Full Version: Tariffs-should we bring them back?
Country A has a high standard of living, the citizens in factories and blue collar work average $15-20.00 an hour. Country B is a formerly "third world" nation with few environmental, labor, or other standards. A trade deal is negotiated and it is "Free" according to our standars. What happens next?
Country A's corporations close factories and lay off $15-20.00 an hour workers with benefits, tossing them into the $6-7.00 an hour job market with few/no benefits.
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Country B sees a boom in the construction of factories and heavy industries. There is a pick up in jobs due to Country A's re-location and subsequent investment.
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V
Country A's corporations are able to produce goods cheaper, thereby increasing their bottom line. Meanwhile, public schools, the infrastructure, and overall well-being of the middle class becomes precarious.
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V
Country B's economy is thriving and the subsequent spending on the part of the newly employed people generates government income to the happiness of country B's politicians.
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V
Country A's citizens resort to the service sector, a fluid area where people with master's degrees are overqualified and can't obtain the jobs, or those who can, have to supplement their income with two or three jobs. Healthcare is also a joke unless you work for county, state, or federal government. It is also found that more jobs have been shipped overseas, than have been created in country A.
Intrestingly enough, the "gains" are less than the "losses" though it's not always apparent.
Source.
Questions for debate:
1.)At what point does country B receive more benefits than country A which is hemorraging jobs and benefits to the benefit of country B?
2.) How do people in country A benefit when the increased profits do not trickle down to them?
3.)In this deal, can it be seriously maintained that country A is by and large, the "winner" in this "Free" trade where their high paying jobs, factories, and income for instrastructure and other developments, are lost virtually over night?
Country A's corporations close factories and lay off $15-20.00 an hour workers with benefits, tossing them into the $6-7.00 an hour job market with few/no benefits.
|
V
Country B sees a boom in the construction of factories and heavy industries. There is a pick up in jobs due to Country A's re-location and subsequent investment.
|
V
Country A's corporations are able to produce goods cheaper, thereby increasing their bottom line. Meanwhile, public schools, the infrastructure, and overall well-being of the middle class becomes precarious.
|
V
Country B's economy is thriving and the subsequent spending on the part of the newly employed people generates government income to the happiness of country B's politicians.
|
V
Country A's citizens resort to the service sector, a fluid area where people with master's degrees are overqualified and can't obtain the jobs, or those who can, have to supplement their income with two or three jobs. Healthcare is also a joke unless you work for county, state, or federal government. It is also found that more jobs have been shipped overseas, than have been created in country A.
Intrestingly enough, the "gains" are less than the "losses" though it's not always apparent.
QUOTE
The most well-known outcome of this process is that the gross gains for professionals outweigh the gross losses of workers, hence the national economy sees net gains from trade.2 It is these net gains (which are much smaller than either the gross gains or gross losses) that constitute the argument in favor of global integration. However, it is (obviously) the gross losses that worry many workers about globalization, and this fear is utterly rational in light of economic theory.3
It should be noted that the (slim) majority of U.S. imports come from countries that are not that much poorer than the United States. This sort of trade (call it rich/rich trade) is not necessarily inequality-inducing in the way described above. However, a significant (and the fastest growing) portion of U.S. trade is with nations that are significantly poorer than the United States, and as such, the scenario sketched out above is (and should be) a real and growing concern to U.S. workers.
It should be noted that the (slim) majority of U.S. imports come from countries that are not that much poorer than the United States. This sort of trade (call it rich/rich trade) is not necessarily inequality-inducing in the way described above. However, a significant (and the fastest growing) portion of U.S. trade is with nations that are significantly poorer than the United States, and as such, the scenario sketched out above is (and should be) a real and growing concern to U.S. workers.
Source.
Questions for debate:
1.)At what point does country B receive more benefits than country A which is hemorraging jobs and benefits to the benefit of country B?
2.) How do people in country A benefit when the increased profits do not trickle down to them?
3.)In this deal, can it be seriously maintained that country A is by and large, the "winner" in this "Free" trade where their high paying jobs, factories, and income for instrastructure and other developments, are lost virtually over night?
1.)At what point does country B receive more benefits than country A which is hemorraging jobs and benefits to the benefit of country B?
I don't understand the question as you've phrased it, mainly because you've answered it yourself - country B benefits because country A haemorrhages jobs and benefits (and tax income for government) to benefit country B. In turn, because those jobs and benefits represent lower costs for the country A corporations who open up the same busiensses on a lower cost base in country B.
2.) How do people in country A benefit when the increased profits do not trickle down to them?
Jobs and skills, and tax revenues, which eventually give them the ability to build their own industrial base.
3.)In this deal, can it be seriously maintained that country A is by and large, the "winner" in this "Free" trade where their high paying jobs, factories, and income for instrastructure and other developments, are lost virtually over night?
It can in the current capitalist system, because jobs and associated employee benefits are not counted as being important - only the profits and the stockholder benefits of the corporations in question count. And they can only benefit - same sales, same profits, but on a lower cost base = higher profits. It's a no brainer. The whole thing about making "flexible workforces to compete in world markets" is less about making things cheap to set up, and more about making them cheap to relocate out of. The whole thing about opening markets in country B to allow the companies of country A to compete there is less about opening a tiny little market up to competition (at least for production and serivce industries - that's ALL it's about for extraction industries) and more about open up a great big expensive labour market to competition.
And, understandably, we don't like the idea of making labour as free to move around as capital is, because that means constant and permanent mass immigration on a global scale. So capital always has the upper hand.
I don't have any answer here, because tariffs and protectionism aren't really very helpful either, since they just stoke up inflationary pressures.
We do have to do something differently, though; much of productivity growth within national markets seems to come from expecting people to work longer hours for the same money, and there's only so far you can push that.
Personally, I think that nothing much will change until labour organises itself transnationally somehow, and resestablishes itslef in developed economies, so that it can balance the transnational (i.e. global) nature of capital, and without the shady links to organised crime that American unions have often had. Because if it comes down to protectionism and tariffs, businesses will fight hard against them (it's been business that has forced them to drop a lot more than any other agency).
I think it's just as unhealthy for an economy, in the long run, to have emaciated labour unions concentrated in a few, dying industries as it is to have them completely dominant and hamstringing any kind of industrial innovation.
And also national governments have apart to play, not so much by raising trade barries as such, but by harmonising tax rates internationally. That means lowering taxes in some places, but it also means marginalising and even eliminating tax havens. I think nations should compete, yes, but on their skills base and application, and not so much on just having lower coprorate taxes and laxer regulation than the next guy. In this, especially laxer regulation, Britain is significantly a worse culprit than the USA. I don't see it as a badge of national pride that my government is more willing to grab their ankles in front of corporate lobbyists and non-domiciled foriegn billionaires than the competition; quite the opposite.
I don't understand the question as you've phrased it, mainly because you've answered it yourself - country B benefits because country A haemorrhages jobs and benefits (and tax income for government) to benefit country B. In turn, because those jobs and benefits represent lower costs for the country A corporations who open up the same busiensses on a lower cost base in country B.
2.) How do people in country A benefit when the increased profits do not trickle down to them?
Jobs and skills, and tax revenues, which eventually give them the ability to build their own industrial base.
3.)In this deal, can it be seriously maintained that country A is by and large, the "winner" in this "Free" trade where their high paying jobs, factories, and income for instrastructure and other developments, are lost virtually over night?
It can in the current capitalist system, because jobs and associated employee benefits are not counted as being important - only the profits and the stockholder benefits of the corporations in question count. And they can only benefit - same sales, same profits, but on a lower cost base = higher profits. It's a no brainer. The whole thing about making "flexible workforces to compete in world markets" is less about making things cheap to set up, and more about making them cheap to relocate out of. The whole thing about opening markets in country B to allow the companies of country A to compete there is less about opening a tiny little market up to competition (at least for production and serivce industries - that's ALL it's about for extraction industries) and more about open up a great big expensive labour market to competition.
And, understandably, we don't like the idea of making labour as free to move around as capital is, because that means constant and permanent mass immigration on a global scale. So capital always has the upper hand.
I don't have any answer here, because tariffs and protectionism aren't really very helpful either, since they just stoke up inflationary pressures.
We do have to do something differently, though; much of productivity growth within national markets seems to come from expecting people to work longer hours for the same money, and there's only so far you can push that.
Personally, I think that nothing much will change until labour organises itself transnationally somehow, and resestablishes itslef in developed economies, so that it can balance the transnational (i.e. global) nature of capital, and without the shady links to organised crime that American unions have often had. Because if it comes down to protectionism and tariffs, businesses will fight hard against them (it's been business that has forced them to drop a lot more than any other agency).
I think it's just as unhealthy for an economy, in the long run, to have emaciated labour unions concentrated in a few, dying industries as it is to have them completely dominant and hamstringing any kind of industrial innovation.
And also national governments have apart to play, not so much by raising trade barries as such, but by harmonising tax rates internationally. That means lowering taxes in some places, but it also means marginalising and even eliminating tax havens. I think nations should compete, yes, but on their skills base and application, and not so much on just having lower coprorate taxes and laxer regulation than the next guy. In this, especially laxer regulation, Britain is significantly a worse culprit than the USA. I don't see it as a badge of national pride that my government is more willing to grab their ankles in front of corporate lobbyists and non-domiciled foriegn billionaires than the competition; quite the opposite.
Nebraska, you're flawed premise is that one country must lose while another one 'wins' with trade. The fact is that everyone wins because all people involved are put to work on products and services that they are relatively good at doing.
How do people in country A benefit when the increased profits do not trickle down to them?
People want to bash President Clinton for raising taxes in 1993. The fact is that President Clinton passed one of the biggest tax cuts in US history with the passage of NAFTA because prices on so many everyday goods dropped. People in country A benefit from lower prices from the increased competition. You seem to think that the cheap labor benefits stay in the pockets of the corporations. They don't. There is nothing to trickle down. The savings are right in your face on the shelf everyday.
How do people in country A benefit when the increased profits do not trickle down to them?
People want to bash President Clinton for raising taxes in 1993. The fact is that President Clinton passed one of the biggest tax cuts in US history with the passage of NAFTA because prices on so many everyday goods dropped. People in country A benefit from lower prices from the increased competition. You seem to think that the cheap labor benefits stay in the pockets of the corporations. They don't. There is nothing to trickle down. The savings are right in your face on the shelf everyday.
QUOTE(nebraska29 @ Feb 23 2008, 11:03 AM) 
Country A has a high standard of living, the citizens in factories and blue collar work average $15-20.00 an hour. Country B is a formerly "third world" nation with few environmental, labor, or other standards. A trade deal is negotiated and it is "Free" according to our standars. What happens next?
Country A's corporations close factories and lay off $15-20.00 an hour workers with benefits, tossing them into the $6-7.00 an hour job market with few/no benefits.
|
V
Country B sees a boom in the construction of factories and heavy industries. There is a pick up in jobs due to Country A's re-location and subsequent investment.
|
V
Country A's corporations are able to produce goods cheaper, thereby increasing their bottom line. Meanwhile, public schools, the infrastructure, and overall well-being of the middle class becomes precarious.
|
V
Country B's economy is thriving and the subsequent spending on the part of the newly employed people generates government income to the happiness of country B's politicians.
|
V
Country A's citizens resort to the service sector, a fluid area where people with master's degrees are overqualified and can't obtain the jobs, or those who can, have to supplement their income with two or three jobs. Healthcare is also a joke unless you work for county, state, or federal government. It is also found that more jobs have been shipped overseas, than have been created in country A.
Intrestingly enough, the "gains" are less than the "losses" though it's not always apparent.
Source.
Questions for debate:
1.)At what point does country B receive more benefits than country A which is hemorraging jobs and benefits to the benefit of country B?
2.) How do people in country A benefit when the increased profits do not trickle down to them?
3.) In this deal, can it be seriously maintained that country A is by and large, the "winner" in this "Free" trade where their high paying jobs, factories, and income for instrastructure and other developments, are lost virtually over night?
Country A's corporations close factories and lay off $15-20.00 an hour workers with benefits, tossing them into the $6-7.00 an hour job market with few/no benefits.
|
V
Country B sees a boom in the construction of factories and heavy industries. There is a pick up in jobs due to Country A's re-location and subsequent investment.
|
V
Country A's corporations are able to produce goods cheaper, thereby increasing their bottom line. Meanwhile, public schools, the infrastructure, and overall well-being of the middle class becomes precarious.
|
V
Country B's economy is thriving and the subsequent spending on the part of the newly employed people generates government income to the happiness of country B's politicians.
|
V
Country A's citizens resort to the service sector, a fluid area where people with master's degrees are overqualified and can't obtain the jobs, or those who can, have to supplement their income with two or three jobs. Healthcare is also a joke unless you work for county, state, or federal government. It is also found that more jobs have been shipped overseas, than have been created in country A.
Intrestingly enough, the "gains" are less than the "losses" though it's not always apparent.
QUOTE
The most well-known outcome of this process is that the gross gains for professionals outweigh the gross losses of workers, hence the national economy sees net gains from trade.2 It is these net gains (which are much smaller than either the gross gains or gross losses) that constitute the argument in favor of global integration. However, it is (obviously) the gross losses that worry many workers about globalization, and this fear is utterly rational in light of economic theory.3
It should be noted that the (slim) majority of U.S. imports come from countries that are not that much poorer than the United States. This sort of trade (call it rich/rich trade) is not necessarily inequality-inducing in the way described above. However, a significant (and the fastest growing) portion of U.S. trade is with nations that are significantly poorer than the United States, and as such, the scenario sketched out above is (and should be) a real and growing concern to U.S. workers.
It should be noted that the (slim) majority of U.S. imports come from countries that are not that much poorer than the United States. This sort of trade (call it rich/rich trade) is not necessarily inequality-inducing in the way described above. However, a significant (and the fastest growing) portion of U.S. trade is with nations that are significantly poorer than the United States, and as such, the scenario sketched out above is (and should be) a real and growing concern to U.S. workers.
Source.
Questions for debate:
1.)At what point does country B receive more benefits than country A which is hemorraging jobs and benefits to the benefit of country B?
2.) How do people in country A benefit when the increased profits do not trickle down to them?
3.) In this deal, can it be seriously maintained that country A is by and large, the "winner" in this "Free" trade where their high paying jobs, factories, and income for instrastructure and other developments, are lost virtually over night?
1) Under pure economic theory, trade is always "good" in that it results in the production of more total goods and services in the world and a reduction in global price. This is true even when a nation is lower tech, or has higher wages, than another nation. This is the theory of comparative advantage.
http://internationalecon.com/Trade/Tch40/T40-0.php
2) I am not sure about your question here. If you mean some dictator holds all of the profits, I guess that is a bad thing, but even in the most draconian societies, as profits increase, some of this will result in improvements to the standard of living of Everyman.
3) Again, under the theory of comparative advantage, all trade is good. I believe economics and politics are inextricably linked, however, so I cannot look at this solely through the jaundiced eye of the global economist.
Life is about power and control, and the corrollary of that axiom is one should always be preparing for the next war. (This world will never be peaceful--mankind fights wars, get over it.) Therefore, losing one's aircraft industry to the economic theory of comparative advantage and reallocating those resources to the production of apricots doesn't do much for me, even if the world as a whole ends up with greater overall production of planes and apricots and at lower prices.
To me, the healthiest possible nation is a net exporter; is a net creditor; has state of the art design, manufacturing, and finance; and continually turns out young adults with top quality research and technical skills. Why? If you lose exports, you lose money, but you still keep the industry, the patents, and the skills; if you are a net creditor, you have plenty of money--and if someone stiffs you, you can always invade and collect; a net debtor will be unable to support a long war defending against a creditor nation (also, see the USA currently in Iraq funding the war with overseas debt); if you are a world leader in technology, you have huge production and military advantages; if you have well-trained people, you are prepared for anything.
So, tariffs may be advantagous to protect strategic industries, GATT notwithstanding. Getting the chapest underwear at Walmart is fine and dandy, but not at the expense of losing your production technology skills that enable cheap, quick production of that underwear, for example.
QUOTE
We do have to do something differently, though; much of productivity growth within national markets seems to come from expecting people to work longer hours for the same money, and there's only so far you can push that.
QUOTE
People in country A benefit from lower prices from the increased competition. You seem to think that the cheap labor benefits stay in the pockets of the corporations. They don't. There is nothing to trickle down. The savings are right in your face on the shelf everyday.
Cheaper goods are wonderful when you have cash to pay for them but as jobs that pay well become a piece of history who cares if Wal Mart is cheap. More and more of the available jobs are being pared down to part time to avoid paying benefits and those that aren't are being taken over by the "temp" firms -- again to avoid benefits or decent pay.
The freemarketeers are going to drive themselves right into the arms of the socialists as they destroy the stability that society requires.
Work harder for less. and less and less and less.
We ever actually get a guest worker program here it will just get worse. Living in a border state where cheap labor of the legal and illegal kind is readily available I get to see very clearly where we are headed. Pay in Arizona is horrid and if you are lucky enough to have a good paying job you willingly put up with a lot of abuse because it is really scary to contemplate going from 18-20 an hour down to 11 with no benefits. The temp companies are gaining a greater and greater hold here.
There was excitement here for a while about many tech firms supposedly relocating here, especially when you could see the construction beginning-- except it was cheaper to just go and move the jobs to Asia.
It is with great satisfaction when i hear just how badly it is actually working out for many of them. Hard to crow about costs savings when your own customers begin to resent that their jobs are somewhere else.
Interesting twist on the trickle down economic theory is the costs that trickle down from above to pay for failed ventures as it seems that I pay more and more for fuel and the companies that make it are getting huge tax breaks or incentives and recording the largest profits EVER posted by any business. Failed real estate speculation and bad bank loans that couldn't be supported -- but made a few people very wealthy at the expense of everyone else -- make the economy even worse for those that actually work.
Seems the trickle down economic theory is really one of the oldest theories ever -- and it really does flow downstream.
I am still hopeful that some people out there really will reap as they sow.
QUOTE(christopher @ Feb 28 2008, 10:29 PM)
Cheaper goods are wonderful when you have cash to pay for them but as jobs that pay well become a piece of history who cares if Wal Mart is cheap. More and more of the available jobs are being pared down to part time to avoid paying benefits and those that aren't are being taken over by the "temp" firms -- again to avoid benefits or decent pay.
This is all relative isn't it? America's version of poverty (i.e. the poverty line) is vastly different than Africa's. Fair, open trade agreements like NAFTA provide at least as many jobs as they displace. In 1994, the unemployment rate was 6.7%. Today it's 4.9%.
QUOTE(christopher @ Feb 28 2008, 10:29 PM)
The freemarketeers are going to drive themselves right into the arms of the socialists as they destroy the stability that society requires.
Work harder for less. and less and less and less.
Work harder for less. and less and less and less.
Again, this is really relative. Our lives are far superior to our parents in terms of material goods. We're getting a lot more for a lot less. We choose to have big cars, high speed internet, cell phones, satelite TV, etc. Our parents were playing cards on Friday night and reading library books. I'm not saying that one is better than the other, but we have more options because everything costs less, and so society has more time and resources to dream up new ways to entertain us. The basic needs of food, clothing, shelter, and fire are covered for us automatically in America and we just take it for granted. It is rediculous and beyond selfish of us to sit here and expect hundreds of thousands of Asian, Latin American, and African people to starve to death because we refuse to let them work like slaves to make our lives better.
I understand the concerns though. When you lose your job, the jobless rate in the US isn't 4.9%, it's 100%. The fact is that open trade puts a wealth of both unskilled and highly skilled labor on the market for employers to turn to (but not semi-educated, HS diploma types oddly enough) that causes change. And change can be scary. Trade adjustment assistance in the form of reeducation is the answer though, not protectionism.
QUOTE
Nebraska, you're flawed premise is that one country must lose while another one 'wins' with trade. The fact is that everyone wins because all people involved are put to work on products and services that they are relatively good at doing.
Ahh, but in relation to trade, we have been losing. We are losing to Mexico:
QUOTE
Our workers' instincts are backed up by stats. In 2007, the U.S. trade deficit with Mexico soared 16 percent to $73 billion, a record. Mexico now ships more cars to us now than we ship to the world. And where did Mexico get an auto industry?
Under Bush, the U.S. trade deficit has doubled. Three million manufacturing jobs have vanished. And America has begun to run a trade deficit in advanced technology goods of more than $50 billion.
Our trade deficit in advanced technology goods with China is $67 billion, eight times what it is with Japan.
Under Bush, the U.S. trade deficit has doubled. Three million manufacturing jobs have vanished. And America has begun to run a trade deficit in advanced technology goods of more than $50 billion.
Our trade deficit in advanced technology goods with China is $67 billion, eight times what it is with Japan.
source
QUOTE
Questions for debate:
1.)At what point does country B receive more benefits than country A which is hemorraging jobs and benefits to the benefit of country B?
2.) How do people in country A benefit when the increased profits do not trickle down to them?
3.)In this deal, can it be seriously maintained that country A is by and large, the "winner" in this "Free" trade where their high paying jobs, factories, and income for instrastructure and other developments, are lost virtually over night?
1.)At what point does country B receive more benefits than country A which is hemorraging jobs and benefits to the benefit of country B?
2.) How do people in country A benefit when the increased profits do not trickle down to them?
3.)In this deal, can it be seriously maintained that country A is by and large, the "winner" in this "Free" trade where their high paying jobs, factories, and income for instrastructure and other developments, are lost virtually over night?
What you leave out in your simple, answer your own question model here is that those horrible greedy corporations are based here and hire lots of “staff’ here too – and they spend much of their profits here and reward their stockholders here.
Meanwhile country A citizens spend less on sneakers and use the extra money to buy other things – good and services which creates more jobs. In addition country B with a rising standard of living will buy products from country A to balance the trade.
This does not always work and I see China today as an example. They maintain the price of their currency too low and thus gain an unfair advantage. We have been talking about doing something about this (in Congress) for years but, as usual little actually happens.
In general though imo free trade benefits both countries.
QUOTE(nebraska29 @ Mar 4 2008, 09:05 PM)
QUOTE
Nebraska, your flawed premise is that one country must lose while another one 'wins' with trade. The fact is that everyone wins because all people involved are put to work on products and services that they are relatively good at doing.
Ahh, but in relation to trade, we have been losing. We are losing to Mexico:
QUOTE
Our workers' instincts are backed up by stats. In 2007, the U.S. trade deficit with Mexico soared 16 percent to $73 billion, a record. Mexico now ships more cars to us now than we ship to the world. And where did Mexico get an auto industry?
Under Bush, the U.S. trade deficit has doubled. Three million manufacturing jobs have vanished. And America has begun to run a trade deficit in advanced technology goods of more than $50 billion.
Our trade deficit in advanced technology goods with China is $67 billion, eight times what it is with Japan.
Under Bush, the U.S. trade deficit has doubled. Three million manufacturing jobs have vanished. And America has begun to run a trade deficit in advanced technology goods of more than $50 billion.
Our trade deficit in advanced technology goods with China is $67 billion, eight times what it is with Japan.
source
Nebraska, again we don't lose in relation to trade. We gain from lower prices. Eliminating NAFTA would be the equivalent of putting a tax on society so that people could continue to do jobs that they are uncompetitive at. Imagine the disadvantage that we'd be at if the rest of the world were working together specializing in areas of strength while we tried to do everything for ourselves. It would be like you and I growing our own food instead of going to work everyday. Fair agreements like NAFTA are win-win. We need to embrace our neighbors, not make enemies out of them.
As for your source piece- it states that 3 million manufacturing jobs have 'vanished'. You need to look at the whole story here. That is not just due to NAFTA. 5 times that many manufacturing jobs have vanished in China. Yes, China. Increased productivity and use of machinery is going to put pressure on manufacturing jobs regardless of trade. And how many service jobs have been added BTW?? Additionally, half of the US trade deficit with Mexico is caused by one import - oil. We don't have a trade deficit problem with Mexico, we have an oil deficit problem.
I agree that the trade deficit is an issue. NAFTA is not the problem though. Corporate tax rates, our wasteful use of energy, oversized litigation awards, and payroll taxes play a major role in our trade imbalance. Now if you want to talk about China or India trade policy it's a little bit of a different story. Our ad valorem tax rate on imports is about 4%. China's is 15%. India's is 25%. I'm all for levelling the playing field or renegotiating agreements there.
1.)At what point does country B receive more benefits than country A which is hemorraging jobs and benefits to the benefit of country B?
Both countries benefit. Of course, certain individuals in both countries also suffer. As a whole, however, the truth is that Country A gets goods and services that are cheaper than they otherwise would be if they were produced domestically.
Let's keep things local. If I were in the ditch digging business and paying my guys $10 an hour to dig ditches, what would happen to my business if a competitor started a business paying his diggers $5 an hour? If he got the same productivity (which is not necessarily true) he could charge about half as much as my company and I would lose my work. What happens to the guys I was employing at $10 an hour? They lose their jobs. They were paid too much to be competitive.
Welcome to capitalism 101. Capitalism encourages resources to be allocated efficiently so that goods and services are made cheaper. This benefits society as resources are allocated better and wasteful effort is eliminated. Older technology is encouraged to be obsoleted while newer, more efficient technologies are favored.
50 years ago, it took highly qualified people to make cars. Therefore, auto workers were highly paid. Unfortunately, the unionized nature of the auto industry meant that the workers were paid ever increasing salaries and benefits for decreasing return. At the same time, robots and machine tools made the skill required to perform these jobs lower and lower. Soon, janitors at these auto companies were making more than machinists in other companies. In fact, workers were highly paid even when they were not working or after they had retired. The auto industry became less and less competitive and the domestic auto companies lost more and more market share. Should the government step in and subsidize the inefficiencies of the auto industry so that a few people keep their (overpaid) jobs?
2.) How do people in country A benefit when the increased profits do not trickle down to them?
Trickle down? They benefit from the decreased price of goods that they import. Why do you think Walmart has such low prices and such high sales? Walmart is the biggest company in the world ($351 billion in sales), employs the most people (1.9 million) outside of government, and is fourth even if these are included (after the Chinese army, the British health system and the Indian rail industry). Of course there are criticism of any big company (as I'm sure will come up here) but the fact remains that it sells products and groceries at the cheapest cost and people benefit from that service. Yes, it might not sell the best quality stuff or high end stuff, but people buy what they do sell and they save money by doing it.
3.)In this deal, can it be seriously maintained that country A is by and large, the "winner" in this "Free" trade where their high paying jobs, factories, and income for instrastructure and other developments, are lost virtually over night?
A lot of the anti-NAFTA rhetoric is empty. Millions of jobs lost? Well, millions of manufacturing jobs left the US in the decade before NAFTA was enacted. In fact, just about the same number left 1984-1994 as left 1994-2004. China has lost many more manufacturing jobs than it has gained. These numbers have nothing to do with "going overseas" they have to do with the increased efficiencies of workers. Less workers can now produce more goods and services. If want to call this "working harder for less" that's your choice. I'd call it working harder to keep your competitive advantage.
The whole anti-free trade argument is bunk. Tax dollar revenues have increased every year for the past umpteen decades. GDP has risen every year. Tax revenues as a percentage of GDP varies some, but not wildly.
Capitalism rewards efficiency and progress. Paying workers more for digging ditches does not mean that ditch diggers will forever be comfortable because when replace four guys making $10 an hour by one guy making $15 an hour by giving him a backho, the four guys are certainly grumbling. But meanwhile, the job gets done quicker for less money and maybe the guy who needs the ditch can then hire more people to make his widgets. Or else government can hire those guys to fill the ditch back in...
Both countries benefit. Of course, certain individuals in both countries also suffer. As a whole, however, the truth is that Country A gets goods and services that are cheaper than they otherwise would be if they were produced domestically.
Let's keep things local. If I were in the ditch digging business and paying my guys $10 an hour to dig ditches, what would happen to my business if a competitor started a business paying his diggers $5 an hour? If he got the same productivity (which is not necessarily true) he could charge about half as much as my company and I would lose my work. What happens to the guys I was employing at $10 an hour? They lose their jobs. They were paid too much to be competitive.
Welcome to capitalism 101. Capitalism encourages resources to be allocated efficiently so that goods and services are made cheaper. This benefits society as resources are allocated better and wasteful effort is eliminated. Older technology is encouraged to be obsoleted while newer, more efficient technologies are favored.
50 years ago, it took highly qualified people to make cars. Therefore, auto workers were highly paid. Unfortunately, the unionized nature of the auto industry meant that the workers were paid ever increasing salaries and benefits for decreasing return. At the same time, robots and machine tools made the skill required to perform these jobs lower and lower. Soon, janitors at these auto companies were making more than machinists in other companies. In fact, workers were highly paid even when they were not working or after they had retired. The auto industry became less and less competitive and the domestic auto companies lost more and more market share. Should the government step in and subsidize the inefficiencies of the auto industry so that a few people keep their (overpaid) jobs?
2.) How do people in country A benefit when the increased profits do not trickle down to them?
Trickle down? They benefit from the decreased price of goods that they import. Why do you think Walmart has such low prices and such high sales? Walmart is the biggest company in the world ($351 billion in sales), employs the most people (1.9 million) outside of government, and is fourth even if these are included (after the Chinese army, the British health system and the Indian rail industry). Of course there are criticism of any big company (as I'm sure will come up here) but the fact remains that it sells products and groceries at the cheapest cost and people benefit from that service. Yes, it might not sell the best quality stuff or high end stuff, but people buy what they do sell and they save money by doing it.
3.)In this deal, can it be seriously maintained that country A is by and large, the "winner" in this "Free" trade where their high paying jobs, factories, and income for instrastructure and other developments, are lost virtually over night?
A lot of the anti-NAFTA rhetoric is empty. Millions of jobs lost? Well, millions of manufacturing jobs left the US in the decade before NAFTA was enacted. In fact, just about the same number left 1984-1994 as left 1994-2004. China has lost many more manufacturing jobs than it has gained. These numbers have nothing to do with "going overseas" they have to do with the increased efficiencies of workers. Less workers can now produce more goods and services. If want to call this "working harder for less" that's your choice. I'd call it working harder to keep your competitive advantage.
The whole anti-free trade argument is bunk. Tax dollar revenues have increased every year for the past umpteen decades. GDP has risen every year. Tax revenues as a percentage of GDP varies some, but not wildly.
Capitalism rewards efficiency and progress. Paying workers more for digging ditches does not mean that ditch diggers will forever be comfortable because when replace four guys making $10 an hour by one guy making $15 an hour by giving him a backho, the four guys are certainly grumbling. But meanwhile, the job gets done quicker for less money and maybe the guy who needs the ditch can then hire more people to make his widgets. Or else government can hire those guys to fill the ditch back in...
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