Is regulation of foreign trade justifiable protectionism, a hindrance to economic progress, or (insert third option here)?

6/12/2008 11:22:31 AM

in most cases, hindrance to economic progress.

When we have protectionist trade policies, the consumer loses because they're probably paying above market for goods that could be made more efficiently elsewhere.

6/12/2008 11:24:10 AM

A hinderance to economic progress.

Here is the twist: the individuals that lose their jobs to overseas competition under free trade only lose their job a few times, suffering lower wages for a total of a few years, depending on individual circumstances. However, under trade restrictions they would be paying higher prices and earning lower wages their entire life.

As such, even those that are labelled as being "harmed by trade" are better off on average under a free-trade system.

[Edited on June 12, 2008 at 11:33 AM. Reason : .,.]

6/12/2008 11:33:21 AM

My understanding was that fewer of the high-paying jobs sometimes cited are available, since fewer repair techs or managers are needed than the higher-paid industrial workers, so where are these other people going? I can buy your higher prices argument, Snark, but where are you getting "lower wages"?

6/12/2008 11:53:08 AM

Your mistake lies in assuming that, if a worker is temporarily replaced by better machinery or lower-priced foreign labor, then there's now nothing for him to do. Temporarily, he's out of work yes. However, there's always some new productive enterprise his services can be employed in.

Consumer demands aren't a fixed pie that workers have to fight each other over a chance to fill. Consumers will always be able to consume more if you can produce it and they can afford it. Work isn't a finite resource that can be used up. If someone finds out a way to get more work done by hiring fewer people, then there's always going to be a way to figure out how to do more work. Ultimately though, work isn't the goal, its the produce of work that matters. If we could all have 10 times as much for half the work, then that would be fucking awesome.

6/12/2008 12:04:30 PM

I don't doubt that they get jobs again, very few people want to be out of work. I'm concerned for the quality of those jobs, i.e. flipping burgers/greeting people at Wal-mart until they're 75, because I'm an avowed bleeding heart, but it looks like I'm confusing politics with economics again.

6/12/2008 12:11:57 PM

I agree. Why would anyone want to work at an entry-level service job?

If you're stuck in that rut, figure out a way to do something more productive. Learn a marketable skill, get a new degree, buckle down and do what it takes to to get what you want. However, don't think that somebody is going to come along and make you productive. Don't think that somebody is going to come along and just hand you wealth and success and upward mobility or anything else that matters. Go out and create it for yourself.

Clutching desperately to the outdated forms of the past by enshrining them in regulation isn't going to do that. Boldly enterprising and overcoming the obstacles of the future to create something new and something better is.

6/12/2008 12:24:27 PM

I don't think telling people to pick themselves up by the bootstraps and stop being wimps is effective either. I don't want to see the easy life just handed to people; that's an impossibility. I would like to see opportunities to advance made a little easier so more people can make it. But this argument is old.
I'm just in this right now to find out more about foreign trade, and your point about protectionism, shockingly enough to us both, I'm sure, made sense to me.

6/12/2008 12:33:39 PM

No economist has ever been able to definitively answer where jobs come from. The best we can discern is that they are the result of unseen negotiation between four groups of people: workers, entrepreneurs, capital owners, and consumers. New jobs are created when threse four groups work together; they are not when at least one of these is withheld.

It is improbable to predict before-hand which of the four is holding back job creation.

As a hypothetical, when a plant making textiles announces that it is closing in the Clayton area, that could be music to the ears of Caterpillar which is desperate to expand machinery production, but has been holding off because they knew the local job market for machine operators was already saturated.

Well, inside this single example, based upon people's actions (Textile mill closes, Caterpillar expands), we can see that those American workers would be more productive making machinery as opposed to textiles, and the best determinant we have for worker compensation is productivity. As such, by the workers becoming more productive (moving from a bankrupt textile mill to a profitable Caterpillar), their compensation will have room to rise. As this process repeats, and more and more workers move to more productive employment, wages will be bid upwards.

And for everyone else in America, as a result of cheaper imported textiles and increased machinery production the prices of these two goods will fall, making everyone in America better off, including the new workers at Caterpillar which invariably wear clothing and buy bulldozed land.

[Edited on June 12, 2008 at 6:02 PM. Reason : .,.]

6/12/2008 5:59:55 PM