that don’t have the UAW’s advantages–big centralized factories that can be easily blockaded, jobs that managers can’t easily do, a reputation for physical confrontation–don’t get UAW pay. Ask the garment workers. …

Read more: http://dailycaller.com/2011/10/13/ford-uaw-deal-in-trouble/#ixzz1bRpMqAUP

Refer to the article link I posted. Computers are coming to the US with rootkits embedded into the BIOS.

But.... but.... I thought everything that mattered was in American hands!

You seriously underestimate the ease by which the Chinese can contaminate these products if their manufacturing is done in the PRC.

I'm afraid you misunderstand the nature of security threats. Ever heard of Stuxnet? It infected computers with no network access in underground bunkers and only security-cleared workers ever touched them! The Chinese (or anyone) don't need to touch a computer to infect it, so why you're arguing along this line is puzzling. It's an argument from FUD (fear uncertainty and doubt.)

My line of argument is that there is a strategic and monetary value in authorship, if that is the right term. It actually does provide security in a sense (though that wasn't my argument) because if you control the software frameworks and someone copies it or reverse engineers it illegally you just change it so the copies stop working. RealAudio (whatever they are called now) tried this to get "compatibility" for 3rd party hardware to Apple's music store. I'm not sure about the legality in that case, but it isn't even worth calling the lawyers unless they foolishly persist. Change a few bits on the next update and the competitors "compatibility" feature stops working. No one can keep up, and it is quite obviously pointless to try. Digital cryptography keeps and oversight keeps malicious code out of data stores. Security can always be breached, but that fact is independent of location.

But the bottom line is the more of your own stuff in in your products, the better off you are in a whole host of ways. Those who make their own stuff are the smart and prosperous ones, and the death of this is greatly exaggerated.

BS

I've met my quota of commenting for the month pb. I doubt you know anything about the CW anyway or you'd have displayed some knowledge in your comments.

Go Cisco. I hear they're getting ready for more layoffs.

If only they were unionized, that wouldn't be a problem would it? They'd just keep their workers, let the products stagnate, and hope for a government bail out. I suspect that would be the preferred method for the anti-trade types when they're not dreaming of lifetime employment without concern for the product or service made or provided.

As I've said before, I don't always agree with everything he has to say on the topic (I think he's badly mistaken about immigration), but just yesterday Don Boudreaux provided his readers with this link to the conclusion of his book Globalization:

http://cafehayek.com/site/wp-content/uploads/2011/10/this-the-Conclusion.doc

I thought this was particularly interesting:

"Researchers estimate that the greater participation by Americans in international trade since the end of World War II is responsible for the average American household today enjoying an annual income that is between $7,000 and $13,000 higher than would have been the case had this expansion of Americans’ global trade not occurred."

Maybe this shouldn't need to be pointed out, but since it hasn't been said yet in this thread. Jeff C. makes this argument for protectionism:

We want some of the same things the unions want, don't we? Decent wages and working conditions for American workers. American companies are unable to provide this while competing directly with wages and working conditions in the developing world

In the main post, he says,


Turns out that "free trade" is just another term meaning "cheap is all that matters":

And NM says,

I guess to the neo-con cheaper is always better regardless of other consequences.

These latter quotations look like admissions that free trade makes goods cheaper. The tension here should be obvious.

What counts as a "decent wage" is to a huge extent a function of what the money will buy. If the American worker himself is paying higher prices for things because of policies that de-prioritize the goal of making things cheaper (after all, "cheaper isn't all that matters," "it's only neo-cons who think that cheaper is always better regardless of consequences"), then that American worker's wages are _automatically_ less valuable. Hence, "decent wage" has just become harder to achieve.

Free marketers point this sort of thing out incessantly, in a variety of contexts, including the argument over minimum wage laws. Yet the lesson seemingly never gets learned. We continue to hear, on the one hand, sneers against the goal of cheapness and, on the other hand, calls for better wages for workers! That making things more expensive makes wages poorer is just one of those basic economic factors that get left out of the equation. It's amazing, but so it is, again and again and again, until one almost wants to yell, "Newsflash! The American worker for whom you have such solicitude also has to BUY STUFF."

Bravo Lydia! I already linked to Mark Perry on the earlier "Occupy" thread who had some excellent figures concerning some of the myths of "our declining middle-class", but in addition to Perry, I just came across this excellent Fed study which reinforces exactly the point you are trying to make:

http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4023

But then Nice Marmot will show up and remind us that Wendell Berry tells us that all that stuff in our houses (especially the shiny bathrooms) doesn't make us happy and we all need to raise chickens and use an outhouse or we are DOOMED...

We continue to hear, on the one hand, sneers against the goal of cheapness and, on the other hand, calls for better wages for workers! That making things more expensive makes wages poorer is just one of those basic economic factors that get left out of the equation.

It boils down to government redistribution of a smaller pie (which the Left is happy to embrace).

"I've met my quota of commenting for the month pb. I doubt you know anything about the CW anyway or you'd have displayed some knowledge in your comments."

No, I just know it's fruitless to debate you on the WTPSI. So I just call it as I see it.

I'm afraid you misunderstand the nature of security threats. Ever heard of Stuxnet? It infected computers with no network access in underground bunkers and only security-cleared workers ever touched them! The Chinese (or anyone) don't need to touch a computer to infect it, so why you're arguing along this line is puzzling. It's an argument from FUD (fear uncertainty and doubt.)

Thank you for making my point. These devices are assembled in China. Chinese Intelligence can get ahold of a pallet that is headed for the US and infect them. The article, which I referenced, shows a relatively unimaginative way in which the Chinese could pwn an air gap network.

When those goods are assembled in China, do you think there are some seraphim flying around them, wielding flaming swords at Chinese intelligence officers who are using their corporate-PLA connections to get access to devices headed for buyers like US banks, US Government agencies and defense contractors?

No, I just know it's fruitless to debate you on the WTPSI. So I just call it as I see it.

I think you can add infosec to the list.

Thank you for making my point. These devices are assembled in China. Chinese Intelligence can get ahold of a pallet that is headed for the US and infect them.

Far from making your point, I showed the problem is independent of anything you have mentioned, including physical proximity which your line of argument depends upon.

But then Nice Marmot will show up and remind us that Wendell Berry tells us that all that stuff in our houses (especially the shiny bathrooms) doesn't make us happy and we all need to raise chickens and use an outhouse or we are DOOMED...

Jeff Singer -- as I mentioned above I take an empirical and emphatically non-ideological view of free trade, or what today's writers call free trade: I want to know the effectual truth of it is. If it is true that free trade will benefit Americans, I favor free trade; I only insist that no one appealing to empirics stomp around in a huff declaring that free trade, or what today's writers call free trade, is always and everywhere without qualification beneficial to Americans.

Now, I will admit that the way the free trade argument correlates with a certain assiduous flippancy regarding the dangers of usurious finance, leaves me a touch more suspicious about free traders than I used to be. If these guys can so easily fall into stupefaction before the financial power, I do wonder if they have blinded themselves to other economic follies.

Nevertheless, if we permit the full flowering of Adam Smith's insight that wealth lies in the supply of goods and services, not gold, I believe empirical evidence obliges us to recognize the extraordinary benefits usually entailed by a free flow of commerce. (Note that Smith's insight introduces immediate tensions for the hard-currency advocate.) So in the case of, for instance, the two free trade deals recently passed by Congress and signed by the Executive, my inclination is to greet them cheerfully and with real hope for future benefit to all.

That said, suppose there is an advocate of free trade, arguing amongst a bunch of conservatives somewhat suspicious of free trade. Suppose this advocate himself is pretty sympathetic to conservative principle on many matters. Suppose, further, this is an advocate who really imagines his task to be one of persuasion.

I cannot understand, given the above context, what utility he thinks he has grasped in indulging cheep caricatures like insinuating that his interlocutors want us all to "raise chickens and use an outhouse or we are DOOMED." Does he think he will persuade conservatives by laying hold of the sort of stale cliches so often on the lips of liberals? Maybe he'd like to do an Ozzie and Harriet and Jimmy Stewart sneer as well. Then, just to crown the demonstration with finery, maybe he'd go for chiding silly conservatives about stupidly wanting to "turn the clock back."

Whenever self-styled conservatives start sounding like liberals in their rhetoric, I get a little nervous even when I agree with them. I offer a caution on dogmatic free trade advocacy and Ilion counters by identifies his view with liberty as such, painting anyone who doesn't pass his ideological muster with the broadest of brushes. Gee, we've never heard a liberal make that presumption, have we?

Come on, fellas. This is embarrassing.

I cannot understand, given the above context, what utility he thinks he has grasped in indulging cheep caricatures like insinuating that his interlocutors want us all to "raise chickens and use an outhouse or we are DOOMED."

Sorry, Paul--One might call that an in-house joke. Jeff S. is alluding to an earlier post of _his_ (from his personal blog) on Wendell Berry on which I think perhaps Nice Marmot (writing under his older handle) commented. If I'm mistaken on that latter point, it is in any event an allusion to that post of Jeff's and to the quotation from Wendell Berry which inspired it (as well as to NM's repeated allusions to Berry). The quotation that inspired the post concerned shiny bathrooms. Moreover, Jeff expressly mentioned NM in his comment here, not everyone on the thread, and I think you'll have to admit that NM represents the more, shall we say, dogmatic side of the anti-free-trade group here.

Fair enough. Thanks for that context.

"But then Nice Marmot will show up and remind us that Wendell Berry tells us that all that stuff in our houses (especially the shiny bathrooms) doesn't make us happy and we all need to raise chickens and use an outhouse or we are DOOMED..."

Really, that's just idiotic, and comes from someone who's either unfamiliar with Berry's writing, or is simply too ideologically committed to get it. But then what do you expect from folks that think that consumerism doesn't exist, or that if it does, it's a good thing?

Conservatives of various stripes have been sounding off about materialism and consumerism for a very long time. Interesting how the neo-cons find it acceptable to ignore completely this long train of thought, and not only ignore it, but ridicule it.

"NM represents the more, shall we say, dogmatic side of the anti-free-trade group here."

I'm not dogmatically against free trade. What I'm dogmatically against is the driving notion behind the defense of free trade, the one that says that material prosperity is an unalloyed good and is always and everywhere to be sought, or that the things of life that cannot be quantified are of lesser value that the things which can.

Lydia,
There is no tension at all. To benefit from cheaper prices, one's income must either stay the same or fall slower than the fall in prices. The biggest problem with free trade theory is that it never seems to address that people are both consumers and producers. It only worries about consumption and somehow thinks production (and the income derived from it) will just solve itself. Cheaper cars etc. mean nothing if I do not have a job! Cheaper products and higher wages have to be addressed together and not separately or the system will not work.

"NM represents the more, shall we say, dogmatic side of the anti-free-trade group here." "I'm not dogmatically against free trade."

My feeling is that extreme dogmatism is, alas, a prominent feature of most debates concerning political economy in America.

One prejudice I have is a preference for actual businessmen over academic opinion. Thus the sources and mentors I trust on, say, the nature of modern securities markets, are active businessmen who, in addition to running their own businesses, also trade for themselves in equity, debt, futures, derivatives, foreign exchange or any other market they feel brings advantage to them.

Being a Burkean, I deny that "wise prejudice" is a contradiction.

Thus my trust for those with immediate and extensive experience over those with theories and projections. It follows that experience might demonstrate, what theory would feebly fail to do, that in this rare instance free trade is destructive of national prosperity. If the answer to "more free trade" is, unexpectedly, "it's a trap!" -- why, it's predicable that the working businessman would discern this before the academic.

Now let us say that this rare instance equals, say, trade between America and China in the early 21st century. Posit the rarity of the peculiar circumstances. Posit even that free trade with India on balance benefits all; posit that 9 out of 10 times free trade works.

Lydia above indicated that vis-a-vis China she probably does not favor what is called free trade. Given the importance of this particular trading relationship, does that not make her an opponent of free trade?

I ask the proponents of free trade around here to reflect on this: that their dogmatism could force them, by hard logic, to exclude their strongest ally at What's Wrong with the World.

"Conservatives of various stripes have been sounding off about materialism and consumerism for a very long time. Interesting how the neo-cons find it acceptable to ignore completely this long train of thought"

I wrote that last night, but the more I thought about it, the more it occurred to me that it's a fair question to ask neo-cons and other modern mainstream Fox/Tea Party types. So I'm asking: What makes you folks reject the strain in American conservatism which has, since at least the early 20th century, been very suspicious of materialism/consumerism? I mean seriously, you're talking about a line that runs through the right-leaning populists, the New Humanists, the Agrarians, Eliot, Weaver, Kirk, Nisbet, Chambers, Flannery O'Connor, Walker Percy, Bradford & the other Southern Conservatives, Marion Montgomery and even Solzhenitsyn. Honestly, I just don't get how this entire "anti-consumerist" thread can simply be ignored.

I realize, of course, that many of today's conservatives are ignorant of this lineage, but it doesn't explain why those who are aware of it feel free to almost completely disregard it.

the one that says that material prosperity is an unalloyed good and is always and everywhere to be sought, or that the things of life that cannot be quantified are of lesser value that the things which can.

Actually, NM, as far as I know, nobody on this thread thinks that the things of life that cannot be quantified are of lesser value than the things which can.

But I notice that, though Jeff S.'s specific way of predicting it was perhaps a little unnecessarily sarcastic, to some extent his prediction is coming true. That is to say:

There is a constant swing in these sorts of conversations. In one part of the conversation the anti-free-market position will be presented as an _economic_ position, a position that means that the actual physical lot of the poor person, or even the ordinary middle-class person, or lots of people, will be better off--i.e., more prosperous! That is, the complaint against the free market or free trade will be that it makes people worse off in _economic terms_, in terms of _prosperity_. When that is challenged directly by an economic argument, as I challenged it above in my comment concerning the meaning of "decent wages" and rising prices, the ground shifts. Now suddenly we're supposed to be talking only about intangible goods and the _evils_ of prosperity.

If the anti-free-traders or the anti-free-marketers would come out and say, "Our whole deal, our whole McGiel, is that we hanker after certain immaterial values and are willing seriously to damage the entire economy of the United States and ruin the material well-being of lots of people because at the end of the whole process everyone will be better off spiritually living in accordance with these immaterial values," then we'd know what we were talking about, wouldn't we?

I find that this _very same_ dynamic takes place in any conversation about the poor or redistribution of wealth. We start by talking about the poor poor, the rich battening on the poor, the well-being of the poor, _clearly_ meaning the _material_ well-being. When, with arguments which have also been honed for a long time but which get insufficient attention from the anti-free-market side, the free marketers take the time to reply and argue that actually the poor will be materially better off if the suggested policies _aren't_ put into place, the ground shifts. Now it's all about the evils of prosperity and greed and the importance of immaterial values!

I wish anti-free-marketers understood better how incredibly frustrating this is.

To Jeff Culbreath's credit, he _began_ this discussion in the main post more or less on the other side of the swing, though he didn't put it quite as negatively for his own side of the argument as my example above. But his main post actually is mostly about being willing to make people worse off materially in exchange for national independence in manufacturing and the alleged good-in-itself of America's making different things from the things that America presently makes. It was only in the comments that he made that remark about "decent wages" which, as seems irresistible in these conversations, implied that the working man would be _materially_ better off--i.e., have _better wages_--if protectionism were put in place.

H.G. says,


There is no tension at all.

Sorry you can't see it. But of course there is a tension between the goal of giving people "decent wages" and the goal of doing something which will automatically make prices higher and wages worth less. If the policy someone proposes has automatically and at a stroke of the pen the effect of making wages less valuable, then even if it also has the effect of keeping (some) people's wages higher than they otherwise would have been, there is a *very real question* as to whether at the end of the process their material lot will be better or worse than it was before. It could quite easily be worse off and their wages, in _real, inflation-adjusted terms_, less "decent." This should be dead obvious.

As for people who don't have a job at all, that is a different matter, and we're no longer talking about the meaning of the phrase "decent wages." But even for the poor, even, for that matter, for the _very_ poor, cheaper _is_ actually materially better! Charity dollars themselves go farther when prices are lower. Here, too, I would refer to Perseus's comment about dividing up an ever-smaller pie "more equally." I think that comment was exceedingly shrewd, as all his comments on this thread have been.

Paul C. writes:

Nevertheless, if we permit the full flowering of Adam Smith's insight that wealth lies in the supply of goods and services, not gold, I believe empirical evidence obliges us to recognize the extraordinary benefits usually entailed by a free flow of commerce. (Note that Smith's insight introduces immediate tensions for the hard-currency advocate.)

A quick point of clarification because I think this is very misleading. Adam Smith formalized what is called the Real Bills Doctrine which explains how real bills (which had existed for centuries) serve as the clearing mechanism for a gold-based economy. Real bills are a form of self-liquidating credit which arises spontaneously in a free market to facilitate the bringing of those goods most urgently in demand (clothing, food, fuel) to market without the economy having to reach into its pool of gold savings at each step in the process. This allows gold to serve its most vital function as that of long-term savings and capital formation. Thus for example, an importer owes a payment for goods received to an exporter from another country, a wholesaler owes the importer, a retailer owes a wholesaler and finally a consumer owes a payment to the retailer. The importer down to the retailer don't exchange gold for goods received, they draw and then endorse (or re-discount) a real bill backed by the goods to be sold. The consumer only pays in gold which liquidates the chain.

This is a stylized example, in reality banks would get involved and a market for real bills would form giving rise to a discount rate which relates to the propensity to consume (different from an interest rate which relates to the propensity to save). The existence of credit money, backed by in demand goods and services, is not antithetical to a classical gold standard, in fact a gold standard is unworkable without it. This is not theory, this is the way the world worked leading up to WWI when government legal tender laws for fiat currency and the incentivising of banks to replace real bills with financial bills (sovereign debt) as the primary asset in their the asset pools destroyed the market for real bills and thus the classical gold standard.

Lydia,

Sorry you can't see it. But of course there is a tension between the goal of giving people "decent wages" and the goal of doing something which will automatically make prices higher and wages worth less. If the policy someone proposes has automatically and at a stroke of the pen the effect of making wages less valuable, then even if it also has the effect of keeping (some) people's wages higher than they otherwise would have been, there is a *very real question* as to whether at the end of the process their material lot will be better or worse than it was before. It could quite easily be worse off and their wages, in _real, inflation-adjusted terms_, less "decent." This should be dead obvious.

If you wish to talk about "very real questions", concerning whether a person's material lot is better under free trade vs. a some sort of regulated trade, then that is a great conversation to have. My comment above concerning your claim of tension was to demonstrate that either there is no tension or the tension is no greater than the one held by free trade advocates. Free traders make the claim that the average person is benefited by the reduced price of goods and services due to the outsourcing of various jobs. This only makes sense if the new job is as good as the old one. If this was the case, why would that new job not also be outsourced? As long as wages continue to be a substantial part of the product price, there is nothing to stop the outsourcing of all jobs that are possible to outsource. A person could easily be worse off under a free trade scenario. This should be obvious.

There is also this: http://www.zerohedge.com/news/median-male-worker-makes-less-now-43-years-ago

Now it is true that the national economy is a complicated thing, and it is hard to point the finger at one or two things in order to place the complete blame. However, I'm not sure how free trade can escape any and all blame for our current situation.

Hermonta

As long as wages continue to be a substantial part of the product price, there is nothing to stop the outsourcing of all jobs that are possible to outsource.

Self-interest of the employer. That is, if there is some _actual advantage_ to those darned capitalists of doing stuff here in the U.S. If there isn't, we should be asking ourselves why there isn't.

I think this whole comment is telling. It assumes that employers will only hold out good jobs in the U.S. if they are forced to do so by sticks instead of carrots. That's the anti-free-trade attitude in a nutshell. Accept as a given that it's a lousy deal for anybody to manufacture in the U.S., insist that this _has_ to be a given because otherwise some dreadful intrinsic injustice to the workers will be done, and then look for ways to punish companies for outsourcing in order artificially to twist their arms and force them to keep jobs in the U.S.

This whole approach is _precisely_ what I question the wisdom of. If all were as it should be, capital, jobs, and entrepreneurship should flow into America naturally, not by force. America should be a good place to do business. If they aren't doing so, I strongly suspect that this is because we are driving them away by government's already doing too much of the wrong things.

We could start with Jeff S.'s suggestion: Down with the Wagner Act!

This whole approach is _precisely_ what I question the wisdom of. If all were as it should be, capital, jobs, and entrepreneurship should flow into America naturally, not by force. America should be a good place to do business. If they aren't doing so, I strongly suspect that this is because we are driving them away by government's already doing too much of the wrong things.

Let's for sake of argument say that I agree with the "If all was as it should be" point of view. If jobs are not flowing in this direction, why is it necessarily the case that our government is somehow doing something wrong? Why is it not that other governments are doing things unjustly. The Chinese are subsidizing manufacturers to bring their operations to China on top of a cheaper workforce. Since we don't subsidize (at least to the same extent), then our government is doing something wrong? Because a manufacturer could more easily pollute the water supply overseas and therefore spread costs more easily, implies that we should change our regulations here so we don't lose business? etc.

Self-interest of the employer. That is, if there is some _actual advantage_ to those darned capitalists of doing stuff here in the U.S. If there isn't, we should be asking ourselves why there isn't.

If we have problems being the lowest cost producer does that imply government regulatory failure?

Also there could be many companies that wish to keep jobs in the US. But if their competitors are able to utilize cheaper labor elsewhere, companies could go broke attempting to keep jobs here.

I do not care if carrots or sticks are used. However we must realize that at the end of the day, it will come down to balance sheets. If a tariff is necessary to help the balance sheets say that jobs should stay here, then so be it.

NM,

I'll try to answer your question, though you won't like the answer much. First, as to my exposure to agrarian and distributist ideas. With the exception of Chesterton, whom I've read a fair bit of directly, and M.E. Bradford, whom I did meet once and get to hear speak once while I lived in Nashville, my exposure to these economic ideas has been through the disciples of the thinkers you mention, not through reading their works or hearing them myself. However, these were by no means ignorant disciples or poor proponents of the ideas. For example, my dissertation director and mentor in the English department at Vanderbilt, literally the very last of the old guard in that department, was (and is, though now retired) an ardent and highly intelligent southern agrarian. I do not think you would ever have heard of him, but I think he represented the positions, not to mention the fascinating and in some ways wonderful oeuvre, of southern agrarianism very well. One of my dearest friends in graduate school had been a student of M.E. Bradford's, and we had many, many economic and other political debates. These are just examples. Since then, and all the more since the rise of the Internet (yes, I went to graduate school before the Internet), I've encountered still more through blogging interlocutors and associates and through sites like Front Porch Republic. My former editor at the now-defunct blog Right Reason was a huge follower of Russell Kirk (he lived at Mecosta for a while, where we got to visit him and meet Annette Kirk), and he insisted that I give due heed to what was then the newly dubbed “Crunchy conservatism.”

So though I haven't read as much as you would no doubt prefer I have, I do think I have had a pretty fair exposure.

I think the arguments and positions of this loose group of “conservative anti-free marketers” (for want of a better term) fall generally into two categories, tracking the two sides of what I discussed above as the frustrating “swing” of debates on economic issues. The one category includes attacks on “consumerism” and generally concerns the value of intangibles. The things said on this topic are varied and include things I sympathize with (I can be as nostalgic as the next guy) and things I absolutely do not sympathize with. Much of the disagreement here is aesthetic. Some of it is a disagreement over the alleged “essence” of the free market. Some of it arises from frustration on my part, as an analytic philosopher, over strong condemnations of so indefinable and wide-ranging a concept as “consumerism.” Part of my frustration with people in these camps stems from their failure to make concrete policy proposals. But to the extent that I can get any grasp on what policies they are proposing, or what policies *would in fact* be necessary to bring about the world they long for, the upshot is that I do not consider the cost in terms of the well-being--yes, the physical well-being, but that is not to be despised--of many real human beings, many of them weaker and worse-off than I am, to be worth the somewhat nebulous hoped-for intangible benefits in terms of “curbing consumerism” or returning us (or moving us) to an allegedly simpler and more beautiful world. In fact, I usually consider that I perceive (where my anti-free-market friends do not), that “simpler” is by no means likely to characterize the world of greater regulation, etc., that would be likely to result if their Jeremiads against “consumerism,” “suburbia,” and the like were taken seriously in the public policy arena. I also think they often do not see the probability of the _loss_ of other intangible values, such as the replacement of a healthy dislike for bureaucratic nit-picking with a 21st century British (sorry, Brits) resignation to or even love for their meddling.

This leads to the second category--allegations concerning the material well-being of groups such as “the poor” and so forth. Here, we have just a straight-forward economic disagreement. Again, to the extent that the ideas of people in these camps can be brought down to brass tacks in the form of public policy prescriptions (such as Jeff's in this post of tariff protectionism), we simply disagree that, taking all things together, such policies will make people in our country materially better off.

With more sweeping “visions,” such as Chesterton's, I do not hesitate to say that a serious and sustained public policy attempt to bring about what Chesterton evidently regarded as Utopia would be utterly disastrous and would lead to both a material situation and a situation for human freedom that would have horrified Chesterton. But he was, of course, blissfully unaware of this.

Okay, long enough answer.

If jobs are not flowing in this direction, why is it necessarily the case that our government is somehow doing something wrong?

Not as a matter of a priori logic. But, first of all, as a matter of human experience. (A point P.J. O'Rourke makes, not always elegantly but effectively, in _All the Trouble in the World_, is that it seems to be a constant of human society and human history that where there are economic problems, government activity ends up being at the root of them.) Second of all, because we can find and point to actual, known things that government _is_ doing that will _obviously_ discourage American jobs, and the tariff-proposers are not proposing even trying first doing away with these roadblocks.

Lydia,
Unless there is some reason to believe that if our government did everything right and another government did everything right, jobs will inherently flow this way and not that way, one will still come down on the side of a tariff regardless of other changes that could/need to be made.

Or as I asked in the previous post

If we have problems being the lowest cost producer does that imply government regulatory failure?
Unless you can say yes, then it seems that you case against regulated trade falls apart.

Unless there is some reason to believe that if our government did everything right and another government did everything right, jobs will inherently flow this way and not that way, one will still come down on the side of a tariff regardless of other changes that could/need to be made.

That's just not true. One has reason to believe that if our government changed its behavior significantly in the ways suggested jobs would _in fact_ flow this way far more than they are presently doing. Whether that would be address any _legitimate_ concerns of the anti-free-traders (while preserving the benefits of free trade) remains to be seen. It certainly hasn't been tried.

Lydia,
Are you an empiricist? If not, I am not understanding your line of reasoning. If labor remains a substantial cost of production, what is it that we are able to offer a company that another country cannot to make up the wage differential? Are we inherently smarter, than people in other countries? I would say no. Are we inherently harder working than people in other countries? Again I would say no. Do we have better access to capital (and therefore better facilities and technology) than other countries? Again I would say no. What is it that makes you believe that better regulation solves inherent problems?

Sorry, I'm afraid you're the one not being an empiricist. I can imagine lots of reasons why employers might _want_ to do their business here. Why, Mike T above even mentioned patriotism, of all things. And he's hardly a free trade hard-liner--not at all. It would hardly be a shocking thing to suggest that America, the richest nation in the world, might just if left alone have better facilities and access to capital than many another country. Again, empirically, instead of doing this a priori, "There can't possibly be any net advantage to deregulating and lessening the power of organized labor. In the end we can tell from our armchairs that there's going to be a huge outsourcing problem whatever we do unless we just go straight right now for full-bore protectionism," how about _trying_ removing these government barriers to American jobs, American enterprise, and American capitalism? Hmmm?

Easier physical accessibility of the allegedly desirable American consumer market. (You don't have to ship those goods from across the world.) The deregulation itself and the absence of a need to bribe officials could be a selling point as compared with some other countries.

If we strengthened our currency, "lower" wages in the U.S. (than now) might, in fact, be higher wages in terms of real dollars--another idea.

It's not rocket science to think of a lot possibilities. But we'll never know unless we try, will we?

political stability

security of contracts

the fact that your officials don't have to risk getting horrible tropical diseases when they go to inspect your plants

(It isn't even hard to keep on going with these things. I'm sure others can suggest more.)

I was insulting empiricism. Let say that I cannot make my mortgage payment by about 500 dollars a month. However I go out to eat a lot and spend about $350 a month on take out etc. I do not need to do an experiment to see if when I stop eating out, I can then make my mortgage payment. The gap will shrink but I still am at a deficit.

I dealt with the patriotic argument in a different form earlier. Even if people want to keep jobs here, that does not imply that they will be able to do so. If someone outsources the others will have to follow or risk going out of business.

Do you really believe that if someone's only lack was access to capital that the trillions of dollars available worldwide for financing projects, no one would send them any money?

Lastly, it seems like you are choosing the "Americans are inherently smarter or harder working" when you reference the American enterprise and American capitalism part at the end of the post. Is that your final answer?

If we strengthened our currency, then our dollars will go even further when we buy things overseas, such as labor etc. That is not hindrance to outsourcing. It is a help. (Not that I am against a stronger dollar)

As far as the rest of those suggestions, those are real issue in various places, but those are not inherent issue of trade unless one wants to say that Americans are inherently less prone to corruption, better able to make secure contracts, are smarter etc.

Americans are inherently less prone to corruption, better able to make secure contracts, are smarter etc.

This "inherently" stuff is so stupid, frankly, that I'm going to stop answering it after this comment: *It doesn't matter*. Due to our legal, political, etc., system, we *do in fact* have these sorts of advantages as a country over a great many countries (including plenty of those that have cheaper labor) that are less stable, more anarchic, more corrupt, have less protection for intellectual property and patents, are less able to guarantee the honoring of contracts, have more disease, etc., etc. I don't give a tinker's damn whether this is an "inherent" matter. These things are _true_, and that's what matters for attracting jobs to America if we can get the government out of the way.

Can't help wondering: How typical is this attitude we're seeing in these last few comments from H.G.? How many other anti-free traders believe, more or less, that America has nothing to offer the businessman? And hey, since other countries are so dirt-poor that their people are willing to work for peanuts, this is the only factor in the equation, so the only way to get businesses to set up shop in the U.S. is to force them through tariffs? Very interesting.

I have no problem with you making the argument that Americans are better at these things. I do not think it makes sense to make public policy based on this assumption.

Even under this assumption, you do not make the case that we are better than all countries with cheaper labor. So you seem to admit that we will lose jobs to those countries, regardless of government regulation.

Lastly, it seems that free trade only make sense if one is "better" than their trading partners in a myriad of ways (education etc). If they are not, than free trade will be a net job loss proposition.

Far from making your point, I showed the problem is independent of anything you have mentioned, including physical proximity which your line of argument depends upon.

Mark, you are a grade A total f#$%ing moron. There are only two ways to infect an air-gap network: compromise the hardware being added to it or compromise one of the people who uses it.

I do not think it makes sense to make public policy based on this assumption.

Yeah, let's not let a few empirical facts interfere with our a prioristic public policy recommendations. Sheesh.

Even under this assumption, you do not make the case that we are better than all countries with cheaper labor. So you seem to admit that we will lose jobs to those countries, regardless of government regulation.

Jeepers. I admit nothing of the sort. I don't know exactly, precisely, to whom we'll lose or from whom we'll gain jobs. But I think it would be the height of stupidity to take on the known and definite negatives of protectionism because of the mere possibility that we might lose some jobs that we could otherwise strong-arm into coming here. Nobody ever said that we have to have all the jobs in the world located on American soil! And we're certainly losing plenty of jobs to other countries the way we're going on now! The question--which is, of course, an empirical one--is how the American people will be better off.

Two quick points:

1) Paul, as Lydia correctly noted, I was obviously using hyperbole and sarcasm earlier 6:22 PM comment from Oct. 21. But in my defense, NM sort of deserves it -- has he made a substantive comment here that does anything more than vaguely insinuate that something is rotten in Denmark? Again, as Lydia noted, both Jeff C. in his original post and someone like Mike T. in the comments have detailed their specific concerns with how global free trade is destroying our manufacturing base and why this might be a problem for the U.S. I disagree with their position, but at least is is an argument we can all grasp.

2) Lydia is really doing yeoman's work with HG and it is kind of jaw-dropping that HG thinks Americans can't compete with poor countries (apparently this is also a big problem in Japan and Germany as they have no inherent advantages and just can't compete with poor countries) -- I would just add two words: comparative advantage.

The question--which is, of course, an empirical one--is how the American people will be better off.

I suppose it hinges on what you mean by American people, but for the majority (i.e. the proverbial "working man"), the empirical question has a definite answer in regards to NAFTA. NAFTA of course is much more balanced than the situation with China, where they have basically weaponized their economy. Apparently the free market solution with China is to reset the clocks to the early 1900's and get rid of labor laws, worker safety laws, and environmental protection. For some reason, that is supposed to demonstrate our superior standards of human rights.

http://www.epi.org/publication/briefingpapers_bp147/

There is one confusing argument which is related to what Mark was saying about the top of the food chain being where the product is designed, not where it is assembled. First, why blame supposedly lazy union workers for bad quality and product stagnation if the main problem is the American design? As someone who made the mistake of buying two GM vehicles, both of them were great to own until the design flaw showed up about a year after the warranty expired. If they are designed to fall apart, how is that a negative reflection on the workers who made it? The lesson I learned was that GM management has zero respect for their customers.

Second, anyone who isn't an ideologue should admit that free trade with developing nations will have at least a temporary negative effect on portions of the domestic workforce because of comparative advantage. Since that is intrinsically "part of the deal" with free trade, it seems like the decent thing to do is to also advocate a social safety net to assist and retrain those whose lives are significantly disrupted by a changing market. That is one thing about libertarians that I find particularly odious, which is that they want to implement their infamous creative destruction - which can destroy more than it creates, yet the only possible excuse for being unemployed is laziness.

Since that is intrinsically "part of the deal" with free trade, it seems like the decent thing to do is to also advocate a social safety net to assist and retrain those whose lives are significantly disrupted by a changing market. That is one thing about libertarians that I find particularly odious, which is that they want to implement their infamous creative destruction - which can destroy more than it creates, yet the only possible excuse for being unemployed is laziness.

The problem with this approach is that getting the workers back to work is more involved than just throwing some education programs at them (what both sides typically mean when they throw out the education card). An experienced worker who has to be retrained into a new field must start out as entry level unless the move is into a related field where a lot of the previous job's skills are applicable. Thus the worker needs both training and support until they can get themselves back onto their feet.

Strategically restricting trade to protect the working class in reasonable ways is probably the cheapest way to do this. You are quite correct when you say the Chinese economy is "weaponized." The best way to blunt that is to impose restrictions that target the advantages their government has given their businesses.

And on that note, I'd like to very pointedly remind Jeff and Lydia that a very significant percentage of the Chinese "private sector" is actually owned by people affiliated with the PLA or intelligence services. The idea that there is a meaningful "private sector" to trade with is naive. Thus a restraint on trade to protect our people against these facades for the Chinese military is not really a meaningful restriction on individual liberty worth worrying about.

Mike T, we're probably in agreement about China, but that's really, on my part, for reasons that could be appreciated independent of the _general_ argument against free trade. The general argument about "losing American jobs," etc., would apply concerning lots of other countries that don't raise the specific issues that China does. Heck, Ilion is probably the most dogmatic free trader who has commented on this thread, and even _he_ said that China is different.

There are only two ways to infect an air-gap network: compromise the hardware being added to it or compromise one of the people who uses it.

I know that Mike, but last time I checked routers weren't air-gap devices. The two air-gap exploits we discussed (Award BIOS rootkit and Natanz-stuxnet) both happen because of contaminated media and don't require that people who use the media have any malign intent.

The point being this issue in no way supports what you are arguing for, whatever other merits your position may have.

There is one confusing argument which is related to what Mark was saying about the top of the food chain being where the product is designed, not where it is assembled. First, why blame supposedly lazy union workers for bad quality and product stagnation if the main problem is the American design?

step2: Why indeed? Dear Lord, who ever made the claim that the assemblers were to blame? The only time I have ever heard this said was as a strawman. Pro-union folks say "You guys always blame the union for the failures of . . ." But it's not true. In the case of GM (and I have actually worked in GM factories), I think the union was one corrupting influence among many, and another massive factor is congressional meddling. The latter two have a severely corrupting influence on management. Management is to blame, but what corrupted them? There is no single point of blame, but the lack of control engendered in everyone participating in a company where such rules predominate is the real answer. The company culture itself is corrupted as far as being the type to produce quality products and take pride in one's part in their production.

It is so very, very terribly misguided to say the view I've expressed would make a right-thinking person blame the assemblers. It does not follow in any way.

Mike T,

The problem with this approach is that getting the workers back to work is more involved than just throwing some education programs at them (what both sides typically mean when they throw out the education card). An experienced worker who has to be retrained into a new field must start out as entry level unless the move is into a related field where a lot of the previous job's skills are applicable. Thus the worker needs both training and support until they can get themselves back onto their feet.

In practice such would destroy free trade. If you have the (former) employer on the hook for the workers who lost their jobs due to outsourcing, the cost advantages to outsource disappear. You end up paying for two sets of workers etc. You could not in conscious put the cost on society in general because that would just privatize the profits while socializing the costs.

It is so very, very terribly misguided to say the view I've expressed would make a right-thinking person blame the assemblers. It does not follow in any way.

In previous comments you wrote:
"American manufacturing is alive and well in non-union shops, but more importantly where the rate of change outruns the ability of government to locate something to tax and regulate."

"If only they were unionized, that wouldn't be a problem would it? They'd just keep their workers, let the products stagnate, and hope for a government bail out. I suspect that would be the preferred method for the anti-trade types when they're not dreaming of lifetime employment without concern for the product or service made or provided."

In your most recent comment, you also wrote that management in a union shop is corrupted by a culture that isn't the type to produce quality product. So even though the design is directly at fault for some cases of failing companies, and the design is at the top of the food chain, there is still a mysterious causal connection to assembly.

my dissertation director and mentor in the English department at Vanderbilt, literally the very last of the old guard in that department, was (and is, though now retired) an ardent and highly intelligent southern agrarian.

Lydia, I didn't know or had forgotten you went to Vanderbilt. I had never thought about the Southern Agrarian connection. I forget who it was that said that it was important to remember it was a literary movement foremost, rather than political.

Kenneth Stampp gave a characteristically brilliant inaugural lecture at Oxford in '62 called "Andrew Johnson and the Failure of Agrarian Dream" that is well worth a read if you can find it. Stampp points out its little-understood but pernicious and decisive role in the beginnings of Reconstruction in the person of Johnson. I suppose it's never easy to identify what is good in something and apply it to the future in changing circumstances, but it seems to this midwestern farm boy that the Agrarians never seemed connected to life or thought as it was in the agrarian culture of those who actually lived it.

So even though the design is directly at fault for some cases of failing companies, and the design is at the top of the food chain, there is still a mysterious causal connection to assembly.

step2: I see no need to defend myself on the charge of a "mysterious causal connection." If my explanation is mysterious, then so are all similar social phenomenon we encounter in life even down to banal office or even family politics. I'm not persuaded it is mysterious.

step2: I'd also point out something else. When you say "design is directly at fault for some cases of failing companies, and the design is at the top of the food chain . . ." there is a problem.

Design isn't always at the top of the food chain. It is at successful product companies, and not necessarily at others. That is the problem. A recent past CEO of GM said he was surprised to find after assuming the role that the most important job was managing the benefits of the union, and not designing cars. In fact, among auto aficionados such as myself the main decision of the boards of directors of any of the American auto companies was whether or not they'd appoint a "car guy" or not. Everyone knows which is which, and there is a huge struggle. Usually they didn't, and we knew what that meant.

Here's Steve Jobs giving probably the most concise and accurate analysis of what happens to successful product companies over time. The "sales guys" take over. And it isn't about design any more. There are product guys and sales guys (or accountants or bean counters if you prefer.) Whether its cars, computers, or widgets, the story is the same.

I know that Mike, but last time I checked routers weren't air-gap devices.

No networking device is an "air-gap device." Air-gap networks are networks of any level of complexity (including ones that use routers!) that are physically separated from insecure networks like the public Internet. That's what air-gap security means, Mark.

As to your point about contaminated media, you are ignoring the fact that all of the programmable pieces of a computer are media. The chip that holds the BIOS, the disk controllers, the network controllers, etc. If the Chinese find a good zero day exploit that causes a buffer overrun, there are all sorts of places they can squirrel away malicious code for their buffer overrun exploit to load and wreck havoc.

Interesting answer, Lydia, although I think you're not seeing the underlying philosophical foundation of the anti-consumerist mentality. More on this later.

In the meantime, given your answer what then do you do with Solzhenitsyn? Is his critique of Western culture as crass and materialistic in any way valid? If so, then how can modern capitalism, with its appeal to the sovereignty of the appetitive aspect of man, escape blame?

Air-gap is a physical isolation. Routers and switches can be in an isolated network, obviously, but can't communicate across them. I am not ignoring media, and I've said how the Iranians found out the problem of compromised media (via sneakernet) in the most extreme air-gap example I know of. But the point isn't that no security is perfect, but that your implied geographic understanding of security methods doesn't advance any argument you've made in this thread.

Is his critique of Western culture as crass and materialistic in any way valid? If so, then how can modern capitalism, with its appeal to the sovereignty of the appetitive aspect of man, escape blame?

In his theocratic-agrarian way, sure he had a point. But on the political and practical level, the question is "Crass and materialistic compared to what?" Critics of his type are valuable to society. They are also not the most balanced voices we have, and never wanted or claimed to be. So it all depends upon what point one wishes to make in citing him. The question is not whether Solzhenitsyn's critique is in any way valid, but whether or not the point one wishes to make is justified by citing Solzhenitsyn.

"So it all depends upon what point one wishes to make in citing him."

The point I wished to make is contained in my question.

'But on the political and practical level, the question is "Crass and materialistic compared to what?"'

How about compared to what it should be? Not in an ideal sense, of course, but in a morally realistic sense? How about not having pornography as a multi-million dollar industry? How about not having to worry about what comes on the radio or TV when your kids are in the room? How about not having an endless parade of degenerates as pop icons? How about not being beat over the head 24/7 with inane, vulgar advertisements for things we don't need upon which we can spend money we don't have?

Maybe instead of over-analyzing our prophets we ought to just start flippin' listening to them....

The point I wished to make is contained in my question.

I know. I was speaking generically. It's an awfully tough argument to make that modern capitalism "appeals to the sovereignty of the appetitive aspect of man" in some unique way. I think it a good bit less. And I'm not sure it is a good idea to decry modern capitalism while using a monetary figure to rate the comparative evil of a given nation's porn. Have you looked into the statistics of the porn industry overseas? Asia? I did this the months ago when you brought up this point and it was pretty interesting what I found. I wonder if you've tried to answer your own question.

How about compared to what it should be? Not in an ideal sense, of course, but in a morally realistic sense

What it should be in a morally realistic sense? You've used negative terms so far. When or where was the world "as it should be?" The world isn't lacking in actual alternative examples to "modern capitalism." How did it go? I should think no culture is or ever was as it should be. If you think other cultures, particularly the repressive ones, have a better popular culture I think you're mistaken. It's a mad world out there. Tehran has a large preponderance of plastic surgeons, and Iran has the largest number of nose jobs in the world. Crazy, huh? You know how I know that? Because an eight-year old girl I was teaching to read a few years ago told me her mother suggested she should get a nose job when she was eighteen because her nose was too big. I was shocked. So I looked into it and yep, Iranian mothers might just do that because that's their culture. They want to look like Iranian movie stars. Go figure. I had a Pakistani teacher some years ago that didn't mind telling us how the trope that Western is corrupt is not true, certainly not compared to any ME nation, including pornography. On and on it goes. You are trying to get way too much mileage out of the pornography charge. It's not like it is unique to economically capitalistic nations. The world is awash in it, whatever their economy is like, and regardless of whether or not they'll cut your hand off for stealing.

Article on backdoors in chips:

http://arstechnica.com/security/news/2008/05/pentagon-fears-manchurian-chips.ars

Additional article on countfeit CISCO routers that made it into government use:

http://www.abovetopsecret.com/forum/thread350381/pg1

I would say the concerns are very real.

Also, CISCO is a heavy user of H1B's. So a lot of those "American" designed products use imported foreign workers to design them.

But the point isn't that no security is perfect, but that your implied geographic understanding of security methods doesn't advance any argument you've made in this thread.

Mark, you obviously aren't even following anything I've said if you think my argument is about geography in any way. It is, and has always been, about the ability of foreign governments to compromise the security of devices made in country by modifying the hardware or software. Chris did you a favor by posting you some reading material. You ought to read it before you continue to make an ass out of yourself.

So a lot of those "American" designed products use imported foreign workers to design them.

And let's not forget that Microsoft has given the source code of Windows to the Chinese government to help assuage their security concerns. The Russians also have it. This isn't speculation, it's fact that Microsoft has released in public press statements that Mark can find if he does any research (which he won't).

What's that Mark? The Chinese government now has all the tools they need to have an army of hackers look for 0 day exploits in Windows and target them with malicious code? What did you say? Sounds like they have everything they need to ensure that US government agencies and contractors get a little "secret sauce" put on their Windows-driven devices to "add a little zing to the user experience."

Is his critique of Western culture as crass and materialistic in any way valid? If so, then how can modern capitalism, with its appeal to the sovereignty of the appetitive aspect of man, escape blame?

Once again, are we having a discussion of economics in terms of economic cost and benefits, or are we not? Swing back and forth. We _start_ by talking about the supposed "materialistic" harm to people--loss of jobs, loss of wages--and when those darned capitalists discuss the matter on that level, we swing the rudder hard over to discussing the supposed _evil_ of making people materially well-off and the supposed "original sin" in free market economics of its being based on people's desire to get ahead. It never ceases to happen. This is what I discussed above.

As for pornography, I think it should all be outlawed. You don't have to be a hard-core libertine-libertarian to have serious doubts about trade protectionism.

By the way, I note: Our editor, Paul Cella, and I often have disagreements about various aspects of economics. On this very thread he has been, as he says on another thread, quite happy to "make prosperity the touchstone."

The thing is that y'all have to make up your mind: On the one hand, you seem to be saying that because the method of the free market is to harness people's desire to get ahead in life, make good, even, yes, make money, it must be bad, bad, bad, crass, etc., no matter how much it actually _works_ for the purpose of making people (in fact, the society as a whole) materially better off, lengthening expected life-span, etc. In fact, it's worse _because_ it works so well in these terms. On the other hand, you want to tell us that actually capitalism involves making the poor or middle-class worse off and that it's to be critiqued on economic grounds. You can't really have it both ways.

Mark, to me the "it's-worse-somewhere-else" arguments are no more valid than "the-grass-is-greener" arguments. I'm talking about contemporary Western culture and that alone.

Lydia it is not a "swinging back and forth" or a desire to "have it both ways" but rather an attempt to demonstrate the fact that there is a connection between the two sides. This inability on the part of your group to see the (to us, rather obvious) connection is what frustrates folks on our side.

To put it briefly one might phrase it this way: there is a direct connection between the modernistic philosophical denial of the transcendent and the crass acquisitive consumerism of contemporary society.

Even more briefly: Materialism in the philosophical sense and materialism in the societal sense are directly related.

I'm afraid that won't do, NM. If it's a _bad thing_ to make people more physically prosperous, because it encourages materialism and crassness and all the rest, then, if y'all think that capitalism keeps the poor downtrodden, you should thank the capitalists for inadvertently bestowing these "spiritual benefits" on the poor.

On the other hand, if it's a good thing to uplift people's lot materially, including the poor, and if "crass, materialistic" capitalism does so successfully, you should be thanking the capitalists for instituting a system that raises all boats.

There really is a consistency issue here.

P.S. Here I just find that I can't resist posting the link to an article I was discussing on another thread, by Paul's friend and mentor, Francis Cianfrocca. I continue to assert that if I posted this word-for-word here, at W4, under my own name, I would be pilloried as a simple-minded consumerism-defending capitalist. Though possibly all of that pillorying would come only from commentators such as you, NM. Here is the link:

http://www.commentarymagazine.com/article/wealth-creation-under-attack/

And here is perhaps my favorite quote. I love the lack of embarrassment in saying such things:

Those who work to get rich are not doing so because they are seeking to provide enhanced tax receipts for the government, or to make it easier for government to do what elected officials and unelected bureaucrats think is best. They are, rather, fulfilling basic human desires—to excel, to succeed, to best the other person, to show the old man. Those desires provide the drive. The drive provides the wealth. The wealth provides the ancillary benefit for others. And the act of wealth creation itself creates opportunities for others. Americans pursue business and wealth for their own reasons, and we should be deeply hesitant to throw those out with the proverbial bathwater. The unintended consequences of such action could be catastrophic.

Indeed. And somehow, somehow, this doesn't make the system based on these "basic human desires" inherently evil and poisoned.

"There really is a consistency issue here."

Indeed. But it's not with me. ;-)

More on this later, as I said above. I'm trying to put together a short summary of the philosophical argument involved which neither includes too much nor leaves out anything vital.

As to Cianfrocca's statement, I understand it -- I used to believe it. Of course the question arises: are all these human desires morally equal and thus morally virtuous?

Indeed. And somehow, somehow, this doesn't make the system based on these "basic human desires" inherently evil and poisoned.

A lot of people enter into marriage for reasons that are wrong--quite often indefensibly and wickedly wrong like marrying for money or to have sex licitly. That never seems to condemn marriage itself as an institution.

It seems to me that the problem with Capitalism is elevating what is normally a virtually unqualified good, people working productively and peacefully to make a living and create wealth, to the level of an idol. Socialism does the same thing with community and the poor. The idle poor are not legitimate targets of charity anymore than the "greedy rich" (by that I mean those rich people whose lives bear the signs of being given over to greed, not ambition and productivity) are men and women we should revere.

There is a difference between an institution's taking into account unvirtuous reasons and an institution's encouraging of them.

I would say the relationship between "legitimate pursuit of material well-being" and "greed" is pretty similar to the relationship between "legitimate pursuit of health and pleasant appearance" and "vanity" or "obsession with health." There's no good way to _stop_ people from moving from the one internal motivation or mental attitude to the other, and there are major problems with trying to do so.

Mark, to me the "it's-worse-somewhere-else" arguments are no more valid than "the-grass-is-greener" arguments. I'm talking about contemporary Western culture and that alone.

NM. I can see that. That's why it's called idealism, though you wish to deny it. You resist giving any examples on planet earth in any form for any reason.

Mark, you obviously aren't even following anything I've said if you think my argument is about geography in any way. It is, and has always been, about the ability of foreign governments to compromise the security of devices made in country . . .

In country, but not about geography? Uh-huh.

What's that Mark? The Chinese government now has all the tools they need to have an army of hackers look for 0 day exploits in Windows and target them with malicious code? What did you say? Sounds like they have everything they need to ensure that US government agencies and contractors get a little "secret sauce" put on their Windows-driven devices to "add a little zing to the user experience."

I know that Mike. I never said all companies operated wisely, and in fact I said many didn't. Remember when I said this?

They'd be fools not to know what goes on in China, the lack of respect for copyright laws, and the intentions of the Chinese government. People are right to be suspicious of them, and it worries me when people aren't.

When the history of the decline of MS is written, the turning point will be the failure to adopt Unix under the hood as everyone else had by the year 2000, in which the source code is open. That they'd spend all the development work reinventing the wheel and then disclose it to China (and others) beggars belief. They still have loads of cash, but stuff like this just shows how little they are in control of their own future now. They think they need China worse than China needs them, and unfortunately in their case they may be right.

In my experience prescriptions aren't written until diagnoses are confirmed.

I see no need to defend myself on the charge of a "mysterious causal connection." If my explanation is mysterious, then so are all similar social phenomenon we encounter in life even down to banal office or even family politics. I'm not persuaded it is mysterious.

I don't necessarily care if you defend yourself, but if you want your claim about union shops to mean something you should try to explain how the board of directors and the CEO are led astray from pursuing better design by the mere fact of having union employees. I can easily understand the arguments about cost and price that Lydia has made, even though we disagree strongly about policy responses, but yours has been a mixture of inconsistency, backtracking, and vagueness. It's the union's fault, but not really, then it is management's fault, until it isn't, then it is the culture of the company, which according to Steve Jobs has a fairly predictable cycle of rise and decline in pursuit of design - completely independent of union workers.

Step 2,

You said, "I suppose it hinges on what you mean by American people, but for the majority (i.e. the proverbial "working man"), the empirical question has a definite answer in regards to NAFTA."

Then you cited a study from the left-wing Employment Policy Institute. So I need to go on the record to note that there are plenty of right-wing studies that disagree with that analysis (so the matter of whether or not there is even an empirical answer is a tricky question) and for those who are interested, here is a really good recent study:


http://www.ncpa.org/pub/ba619

Thanks, Jeff. I was going to say in response to Step2 that I would be interested in seeing a think-tank rebuttal.

Plus there's the fact that all of those results--whatever they have been--have taken place under the regulatory, etc., burden companies in the U.S. presently carry, so not an experiment with free trade + regulatory easing. Nor is the entire regulatory burden in the area of labor relations, either.

So I need to go on the record to note that there are plenty of right-wing studies that disagree with that analysis (so the matter of whether or not there is even an empirical answer is a tricky question) and for those who are interested, here is a really good recent study:

Since your study commits exactly the fallacy that my study predicted, counting only exports while totally ignoring imports, I would say your study isn't that good. The obscurantist notion that there may not be an empirical answer is plainly absurd. If you honestly believe that you shouldn't be citing any studies at all, since they can't provide proof for something that doesn't exist.

In country, but not about geography? Uh-huh.

My argument was about the wisdom of having companies under Chinese control do the manufacturing. The problem exists whether it's done by an outsourcing company in Shanghai or whether Huawei builds the devices in Brazil.

I know that Mike. I never said all companies operated wisely, and in fact I said many didn't. Remember when I said this?

And that foolishness is the norm in this industry. That's what Chris was trying to show you by citing the publicly-acknowledged fears of the US Department of Defense about these practices.

'If it's a _bad thing_ to make people more physically prosperous, because it encourages materialism and crassness and all the rest, then, if y'all think that capitalism keeps the poor downtrodden, you should thank the capitalists for inadvertently bestowing these "spiritual benefits" on the poor.

'On the other hand, if it's a good thing to uplift people's lot materially, including the poor, and if "crass, materialistic" capitalism does so successfully, you should be thanking the capitalists for instituting a system that raises all boats.'

It is obviously not the bare fact of increasing physical prosperity that encourages materialism and crassness. Both the intent and the degree of the prosperity have an effect. The either/or you are proposing isn't as simple as it you're making it out to be.

NM,

It might be easier at this point to lay out quite specifically what you think the economic system ought to be rather than describing how capitalism is not that system.

Actually, I'm in the middle of putting together a longer post summarizing what I'd call a philosophical objection to capitalism.

But in short, I'd describe myself as a "small market capitalist" using the term "capitalist" in this context very loosely, meaning a market proponent. My beef isn't with the market per se, but with the direction market economics took post-Enlightenment, i.e., towards an industrial/commercial/finance capitalism which held acquisition of wealth to be a virtue in and of itself and which tended to shift economics from a humane science to a matter of mere number-crunching.

I'd like to see economics return to a more humane qualitative vision of life in its completeness, as opposed to the current understanding which is almost exclusively quantitative.

Step 2,

You say, "Since your study commits exactly the fallacy that my study predicted, counting only exports while totally ignoring imports, I would say your study isn't that good." Giggle. You realize how ridiculous you sound. Here is what your study did. It looked at total exports and said those exports = x number of jobs based on some sort of formula (who knows how they came up with the formula). Then they looked at the bigger total of imports and said those imports = -x number of jobs lost, again based on a formula they pulled out of their unicorn grazing pasture. There is not discussion, nada, in that EPI paper of how imports can actually lead to new jobs in different industries by bringing down the cost of intermediate goods or redirecting inefficient uses of labor and capital to better uses.

Meanwhile, the methodology of my study was to look at what actually happened in the economy pre and post-NAFTA:

More Jobs. The greatest opposition to NAFTA (and free trade in general) comes from the belief that foreign competition hurts U.S. employment. This misconception stems from the fact that while the greater benefits of free trade are often dispersed relatively evenly across an economy, losses tend to be concentrated in a few sectors or industries. But job losses are balanced by other jobs created in more productive sectors of the economy, and the new jobs usually pay more than the lost ones. For instance:

U.S. employment rose from 110.8 million in 1993 to 137.6 million in 2007, an increase of 24 percent.
The U.S. unemployment rate averaged 5.1 percent for the first 13 years after NAFTA, compared to 7.1 percent during the 13 years prior to the agreement.
Moreover, increased openness to trade has been accompanied by a more rapid rise in wages. For example, from 1979 to 1993 U.S. business-sector real hourly compensation rose at an annual rate of 0.7 percent each year, or 11 percent over the entire period. Between 1993 and 2007, however, real wages rose 1.5 percent annually, for a total of 23.6 percent.

Now, I would actually argue that it is hard to tease the impact of NAFTA on the growth of the economy during those years and my study oversimplifies the picture. But it is not worse than the EPI study and probably a better overall picture of what exactly NAFTA did for the U.S.

P.S. Click on my name for more good data on free trade and manufacturing.

All,

I wasn't kidding about that CATO page I told you to link to -- this Ikenson briefing in front of Congress is particularly good at exploring the problems with Jeff C's original post. Much of the reason we don't make simple, low-end consumer goods anymore is because it just doesn't make sense from an efficiency standpoint to do so -- our factories are better off automated.

http://www.cato.org/pub_display.php?pub_id=12881

From the testimony (but please, please, please read the whole thing as the kids like to say):

The Myth of Manufacturing Decline

Americans often hear that some nefarious foreign trade practices are to blame for the decline of U.S. manufacturing. But the problem with that presumption of causation is that U.S. manufacturing is not in decline in the first place. Until the onset of the recent recession (when virtually every sector in the economy contracted), U.S. manufacturing was setting new performance records almost year after year in nearly all relevant statistical categories: profits, revenues, investment returns, output, value added, exports, imports, and others. After contracting during the recession of 2008 and 2009, the manufacturing sector has come roaring back. According to the Institute for Supply Management, economic activity expanded in the manufacturing sector for the 19th consecutive month in February 2011, reaching its highest level since May 2004.2

In absolute terms, the value of U.S. manufacturing has been growing continuously, with brief hiccups experienced during recessions over the past several decades. As a percentage of our total economy, the value of manufacturing peaked in 1953 and has been declining since, but that is the product of rapid growth in the services sectors and not — as evidenced by manufacturing's absolute growth — an indication of manufacturing decline.3

The preponderance of Chinese and other imported goods on retail store shelves may give the impression that America does not make anything anymore — a fallacy sensationally exploited by ABC News in its recent series, "Made in America." But U.S. factories make lots of things — in particular, high-value products that are less likely to be found in retail stores — like airplanes, advanced medical devices, sophisticated machinery, chemicals, pharmaceuticals, and biotechnology products. American manufacturers are no longer heavily in the business of making sporting goods, tools, clothing, footwear, housewares, and furniture, but their factories are still the world's most prolific, accounting for 21.4 percent of global manufacturing value-added in 2008, while China accounted for 13.4 percent.4

America has maintained its industrial preeminence by transitioning away from high-volume, low-value industries into higher value-added production. In the process, the number of jobs in the manufacturing sector — perhaps the most important metric from a political standpoint — has declined. U.S. manufacturing employment reached its peak of 19.4 million jobs in 1979 — fourteen years before the implementation of the North American Free Trade Agreements and 22 years before China joined the World Trade Organization. So the downward trend in manufacturing employment, along roughly the same trajectory for 30 years, began long before the common scapegoats for manufacturing job loss even existed.

Manufacturing job loss has very little to do with trade and a lot to do with changes in technology that lead to productivity gains and changes in consumer tastes. China has also experienced a decline in manufacturing jobs — in fact, many more jobs have been lost in China's manufacturing sector — for the same reasons. According to a 2004 study published by the Conference Board, China lost 15 million manufacturing jobs between 1995 and 2002, a period during which 2 million U.S. manufacturing jobs were lost.5

The fact of the matter is that, with the exception of cyclical contractions during noted economic recessions, the U.S. manufacturing has been thriving in the global economy. Whether U.S. manufacturing will continue to thrive and even become a reliable job creator in the years ahead depends to some extent on the public policies adopted and eschewed.


Jeff,

As I mentioned above, the problem with studying the effects of NAFTA is that it occurred simultaneously with a massive influx of foreign capital and the IT revolution in business. Add in a good deal of deficit spending for artificially boosting GDP under Bush for good measure. It's hard to say what good, if any, really came from it.

A national sales tax that included businesses would be a subtle way for the US to encourage manufacturing domestically. If Apple USA had to pay the federal government 10-15% on a $1,000 laptop it bought from Apple Caymens, it would be similar to a tariff without being able to raise credible opposition in the WTO. Thus the US could blunt outsourcing while flashing a $!@#-eating grin at the rest of the world "awww come on, we're engaging in free trade!"

Giggle. You realize how ridiculous you sound.

I realize you sound like a teenage girl. First you were swooning over Perseus and now this argument where concrete statistics about drastically increasing trade deficits and a shrinking manufacturing base in terms of both jobs and categories of items produced is on one hand supposed to be applauded for moving domestic companies into higher value-added work and on the other hand irrelevant because of a long-term global decline in manufacturing jobs. You haven't begun to justify accelerating the decline by outsourcing or demonstrated that these newer manufacturing industries average better wages or that the displaced manufacturing workers are averaging anything close to their previous wages in different fields.

The end of the Ikenson testimony was pure political grandstanding based on right-wing myths, which gives me yet another reason to doubt his policy prescriptions.

Step 2,

You say, "and now this argument where concrete statistics about drastically increasing trade deficits and a shrinking manufacturing base in terms of both jobs and categories of items produced is on one hand supposed to be applauded for moving domestic companies into higher value-added work and on the other hand irrelevant because of a long-term global decline in manufacturing jobs." But curiously, you fail to respond to the real-world data of increased employment and wages cited by The National Center for Policy Analysis in the post-NAFTA world.

But let me end on a note of agreement with your concern "that the displaced manufacturing workers [due to free trade] are averaging anything close to their previous wages in different fields.". As I said way up above, this is my biggest concern w/r/t our current free trade regime but as I've also said, I'm not sure if free-trade is really the problem (see e.g. the Ikenson comments about technology making many low-IQ jobs unnecessary).

(Here's a quickie on the philosophical problem with capitalism as I see it. Note that this is a very brief and general summary of my view of the thing, and is really my first-ever attempt to sum it up in anything like this short of a space. Hence there are undoubtedly omissions, etc., and such a summary will probably generate more questions than it feebly attempts to answer.)

If, per Enlightenment thought, man is autonomous in his reason, not bound to either religion or tradition, then any appeal to the transcendent is ruled out. Since there is no metaphysical transcendence the cosmos is viewed as purely physical, and thus any connaturality of man and cosmos is also limited to the physical. This has the effect of making nature into merely a humanly manipulable “stuff,” or as Marion Montgomery puts it, “accidental material to serve man’s appetitive desire.”

At the same time, since man is now an autonomous individual with no connection to transcendence and no appeal to metaphysics, there is nothing above him by which he can prioritize his desires, no standard according to which he can distinguish higher from lower desires. He becomes, as someone has put it, his own professor of ethics. As his lower, “appetitive” desires become destigmatized, certain vices become virtues – lust becomes love, now known as “free love” and by this switch comes the corrosion of the institution of marriage. Greed or avarice becomes “self-interest,” and thus an acquisitiveness always found suspect in the classical and Christian traditions now becomes praiseworthy.

Thus “freed,” man’s appetitive desires, no longer having any commonly accepted metaphysical strictures, become dominant, since the only reins on them are merely human and rational, and since the appetites will always trump the intellect (as St. Augustine put it, “He who controls the passions controls the man.”)

Meanwhile the cosmos, having been reduced to accidental manipulable material, is confronted with a humanity whose appetites are no longer bound in any meaningful sense, both creation and man having been stripped of their telos. Nature is there simply to be used to answer man’s appetites. Which means of course that it can be bought and sold. Creation is commoditized; virtually anything can be purchased, and man becomes a “consumer,” or one who seeks to fulfill his appetites without any sort of guidance towards the good.

Consumerism then could be described as a cultural situation in which man’s appetitive desires are simultaneously encouraged and exploited in a system wherein certain actors seek to gain wealth and power by this encouragement/exploitation. Getting and spending become primary activities. Materialism in the philosophical sense has yielded materialism in the cultural sense. A fair amount of blame must be laid at the feet of capitalism, in my opinion, specifically w/r/t what might be called its baptism of appetitive desire, in this case, the desire reflected in an unguided, unexamined acquisitiveness. As Edward Skidelsky has put it, avarice has been emancipated. Or per William Safire, greed has finally begun to be seen as a good.


'Fraid it's nothing I haven't heard before, NM.

I don't, of course, believe that about man's having no connection to metaphyics or the transcendent.

However, since it happens to be _true_ that it provides best for the well-being of the largest number of people, the poorer among them most of all, if people's natural desires to make good materially are given a goodly amount of free rein (no, I'm not talking about making pornography, I'm talking about making shoes and stuff), I advocate capitalism as an economically good and workable system for the best good of the polis.

If some people can rewrite that as "emancipating avarice" and "making greed a virtue" and so forth, let 'em. I'm unmoved by that. It's just rhetoric to me and has no normative force to support concrete public policy proposals, such as, "Okay, _therefore_ we should favor so-and-so's environmental regulations" or whatever.

"'Fraid it's nothing I haven't heard before, NM."

I don't recall implying that it was going to be.

"It's just rhetoric to me and has no normative force to support concrete public policy proposals"

Precisely what I meant above by diagnoses preceding prescriptions. For instance, if you don't see consumerism as a problem, you're not going to see policy proposals aimed at ameliorating it as helpful.

In any case, it's difficult to discuss policy with folks who think that it's okay to encourage a fallen appetite because the outworkings of that appetite happen to have some good results. To me it's very wrongheaded to say that a certain sin is okay up to a point. That your side refuses to call a spade a spade is not, ultimately, my problem. It certainly isn't from lack of trying on our part.

Iow, there is a major theological/philosophical rift between my sort of capitalist critic and your sort of defender. Not sure if there's really enough common ground there to engage in productive dialogue.

See my comments above on the desire to get ahead and the desire for health. There is not an absolutely bright line between the normal, legitimate desire to secure one's own and one's family's economic and material well-being and what you want roundly to condemn as a sin, a "fallen appetite," and all the rest. Much of what drives the capitalist economy is simply the need, which was a _punishment_ of the Fall and not a sin in itself, to provide for oneself and one's family by the sweat of one's brow. The motives of "wanting to get ahead" that drive the capitalist economy are a mixed bag--some a sinful desire for money for its own sake and some wholly legitimate. Nor is government the right entity to determine purity of motive per se, so long as the product produced is not an evil in itself (such as pornography, selling kidneys, or whatever).

The ease with which people who make your critique condemn the whole shebang as "encouraging sinful appetites" is always nearly breathtaking to me.

"The ease with which people who make your critique condemn the whole shebang as 'encouraging sinful appetites' is always nearly breathtaking to me."

As I said above a couple times I don't condemn the whole thing. What I find breathtaking is the fact that defenders often seem unwilling even to entertain the idea that there might be a worm at the heart of the thing.

Only in the sense that there is a "worm at the heart of" every single human endeavor throughout history--that is, in the sense that man is fallen. Some proposals for, e.g., economics are wiser in dealing with this fact and others are more unwise. Some are better and some are worse at accomplishing the good they aim for.

Free market capitalism, with, as I've indicated, laws against actual, specific evil actions (like prostitution, pornography, etc.), is in my opinion exceedingly wise as a means of dealing with the Fall in the economic realm and doing the best for the commonwealth and for ordinary people. To say that because it makes use of the natural (and not intrinsically illegitimate) human desire to acquire material goods it is bad at the core _is_ to condemn the whole thing, say what you will. It is to say that somehow we should _not_ make use of that desire as part of our economic system, that to do so is ipso facto to encourage sin, and that some identifiably different approach is better in that it (whatever it may be in concrete terms--we're seldom told) avoids that vague, foggy danger: "Consumerism." I just disagree with all of these implications.

'Only in the sense that there is a "worm at the heart of" every single human endeavor throughout history--that is, in the sense that man is fallen'

And of course in my view you're disregarding the effects of the Enlightenment on this particular human endeavor.

So: The Philosophes were bad dudes. And this means exactly, precisely _what_ about specifically, precisely, what economic policies? Perhaps it means we should have sumptuary laws, to remind people not to be proud or greedy or something? Or maybe, to return to the subject of the main post, we can derive from:

There were quite a few bad philosophers in the Enlightenment

the conclusion

Therefore,

Down with free trade!

But I think you'll have to supply a few missing premises.

I mean, what? What? It's all just talk. I do not find that conversations with me thrive on culturo-sociologico-historical generalizations. I like to get down to brass tacks.

Which I think is a big part of the problem. Too many contemporary economists and economics-minded scholars view that science as one primarily having to do with mathematics -- it represents a quantification, so to speak, of human economic activity. This is certainly one aspect of the science, but it is not the whole, at least according to the classical/Christian understanding.

If one moves back, as it were, from examining the nuts and bolts exclusively to looking at the machine in toto, one begins to see how much philosophy and even theology come into play here.

What you're doing is sort of like paying so much attention to baseball stats that you neglect the game as a whole.

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