Raise tariffs on America

[Dinner]

They would benifet from lower prices, no? Of course if you lose half of your tax base and 1/3 of your people become unemployed then those price decreases aren't going to mean very much will they? I grant you that few countries will be that uncompetetive but for those that are I believe a slow phase out of tarrifs is the best policy because it gives them time to increase their competetive level and let nonstate owned industries take root.

Granted it is still dependent upon the company to take the necissary steps so, as Dan showed with US Steel, poor management can still sabotage everything.

[KrazyHorse]

Originally posted by DanS


Don't cry for Canada. Canada benefits hugely by a free trade zone with the US. Most of its population lives within 50 miles of the US border and a very large portion of the Canadian economy is US trade related.

What free trade zone? BushII seems to have repealed NAFTA without telling anybody else...

[DrSpike]

Originally posted by Oerdin
They would benifet from lower prices, no? Of course if you lose half of your tax base and 1/3 of your people become unemployed then those price decreases aren't going to mean very much will they? I grant you that few countries will be that uncompetetive but for those that are I believe a slow phase out of tarrifs is the best policy because it gives them time to increase their competetive level and let nonstate owned industries take root.

There is no reason to think 1/3 of the population would become unemployed. The dometic demand that existed in autarky still exists after the switch. The time frame point is not without merit, but it applies to both sides. Namely, both import competition for the state industry and the export market potential will take time to develop.

You are correct in that in practice countries often move slowly from one point to another. The autarky to free trade instantaneous move is just a device. And it was a necessary device to underpin exactly why some of the arguments given earlier were incorrect. I hope the posts have helped anyone interested in international trade.

[Dinner]

I contend that in the intermediate term demand would fall as people lose their jobs and thus their desposable income. Of course that would only happen in die hard countries like North Korea or the former Soviet Union as they move out of the communist system but never the less free trade isn't the best option for them.

If you are a South Africa or a Brazil then Free Trade will help much faster since there is a privite sector but they would still see much of their previously protected industry go belly up. Over time new industries (most likely foreign owned) will move in to take advantage of the open markets but that doesn't help if you are the guy trying to feed his family during the 10-20 realignment period.

[DanS]

What free trade zone? BushII seems to have repealed NAFTA without telling anybody else...

You perceive such strange things that aren't true. How am I to argue against an illusion of yours?

[KrazyHorse]

What else would you call imposing a number of new tarriffs which have no hope of surviving NAFTA appeal, but which will nonetheless be in place for a couple of years before a panel can decide on them?

[DanS]

I would call it something correct. Correct your own damn work.

[KrazyHorse]

I have no idea what that last comment means

[DrSpike]

Originally posted by Oerdin
I contend that in the intermediate term demand would fall as people lose their jobs and thus their desposable income. Of course that would only happen in die hard countries like North Korea or the former Soviet Union as they move out of the communist system but never the less free trade isn't the best option for them.

Hehe but in the intermediate term when people are losing jobs in the state industry they are gaining them in the new export industries. You seem to me to be struggling to find a case where all of a sudden vast swathes of the population become unemployed, without the counteracting positive effects being allowed to kick in yet.

Ultimately what you suggest is not impossible in principle (though the conditions necessary for your conclusion to hold are somewhat torturous); in reality its an empirical question, and I can't think of any cases that back you up. I can think of many that back me up.

Anyway we're getting a little off the central points I'd like people interested in the issues to take away. What started this is your (Oerdin's) post that the US should only allow countries access to their markets if they acted likewise. Dan correctly pointed out that this wasn't true, since the main group affected by any Japanese protectionism is Japanese consumers. This is the first key point.

i.e. key point 1 is that the case for free trade does not depend on what others choose to do, as I posted earlier in response to Spiffor and Ben.

Key point 2 is that considering the effect on jobs does not in any way change the conclusion. This is worthy of a whole point, since the incorrect argument discussed is made every single time the case for free trade is presented.

Key point 3 is that the case for free trade only requires a comparative advantage in the production of some goods, not an absolute advantage.

[DanS]

I have no idea what that last comment means

When you say "[w]hat else would you call...", I suggest that you describe it right the first time, and refrain from the histrionics, and I won't have to do the work in imagining what you are trying to say and then wording it correctly for you.

Your arguing style is par for the internet, but it still sucks.

[KrazyHorse]

Snooze. Histrionics? Try again. Maybe if I'd claimed that he was pulling the bread out of our children's mouths or something.

Exaggerated, yes. But I assumed you would take the comment for what it was worth, not literally...

[DanS]

Well, what else would you call it? And don't act like a nutter this time.

[Dinner]

Originally posted by DrSpike
Ultimately what you suggest is not impossible in principle (though the conditions necessary for your conclusion to hold are somewhat torturous); in reality its an empirical question, and I can't think of any cases that back you up. I can think of many that back me up

Post Soviet Russia lost something like 2/3 of it's economic output and still hasn't recovered it's level of employment and GDP it had in 1988. It's been 15 years.

How's that for an example? Of course you could, rightly, say the Russians don't have a free trade zone but compared to Soviet times trade has been greatly liberalized.

[KrazyHorse]

Originally posted by DanS
Well, what else would you call it?

Politically-motivated protectionism, and reneging on at least the spirit of the NAFTA agreements.

And don't act like a nutter this time.

The last time I checked I was here for entertainment, not to participate in a debating society.

I find this especially odd coming from somebody who has been known to engage in hit-and-run tactics from time to time himself...

[DrSpike]

Oerdin: Well that's an example of an economy where output fell. Is it one where output and employment fell as a result of trade liberalization? Or do you think perhaps changing the entire economic structure from a centralised system to a more market oriented one might have contributed a little?

In fact, like Spiffor's South Korea example earlier, you inadvertently reinforce my arguments. Trade liberalization and an increasing trade/gdp ratio in Russia since the early 90s has been (and will continue to be) a key driver of increasing prosperity, and an important factor in allowing unemployment levels to return to earth.