Free Trade Benefits the United States
Welcome. As debate over the Trans-Pacific Partnership heats up, questions about the benefits and drawbacks of free trade are being raised by people from all sides of the political spectrum.
This debate will not be a defense of the TPP, as I do not know the full details of the bill. Instead, this debate will focus purely on the concept of free trade, and how it effects the US economy. I am an avid support of free trade, and I think it is extremely beneficial to both our country and the countries we trade with.
To be eligibile to debate this, you must have a minimum of 3 debates voted on and an elo of 2000. Also, you must make sure that there are no things in your schedule that would potentially prevent you from completing every round.
These are very lenient requirements intended to reduce the chance of forfeited rounds,
The debate will have 4 rounds, a 72 hour window to respond per round, and a 10,000 character limit.
The burden of proof is shared. Con is requried to show that free trade is a net harm to the country, and I am required to show that free trade is a net benefit to the country. Whoever best meets their burden of proof should be voted the winner of this debate.
The rounds will have the following structure:
-Pro: First Arguments
-Con: First Arguments/Rebuttals
If you're interested in doing this debate, please say so in the comments and I will let the most qualified person accept within a few days.
Free Trade Increases Innovation and Efficiency
The first reason one should support free trade is because open trade with other countries leads to maximized innovation and efficiency in the economy.
The reason why there is more innovation in a free market is because businesses are forced to compete against each other on an equal playing field, which means they have to come up with ways to outcompete their competition. This results in businesses and individuals creating and employing new ideas to decrease their expenses (such as replacing a component of a machine with a cheaper material), increase the quality of their goods/services (such as making a food product taste better), and create more efficient methods to create and employ the goods/services (such as making an efficient website to ease purchases of a product).
Free Trade Lowers the Cost of Goods and Services
One of the best reasons to support free trade is the fact that it lowers the cost of living for everyone.
This happens because of the competition that I mentioned above. When companies compete without the distortion of tariffs, they are forced to provide the cheapest price possible in order to remain competitive and generate revenue.
For proof, we can look at multiple studies that prove this to be true. One study found that "the results of a panel covering 325 manufacturing industries from 1997 to 2006 show that imports from nine low-wage countries are associated with strong downward pressure on prices. When these nations capture a 1% share of the U.S. sector, the sector's producer prices decrease by 2.35%" (1)
The graph below shows how imports effect the US methanol market. (2)
The term used to describe the efficiency increases as a result of free trade is called the gains of trade. Below is a graph to help visualize how the gains of trade works.(3)
Other benefits of Free trade include: (5)
I'll start with my arguments and then do a rebuttal.
Free trade poses an existential threat to human survival
97% of climate scientists agree that humans are causing global warming.  Climate change harms agriculture, human health, ecosystems, water supplies, and the economy.  If greenhouse gas emissions continue at their current rate, we'll soon reach a tipping point, after which runaway climate change will make the planet uninhabitable to humans. 
Free trade is incompatible with reducing emissions, slowing climate warming, and saving our planet. Under a free trade regime, prices are set solely by supply and demand, so social costs like climate change and environmental damage aren't reflected in a good's price. Economists call these unaccounted social costs an "externality." Free trade is driven by prices, so if prices are wrong due to externalities, free trade will produce bad outcomes.
For example, transportation costs. Free trade encourages goods to be made in one place and used very far away. The transportation costs are not only a waste of energy but they also increase the amount of carbon dioxide in the atmosphere, which speeds up climate change. And, not only does free trade fail to account for carbon emissions from transportation, it also fails to account for carbon emissions from harmful production facilities, as well as radioactive waste from nuclear power, or pollution from pesticides, chemicals, and heavy metals. In fact, free trade not only permits environmental damage but encourages it, as a way to grab a cost advantage.
A potential solution is a small, uniform tariff for all imports. This would encourage local production, thereby avoiding an enormous amount of wasted energy in transportation. Another idea is a carbon tax; the US could penalize imports of fossil fuels and other harmful energy-intensive industries. This would help discourage greenhouse gas emissions and encourage clean production facilities and renewable energy sources.
Free trade is unsustainable
Free trade lets the US import more than it exports (i.e. deficit trading). To make up the difference, the US must assume debt. As a result, foreign countries own over $30 trillion in US assets, and the US net international investment position is -$5.445 trillion.  The harm to the economy is huge. In 2001, the Economic Strategy Institute estimated that deficit trading shaves at least one percent per year off our economic growth.  Economist William Bahr estimates that our trade deficit since 1991 has made our economy 13% smaller than it otherwise would be.  Other economists estimate that trade deficits have stunted GDP growth by up to 20%.  And trade deficits also destroy jobs (e.g. trade deficits with China cost the US 2.8 million jobs between 2001 and 2008). 
Free trade increases economic inequality
The Stolper-Samuelson theorem, an underlying mechanism of free-market economics, says that freer trade raises returns to the abundant facctor of production and lowers returns to the scarce once.  In the US, the abundant factor is capital and the scarce one is labor. Thus, according to the Stolper-Samuelson theorem, free trade increases economic inequality.   The jobs that suffer most are those that are easily traded for cheap labor abroad. This primarily impacts low-skill workers, who either lose their job or get paid less. Of course, that means free trade hurts most Americans, as most American work the sorts of blue-collar jobs that are easily traded. So we're talking about a massive impact here: a minority gets richer (and these are folks who are already rich), while the vast majority gets poorer.
This is unfair. Making an extra $10,000 will improve the well-being of a middle-class family more than losing $10,000 will reduce the well-being of a billionaire. Given that fact, it makes no sense to redistribute wealth to the rich through free trade. Besides, inequality contributes to mental illness, drug abuse, obesity, and teenage pregnancy. It fosters crime and vioelence. It lowers life expectancy. And it's been shown to harm trust and community life, and overall child well-being.   This explains why the US has so many problems with drug abuse, crime, imprisonment, and obesity when compared with other countries, since the US is so unequal. There's no other explanation. And the case against economic inequality isn't just based on social impacts. New OECD analysis has found a "negative and statistically significant correlation" between income inequality and economic growth.  In other words, inequality also slows economic growth.
Innovation. Pro says free trade increases innovation. But the evidence shows otherwise; free trade harms innovation.  Pro's argument rests on the false assumption that more competition necessarily means more innovation. But economists have found the opposite: after a certain point, more competition reduces innovation!   Less competition means less market uncertainty, which gives companies more confidence to invest in innovative R&D. Pro underestimates the role that market stability and market concentration plays in innovation. This has led economists to say that the relationship between competition and innovation is an inverted U-shape. In other words, competition only increases innovation up to a certain point, after which more competition actually harms innovation.  cites empirical data showing that free trade harms innovation; economic theory cited in  and  supports this result.
Lower prices. Pro says free trade lowers prices. But what Pro misunderstands is that free trade affects relative prices, not the price level (the latter being affected by macro and monetary factors). Free trade lowers the relative price of imports; by necessity, the relative price of exports must go up. Thus, consumers only benefit from free trade if they buy more imports than exports. That's not something we can rely on, as many consumers prefer exported goods rather than imported goods (e.g. in Argentina, most consumers eat mostly beef, which also happens to be Argentina's biggest export). Pro's own sources clearly state their limitation to imports.
Economic growth. Pro's argument rests on the mistaken theory of comparative advantage. Comparative advantage is the idea that it's beneficial to import some goods (including services) in order to free up our workforce to produce more-valuable goods instead. The theory doesn't work because it assumes workers move easily between industries. If workers can't move, imports won't push a nation's economy into industries better suited to its comparative advantage. Instead, imports will just kill off existing industries and leave nothing in its place. Many workers don't have the skills or don't live in the right place to move between industries. Free trade will leave these workers unemployed.
This problem is compounded because of at-will employment and relatively low minimum wage in the US. The result is folks with PhDs in physics making minimum wage because they can't find a better job. In effect, free trade leads to both less jobs and lower wages. The human cost is obvious but there's an economic one as well: when skills that cost money to acquire (e.g. physics) aren't used, the economy loses large investments in human capital. These losses put the whole economy at risk. Nobel laureate James Tobin put it this way: "it takes a heap of Harberger triangles to fill an Okun gap." A Harberger triangle is the area in a supply and demand diagram that measures the loss of taxation (i.e. the benefits of free trade). An Okun gap is the loss in output and employment when the economy falls below potential. Tobin's point is that the benefits of free trade are tiny compared to the huge cost of running our economy below full capacity due to imports and lost jobs.
Other benefits. Pro also lists a host of other benefits that supposedly follow from free trade. But these "benefits" are bare assertions. Pro doesn't actually offer any evidence/argument about these benefits. There's simply no link between these "benefits" and "free trade."
A final point. Free trade creates win-lose situations. Consumers enjoy lower prices on imported goods, but the relative price of exports goes up. And as a result, workers lose their jobs, and get paid less. Given that consumers and workers are ultimately the same people, there's no way to determine whether these consumers/workers gain more than they lose. No theorem in economics guarantees that the gains of consumers from lower prices on imports outweighs the loss of workers (and higher prices on exports, and lower wages).
 The Spirit Level, by Pickett and Wilkinson
"If greenhouse gas emissions continue at their current rate, we'll soon reach a tipping point, after which runaway climate change will make the planet uninhabitable to humans."
Free Trade is Beneficial to the Environment
Free trade would also benefit the environment because it facilitates the spread of more efficient and greener technologies. A World Bank study found that "Access to climate-friendly clean energy technologies is especially important for the fast-growing developing economies. Within the context of the current global trade regime, the study finds that a removal of tariffs and NTBs for four basic clean energy technologies (wind, solar, clean coal, and efficient lighting) in 18 of the high-GHG-emitting developing countries will result in trade gains of up to 13 percent. If translated into emissions reductions, these gains suggest that—even within a small subset of clean energy technologies and for a select group of countries—the impact of trade liberalization could be reasonably substantial."
This proposal to reduce carbon emissions is flawed. First off, tariffs would lead to an inefficient allocation of resources in society due to the loss of comparative advantage. Losing efficiency means more waste and higher emissions from inefficient production. The carbon tax is a regressive tax that burdens poor people the most, would increase the cost of living for everyone, lead to less economic growth, and would not affect oil consumption greatly unless the tax is set enormously high, due to the inelastic demand for oil.
Free trade is Sustainable
"Free trade lets the US import more than it exports (i.e. deficit trading). To make up the difference, the US must assume debt. As a result, foreign countries own over $30 trillion in US assets, and the US net international investment position is -$5.445 trillion. "
Free trade increases the standards of living of the poor
Free trade has overall helped poor Americans. Yes, some types of jobs have been lost, but overall poor Americans are better off with free trade than without.
Also, "The average U.S. tariff rate on all goods has fallen from over 19 percent in 1933 to 1.8 percent in 2004. As a percentage of GDP, the importance of Trade in the economy has climbed from single digits in the 1930s to nearly one-quarter of U.S. GDP in 2004. At the same time that Trade has become freer, real per capita GDP in the U.S. (in constant 2000 dollars) has climbed from a low of $5,061 in 1933 to about $36,000 in 2004."
As I have ran out of time, I will be discussing and defending my arguments for innovation and the gains of trade next round.
The trade regulations I advocate are targeted towards specific problems with unfettered free trade. I don't argue massive tariffs on every industry. To the extent that Pro's rebuttals attack wholesale protectionism, they simply miss their mark.
Pro admits that we must drastically reduce carbon emissions to save our planet. Pro admits that we must do this now before it's too late. And Pro admits that global warming is an externality. Yet instead of *internalizing* global warming, Pro says we're better off leaving our survival to the chance that the market will reduce emissions on its own.
Pro fails to realize that free trade is driven solely by prices, and if prices don't account for the harmful effects of carbon emissions, there's no incentive to reduce carbon emissions. In fact, the opposite happens: carbon emissions increase as a way to grab a cost advantage. Carbon emissions have increased every single year over the past 30 years as we've liberalized trade. We need to change that now. And the change can't be incremental. We need to lower emissions by at least 8-10% per year to ensure our survival.  Free markets alone can't effect that kind of change.
Pro dismisses my arguments because they lacked any sources. But not all arguments require sources. Mine doesn't. The argument I made is analytic, not empirical. But experience proves me right.
Pro also cites two sources. They don't help.The first source "estimates" that a 1% increase in sulfur dioxide output from free trade leads to a decrease in sulfur dioxide concentration of around .8%. The estimation is based on a limited theoretic framework and limited empirical data (since it doesn't look at actual free trade). It's also totally irrelevant because it dealt with sulfur dioxide. The source even notes that limitation explicitly: "Free trade appears to lower sulfur dioxide concentrations for an average country in our sample, but may of course worsen the environment through other channels. Our evidence is specific to sulfur dioxide." The issue in this debate is reducing carbon dioxide, not sulfur dioxide. Carbon emissions are an entirely different ballpark. The regulations that affect carbon are completely different than the regulations that affect sulfur emissions. Also, note that Pro's source actually finds an increase in pollution output. It's the increase in output that also leads to a decrease in concentration. This is very limited evidence compared to the huge number of studies showing harm to the environment from free trade:     
Pro's second source supports my argument, not Pro's. It states: "Current actions are not enough if we are to stabilize greenhouse gases (GHGs) at any acceptable level. The economic challenges are complex and will require a long-term international collaboration to tackle them." Acknowleding that "no [trade] measures for climate change are in use anywhere in the world," it finds that "theoretical analysis points to a role for trade restrictions." In fact, Pro completely distorts his source's findings. Pro fails to mention that we're talking about liberalizing trade in renewables while maintaining tariffs on fossil fuels. The study finds, just as I suggested in R2, that taxing carbon-intensive industries while liberalizing trade in renewables leads to increased use of renewables, which in turn leads to a reduction in emissions. This is precisely what I suggested would happen with a tariff targeted specifically at fossil fuels.
Pro argues that "tariffs would lead to an inefficient allocation of resources due to the loss of comparative advantage." But inefficiency is a better outcome than human extinction. And again, Pro's argument relies on the theory of "comparative advantage," which is wrong (see R2). Pro dropped that, or apparently deferred his response.
Pro says "losing efficiency means more waste and higher emissions from inefficient production." This is untrue. First, Pro offers no evidence that "inefficient allocation" leads to "inefficient production." On the contrary, as Pro's second source suggests, targeted tariffs and subsidies can increase efficient production and reduce emissions by encouraging efficient clean energy. Second, "waste" refers to an economic loss, not to an environmental harm. Don't let Pro muddle this this issue: we're weighing potential economic growth against certain extinction of our species.
Given our looming planetary ecological catastrophe, it's clear that environmental protections are necessary even at the cost of degrowth. Which isn't to say there's any degrowth; I'm just emphasizing the importance of collapse of reducing emissions.
Pro argues that there's no link between free trade and our international investment position. But that is simply untrue. Free trade *allows* deficit trading, which is directly related to a country's international investment position. An international investment position is a statement of a country's foreign assets and debts. Free trade creates foreign debts via trade deficits.
Pro completely drops my impacts. The results of deficit trading are disastrous for our economy. If there are any economic benefits to free trade, they're completely outweighed by the harms from deficit trading.
Trade regulations can bring our trade closer into balance. Warren Buffet suggested one solution: give exporters $1 certificates for every dollar they export, and then require that importers buy a certificate for every dollar of goods they import. This would immediately bring our trade into balance.
Pro broadly asserts that all trade regulations hurt the economy. But Pro offers no substantiation for this assertion. I've explained how trade deficits weaken our economy. Pro hasn't argued otherwise.
Smoot-Hawley is irrelevant. I'm don't argue for Smoot-Hawley or anything even remotely similar. I support initiatives that bring our trade closer to balance, not drastic increases on tariffs for all industries. Pro's attack on Smoot-Hawley is a strawman and a red herring.
Pro admits that free trade increases inequality. Pro also drops all the impacts of inequality. Those impacts include more mental illness, drug abuse, obesity, teenage pregnancy, crime, violence, lower life expectancy, harm to trust and community life, harm to overall child well-being, and unsurprisingly, harm to the economy.
Remarkably, Pro nonetheless asserts without any substantiation that economic growth from free trade outweighs all these social harms. I have two responses. First, the impact from an increase in GDP simply cannot outweigh these harms. Pro doesn't even tell us what the impact is. Growth has little if any positive impact. It simply means more wealth. It doesn't tell us who possesses that wealth. Nor does it tell us if more wealth is good for those people.
What are they buying with that money? In the US, only a tiny proportion of production and human labor is devoted to actual human needs as opposed to market-generated wants. Over a trillion dollars is spent every year on marketing. More growth means more marketing, more market-generated wants, and more consumption of stuff we don't need. More growth doesn't mean more food, clothing, shelter, health care, education, or public transportation. More growth doesn't mean a cleaner environment. More growth doesn't mean less poverty or inequality. And most importantly, more growth doesn't mean more happiness. Research has found "no trace of a relationship between income and happiness." In fact, studies suggest that "wealth may undermine people's ability to savor positive events."  In other words, the rich may experience less happiness because awesome things like caviar and champagne become a regular experience instead of something to appreciate and savor. Accumulating wealth for its own sake might even be net harmful.
Second, Pro fails to address my point that inequality slows economic growth. Pro hasn't offered a single reason to believe that growth from free trade outweighs degrowth from inequality. Pro's source, an article by the Heritage Foundation, a conservative think tank, offers no substantiation for its assertions. The article doesn't explain how free trade leads to job growth. It simply assert that free trade increases GDP based on an observed GDP increase. But there's no analysis as to what caused the GDP increase; it could have been any number of things besides free trade. And even if GDP increases, it doesn't mean the benefits pass onto most Americans. Most Americans work blue-collar jobs and are thus left unemployed by free trade. Then, they end up less happy because of greater inequality, and end up being at higher risk for mental illness, obesity, crime, and all the other impacts of inequality. To assert that an abstract quantifier like GDP outweighs all the harms from an increase in inequality simply misunderstands the nature of human well-being and happiness.
Pro defers his defense of "innovation and the gains of trade" until R4. This deprives me of a rebuttal in R3, which is both unfair and a violation of Pro's requirements in R1. With three days per round, Pro effectively gets nine days to write his defense while I only get three days to respond. Timing matters. Six extra days of research and polish increases the quality of one's arguments significantly. Pro gets an unfair structural advantage because of that. If Pro had no intention of addressing my rebuttal until R4, the debate should have been structured to limit rebuttals to R3 and R4. Instead, Pro required rebuttal in R2. Not addressing that rebuttal until R4 is abusive towards that requirement. Pro says he "ran out of time." But that's not an excuse. Everyone must balance time. R1 states: "you must make sure that there are no things in your schedule that would potentially prevent you from completing every round." Yet Pro couldn't complete his round because he "ran out of time." Punish him for that.
Sources in the comments and reposted in R4.
Valladarex forfeited this round.
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