Dear West Mall Democrats: I am writing to you today about something that is fundamental to the American Idea: free trade. It helped shape America's path from colonial backwater to great power status. Free trade is America's best tool of diplomacy and one of our best tools for fighting poverty in the third world. It is one of the things that has made America the greatest country on the planet. Free trade is good for all Americans; the U.S. typically sees job growth and GDP growth, all with lower prices for consumers, after the passage of free trade deals. The record of trade liberalization is decidedly positive. Free trade unobtrusively promotes liberty in the world, without guns or soldiers. It promotes peace, as active trade partners are less likely to go to war with one another. It promotes economic growth in poor countries and stability in unstable ones; it allows people to exchange not only goods and services but culture and ideas. Free trade is the easiest and most peaceful way to boost American national security interests. Tariffs and other trade restrictions have been infamously detrimental to the United States over the years. Some historians believe the Civil War actually had deeper roots in grievances over tariffs than anything else. Nearly all economists believe that the Smoot-Hawley tariffs of 1930 prolonged and deepened the Great Depression-- thanks Hoover. Vice President Al Gore famously debated (and destroyed) Ross Perot on NAFTA on Larry King Live in 1993; Gore mockingly gave Perot a framed portrait of Senator Smoot and Representative Hawley to emphasize the misguidedness of protectionism. Free trade, in recent history, has not been the exclusive purview of one party or the other. Bill Clinton actively promoted free trade while president. JFK was considered a free-trader, as was FDR. There is a long tradition of free trade within the Democratic Party, although in the past 5-8 years, the party's leaders have moved from strongly supportive of, to tenuously supportive of, to outright hostile toward free trade. See the NAFTA debate between Obama and Hillary for evidence of this. The entire stable of top-flight Democratic candidates in the primary were anti-trade, whereas decades ago, it was usually split. In 2005, only 15 Democrats in the House of Representatives voted for CAFTA (down from well over 100 for NAFTA, down from trade promotion authority for Bill Clinton, and down from MFN for China); Democrats in Congress are now balking on free trade with Colombia, West Mallers: I know there are plenty of free trade Democrats around here. Demographics-- you are well-educated, affluent, young, have ties to Texas, are not likely in unions-- tell me that you are inclined to be supportive of free trade. More than that, I agree with many of the comments a few of you guys make on this issue when it comes up. The only true protectionists on the West Mall seem like grumpy old flannel-wearing Archie Bunker "I hate change" types who hate free trade because it means contact with foreigners, and, "they took our jobs". And there aren't a whole lot of them around here. Unfortunately, as Obama and Hillary have positioned themselves as more anti-trade than the other, only a small handful of Democrats around here have piped up and noted how wrong the anti-trade trend is. For the most part, West Mall Democrats have EITHER been silent on the issue, probably because you're embarrassed that your chosen candidate (Obama, most likely) is pandering on the wrong side of this issue (hey, I can relate-- I am sure most of us can), OR you have actually adopted the protectionist talking points yourself. I am not sure which is more troubling. Free trade ought to be a bi-partisan no-brainer. Instead, these days, it seems like there are a million special-interest excuses not to expand free trade. Some of them sound okay. Some are awful and ridiculous.
Thats a hell of a long post SML! I am free trade all the way and always have been. The best way to understand free trade and globalization is this. If we don't take advantage of whats going to happen anyway, we miss the boat. Business will adapt and find way to profit and we should limit anything that restricts this so the US is always on top. On the opposite end we need the brains to actually come in and take advantage of a global economy, but thats a different rant all together.
Nope...no deal. I care about the well-being of my neighbor too much to see his job go overseas, and I'm more than willing to spend a little more money on occasion if it means I can continue to buy local and domestically produced goods in order to keep that same neighbor in a job. Besides, s/he produces a far better product than the ones that come out of Hong Kong, China, or Mexico.
there are lots of arguments that can be made on each side of the hot-button political topics of the day-- War, abortion, economy, etc. This topic you bring up is much like ag subsidies in that there is practically zero prima facie case that can be made for "reduction of free trade" being good for the country overall. as you mention, the benefits accrue to a relatively small group of mostly antiquated / obsolete workers and communities while the costs are borne by the entire consuming population. I'm not really adding anything to your excellent argument, but want to voice my agreement. I will say that this is one place where the president can have an effect on the long term viability of our economy.
And related to Democrats and Obama, HRC, ....they aren't the only ones speaking like this. Huckabee and some of the other R's also spoke of this economic populism BS. McCain was actually the most spot on out of any of them. I like Obama quite and bit and think he will 'do the best' for this country by being president, but his economic views are by far he weakest point. I just hope he can't actually enact any of them.
As long and as thorough as your post was, it is a drastic oversimplification. Basic economics tells us that in the long run, an unfettered market will almost always result in distortions and disequilibriums -- like monopolies and that sort of thing. At some point, the market will again find its way back to equilibrium. But at what cost? The effects that economists speak of in the abstract have very real HUMAN consequences. Moreover, the economic models supporting free trade assume an even playing field. And when the field is not level, it will eventually be leveled (at least theoretically), but again, at what cost? So free trade in the abstract is a great thing. But its real world application is far different. China for example does not play fair -- it pegs its currency to the dollar so no matter what the U.S. will never experience a cost advantage despite the strengthening of the Chinese economy -- barring some drastic change in technology or something like that to give us a competitive advantage (this is another reason I support getting off of fossil fuels, it could give us a manufacturing competitve advantage). Another MAJOR consideration -- national security. Before World War II Japanese Admiral Yamamoto toured the U.S. and attended Harvard. He saw first hand the manufacturing prowess we were amassing. He later wrote that when he was asked to begin plans for the attack on Pearl Harbor that there was no way the Japanese could defeat the U.S. in a long, protracted war. Why? Because of our manufacturing and industrial prowess. He knew Japan's only hope was to strike such a massive first blow that we would be forced to negotiate a peace (had our carriers been in dock that morning, they likely would have succeeded). Fast forward to today. Where is most U.S. steel produced? Overseas. Where are most factories going? Overseas. If trade patterns continue, in ten years, if we were to go to war with say, I don't know, the Chinese, how could we gear up for war? Where would we get our steel? Where would get our oil (another reason for getting off fossil fuels)? Where would we manufacture our tanks. Where would we get their spare parts? So, pure free trade is much more complicated. And there is nothing wrong that when you strike a treaty there are some things in place that can prevent too much advantage to one side (e.g., having certain labor protections in place). And finally, democrats and conservatives must realize, we are a superpower because of our economic might. We could not have the former without the tax revenues produced by the latter (see China's "modernization" of their economy, increased defense spending, but their government remains authoritarian and "Communist"). The further we eat away at our economic and industrial base, the further we erode our national security. In sum, there are other costs the economoc models simply do not capture. So your post is oversimplistic.
And thus is the challenge of people like me. We get to decide whether we would prefer favorable economic policy and an erosion of our civil liberties, or whether we want our civil liberties restored while we deal with less favorable economic policy. This is the problem with the 2 party system. The party that supports both is completley marginalized so you are left, do you throw away your vote on the marginalized party, or do you pick the lesser of two evils? 10 years ago, I was always more in favor of economic freedom so I voted exclusively Republican. 7 years ago until today I found them to be of equal importance so I threw away my vote on the marginal party. This election, I'll have to decide whether to stay marginalized in a 3rd party, or whether to vote against more economic freedom in the hopes that at least some of the civil liberties erosions over the past decade will be reversed. I hold all partisans responsible for making us choose, because we should not have to choose one or the other in this country. This is supposed to be a free country, you would think at least one major party would support that freedom.
let me think about this... i agree, but... Free Trade doesn't work so well right now because: 1. Autoworkers in the USA make about $30 an hour = GM Plant in Ohio moves to Mexico. 2. Textile workers in Asia make about $13 a month = No clothes made in America. 3. Non-customer facing service jobs are being sent out of the U.S. to people who will do the job for 1/3rd the cost of an American. 4. We have little or no resources that aren't available elsewhere. 5. Etc. Apply that to pretty much everything and you have the issue that Americans actually face. I know. Americans don't want to make Nikes and Levis. I know. The cost of American-made Levis would be $200, not $20. I know - auto plants opening in Alabama and Texas don't have the same union issues as plants in Ohio and Michigan (they will, eventually, i presume, as non-union wages are now on par with union wages.) You see, the problem is this. We, the people, have nothing to export that can't be made cheaper by people in another country. So companies in the U.S., if they want to stay competitive, HAVE to send jobs out of this country, which puts a serious pinch on the average person in the U.S. That 11 percent of the economy that is still manufacturing (down from about 28% after WWII) is going to get closer to zero, because someone else will do it cheaper (at least for the next who knows how many years.) Eventually, this will bleed into other industries: When the baby-boomers, already faced with high priced health care, are able to make a trip to Mexico and Canada to get quality health care at a lower price, they'll go. Firms are already "out-sourcing" data centers and IT jobs, how long will it be before anything that doesn't require face time is out sourced? (As fast as someone can teach a willing foreign person to speak with an acceptable English accent) Service industries? You ever been to a hotel? I never see Americans working, except the bar (sometimes) and the reception desk (sometimes). Pretty soon, restaurants will barely need people to cook the food, much less Americans who need to make more than $10 an hour. I agree, totally, that free trade is the best in the long term. In the short term, it's going to be very painful... Just wait until someone has the resources (and balls) to do business in Africa. Talk about cheap labor! Hell, that's how THIS country came out of nowhere to become what it is. That whole comparative advantage thing works better in class than it does in real life. In real life, there are greedy ******** involved. But let's say the world caught on to comparative advantage. Free trade in it's most absolute form. What would we have to offer? Probably agriculture. Aggy would be in charge. I'd move to Africa or the Middle East (like the execs of oil and related services companies are) I'm rambling. I think I'm saying I don't know that America is best served by free trade any longer. I don't know that it's not, either.
That's right. We might agree that free trade is a good idea, but not entirely. The pact needs modification. The environment takes a beating when we order goods from places that have no environmental protection. We are in effect exporting our pollution to third world nations. And there does need to be some consideration for U.S. jobs. Just because someone is for a law or treaty doesn't mean that they can't be for amending the law at a later date in response to some of the consequences of that law or treaty.
SML: Very eloquent and accurate. However, you wasted about an hour typing your diatribe the folks you are trying to reach. The voices of reason in the democratic party have been drowned out by the freaks that rioted in Seattle against the WTO and the new generation of democratic activists motivated by extreme groups like moveon.org, etc. Free trade is fundamental to the health and security of our nation, and the global economy. Bill Clinton did understand this. Now, Obama and Co. is throwing him under the bus for NAFTA and other reasoned trade policies such as limiting farm subsidies. Rubin and Clinton were very open on free trade issues and that policy helped usher in the 90s boom. But I was always skeptical that hard core Dems quitely resented Clinton's pro-trade leanings and that skepticism has been verified in this election cycle. Smelling conservative blood in the water, the most liberal dems have reasserted control and forced the hands of the two major candidates to adopt populist nonsense about renegotiating trade agreements. Dangerous stuff IMO.
If it is only about making things cheaper why do they still manufacture so many things in germany where it is far more expensive? The point being is you can make products here at a high cost IF they are worth paying for. Our problem is we often make ****** products at a high cost. There is no value in that. GM is a prime example. At the end of the day free trade is where it is at. You may care about your neighbor, but at the same time this is a competition. Your neighbor needs to adapt, compete and get ahead in the free market no by being propped up with tariffs and trade restrictions. There is no participation trophy in life which is something we have a hard time understanding in America today. We see it with all the damned entitlements and give away programs that voters seem to want. It is a sad, pathetic endictment on our populace.
nice pics bierce. glad i dont have to look at that **** out of MY window. i understand there is a global effect to pollution, but try this hyperbole on for size...would you rather pay $200 for a t-shirt so a river runs clear in china?
I'm going to be careful posting on this thread, because I think it's a very valuable topic, but there's a high risk I'll end up posting something rude to somebody, and that's not conducive to the dialog we all want. Here are a few thoughts on this topic: A lot of times when we talk about free trade we're really talking about offshoring and globalization in general. i think this thread is no exception. I believe I'm one of the few people on this board who is a party to sourcing decisions that impact jobs. Outsourcing, off-shoring, and industrial globalization can be good business or fools gold, depending on what and who we are talking about. Companies often outsource, offshore, OEM or Brand license the wrong things and end up slapping their brand on the same undifferentiated commodity products that all their competitors sell, and losing competitive advantage in the process. Free trade's great. The tax-payer funded destruction of the American industrial base hasn't been. To be capitalist means that you own the means of production. When the Japanese invaded China, the first things they took were the factory machines from Harbin. That was no accident, and very often the asset-lite mentality of off-shoring is done with the understanding that you are selling the family jewels and MUST acquire some other capability or risk the end of competitive advantage, irrelevance, and potentially ruin. In some cases they do, in other cases they don't. But to those of us in global firms, some things we talk about a lot are that 1) we can't all be marketers and industrial designers, 2) You can offshore/outsource that too 3a) How you make stuff so cheap that the offshore outsource vendors of your global brand business customers will buy it or 3b) How you make stuff so cheap a nation of cashiers can buy it and 4) Get them to buy more stuff every quarter so that the stockholders don't get fussy I recently found myself mediating a price negotiation between two separate licensing partners so that we could ship a bundle product through the OEM partner of another division in my own company. It's a whole new world. Free trade is associated with but not the same thing as outsourcing, or globalization, or a tax code that pays companies to establish paper HQ's in the Bahamas or even in Delaware. Just because a highly complex trade deal says "free trade" in it doesn't mean it promotes free trade. Trade deals are usually the product of the political ascendancy of one set of interests over another. NAFTA and CAFTA are no different. Trade deals and economic policy are usually non-idelogical, and the are to be carefully examined as to their merits. Whenever you see somebody trying to enlist support or opposition for a trade deal or economic policy based on a principle (i.e. "Free Trade is good") rather than the specific content of the deal, you should realize that person is either naive about what the content of these deals are (thus supporting or opposing the deal's branding) or being deliberately deceptive.
I am pro-free trade, but I am also pro-reality. Free trade helps first and foremost shareholders, and a byproduct of free trade is lower prices, but we do not have free trade because it produces lower prices. So I am for a global economy and for free trade, but I know which Americans get the short end of the stick. So these Americans do not want handouts but they do want to benefit from free trade, and lower prices are not a big help when you get lower wages because your union factory job is shipped overseas. I do not want to get this thread off topic, and if that happens I apologize in advance, but I think one way we can make free trade more palatable is to have universal health care. Health care is something everybody needs and it is often difficult to plan for these expenses because health problems are often unexpected. Also, people with children might fear losing a job or might want to search for a better job but often they cannot give up a job because of health care benefits. Also, health care costs are increasing greatly and this interferes with people's purchasing power and our economy is based on the consumer economy. Also, other industrialized nations have universal health care, so manufacturers that export products in those nations do not have to pick up the health care tab, while our exporters often have to pick up the tab. So, yes I am for free trade, but I realize that free trade is much better for some Americans than others. The thing we must do is make free trade palatable for all Americans, otherwise we might have a backlash and we might start putting up trade barriers. Basically, Henry Ford paid his factory workers a wage high enough so he would have a larger market for his Model T. Now American corporations manufacture shoes in China and sell them in the US and Brazil and a few executives in Portland benefit from this dynamic. The post-World War II economic equilibrium (Ford helped create the foundation for this boom) that created the middle class is out of whack. We need to adapt to this new dynamic.
I am a free trade Democrat who sees free trade agreements like NAFTA and the European Union as great catalysts for wealth creation in all partner countries. That said I see situations where it is not the best policy at the moment and am not an ideological crusader on the subject who demands that all countries open their borders to the US. I am certainly willing to forge a coalition with Republicans, libertarians, and like-minded Democrats to implement more free trade agreements but I am not a single-issue voter so when voting on a candidate like President I look at other things as well. The anti-NAFA rhetoric in Ohio was extremely frustrating because Obama was telling Canadian officials his views aren't as harsh as he says in public (good) but yet he feels compelled to rail against it. I really don't feel it's critical to win to the Democratic nomination, so show some backbone Obama! I too am shocked how fast the Democratic Party abandoned the very successful New Democrat platform. Of that the major Democrats since Bill Clinton only Joe Lieberman espouses most the New Democrat policies. Very frustrating.
Beautiful post, SomeMildLanguage Free Trade is not that simple, I agree. However, outside of the environmental argument (which is significant, to be sure), I believe that everything protectionists are worried about with free trade are ultimately made worse by protectionism. The reason this is true is not simple, but it is all rooted in the complex and far reaching effects of competition.
Err Obama did not say anything to Canadian officials, there was a big scandal over that and it might have cost him Ohio. Free trade is a disaster, look at Mexico for example, post NAFTA growth was not much different than pre-Nafta but immigration to the north has balloned because poor farmers lost their jobs. I could definitely see a world where trade is freer than it is now, but not without a more humane approach than destructive creationism (aka neoliberalism). That said rewarding a govt that leads the hemisphere in HR violations is par on course for a Republican though. Not to mention they beat the rest of the world COMBINED in organized labor murders, for a country of just 40 million that is just insane. PS FDR did not support free trade, where did you get that idea?
