The New York Times has endorsed Hillary Clinton: editorial. As my ballot here in Massachusetts consists primarily of candidates running unopposed this is not of any personal relevance. One item caught my eye, however:
She helped promote the Trans-Pacific Partnership, an important trade counterweight to China and a key component of the Obama administration’s pivot to Asia. Her election-year reversal on that pact has confused some of her supporters, but her underlying commitment to bolstering trade along with workers’ rights is not in doubt.
How is it possible for a politician to “bolster trade” and simultaneously support “workers’ rights”? Does “workers’ rights” refer to the rights of workers in Vietnam to have full access to the U.S. market?
What do readers think? Is there a way to promote free trade and also shield Americans whom employers don’t value (see unemployed = 21st century draft horse?) from the fact that the world is now full of well-educated, hard-working, and sought-after employees? (or the fact that a company may be better off running leaner rather than bringing in less-qualified American workers) If the answer is “give cash handouts to Americans” I don’t think that qualifies as relating to “workers’ rights” because handouts are usually available to those who don’t work (see Book Review: The Redistribution Recession).
Related:
The classical explanation was that trade makes EVERYONE richer thru comparative advantage. If I am both the best lawyer and the best typist in town, it STILL pays for me to hire a typist so I can spend all my time practicing law which is a better use of my time. So if America excels at making both TV sets and T-shirts, it still pays to send the T-shirt factory to China so the American workers can go work in the TV set factory. I think this sort of breaks down when BOTH the TV set factory and the T-shirt factory are in China and the only job left for Americans is working at Starbucks.
Exchange rates are supposed to adjust so that comparative advantage results in balanced trade but what happens when one side manipulates the exchange rates or otherwise stacks the deck on trade? Most Asian countries seem to have a far greater willingness to export than to import.
The rising tide lifts all boats…
and everyone is happy except for those peasants who have their fields flooded.
Free trade only works with an international gold standard or something like it. With the global pure fiat petro-dollar standard we’re stuck with, we smack into the Triffin paradox. America inevitably runs endless trade deficits while simultaneously being hollowed out.
Jackie in the first comment pretty much nailed it.
I’m more than confident that if Ricardo and/ or Smith were resurrected today, they would oppose all the post 1990 trade agreements. They are not agreements about lowering tariffs, which were lowered through GATTs. They are agreements about property rights, essentially to enable corporations to arbitrage government imposed taxes/ environmental standards/ labor standards by manufacturing the country most favorable to them and exporting to the countries with the consumers with the most cash. It would have been more honest to just repeal this stuff in certain countries, but the trade agreements have been a rather dishonest and undemocratic way around that.
Basically what Jackie and Ed said.
Free trade breaks down when it forces a race to the bottom in terms of safety regulations, child labor regulations, health regulations, environmental and even security.
Yes, that furniture and even software can be made cheaper in countries where children can work, where pollution is rampant, where factory doors can be locked, where there are no seismic or air quality standards, and who rely on the US or other superpowers for security.
And also in countries that have no health care of any sort, from single payer, to obamacare, as well as in countries with no social safety net, from food stamps to medicaid.
To help even the playing field our governments will carve out special tax deals for the Walmarts and Major manufacturing firms to set up new plants but make up for that by charging Joe Small Local Business owner the full freight.
Every single comment so far explains the issues with free trade. The commenters clearly understand the challenges with free trade. So why didn’t our politicians and lawyers see this simple logic when they were promoting free trade?
For those interested in the topic of trade and the effects on the average worker, I recommend “23 Things They Don’t Tell You About Capitalism” as well as “Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism” by Ha-Joon Chang.
https://www.amazon.com/Ha-Joon-Chang/e/B001HOFPKS/ref=dp_byline_cont_book_1
How is it possible for a politician to “bolster trade” and simultaneously support “workers’ rights”? Does “workers’ rights” refer to the rights of workers in Vietnam to have full access to the U.S. market?
You know, of course, that the reference was the rights of American workers. However, there are many different ways that trade treaties can written. There were proposals, years ago, that we should only trade with countries like China and Mexico if their workers were given certain rights, such as the right to bargain collectively. That would be one way to bolster trade and support the rights of workers.
Bit of an economics deficit here!
– The American “trade deficit” is a good thing – foreigners send you more “stuff” than you send to foreigners! The traditional way we did this was by painting one’s face blue preperatory to raiding our neighbors & stealing their cattle, women, etc. That you can do this through the sheer awesomeness of American innovation, work ethic and business-friendly environment shows the extraordinary strength of your economy.
– The currency manipulation you are talking about is probably the old Chinese policy of making their currency weaker to boost exports. Those days are long over – these days, they are spending to prop the renminbi UP!
– Also, manufacturing jobs make up maybe 9% of your modern American economy. Whatever gains to those jobs you can make by building trade barriers (or, in other words, impoverishing every American consumer!) will have little effect on overall wages or employment in America – great for robotics and automation firms, of course!
More reading on trade deficits:
https://fee.org/articles/the-absurdity-of-worrying-about-trade-deficits/