Why would anyone want free trade?

[Al B. Sure!]

What are the benefits of a global economy?

By setting up tariff walls and what not in the United States, not only would we be improving American industry and keeping money in the US but more American jobs will be created instead of the Chinese taking American jobs... so why are both parties generally in favour of globalization?


thanks

[Nubclear]

Originally posted by Albert Speer
thanks

Your welcome.

Bye

[DanS]

"Keeping money in the US" is a common misconception. The US Dollar is only legal tender in the US, which means that all the money we spend must come back to us in one way or another.

[monkspider]

i used to be against globalization, as it is blatant corporate imperialism. However, over time I have realized that Globalization is just a step in the evolution toward the elimination of nationalities and eventual world-wide socialism. So I now just accept it.

[Al B. Sure!]

DanS:

Not just bank notes but also credit and what not...

Take televisions for example... there is not a single American company building tvs and they are bought constantly. That's millions of American dollars a year going to Sony and Zenith. How can you possibly say that American money is staying in the country?

[DanS]

What does Sony and Zenith do with the US dollars that they receive? The US Dollar doesn't buy anything in Japan.

[Sandman]

You may not favour Chinese people over your own country.

[Q Classic]

Zenith? Zenith used to be an american company. then it was bought out by LG. so the money doesn't go to Zenith, it goes to LG, a korean concern.

the money that LG then gains goes to its expenses. some of it might even go towards taxes in skorea.

when skorea buys f16s from the united states, the almighty american dollar, after having been converted a few times, gets sent to the grand american company, lockheed martin.

[Agathon]

Answers:

Sensible people want free trade in situations in which it generates efficiency gains.

Lunatics want absolute free trade because they are market fundamentalists.

[KrazyHorse]

Originally posted by DanS
The US Dollar is only legal tender in the US

False.

[DanS]

You're right Frogger. But the exceptions prove the rule on this one.

[KrazyHorse]

The mighty economy of American Samoa will crush you!

[Thorn]

The arguement is this: Globalization leads to better standards of living for more people and at lower costs.

The problem is the US has become too dependant on the rest of the world, they no longer have the immediate ability to provide everything for themselves. We have seen how quickly the world turns against the United States... I'm all for isolationalism... who knows maybe Germany might Blitz the rest of the world again... hopefully.

[Japher]

Why a global economy? Why free trade?

I tend to think of it like Ford's assembly line, in that certain nations, countries, states, and regions can and do benefit from each other based on specialization. It is not about being dependent on each other more so about some one else being better at it.

Japan is definitly better a electronics because their economy focused on it. While the US is better at reaping our natural resources for export, as well as Agriculture. That got something that we want, and we have something that they need...

Another example; I work in the California Bay Area, why? Because I am in the biopharm. industry. The cities, poilitics, public works, etc. has all adapted to acccept us. Other areas are not so accepting. Yet, at the same tone, Texas produces most of energy, natural gases, and oils... Why? because they chose to develop in that industry based on their large amounts of natural resources...

Thus, it benefits Japan to trade with the US, as it does for Texas to trade with California. Would each state try to cover all bases the levels of efficiencies in each field would be significantly lower.

Also, hedge funds are fun!

[GePap]

Us money leave the US? crap.

The US is a giant global money vacuum. Direct foreign investment in the US is huge, and is one of the things that allows the US to maintian outrageously high foreign trade deficits. CNN Money said yesterday (will look for ther link) that between 1997 and 2002 Europe poured 1 Trillion, that a T and not a b, into the US economy.

So be thankful for free trade, since the US certainly gains more from it than some poor third wold country.

Edit: they removed the article...well, obviously someone will question it. Whatever.

[MichaeltheGreat]

Originally posted by Albert Speer
What are the benefits of a global economy?

By setting up tariff walls and what not in the United States, not only would we be improving American industry and keeping money in the US but more American jobs will be created instead of the Chinese taking American jobs... so why are both parties generally in favour of globalization?


thanks

Go to some sub-Saharan African shithole for a while and look at the "benefits" of a non-globalized economy.

[nationalist]

Free trade: it works for the big guy. They make money by employing third world workers to make their products, bypassing those pesky labor and environmental laws, then charge people in the first world a huge, inflated sum.

How much of the savings that free trade brings actually reaches the consumer? What proof is there that free trade actually increases our standard of living. I know a bunch of people down in the unemployment line whose standard of living would be raised if they could get a union job at factory. We'll just wait and see how strong a so called "service economy" can be, and how long it will last. There will come a time when those third world countries won't make our goods any more. Then what will Nike do? Probably lobby to repeal the 13th amendment

I've said my piece about this many times. I won't convince those on here that free trade is bad, and the free traders are not going to convince me that it is good. Save your breath, Speer.

[nationalist]

Originally posted by MichaeltheGreat

Go to some sub-Saharan African shithole for a while and look at the "benefits" of a non-globalized economy.

Their economic problems owe a great deal to their political instability. All free trade will do is make them even more of the first wold's *****.

[nationalist]

Originally posted by monkspider
However, over time I have realized that Globalization is just a step in the evolution toward the elimination of nationalities and eventual world-wide socialism. So I now just accept it.

I think you underestimate how much people care for their traditions. Nationalism is on the rise in most of the world. Look at the all of the separist movements.For example, t he Basques are right in the middle of the worlds most integrated free trade area, yet they still want their separate country. Economic nationalism and political nationalism are not completely the same.

[Japher]

nationalist: the standard of living is still at a higher value in the US, and the world, then it was prior to the US coming out of isolation. Poor ppl today still have an easier time living than did poor ppl even 60 years ago... Why is this?

[Agathon]

Originally posted by Thorn
The arguement is this: Globalization leads to better standards of living for more people and at lower costs.

The problem is that while this is generally true it doesn't work all the time and can create disasters for poorer people. Opening up your economy is a good thing if done right, but if done all at once it invites disaster. Moreover, the big players tend to change the rules as they go along.

[nationalist]

Originally posted by Japher
Why is this?

Technology. Technological advances have made things cheaper and people's lives better. This would have happened with or without free trade.

[Flubber]

In theory, free trade is to the benefit of everyone. If for a given amount of effort we can grow 100000 bananas or make one car while another nation can make one car for the effort it takes them to grow 50000 bananas. Obviously if we trade anywhere from 50001 to 99999 bananas we are further ahead and so are they, regardless of the relative effort we must put forth. Multiply that concept a million times and use some form of currency as a medium instead of trading goods for goods and you have freer trade.
.

trade restrictions mean you don't buy cars from the other nation in the above example. Perhaps you want the jobs from carmaking etc but if the restrictions are bilateral, there will be compensating market loss in hte banana industry for every car job loss.

[nationalist]

Originally posted by Japher

I tend to think of it like Ford's assembly line, in that certain nations, countries, states, and regions can and do benefit from each other based on specialization. It is not about being dependent on each other more so about some one else being better at it.

The problem with Competative Advantage is that it assumes that all other variables are equal, and one country can naturally build something cheaper than another. However, in actuality, 3rd world countries can undercut first world producers because they don't have labor laws/environmental laws that are as strict as the first world. In actuality, if the third world had to abide by the same production laws as the first world, the first world, with its technological/infrastructre advantage, could produce things cheaper and have its own comparative advantage.

[Adam Smith]

A recent study in the American Economic Review (which I can't lay my hands on at the moment) found that no more than 20 pecent of all trade was affected in some way by differences in labor and environmental regulations. The rest could be explained by more traditional factors, such as existence of natural resources, specialization of labor, and economies of scale.

There are some cases in which free trade may not be the best policy. However as economist Paul Krugman (certainly not a conservative) has noted

The economic cautions about the difficulty of formulating useful interventions and the political economy concerns that interventionism may go astray combine into a new case for free trade.
Paul Krugman, "Is Free Trade Passe?", Journal of Economic PerspectivesFall, 1987, p. 143.

In other words, other policies are as likely to screw things up as fix them.

[TheStinger]

Lowering trade barries is THE major cause of economic growth since WW2. The less barriers a country has the better it does

[MichaeltheGreat]

Originally posted by nationalist


Their economic problems owe a great deal to their political instability. All free trade will do is make them even more of the first wold's *****.

Or, another way of looking at it, is that their political instability problems owe a great deal to their economies. If free trade makes them the first world's *****, at least they'll be somebody's *****, and a bit more likely to get food, etc.

[Sava]

Ideally, there should be complete free-trade. But in reality... free-trade = cheap labor and tax havens for corporations. These same corporations own media outlets and lobby the government. Many of them pay no or very little taxes, yet effectively exert a huge amount of influence over government decisions.

I'm more for free-trade than I'm against it, however. I think, for instance, the tariffs on steel or cars is plain stupid. If American companies can't provide the same or better quality products for the same or lower prices than foreign companies, then they deserve to fail. It's the nature of business. And some of this governments' practices are very anti-capitalistic. In fact, many of the people in the government who argue against Socialist programs like universal health care are for subsidies to big oil, the farming industry, etc... which are more anti-capitalistic than the Socialist programs they despise. And it's all because their palms are being greased.

[Plan Austral]

I would be for free trade only if the USA and the EU agreed in ending with agriculture subsidies.

[Japher]

Plan Austral

I would be for free trade only if the USA and the EU agreed in ending with agriculture subsidies.

I guess Adam Smith is right... Political agendas and policies are the big bane of free trade.

It would be difficult for the US to agree total free trade with all countries because, in a sense, we are the only capitalist market in the world. Our buisness minds drive our political agendas more so then our politics driving our buisness. While this gives us a corupt government it makes us a rich nation. If we were to have unrestricted trade with ppl such as the UN, a socialist institution, we would have to learn to be more giving with in our buisness models; and that just ain't going to happen.

The problem with Competative Advantage is that it assumes that all other variables are equal

Does it? I don't really think it does. You are correct in that for the US to become such a powerhouse that it is that it has raped its country side and polluted its streams... and that this is something we don't wish to see other countries doing. Thus, we offer aide to help foreign economies out with the contingency that they don't use such things that would pollute or harm. This, naturally, gives them a greater difficulty in becoming a more powerful trade partner.

However Competative Advantage, as you call it, never as assumes that all other variables are equal. What it does, is require those countries to determine which variables of theirs is greater, and exploit them. Cheap Labor, is something that is prolific in 3rd world countries, thus they exploit that. In response more and more buisness are headed out of country to manufacture their goods... Thus, by underminding those laws, which you pointed out, they are in fact taking advantage of the competition. What's wrong with that?