Free Trade Debate

[jfrog]

Does Free Trade benefit or hurt the typical American (especially when considered on the global scale)?

[Esaias]

If it was cooked up by people like Soros, Clinton, Bush, et all, then you bet it hurts the "typical American".

[Originalist]

Originally Posted by jfrog

Does Free Trade benefit or hurt the typical American (especially when considered on the global scale)?

It's not true free trade. The only think we export is our jobs.

[Pressing-On]

Originally Posted by jfrog

Does Free Trade benefit or hurt the typical American (especially when considered on the global scale)?

It is easier to highlight the points that I believe to be factual than to write up an argument in favor of Free Trade myself. This would be the "true" free trade that, I believe, Originalist would agree with.

Trade

The Issue

Free trade occurs when the government does not limit or subsidize either imports or exports—meaning that Americans can spend their dollars on goods and services regardless of where they are from and engage without restriction in voluntary, mutually beneficial transactions, both as buyers and sellers, with people in other countries.

Debates over barriers to trade have erupted from time to time during our history and have not always been resolved in favor of greater freedom, but the historical record is clear: When we have opted for freer trade, we have been rewarded with long periods of greater prosperity. As President Ronald Reagan once reminded his fellow citizens:

The winds and waters of commerce carry opportunities that help nations grow and bring citizens of the world closer together. Put simply, increased trade spells more jobs, higher earnings, better products, less inflation, and cooperation over confrontation. The freer the flow of world trade, the stronger the tides for economic progress and peace among nations.

Critics of U.S. trade agreements and of free trade generally assert that free trade destroys jobs and lowers wages, but the facts show otherwise. Trade—like technology—promotes economic restructuring, eliminating some jobs but creating many others in fields such as transportation, wholesale, retail, construction, and finance. The dollars that Americans save by importing products are spent and invested elsewhere in the U.S. economy, creating new jobs.

Imports from America’s trading partners also give American consumers greater purchasing power, as free trade allows them to buy a wider variety of goods at lower prices. Imports also benefit the domestic manufacturing sector because over half of U.S. imports consist of capital goods and intermediate products, such as steel for carmakers and lumber for builders, which are the lifeblood of U.S. manufacturing.

Skeptics of free trade often tout the misleading concept of a “trade deficit,” which implies that dollars are being drained from the U.S. economy. However, once all financial transactions, including foreign investment, are accounted for, this deficit vanishes. While Americans sent $4.4 trillion abroad in 2014, they also received that much from people and companies abroad that bought U.S. exports, invested in the U.S., paid U.S. investors, or otherwise transferred money to the U.S.

The biggest threat to U.S. prosperity comes from the decline in economic freedom in the United States. In 2010, for the first time ever, the United States fell from the ranks of the economically free in the Index of Economic Freedom, published annually by The Heritage Foundation and The Wall Street Journal. This reduction in freedom has been accompanied by economic stagnation, persistent unemployment, and lethargic economic growth.

Fundamentally, free trade is about rejecting favoritism and expanding economic opportunity for all. What is needed is a return to the free trade policies that have created economic dynamism, which engenders continual innovation and leads to better products, new markets, and greater investment.

http://solutions.heritage.org/the-ec...664.1480949288

[aegsm76]

We are not engaged in "free trade" with regards to some products and some nations.
Some nations have chosen to sell products at a loss, in order to boost that industry or in an effort to drive competing companies/nations out of that market.
That is what many of today's "free trade" worshippers refuse to acknowledge.

[Pressing-On]

Originally Posted by aegsm76

We are not engaged in "free trade" with regards to some products and some nations.
Some nations have chosen to sell products at a loss, in order to boost that industry or in an effort to drive competing companies/nations out of that market.
That is what many of today's "free trade" worshippers refuse to acknowledge.

People who believe in Free Trade are not refusing to acknowledge that fact. I listened to Leon Panetta and Dick Cheney discussing that very thing yesterday.

[Originalist]

Originally Posted by Originalist

It's not true free trade. The only think we export is our jobs.

"Thing" we export. Sorry.

[aegsm76]

Originally Posted by Pressing-On

People who believe in Free Trade are not refusing to acknowledge that fact. I listened to Leon Panetta and Dick Cheney discussing that very thing yesterday.

I have heard a lot of discussions of this over the last 16 years.
And not much done about it.
Hopefully that will change.

[Praxeas]

If Free Trade will reduce the cost of prescriptions then Im all for it

[jfrog]

So let's examine what may happen if total free trade is allowed.

Let's look at an example of a single developed nation with expensive labor and all else the same and a less developed nation with inexpensive labor.

Let's assume the nations go from total protectionist policies to total free trade instantly. What happens?

1. Initially raw materials are sold the developed nation from the undeveloped and due to the cheap labor needed to get them making them far cheaper.

This takes away many raw material type jobs but not all. Such supplies are cheaper which increases purchasing powers

2. Manufacturing invests in the undeveloped country. This takes manufacturing jobs but means cheaper goods and more purchasing power.

We have witnessed these first 2 things happen. What happens after them?

3. Over the phone customer service jobs more overseas. This has occurred as well.

4. More advanced and technical jobs begin to move to other countries. Programming, analysts, research etc...

We also see these things happening but not on quite the same scale yet.

5. What happens next? Eventually the underdeveloped nation has most of the jobs we used to have (cheaper labor costs). Jobs in the underdeveloped nation become more competitive to lure better workers from the other companies there and this causes wages there to increase while the developed countries wages as a whole decrease due to lack of jobs. Eventually the undeveloped countries wages eventually equal ours. Probably much faster than expected.

6. What happens when their wages equal ours (due to theirs increasing and ours decreasing)? The underdeveloped country now has the momentum and the money and the investments. This actually drives its wages and standard of living greatly above the developed countries and then we repeat except the countries roles are reversed.

I believe the only way to avoid such a fate is to enact many protectionist policies. Our economy cannot survive merely on service jobs once we lose most tech and manufacturing and other jobs where something is actually created. Thoughts?