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timschochet

TRADE WAR discussion thread UPDATE:: Trump claims there is a secret, additional part of the agreement with Mexico, but Mexico denies it.

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1 minute ago, dschuler said:

Great Britain isn't a superpower anymore because it is smaller than the size of Florida and Georgia combined.  Would Florida/Georgia be a superpower?  No.  Great Britain gave up a lot of areas they once controlled,  are very limited in its natural resources and doesn't have tech giants like South Korea and Japan have. 

So being a superpower did not have anything to do with free trade at all?

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13 minutes ago, bradyfan said:

Which US companies are making a lot of money in China and India right now?

Most of the same ones that are making money in the U.S.  Turns out McDonalds, Starbucks, Pepsi, Apple, and all of the other big names are filled throughout their malls and the country.

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Just now, bradyfan said:

So being a superpower did not have anything to do with free trade at all?

Germany and Russia were superpowers in the 1940s, did they have free trade?

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4 minutes ago, dschuler said:

Germany and Russia were superpowers in the 1940s, did they have free trade?

Hey, I was not the one who said free trade made us the sole superpower.

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8 minutes ago, dschuler said:

Most of the same ones that are making money in the U.S.  Turns out McDonalds, Starbucks, Pepsi, Apple, and all of the other big names are filled throughout their malls and the country.

Funny you mention McDonalds.  It sold its Stake in China last year.

https://www.bloomberg.com/news/articles/2017-01-09/mcdonald-s-sells-control-of-china-business-to-citic-carlyle

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1 minute ago, bradyfan said:

Hey, I was not the one who said free trade made us the sole superpower.

That's fine, but Great Britain's fall had nothing to do with their trade policy.  It's irrelevant in their case, they gave away their best assets around the world and aren't much different than a 51st US state today. 

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2 minutes ago, bradyfan said:

It sold a majority of its stake yes, and they have added over 1,000 stores since then, so it might not be too much of a dip.  Point is that most US global companies operate in China just fine, and make a killing over there.  Stabucks is opening a store every 15 hours, has 3,000 stores in China and will have over 5,000 by 2021.

https://www.cnbc.com/2017/12/05/starbucks-is-opening-a-store-in-china-every-15-hours.html

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2 minutes ago, dschuler said:

That's fine, but Great Britain's fall had nothing to do with their trade policy.  It's irrelevant in their case, they gave away their best assets around the world and aren't much different than a 51st US state today. 

I don’t think any country willing gave away its assets if it can help it.  Just like GE would not have sold its appliance business to China if it is making money.

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6 minutes ago, bradyfan said:

Does this mean free trade works better for countries that can produce goods at a lower price?

no - free trade - in a large nutshell - is the efficient allocation of resources across global boundaries.

Company A - USA - want to make widgets.  It cost $1 to make a widget at a local factory and the sell them for $2

Now, Company A has found a factory in China that will make the widgets for $0.50 - including the cost to ship back to the US.  Company A, now sells a widget for $1.75, so the US public gets cheaper widgets, and Company A makes $0.25 more per widget.

In theory - lots of winning.

But, Company A laid off 1000 workers in its old factory.  And, neither Company A, nor the US, are spending a lot of this new-found profits to re-train these widget makers into something else.  In fact, most people blame the widget makers for not being prepared to do something else, despite the fact that for decades, being a widget maker was an honorable way to support a family.

So, we have some initial losers in the free-trade game.

 

Long-term - a trade deficit is not sustainable.  It is literally shipping wealth out of the country - we are sending more money out, than we are getting in.  And, when the goods we are getting in return for our money are consumable products - with a limited lifespan - we are pissing away our future wealth to feel good about ourselves today.  Unless, of course, we can continue to put things on our credit card - and never pay off the balance.  

 

So, how do we win?  We win, when we figure out how to best allocate our resources in the USA to produce goods and services that the rest of the world wants - and when that happens, the trade balance shifts back in our favor.  But, we prefer cheap TVs to R&D development into emerging tech, or alternative energy, or nation-wide high-speed internet access (or other infra-structure projects that will promote economic growth in a region).  We don't want to "waste" our hard-earned money training other people on new job skills.  Tough luck for them.  In short, we are not efficiently allocating resources in the US - we are simply allowing companies to take advantage of better resource allocation elsewhere.

The answer is not a trade war or tariffs.  That artificially raises the cost of widgets, and creates an inefficient use of resources - we know its more efficient to use labor in China to make widgets - but we have not figured out how to efficiently use the displaced labor here - and that is how you solve the problem.

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35 minutes ago, bradyfan said:

Great Britain supported free trade, so why is it not a superpower anymore?  I’m confused.

This is a good read on it: https://www.telegraph.co.uk/news/1399693/A-history-of-sterling.html

Best part:

Quote

Reconstruction at Bretton Woods

The Bretton Woods conference in 1944 heralded the end of sterling's predominance in international trade, and the triumph of the American dollar.

The agreement defined both the dollar and the pound as reserve currencies, a sop to British pride rather than a reflection of the truth, ignoring the UK's very large balance of payment deficit caused by the war. That reserve status meant that other nations must accept dollars or pounds to settle debts.

But each country, including Britain, would define the value of its currency in dollars, and the U.S. would tie the value of the dollar to gold.

The world simply did not have enough gold for every currency to hold reserves. In theory there was still a link to gold to impose a discipline on the system.The Americans held their currency stable against their gold reserves in the famous Fort Knox.

But the pound was not a popular reserve currency, although the Commonwealth sterling block helped it retain some importance in currency markets. After the war, rumours swirled that sterling was to devalue, and so many countries converted their pounds to dollars.

At the same time, Britain's trading partners in the sterling block - mostly her colonies - wanted consumer goods, which the UK could not supply. The UK was still geared for war supply.

These nations turned to the USA and dollars for their consumer necessaries, further weakening the British economy, and by 1949 sterling's importance as a reserve currency was severely on the wane. Sir Stafford Cripps, then Chancellor of the Exchequer, accepted this uncomfortable fact, although he denied it in public.

The pound was devalued by 30 per cent on September 18 1949. The enormous postwar balance of payments deficit was just too much for the UK. Lend lease and debt due America had taken its toll. Sterling's weakness and decline then became glaring. National banks wanted dollars not pounds.

 

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4 hours ago, dschuler said:

Even with the tariffs and turmoil the market is still up... why is that?  I think you should consider what I said above.  We are reaching a point where one day FANGM will have such a large market cap comparatively that the other companies in the stock market will have little to no impact on the overall change in the Dow/NASDAQ.   These tariff benefitting companies like American Steel and Alcoa for aluminum have market caps that combine for only about 1.5% of the total value of just Apple.  

Essentially, we have gotten to the point where people 401Ks are still going to go up with 1000000% tariffs as long as the value of FANGM keep going up.  

good for the top 10%, I guess.

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1 minute ago, The Duff Man said:

No idea if this is accurate, but article claims that 200,000 manufacturing jobs were lost last time US had tariffs on these products. 

https://www.marketwatch.com/story/heres-what-happened-the-last-time-the-us-imposed-tariffs-on-steel-2018-03-08

 

By exempting Canada...are we minimizing the impact (both the positive and negative)?

 

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I posted the below in the Trump years thread, but it could go here as well.  I still don't know how this impacts my project.  This is more of a macro-economics item, this is how tarriffs could effect me personally.

==================

The project I'm working on was budgeted to cost $115.  It currently costs $120, with ~$20 in steel, sourced from China.  We had a path to take $5 out, but it was going to be tough.  I don't believe $10 is doable.

If our Chinese steel component prices rise by $5, we will be over budget.  If that happens, this project won't make enough margin to ship - you can't turn around a product that makes less margin than the previous one as the new one will cannibalize your business and you end up losing money.

Last Wednesday, the CEO showed up unannounced and layed off my entire department (except me and my team), consolidating engineering to Germany.  My team was spared only because of this project.

If we are saddled with an extra 25% costs on Chinese steel, they might as well cancel my project and let me go too.

This is not abstract, hypothetical stuff.  This is my career, as well as my employees.

=================

Beyond that, I'd add this: you guys hear how electrolux halted building a facility in Tennessee due to the tarrifs?  Electrolux USA is headquartered here in Charlotte.  I have a lot of co-workers that came from their HQ.  One less Electrolux plant means fewer jobs for a guy like me.  

I still don't know what the impact of the tarriffs will be on my project.  It gets fuzzy as our Chinese steel is not purchased as a raw good - we have a lot of bending, stamping, and welding done and it ships to us as a subassembly.  I have no idea how that will be marked WRT tarrifs.  

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Quote

Toys “R” Us Inc. is making preparations for a liquidation of its bankrupt U.S. operations after so far failing to find a buyer or reach a debt restructuring deal with lenders, according to people familiar with the matter.

While the situation is still fluid, a shutdown of the U.S. division has become increasingly likely in recent days, said the people, who asked not to be identified because the information is private. Hopes are fading that a buyer will emerge to keep some of the business operating, or that lenders will agree on terms of a debt restructuring, the people said.

The toy chain’s U.S. division entered bankruptcy in September, planning to emerge with a leaner business model and more manageable debt. A new $3.1 billion loan was obtained to keep the stores open during the turnaround effort, but results worsened more than expected during the holidays, casting doubt on the chain’s viability.

The situation has also deteriorated for many of the retailer’s overseas divisions, which weren’t part of the bankruptcy. Toys “R” Us’ U.K. unit put itself in the hands of a court administrator after discussions about selling the business fell apart. Its European arm is seeking takeover bids. And talks are being held to offload the growing Asian business, the company’s most profitable arm. It’s not yet clear what will happen to the Canadian unit, which filed at the same time as the U.S. division.

A representative for Wayne, New Jersey-based Toys “R” Us declined to comment.

The news sent shares of the biggest toymakers tumbling in late trading. Mattel Inc. fell as much as 6.1 percent, while Hasbro Inc. declined 3 percent.

Toys “R” Us’s $583 million of first-lien bonds due in 2021 dropped as much as 4 cents on the dollar to 83.9, according to bond-pricing system known as Trace. That’s the biggest decline since September, the month the company filed for bankruptcy.

The downfall of Toys “R” Us can be traced back to a $7.5 billion leveraged buyout in 2005, when Bain Capital, KKR & Co. and Vornado Realty Trust loaded the company with debt. For years, the retailer was able to refinance its debt and delay a reckoning. But the emergence of online competitors, like Amazon.com Inc., weighed on results. The company’s massive interest payments also sucked up resources that could have gone toward technology and improving operations.

Facing broader concerns about the brick-and-mortar industry, the company was finally pushed to hire debt-restructuring advisers last year. Its worsening situation, along with reports that it was considering bankruptcy, spooked vendors – with about 40 percent of them ceasing shipments and forcing the company to seek court protection. That quick descent meant the retailer entered bankruptcy without a plan for how to restructure its debt, which made finding a way to exit more difficult.

The liquidation will be a big blow for the toy industry, as the chain makes up about 15 percent of U.S. toy revenue. Moreover, the retailer was willing to take chances on new products and small companies. Bigger competitors like Walmart Inc. and Target Corp. would typically take a more cautious approach.

The company entered this year with more than 800 stores in the U.S. – under both the Toys “R” Us and Babies “R” Us brands. In January, it announced the shuttering of 180 locations.

It’s not unusual for bankrupt retailers to ultimately liquidate, but Toys “R” Us took an optimistic stance when it filed for bankruptcy in September. It initially pledged not to close stores, and its earnings had shown improvement by some measures.

Toys “R” Us generated $11.5 billion in sales in 2016. And though the company hadn’t reported an annual profit since its 2013 fiscal year because of interest payments, its operating income had risen 22 percent, to $460 million.

The company was founded in 1948 when Charles Lazarus opened Children’s Bargain Town, a baby-furniture store. Over the decades, it grew into the largest U.S. toy chain. In the early 1990s, sales were increasing at a 10 percent annual clip.

In more recent years, sluggish traffic and the shift online took their toll. In the 12 months through September, Toys “R” Us sales declined 5 percent.

Thanks Obama! 

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13 hours ago, timschochet said:

Make no mistake, this WILL be popular with a lot of Americans, perhaps a plurality. Almost every economist, liberal and conservative, will tell you it's a bad idea. But a lot of the public likes it, particularly Trump's primary supporters and a lot of the Bernie people as well.

While they don't make up a significant amount most of my conservative farmers friends obviously don't like these tariffs. It blew me away when they were supporting him despite his tough talk on NAFTA which we farmers support. I told them it's a little late to whine now, he is only doing what he said he was going to do.

Edited by lazyike
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The administration found their chief trade strategist via AmazonThat’s how you hire the best people, Kushner on a browser.

Peter Navarro is so far out of the mainstream it’s difficult to find another published economist who is in sync with his views. His colleagues at UC-Irvine contemplated posting a notice on their department website disavowing his views. Perhaps part of the appeal for DJT is he’s virtually a clone of The Donald: bombastic, prone to hyperbole, frequently cites reports / studies known to be false, et al. “He’s a difficult guy to have a two-way conversation with” is how one of his colleagues described hiim.

Per Wiki:

Mainstream economics may be called orthodox or conventional economics by its critics.[5] Alternatively, mainstream economics deals with the "rationality–individualism–equilibrium nexus" and heterodox economics is more "radical" in dealing with the "institutions–history–social structure nexus".[6] Many mainstream economists dismiss heterodox economics as "fringe" and "irrelevant",[7] with little or no influence on the vast majority of academic mainstream economists in the English-speaking world.

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I am ashamed that Peter Navarro is from my Alma Mater, UC Irvine. And my wife is ashamed that Stephen Miller is from her high school, Santa Monica. 

Its not our fault! 

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4 hours ago, lazyike said:

While they don't make up a significant amount most of my conservative farmers friends obviously don't like these tariffs. It blew me away when they were supporting him despite his tough talk on NAFTA which we farmers support. I told them it's a little late to whine now, he is only doing what he said he was going to do.

I don't see how any farmers can like Trump but the majority of them voted for him for some reason.

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18 hours ago, Epic Problem said:

There's so many tariffs
There's so many tariffs
There's so many
There's so many tariffs
There's so many tariffs
There's so many

Let's have a trade war!
#### up the Dow Jones!
Let's have a trade war!
It can start in Steel Industry!
Let's have a trade war!
Screw the middle-class!
Let's have a trade war!
Trump banged the porn star that's on stage!

Geez. No Fear fans here?

 

Fine! I'm Leeving

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Gotta say I have pretty mixed feelings on this and I’m pretty put off by the perspective of many of you that anti-free trade people are necessarily ill-informed.  Look, I’ve taken college economics.  I understand that free trade makes countries richer.  But I don’t think the analysis should end there.

From my perspective of the last 30 years or whatever, the benefits of freer trade have accrued primarily to the investor class in this country.  If the country is getting richer as a result of the richest 5% of the population getting even richer while everyone else is stagnant, then I think it’s perfectly reasonable for the other 95% to say that the rich need to do a better job sharing or we’re not gonna help them get any richer.

I should make clear that my statements are related to free trade generally not the specific tariffs contemplated by Trump here.  I don’t feel knowledgeable enough to weigh in on the merits of those.

Edited by fatguyinalittlecoat
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11 hours ago, fatguyinalittlecoat said:

Gotta say I have pretty mixed feelings on this and I’m pretty put off by the perspective of many of you that anti-free trade people are necessarily ill-informed.  Look, I’ve taken college economics.  I understand that free trade makes countries richer.  But I don’t think the analysis should end there.

From my perspective of the last 30 years or whatever, the benefits of freer trade have accrued primarily to the investor class in this country.  If the country is getting richer as a result of the richest 5% of the population getting even richer while everyone else is stagnant, then I think it’s perfectly reasonable for the other 95% to say that the rich need to do a better job sharing or we’re not gonna help them get any richer.

I should make clear that my statements are related to free trade generally not the specific tariffs contemplated by Trump here.  I don’t feel knowledgeable enough to weigh in on the merits of those.

There are about 140k people employed in the steel industry.  There's 16x that many in steel related businesses that is going to have to absorb these extra costs which will more than likely lead to layoffs. In 2002 when Bush put tarrifs on steel 187k jobs were created in the steel industry and 200k were lost in related businesses. 

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I don't know where people are coming up with the number 140K for those employed in the Steel industry. If you look at only iron and steel mills, the employment number is closer to 80K.

Those 80K workers produce approximately 80 mm metric tons of steel per year, or about ~1,000 tons per employee. At the absolute peak of employment and production in the US steel industry, in the very early 70s, the industry employed about 600K workers, and they produced 110-120 mm mt per year, or 185-200 tons per year. 

So during my lifetime, the steel industry has lost approximately a half a million jobs as it has become about 5-6x more efficient. Even if you look at just the last 20 years, output per employee has essentially doubled. That is the real story here. Not unfair foreign competition, or bad trade deals, or whatnot.

Early last week I got a call from an old friend to talk about steel prices. His business buys a lot of steel to go in their natural gas fractionation plants. His vendors are attempting to tack a 25% premium on to the steel price from last week. It is clear that prices already moved a bit when the inquiry into Chinese dumping began; the market was building some premium into the price for possible tariffs. So his vendors attempting to pass through a 25% surcharge is clearly "double dipping". 

It would amount to close to a 40% premium from the market price from the end of December. That is far above what is economically justified and is essentially profiteering/price gouging. Benchmark prices outside the US are generally below US prices, so the new equilibrium price should become foreign price + price of transport + tariff. That shouldn't amount to a 40% bump, but in the chaos of current uncertainty vendors are trying to extract economic rents.

This is how real markets work when a market distortion (the suddenly announced tariffs) are introduced. I am not sure how anybody would think this could be a positive for the US economy and for US jobs. My friend is based in East Texas and he builds plants in that region and hires people in that region. The tariffs are likely to enrich his vendors (mostly middle-men) on their current inventories in the short term--rewarding classic rent-seeking behavior. 

Longer term, they are likely to do significant damage outside of the steel industry. That's how economics tell us it should work and that is what real experience tells us about how it basically always works. 

My dad was in the lumber business in the PNW for about 50 years and he has some experience with tariffs and quotas on Canadian forest products. He saw them both as a middle man and also as a supplier of raw US timber. He told me the other day that while the experience differed a bit, depending on his role, he never saw the "protection" of US products as being a net positive for the business. Quite the opposite, in fact. 

Protectionism is one area where economic theory squares with real world experience quite neatly. Yet there are still people who laud protectionist policies. Are they dishonest or just ignorant? Or some of both?

 

 

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Great post Redmond. 

To answer your last question, I believe mostly ignorant. As I have pointed out many times, protectionism is very popular among people who prefer simple answers to complicated questions. 

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6 hours ago, RedmondLonghorn said:

 

Protectionism is one area where economic theory squares with real world experience quite neatly. Yet there are still people who laud protectionist policies. Are they dishonest or just ignorant? Or some of both?

I don’t think it’s necessarily either of these things.  Lots of people do not seem to have had their lives improved by freer trade.  

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1 hour ago, fatguyinalittlecoat said:

I don’t think it’s necessarily either of these things.  Lots of people do not seem to have had their lives improved by freer trade.  

Are these people the Amish, or do they live in some other kind of self-contained and self-sufficient community?

Because virtually everybody else has had their lives improved, in some way, by free trade. If they are consumers, their purchasing power as consumers has been improved by free trade.

Now there are some people who have also lost jobs because of international competitive forces, so for those specific people, the cost to them of free trade may have outweighed the benefits. That's an an unfortunate fact. But on a net basis, the benefits of free trade have massively outweighed the costs for our society as a whole. 

And that number is probably a lot smaller than many people think it is. There was a fairly recent academic study that determined that something like 75-80% of job losses in manufacturing have come as a result of automation, rather than do to foreign competition. Which is why over the past 25 years, while jobs in manufacturing have dropped sharply in the US, the total value of manufacturing output is basically at its all time high. See Chart. I said "basically", because this chart is based on data that is a year old and the inflation-adjusted output index was a little below its mid-2000s peak at that time. As of the new data from the end of the 4th quarter (and this data was released just five days ago), the total real value of manufacturing output is within a whisker of where it was at the peak. See Chart The US is also exporting more durable goods, in terms of real value, than it ever has before. See Chart.

As you can see, the narrative that the US manufacturing sector is dying and we "don't export anything anymore" because of competition from China and others is patently false.

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6 minutes ago, RedmondLonghorn said:

But on a net basis, the benefits of free trade have massively outweighed the costs for our society as a whole. 

Maybe - if you have a myopic short-term view.

@fatguyinalittlecoat is correct that the real beneficiaries of free trade have been shareholders.  The consumers do see a short-term benefit - consumable products are less expensive.  But, long-term, this is not sustainable.  

Long-term, the US, and US companies, are not doing enough to efficiently allocate US labor to different jobs.  That is the true benefit of free trade - the efficient allocation of resources.  Right now, we are simply efficiently allocating our wealth to other countries so we can buy cheaper consumable products.  What we should be doing, as a country, is sharing the benefits of free-trade more evenly.  Taxing corporate profits and using those funds to pay for job training, education, R&D into developing industries.

We need to reverse the trade deficit - but not through tariffs - we need to start producing more goods and services that the world wants - by efficiently allocating our resources towards those goods and services.

The alternative is that the trade balance will eventually even out when we no longer can afford to ship our wealth overseas, and countries stop shipping goods to the US, and our standard of living will drop accordingly.

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Just now, Sinn Fein said:

Maybe - if you have a myopic short-term view.

@fatguyinalittlecoat is correct that the real beneficiaries of free trade have been shareholders.  The consumers do see a short-term benefit - consumable products are less expensive.  But, long-term, this is not sustainable.  

Long-term, the US, and US companies, are not doing enough to efficiently allocate US labor to different jobs.  That is the true benefit of free trade - the efficient allocation of resources.  Right now, we are simply efficiently allocating our wealth to other countries so we can buy cheaper consumable products.  What we should be doing, as a country, is sharing the benefits of free-trade more evenly.  Taxing corporate profits and using those funds to pay for job training, education, R&D into developing industries.

We need to reverse the trade deficit - but not through tariffs - we need to start producing more goods and services that the world wants - by efficiently allocating our resources towards those goods and services.

The alternative is that the trade balance will eventually even out when we no longer can afford to ship our wealth overseas, and countries stop shipping goods to the US, and our standard of living will drop accordingly.

If your position is that the US hasn't done enough to promote development of new industries or to aid those who have been negatively affected by changes to their industries (which again, tend to come more often from automation than from foreign competition), that is a different discussion. And I might not differ too much with you on those comments.

But that isn't the fault of free trade. 

Describing the benefit to consumers of increased purchasing power as a minor benefit is something I would differ sharply on, however. It is a substantial benefit, especially for those people with limited means. 

I would also add that the idea that a trade surplus is always good and a trade deficit is always bad is an overly simplistic analysis. There are pros and cons to both a deficit and a surplus. I would probably agree that running a large and persistently increasing trade deficit carries certain risks that we don't want to bear, however.

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30 minutes ago, Sinn Fein said:

Long-term, the US, and US companies, are not doing enough to efficiently allocate US labor to different jobs.  That is the true benefit of free trade - the efficient allocation of resources.  Right now, we are simply efficiently allocating our wealth to other countries so we can buy cheaper consumable products.  What we should be doing, as a country, is sharing the benefits of free-trade more evenly.  Taxing corporate profits and using those funds to pay for job training, education, R&D into developing industries.

As @RedmondLonghorn eloquently states above - not the fault of free trade - and also not the fault of free trade agreements.

 

31 minutes ago, Sinn Fein said:

We need to reverse the trade deficit - but not through tariffs - we need to start producing more goods and services that the world wants - by efficiently allocating our resources towards those goods and services

Yup - and to some extent you (the US) already have: See Google, Apple, etc profits. Where the US has failed is in unquestioningly allowing the markets most short term thinkers to determine how to spend the profits. Share buy backs don't promote growth, R&D spend does.

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17 minutes ago, msommer said:

As @RedmondLonghorn eloquently states above - not the fault of free trade - and also not the fault of free trade agreements.

 

43 minutes ago, RedmondLonghorn said:

But that isn't the fault of free trade.

 

I've never been opposed to free trade.

I am opposed to how we allocate the benefits of free trade.  I am not into protecting jobs - I am into promoting new growth.  I am into efficiently allocating our resources into more productive roles.  We don't do that.  We tout cheap consumer products.

 

Long term, you simply cannot run a trade deficit - it really is that simple.  And long-term, the trade deficit will balance out - one way or the other.  Yes, in the short-run, there are times when you can go on a spending spree.  But, long-term you are simply giving away your wealth, and when it is gone, people will stop selling to you at prices you can afford.  So, when you have built up a surplus - the best way to utilize free trade, is to use that surplus to invest in the future - not buy more TVs.

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16 minutes ago, Sinn Fein said:

I am opposed to how we allocate the benefits of free trade.  I am not into protecting jobs - I am into promoting new growth.  I am into efficiently allocating our resources into more productive roles.  

Doing that, and at the same time expecting quarterly results to

a) be then end all on performance and

b) always go up

are incompatible

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Just now, msommer said:

Doing that, and at the same time expecting quarterly results to

a) be then end all on performance and

b) always go up

are incompatible

Ok?  Not sure what I said that contradicts that....

:shrug:

 

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10 hours ago, RedmondLonghorn said:

I don't know where people are coming up with the number 140K for those employed in the Steel industry. If you look at only iron and steel mills, the employment number is closer to 80K.

 

 

 

I may have miscounted.  I was distracted around 17,043 or so.

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6 minutes ago, Sinn Fein said:

Ok?  Not sure what I said that contradicts that....

:shrug:

 

It seems relevant to bring up as a reason for the way wealth continues to be allocated to the 1%ers over actual growth thaty could even the trade balance.

If you have an idea on how to change the current allocation mechanism in a way that provides for longer term growth for the country I'd be happy to discuss it.

Triple Bottom line and Shared Value are stabs at that I suppose, but have yet to have measurable impact beyond the CSR pages in the annual reports

Edited by msommer

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42 minutes ago, Sinn Fein said:

 

I've never been opposed to free trade.

 

That's good.

There are, unfortunately, some people who are opposed to free trade. Including, apparently, the POTUS and several people who have his ear. 

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10 minutes ago, Maurile Tremblay said:

The steel and aluminum tariffs are officially stupid.

I think this is the first time I can remember that one of the panelists hadn't read the question wrong and had to change his/her vote later to go with the majority...

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8 hours ago, fatguyinalittlecoat said:

I don’t think it’s necessarily either of these things.  Lots of people do not seem to have had their lives improved by freer trade.  

I agree with RedmondLonghorn here. Free trade has resulted in higher incomes mostly for managers and investors rather than unskilled workers. But not everything is about income. Unskilled workers benefit from being able to purchase reasonably priced cell phones just like everyone else does. If we're just counting heads to see how many lives have been improved by freer trade, it's going to be a really big number.

That may just be a nitpick about phrasing, though. I agree with what I take to be your main point: that the wealth generated by international trade has been more concentrated in recent decades than is ideal. (I'm talking only about the increased wealth in America. I believe the increased wealth worldwide has been much less concentrated.) The solution should not be to hamper international trade. The solution should be greater general income redistribution through things like a more progressive income tax, higher standard deduction, expanded EITC, introduction of a basic income guarantee, etc. As I've argued before, you can't redistribute wealth that was never generated, so wealth-enhancing opportunities like international trade are pretty important precursors to robust redistribution policies.

There's a separate political question of what leverage people who favor greater redistribution might have to get their preferred policies enacted. "We won't support free trade unless you agree to increase the top marginal income-tax rates" might be a decent bargaining position, but I don't see too many people making anything like that argument. Instead, it's mostly "We won't support free trade because we want to benefit Americans instead of foreigners" -- which is exactly the argument that professional economists all think is stupid because hampering free trade will end up hurting Americans, not helping them.

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Very interesting conversations and points here guys. It does seem like we have an intersection of 2 issues. One is free trade and the other is wealth distriubution (greed?). Free trade is good, but I think some are right here that the investors and high level managers getting rich on it are failing to see the big picture as this wealth relates to the unskilled workers. America would be in a much healthier place if corporations were investing more $ back into their workers. 

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If people want to have a serious discussion about the real reasons for widening income disparity and misallocation of resources, those things have everything to do with tax policy and (especially) Fed policy, and almost nothing to do with trade.

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8 minutes ago, Maurile Tremblay said:

 

There's a separate political question of what leverage people who favor greater redistribution might have to get their preferred policies enacted. "We won't support free trade unless you agree to increase the top marginal income-tax rates" might be a decent bargaining position, but I don't see too many people making anything like that argument. 

Yeah I think mostly just me.  With that said, I don’t see free traders trying to engage in that sort of negotiation either.  They all just take the attitude that free trade is self-evidently good and therefore there’s no need to engage in discussions about how the benefits of such trade should be distributed.  Maybe if they were more willing to advocate for that they wouldn’t be having the problems they are now.

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35 minutes ago, Maurile Tremblay said:

The steel and aluminum tariffs are officially stupid.

I enjoyed the answer from one economist that was "Strongly Disagree", but only had a confidence level of 3. Either she was really hedging her bets, or she doesn't really understand what "Strongly" means.

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2 minutes ago, RedmondLonghorn said:

If people want to have a serious discussion about the real reasons for widening income disparity and misallocation of resources, those things have everything to do with tax policy and (especially) Fed policy, and almost nothing to do with trade.

Likely true, but for some reason the working class seems to have enough votes to hijack trade deals but not to stop tax breaks for the rich.

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1 minute ago, fatguyinalittlecoat said:

Yeah I think mostly just me.  With that said, I don’t see free traders trying to engage in that sort of negotiation either.  They all just take the attitude that free trade is self-evidently good and therefore there’s no need to engage in discussions about how the benefits of such trade should be distributed.  Maybe if they were more willing to advocate for that they wouldn’t be having the problems they are now.

I don't engage in discussions that link the two, because the two aren't linked. 

Trade policy, tax policy, and things like the social safety net are separate topics. The idea that they are inextricably linked is inaccurate. 

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