FREE TRADE
GOOD OR BAD?  OR EVEN CLOSE TO A QUESTION?

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President Obama, as a candidate, was opposed to free trade.  Three free trade agreements sat on his desk from 1/20/09 to 10/1/11 and then were approved by Congress in 7 days.  One, with the South Koreans, was touted as probably producing 70,000 American jobs. 
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Those who do not understand basic economics mostly think of free trade as the problem, as they believe it is the cause of American jobs being exported, given away.

Recall that President Clinton approved of NAFTA and of free trade in general.

Free trade allows the whole world to create greater wealth and to be able for people to spend less to buy goods, as the production of goods goes to where it is cheapest to buy.

Just as people look at one side of the WalMart phenomenon, seeing that it was too much competition for local stores, they fail to see the benefit of free trade.

Notice that the Americans, even those objecting to WalMart, went to WalMart in droves (or it wouldn't have existed and grown so much).  And the benefit was that people could buy things for less, so that they would be able to live cheaper and/or have more money to spend on other things. 

Well, that benefit is one of the benefits of free trade. 

As other nations sell their goods, they are more able to buy our goods, so we obtain more customers.

The pie gets bigger and the world gets more prosperous overall.  Even if we get a smaller percentage of the total pie than we would have otherwise, we have a larger piece in size than we would have had otherwise. 

See The Economic Forces, for a discussion about the overall effects of economic forces on American's employment and earnings.


CREATING "FAIR TRADE"

Our tariff on Chinese imports is 2.5%; China's imports from us, 25%.

The simple solution is that we declare that we are committed to fair trade and as part of that we will match any tariffs from any country we do business with. 
It is the choice of any country what tariffs to maintain.  We will simply match them.   If China moves down to 2.5%, then that's fine.  If they don't move, then we simply do what is fair and raise our tariffs to 25% - who can complain about equality or say it is unfair?   This would create a substantial number of jobs here in the US also, as American goods will become relatively cheaper compared to the higher costs of Chinese goods for Americans.  If China drops their tariff rate, we get more American jobs because our goods become relatively cheaper in China so we need to produce more goods here. 

It is "stupid" to be cautious and keep such disparities in place.   If someone can give me a good argument for maintaining the disparity, please add it as a comment on the blog (see home page).  







Build, increase the size of the pie, rather than protect the inefficient or costly producer

so enough for all, so that a social net can be afforded and enhanceded

Free trade acts to increase the size of the pie and to reduce costs for consumers so that they can live better...with more people being productive the world grows and there are more consumers to buy goods.




Third way Jonathan cowan

cato institute




conditions for china

happy to work together, by the rules

“our best days are over” - unless we do something very strong

Do we get nasty about other countries' human rights? What business is it of ours? We can only ask for cooperation. Must draw a line that is reasonable. We can't be “haughty” and superior and thinking we have rights.

Never take a hostile staance, only a firm one, recognizing that we want to cooperate.

Based on equal treatment – oppty to lower tariffs to our rate, at their choice, or have us raise ours to theirs – your choice.




This site won't be superior in total informatin but hopefully it can contribute in hitting key understandings, simplifying, and coming to the core of what is important.




Nuclear question

Iran, N.K. Or any country who uses a nuclear bomb would be annihilated – so their use of the bomb is sure suicide – why develop a weapon that could never be used – why waste resources that could be used for human benefits?




Free trade increase size of pie,










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