Topic: Immigration and trade
NAFTA: Here We Go Again, Part 2 Micro Trade - Macro Trade = 0 ==> Micro Trade = Macro Tradeby Christopher Espinal
(Conservative)
Thursday, April 17, 2008
Earlier today I took a look at a microscope observing plant cells. This reminded me of the fact that the laws of biology, physics, and other forms of natural science apply to situations of infinitesimally small scale.
A theme, which parallels that of the miniscule observation, exists for the idea of trade. We shouldn't forget that the idea of trade between firms can apply in situations as small and microscopic as two humans, and situations as grandiose as two countries.
Two human beings trade because they choose to specialize in producing one good or service, leaving the responsibility of the infinite selection of other goods or services to other people. They choose what they produce because it represents their optimal skill, generally speaking.
I'm good at filing papers and organizing stuff. As an office assistant I have a comparative advantage in producing this service compared to my boss. It would be much too costly for my boss to do such things all on her own, thus this task is outsourced to me.
My boss is excellent at handling all sorts of huge projects and managing important and sensitive tasks. She can do this job at a lower cost than other individuals because of her education and experience, which was why she was hired. Note that this is a measure of human capital and productivity as discussed in the previous article.
I don't make my own Coca-cola or pop. I leave that task to the firm that can do it at a much lower cost. Why do you think we buy food from the store? Stores have a comparative advantage or a lower cost method of bringing food to satisfy your dieting needs.
These examples represent what is called market activity - a series of instantaneous interactions between different firms such that an exchange of goods and services take place.
If I use the logic of anti-traders we are all "slaves" to someone else because they can accomplish another task at a much lower cost. If you ask me, this is just plain stupid. The real way we should describe the presence of trade is: someone else has allowed me to put more time into doing something that I'm good at, giving me more leisure at the end of the day. On the international level, that's what happens with countries, where they excel at producing a set of goods or services.
Another way to debunk these silly claims made by anti-traders is to look at technology, a part of an economy that is analogous to the purpose of trade. Like trade, it allows producers to be more productive and reach a wider customer base at a lower cost. If we look at the presence of technology and analyze this concept using anti-trader logic, we should all be in chains working under one master. Creative destruction, an important force in a market economy, has tossed millions of people into the unemployment line in our history.
Yet, the unemployment rate fluctuates around a measly 5% a year. Not to mention, around 95% of these individuals eventually find a job within a week. Technology has improved the lives of millions shifting out their productive capacities, thus making things at lower costs, and making everyone else a bit richer. Anti-trader logic states that we should all be living like crap by now. Yeah, right! When you use a bathroom, you have a private area with a toilet; you don't have to crap in a box. You probably eat a full meal everyday and wakeup thinking, not about hunger, but about what will happen in the OC's. You are living pretty damn well compared to history.
All of these ideas apply to international trade. Should we restrict technology and trade between individuals to save a couple of jobs? Nope. Then we shouldn't restrict international trade either because all that's happening here is that we are interacting on a global market scale.
In conclusion, if you hate free international trade then you plain and simply hate free markets. Trade between person A and person B is the same damn thing as trade between China and the US.
Interesting Rebuttals:
We still need people to do low skilled jobs.
Sure. So what? We can have highly productive people who utilize technology to do jobs that were once low skilled. Please don't be stupid enough to come up with "examples" where YOU don't see technology substituting low skilled jobs. People 100 years probably didn't project the invention of electronic calculators to instantly do annoying arithmetic for them.
Not everyone can send their children to college to improve their human capital.
Despite the fact that there are numerous other ways to become more productive individuals than acquire a formal education, this is true. Or should I say, this was ONCE true. If government has done anything reputable it is finance education for the poor. There's nothing wrong with capturing the positive externalities of more people becoming educated.
Bill Gates has increased his profits while Americans haven't improved their real incomes.
Again, so what? Bill Gates is far more productive than any other person in the world. That is probably why he is the richest man in the world. His products have reached hundreds of millions of households worldwide. No wonder why the man is a billionaire.
If Americans haven't improved their real incomes it is due to one reason: Americans in general haven't improved their productive capacities through elevating their human capital. Our education system isn't the greatest ya know.
However, who cares? Making more money and becoming more productive doesn't make Americans any happier. Americans may have reached a point where they are no longer willing to improve their human capital because its already high. Americans want more leisure, not more money. They already have good rates of leisure here in the US. The middle class work 8 - 9 hours a day. Not bad, eh?
If anyone works longer hours, it's the rich!
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2008 Christopher Espinal, all rights reserved.
Published: Thursday, April 17, 2008
Last modified: Thursday, April 17, 2008
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The North American Union wants to ship your job to the dirty Mestizos down in Mexico. Ron Paul knows that trade agreements like NAFTA are not free trade. Ron Paul opposes the NAU. Oh god I am paranoid. Oh no vote for Ron Paul before it is too late. The Chinese will take us over. Why are the jobs going to India? America is going to disolve itself thank to the Neocons! Get out of Iraq it is too expensive. I am building a bomb shelter are you? Oh my god! Oh My God! The United States is in trouble. LIBERTY AND DEATH LIBERTY AND DEATH
This article is ignoring several things. Manufacturing is the sector that's being hurt the most by global free trade. It's fine to say that unemployment is still low, but that's ignoring the fact that the jobs being lost are high paying union jobs and they're being replaced mostly by jobs in the "service" industry that don't pay as much and are not unionized. Witness the fact that the median income today is lower than it was at the turn of the century. Then there's the fact that free trade is helping Communist China become a superpower at America's expense, and the fact that products made overseas are not subject to American safety inspections...witness all the problems with lead paint in Chinese-made toys. Sure there are inspections done on imports, but only a tiny percentage of goods are checked.
And I haven't even touched on the trade imbalance. Every month, America imports billions of dollars more than it exports. This is starting to hurt the value of the dollar, which in turn makes those imports more expensive while American's pay remains the same.
Not to mention that products made in "low cost" countries are sometimes manufactured in sweatshops. American labor laws don't apply outside the US, after all.
Oh yes, and "free trade" isn't free either; countries often throw up barriers to protect native industries from American competition. China has kept it's currency artificially low for years, making it extremely profitable for them to export goods to the rest of the world, and making foreign-made products extremely expensive in China itself.
I won't even go into the national-security issues! If America loses it's industrial base that could be an even bigger problem than our current reliance on foreign oil. And the Air Force just signed a huge contract for new planes with a European company. If the military comes to rely on foreign weapons that could be a huge problem in time of war.
In short, free trade has it's points but we should change trade policy to fit the needs of our nation, not change our nation to fit the needs of a free trade policy.
Posted By: Christopher Espinal
Date: 2008-04-17 15:59:11
The comment above was aimed not towards JL but concerned zenophobe.
JL....you are right. Median income has gone down! However, that is because there is a gap between human capital and productivity between the "rich and the poor."
The older generation aren't as productive and haven't conformed to the "information age." No one is expecting them to do so. What you need to pay attention to is the fact that there's a transition that must go on. Because there's always a demand for higher skilled labour, there WILL be a transition.
There's no need to protect low skilled manufacturing jobs. Rather, we should focus on making them more productive individuals.
So what if "American laws don't apply outside the borders." That is at the fault of the poor countries....not us. They should enforce their own regulations. However, they can't do that until they have a stable society like ours.
No matter how much you focus on making people more productive, there will still need to be people in low skill jobs. Not everyone can send their kids to college. It's better to have people doing union jobs in manufacturing than slaving at Wal-Mart. And high tech jobs can be outsourced to India just like manufacturing can go to China or Malaysia.
As for the decline in wages, this is the first time in the last century that wages have not grown along with the economy. The median figure is specifically designed to account for the vast difference in pay between you and me and say, Bill Gates. It's far more accurate in that regard than a simple average. If you have a millionare in the same group as a couple of middle class people then the average income goes WAY up but the median changes from the exact middle wage earner to someone who makes slightly more than him.
As for the comment about American labour laws not applying outside the borders, that's perfectly true. However, if a country cannot guarantee that its exports aren't made in sweatshops then we should place restrictions on trade with them. Not only is it immoral to do otherwise, sweatshops also push down wages for other low skill workers, both in those poor countries and here at home. For example, Columbia's poor record at protecting trade unionists is being used by the Democrats as the reason to oppose a trade deal with that nation.
I do not oppose trade, and I do not oppose all free trade deals. To say that "if you hate free international trade then you plain and simply hate free markets" is incorrect. However, the primary purpose of our trade policy should be to serve the interests of the United States and its citizens. To simply say that all free trade is good is a huge oversimplification. Each trade deal should be considered on its merits. I think I've made it plain how our current trade system is failing us.
You have still not addressed my points about security issues, the trade imbalance, safety concerns for foreign products, and the problem of some countries such as China keeping their currencies artificially low to bolster profits and protect their home markets.
Posted By: Lou Dobbs For Pressident
Date: 2008-04-17 17:29:30
This administration with thier lax regulation, amnesty for illegals, (Shut up about my Mexican-American wife), and thier so called "free" trade agreements are killing this country's middle class! The Chinese are selling rat poison as food (even though I like to ignore American produce recalls and other such instances), the Mexicans are sneaking across the border and commiting crimes, and the war in Iraq is costing us billions (if it was up to me I would have waited to get attacked again before I would have invaded) and there is no way to win that war. We could find Osama Bin Laden in Baghdad and there would still be no justification for that war! We are aiding Pakistan with federal dollars and for what? (I will of course not acknowlege that this is simply so that our troops can fly over to get to Pakistan since Iran won't let us) We need to get serious in this country. My dead grandma can't even afford her medice or healthcare any more and it is all Bush's fault! Vote Centrist Indepent Lou Dobbs in 08'
Posted By: Christopher Espinal
Date: 2008-04-17 19:12:18
Lou Dobbs for Retard! The campaign has just begun! He is our only idiot besides Ralph Nader.
Besides clowning that irresponsible man of power, let me get back to some points made by JL.
Security is a different question. I don't know enough of international security theory to know the effects.
Human rights abuses abroad. I actually address this on the first part of this article. I personally believe in corporate accountability but I know it's unrealistic. Of course there will be problems with unions in other countries but our jurisdiction is here, not there. These other countries should adopt models to acquire enough economic stability to enforce laws. That is the ONLY way we will get rid of human rights abuses abroad. Politicians here just don't give a damn no matter how much crap they talk.
I addressed the rest of your concerns under the Interesting Rebuttals section.
Thanks for the comment and vote for Lou Dobbs. Besides Ron Paul he's our only "hope." By hope I actually mean disaster.
You "addressed my concerns" by saying "oh people will just have to become more productive." Also you say that people don't actually want money, they want to work less, and that Bill Gates deserves every penny of his money. While I certainly don't begrudge Bill Gates his dough (the man's earned it, as you say) and I can't argue with the fact that just about everyone in the world wants to work less (or preferably, not at all), you don't actually say anything about the points I raised. I would argue that if Americans haven't improved their real incomes it's because the economy stinks, not because they haven't "improved their productive capacities through elevating their human capital."
Free trade is great when we're trading with friendly nations like Canada, Mexico, Japan, the UK, etc. Free trade is not great when we're trading with unfriendly nations like China.
The trade balance, national security, safety problems, unfair trade practices by some nations, etc are all serious problems. We should not enter into a free trade agreement with a country when one of these becomes an issue. Our policies should serve the United States first and serve ideological concerns such as unlimited free trade no matter the situation a distant second.
Posted By: Lou Dobbs For President
Date: 2008-04-17 20:14:13
That is right China is in as bad shape as Cuba since we started trading with them. Can we really afford our best and brightest jobs to be outsourced by greedy corporations? This administration's tax cuts for the rich have made this possible. They tried to sell our shipping ports to a bunch of towl head terrorists who would have blown up the expensive ports that they have bought! This administration can not be trusted. Neither can congress.
Posted By: Christopher Espinal
Date: 2008-04-18 07:30:43
Maybe I'm confused about your points. Address them one by one in one sentence each and then I'll respond to each.
When an economy "stinks", it means people are getting layed off, businesses are losing money, drops in pay, and such. No one benefits from that. With all due respect, your statement is simply bad economics.
Trade imbalance: I actually addressed this concern before. I said it doesn't matter if we have a trade imbalance. A surplus or deficit helps this economy grow. The people who complain are Keynesians who that state money leaving the country is a leakage. However, their ideas come from normative analysis that doesn't make any damn sense.
As for your statement about median income, I say that the middle class haven't become more productive. The rich, like Bill Gates, have become more productive. Why do you care so much about peoples income in relation to the rich? It doesn't matter because real income in general stays the same unless someone can do your job for less, hence unskilled labour going abroad.
People can purchase the same things they have purchased before, except that Bill Gates found a way to make himself richer. There shouldn't be a problem with that. He's not screwing anyone over, is he? He's just making more money than you.
Yes, unskilled labourers have to become more productive by improving their human capital or pursuing entreprenuerial endeavors. Although entreprenuership bring us into a whole different debate on regulation and barriers to entry, they still have access to educational opportunities. The government provides billions of dollars in grants and loans - justified usage of money to improve the productive capacities of americans. This is a response to you saying that the poor can't afford education.
Last but not least, don't overpay attention to the things immediate effects of trade. Pay attention to the adjustment process and the long run benefits, which most academic economists believe outweight the short run costs. Kevin Murphy has done excellent research on this topic. Maybe you should look up his stuff.
So it seems that I have addressed your concerns. If you need more clarification then please let me know.
Posted By: Christopher Espinal
Date: 2008-04-18 19:55:46
Although a person like Dobbs would never get any utility out of speaking to a no one like myself, you are exactly right....you have too much power for an idiot!
Chris, in looking back at your responses to readers of your prolix pen, many is the time that you have indulged in ad hominem attacks, or even worse, reciting econ 101 as if it's a standalone subject apart from the world, from politics, from national survival.
Above you finally admitted "I don't know enough of international security theory to know the effects." I heartily agree.
R&D comes from the manufacturing industries. R&D is where our defense system gains its strength from a myriad of fields. The people I've read here aren't against trade; they're realists. Trade never stands by itself among nations. Never has, never will. Nationhood always trumps microecon.
To think of economics apart from Nationhood and national security is to miss the point of so many here who have tried to help you understand that National economics is always an intertwined action. There is no 'free trade.' Want to see creative destruction on a grand scale?
Here's what a past master had to say:
"Power comes from the muzzle of a gun, those that have the guns have the power, those that have the power dictate what type of government their shall be." Mao Tse Tung
We trade our secrets away today, to his most 'effective' students.
Posted By: Christopher Espinal
Date: 2008-04-20 02:29:06
AB
If you listen to the stuff you have to say it's quite ridiculous. Seriously!
Then you say that I use econ as if its something super special. Despite the fact that I love econ I know that it's ONE approach to analyzing the world around us. It's not complete.
Where have I engaged in Ad Hominen attacks that weren't justified? I respond stupidly to stupid people who say insane stuff like "the NAU or NWO wants to ship your jobs to people they are going to exploit" and bunch of other nonsense no one can seriously debate. Conspiracy theories are created by people who have a miniscule understanding of the way things work. That's why I admit to not knowing so much and I only focus things I understand: economics. I try not to comment outside of what I know because that leads to making far too many assumptions of how things work.
"To think of economics apart from Nationhood and national security is to miss the point of so many here who have tried to help you understand that National economics is always an intertwined action"
Yeah friggin right. No one here understands economics and that is what I have learned from reading nonsense from so many of these posts. Learn it before discussing it is my advice to you and everyone else.
Last but NOT least, show me what you know about "international security theory." I highly doubt anyone here has such expertise. To alot of people on this site realism is just a clump of conspiracy theories. In the past I have provided evidence for ideals and then everyone chooses to ignore the evidence. That is how people on this site function. If some piece of information doesn't fit their nonsense conspiracy theory then they completely ignore it.
I remember mentioning numbers of how good our economy is then every, I believe including you, starting talking about the government inflating and lying about every number I used. How can we seriously debate when people have such junk that they can't prove in their heads?
Whatever, I really don't care. I'm just posting ideas and that's it. I'm not claiming to be 100 percent correct. At least I admit to not knowing much!
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2008 Christopher Espinal, all rights reserved.