“Who the hell cares if there’s a trade war?” with China

fhl · May 25, 2016

This is why China runs a trade surplus with the US. Because they work extremely cheap. The notion that they only run a surplus because they manipulate everything is just utter bullshit.

Banjo · May 25, 2016

http://www.zerohedge.com/news/2016-...the+survival+rate+for+everyone+drops+to+zero)

Frederick Foresight · May 25, 2016

AAAintheBeltway said:
Sure. For most of American history we had relatively high tariffs. It was only in 1990's that "free trade" became a panacea. The British empire was built on high tariffs and merchantilist policies. Japan became a manufacturing powerhouse by favoring exporters and blocking imports.

We hear from free market economists about the theoretical benefits of free trade. These theories are pure ivory tower stuff however, based largely on obsolete concepts of comparative advantages, like a climate good for growing tobacco. How can there be a comparative advantage in making iron plates for weight lifting? Aren't our steel mills every bit as efficient as China's? What's the advantage that allows them to cover the cost of transportation? No environmental regulations, no affirmative action or other labor distortions and low wages, obviously.

So our choices are to maintain our own standards and watch all our manufacturing jobs leave, or impose tariffs to correct the imbalance.

If so-called free trade is so great, why are we the only ones practicing it? Why is it that the Chines, Japanese, Europeans, etc all try to protect their domestic industries and export like crazy to us? Didn't they read the same econ texts our guys did?

The fact is that overall worldwide prosperity is probably enhanced by free trade, at least as long as we can print the money to pay for it. Our relative advantage however versus the rest of the world is enhanced by closed trade. IOW we would fare better than the rest of the world if we dropped out of these free trade pacts. The reason is we have the biggest market. The overall level of prosperity might be lower, but we would be better off relative to them.

This fact gives us the leverage to negotiate favorable trade pacts with individual countries. We forfeit that leverage however when we join these global rules-based trade pacts, which also have the effect of eroding our sovereignty and handing power over our economy to international bureaucrats.

Trump may not be able to articulate these concepts in a way that Washington elites, but he surely understands them on a gut level. If he knows anything, it is how to use leverage in negotiations.
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I think it's interesting that some people want to impose trade barriers to protect domestic enterprise from competitive realities on the world stage, but at the same time abhor when the government "subsidizes malinvestment." Such people compartmentalize well, don't you think?

ETcallhome · May 25, 2016

Frederick Foresight said:
I think it's interesting that some people want to impose trade barriers to protect domestic enterprise from competitive realities on the world stage, but at the same time abhor when the government "subsidizes malinvestment." Such people compartmentalize well, don't you think?
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it's us against the world

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“Who the hell cares if there’s a trade war?” with China

fhl

Banjo

Frederick Foresight

ETcallhome