The Instigator
Pro (for)
6 Points
The Contender
Con (against)
5 Points

The United States should have a general policy of free trade.

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Post Voting Period
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Voting Style: Open Point System: 7 Point
Started: 3/6/2012 Category: Economics
Updated: 4 years ago Status: Post Voting Period
Viewed: 5,793 times Debate No: 21775
Debate Rounds (4)
Comments (30)
Votes (4)




"Free trade" is "a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports). .. Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation."

The resolution uses "general policy" to allow exceptions for non-economic reasons, principally national security. For example, sales of arms by companies in the United States to other countries is forbidden without a license from State Department. That's not a subject of this debate.

This debate is about the economics of free trade. I will argue that free trade is economically beneficial overall, and my opponent will oppose that viewpoint. My opponent is free to argue the economic effects on trading partners and the world economy as well as upoon the United States, but he is not obliged to do so.

I assume the burden of proof for this debate.

Free trade provokes seemingly never-ending controversy, sure to arise in any election year. I'm looking forward to a good debate.

Debate Rules

I am attaching a set of debate rules as conditions for accepting the debate. I think these are the ordinary debate conventions and contain nothing controversial. The purpose is to make new members reading the debate aware of the conventions.

Both sides agree to the following rules, and that violating the rules is a conduct violation, with anything contrary to the rules to be ignored by readers judging the debate:

DR. 1. The first round of the debate is for acceptance and for clarification of terms and conditions only. I will provide the specific Pro contentions in R2. Opponents should comment before accepting to seek a rule change.

DR 2. All arguments must be made in the debate. Evidence may be cited or linked from the debate, but only in support of arguments made in the debate. Arguments made in Comments are to be ignored.

DR 3. Source links or references must be included within the 8000 characters per round limit of the debate. No links in comments.

DR 4. Any term not specifically defined before use is to be taken with the ordinary dictionary definition of the term that best fits the context of the debate.

DR 5. No new arguments shall be made in Round 4. Arguments and evidence may be presented in R4 in rebuttal to any previous argument, but no new arguments.

DR 6. DDO site rules always apply. Neither side may add or modify rules for the debate once the challenge is accepted.



Thanks Roy. I accept the terms, and am looking forward to a good debate.
Debate Round No. 1


Trade can be restricted by several means. Tariffs can be put on imports and exports in a direct violation of free trade. However, indirect methods can be used to upset free markets. Governments can provide research or production subsidies, and the government can require purchase of local products for government use. For example, Friedman [1. ] documents the bad effect of agricultural subsidies in Europe and the United States have had on Third World economies by obviating the advantage that producers would otherwise have in certain crops.

1. Free Trade Benefits Both Trading Partners

A producer of certain goods has an absolute advantage if he can produce those goods more cheaply than anyone else. almost always, a country has an absolute advantage in producing some goods. Free trade maximizes efficiency, and hence prosperity, by allowing countries to produce more of the goods they are best at, and less of the goods at which they are less efficient.

An economy that has no absolute advantage will nonetheless have a comparative advantage [2.] in producing some goods over others. The theory of comparative advantage then shows that the country is better off producing more of what it is better at producing, and less of other things. The theory f comparative advantage says that both trading partners will still benefit from free trade, even one has no absolute advantage in anything.

We might wonder how poor countries have an advantage in anything. Agricultural products depend upon growing conditions and labor costs. No matter how well capitalized, the US does not have an advantage in growing bananas or coffee. Poor countries have cheap labor and are likely to have an advantage in labor-intensive manufacturing. Poor countries often have unique attractions that make them competitive for tourism.

In most economies the majority of goods and services are not subject to foreign competition. Restaurants and local shops, schools and government, roads and airports, houses and commercial buildings, as well as all the support services that go along with these things are not subject to foreign competition. Friedman [1] calculated that only 19% of the U.S, GDP is subject to potential foreign competition. "For 2011, exports of $2,103.1 billion and imports of $2,661.1 billion resulted in a goods and services deficit of $558.0 billion ..." [3. ] The Gross Domestic Product was $15,094.4 billion. [4. ] so 17.4% of GDP was spent on imports, but all but 3.6% of that was offset by exports.

Does the theory of comparative advantage work in practice? "Though it creates winners and losers, the broad consensus among members of the economics profession in the U.S. is that free trade is a large and unambiguous net gain for society.[26] [27] In a 2006 survey of American economists (83 responders), "87.5% agree that the U.S. should eliminate remaining tariffs and other barriers to trade" and "90.1% disagree with the suggestion that the U.S. should restrict employers from outsourcing work to foreign countries."[28] [5. ]

2. Dislocations are acute, benefits are chronic

If there is nearly universal agreement among economists that free trade is beneficial, then why is it so often opposed? The reason is that the job losses are easy to identify while the job gains are spread over society. for example, the U.S. allows inexpensive manufactured goods to be imported. Jobs sewing underwear were consequently lost in North Carolina, and it's easy to point to those lost jobs. The gain is in the lowered price of underwear, a gain that benefits buyers of underwear. Money not spent on underwear is then available for other purposes. The money saved is available to purchase competitive goods.

Wal-Mart calculated that the total saved from Wal-Mart pricing amounted to $2500 per family in 2006. [6.] Wal-mart got into trouble by implying that the saving came solely from Wal-Mart, when it actually came from the general lowering of prices by Wal-marts competitors as well. The lower prices do not derive entirely from imports. Some of the savings come from the efficiency of the distribution system. The point is that the economy benefits by spending fewer resources on things that America is not competitive in producing, and greater resources on things in which it is competitive.

Friedman's book [1] catalogs examples of high tariffs damaging economies around the world. South America, notably Brazil, "protected" local markets with high tariffs for decades, with resulting poverty. Removing tariffs were key to economic revival. In the early 50s, Hindustani Motors in India and Toyota in Japan were about equal-sized car manufacturers. Hindustani Motors was protected by high tariffs, while Toyota was subject to international competition. Predictably, competition yielded efficiency and growth.

It's reasonable for government to assist in retraining and relocating workers for jobs in growth industries. It is unreasonable to suppose the country's future lies in keeping workers sewing underwear forever at the expense of consumers.

Customers have a right to buy inexpensive products

Government does not have a right to force consumers to pay high prices to keep outdated industries alive. If consumers choose to buy more expensive products for whatever reasons, that the consumer's business. Government doesn't have the right to make the decision that a consumer will pay more for products A, B, and C because the government favors those industries. It is an unjustified intrusion upon the individual's right to make consumer choices.

There is inherent corruption in government choosing which outdated industry is to receive the benefits of protection and by how much. Once a general promise of protection is made, then when an industry starts to fall behind foreign competition their remedy is seek protection from competition rather than reform and become more efficient.

Government must decide how much above market price an inefficient producer will be paid. That determination is subject to political influence. Around 1990, the world price of sugar was four cents a pound. Price supports kept the domestic U.S. price at 22 cents. Now, price supports keep the domestic price at two or three times the world market price. Consumers end up paying the subsidy, but also production of candy is shifted out of the United States and the candy is imported instead of the sugar. [7.] that costs manufacturing jobs.

Trade promotes peace

Free trade benefits both sides of the trading partnership. The theory agrees with a common sense understanding a deal depends upon both sides benefiting. Both the trade process and the results favor peace. "Quantitative studies provide a great deal of evidence for a causal chain running from free trade via prosperity and democracy to the avoidance of military conflict, as well as for another causal relationship between trade or economic openness and conflict avoidance." [8.]

Critics have argued that while conflict reduces trade, trade does not reduce conflict. A recent study [9.] refutes that analysis. "Previous studies that address the endogeneity of trade ... have not overstated the benefit of interdependence. Commerce promotes peace because violence has substantial costs, whether these are paid prospectively or contemporaneously."

The resolution is affirmed.



Free trade is riddled with huge problems, most of which are generally acknowledged even by free traders. As Paul Krugman, winner of the 2009 Nobel Prize in economics, writes: "it's hard to avoid the conclusion that growing U.S. trade with third world countries reduces the real wages of many and perhaps most workers in this country. And that reality makes the politics of trade very difficult." [1] I argue that free trade is not overall beneficial, and that its problems can be solved with pragmatic restrictions.

Comparative advantage

Free trade is fundamentally predicated on the false theory of comparative advantage: it is beneficial for the US to import some goods (including services) in order to free up our workforce to produce more-valuable goods instead. The logic seems intuitive, which explains its support by many. But I assure readers, there is a growing consensus among economists that comparative advantage and free trade is deeply flawed. I will attempt to explain why.


A free trade policy falsely assumes that trade is sustainable. When the US buys goods from foreigners, it must give them something in return. There are only three things we can give in return: goods we produce today, yesterday, or tomorrow. When we end up using the 2nd and 3rd option, goods we produced yesterday and tomorrow, we produce a trade deficit. Even Pro admits free trade causes the trade deficit. See Pro’s [3] and [4].

As a result, foreigners now own 50% of all publicly traded Treasury securities, 25% of American corporate bonds, and roughly 12% of American corporate stock. Net foreign ownership of American assets is $3.5 trillion.

The Economic Strategy Institute estimated in 2001 that the trade deficit was shaving at least one percent per year off our economic growth. Following in their footsteps, economist William Bahr has estimated that our trade deficit since 1991 has made our economy 13% smaller than it otherwise would be. [2] That’s a hole in our economy bigger than the entire economy of Canada. Other economists have reached similar conclusions.

6.5% of our federal budget goes to interest on this debt. According to the World Bank, if free trade continues, “the U.S. net international investment position – which compares the value of foreign-owned U.S. assets with the value of U.S.-owned foreign assets – will hit a staggering minus-69 percent of annual gross domestic product by 2025.” [3] In plain English, free trade is unsustainable.

Deficit trade also destroys jobs right now. It is estimated that every billion dollars of trade deficit costs Americans 9000 jobs. For example, the trade deficit with China from 2001 to 2008 cost the US 2.8 million jobs. [4] Keep in mind that, because Americans consume more than they produce, the debt will have to be paid for in the future. Foreigners already gave us their goods, which we bought on credit; they won’t owe us anything later. In the future we will be required, in effect, to work without being paid.

The trade deficit occurs because free trade makes no distinction between short-term or long-term efficiency. It treats short-term and long-term as completely arbitrary factors. Hence, free trade maximizes short-term living standard, but it comes at the expense of long-term prosperity. Again, free trade is simply unsustainable.

The flip side of financial debt from imports is unsustainable exports. The U.S. exports a significant quantity of nonrenewable resources. Depleting nonrenewable resources, along with pollution and environmental damage, are factors that free trade completely ignores. This makes completely unregulated exports unsustainable as well.

We conclude that free trade is unsustainable. This is a serious problem that is easily fixable. We achieve financial sustainability by controlling trade and fixing the exchange rate. The solution to unsustainable exports is to tax or otherwise restrict trade that depletes nonrenewable resources or emits pollution.


An externality is the economic term for when a product’s price does not reflect its true economic value. A classic negative externality is environmental damage, which reduces the economic value of natural resources without raising the price of the product that harmed them. The classic positive externality is technological spillover, where one company’s inventing a product enables others to copy or build it, generating wealth that the original company does not capture. Free trade is driven by prices, so if prices are wrong due to positive or negative externalities, it will recommend bad policies.

China’s economy, for example, has grown less than it seems when one takes into account the massive pollution and destruction of its soil and air. Free trade not only permits pollution but encourages it, as a way to grab a cost advantage.

The issue of externalities is a well-known problem, even to honest free traders. The solution is to end free trade, tax imports produced in a harmful way, and subsidize research and development of new technologies.

Lower Prices?

This is where we really see the problem of comparative advantage. Anyone who understands comparative advantage knows that free trade affects relative prices, not the price level. When a country opens to free trade, it is the relative price of imports that comes down; by necessity, the relative prices of its exports must go up. Pro's examples of lowered prices (like the Wal-Mart effect) have to be qualified to take into account the fact that the relative price of the goods the U.S. exports is higher than it would have been absent free trade. This means the prices of domestic goods will go up!

Stolper-Samuelson Theorem and Income Inequality

The Stolper-Samuelson theorem [5] is the underlying mechanism of free-market economics. It says that freer trade raises returns to the abundant factor of production and lowers returns to the scarce one. In the US, the abundant factor is capital and the scarce one is labor. Free trade thus hurts American workers. The jobs that suffer most are those that are easily tradeable and can be produced through cheap labor abroad. This primarily impacts low-skill workers, who will either lose their job or be paid less. So while free trade may expand our economy overall, it destroys a huge number of American jobs as well as increasing the wage gap between blue-collar and white-collar jobs. Keep in mind, the majority of US workers are blue-collar workers. In the US, free trade literally redistributes wealth by making the rich richer and the poor poorer. This is unfair.

In fact, in 2006 it was estimated that freer trade cost the average household earning the median income more than $2000. [6] For many households, that is more than their entire federal tax bill! Anyone against higher taxes and big government should bear that in mind when evaluating free trade.

An Alternative to Free Trade

I particularly like one proposed by Warren Buffet: the idea that exporters be given $1 certificates for every dollar of their exports, and that importers would then have to buy a certificate from them for every dollar of goods they imported. This would, of course, force America's trade into balance immediately, solving a major problem with free trade.

Concluding Remarks

Free trade creates win-lose situations. When imports replace goods produced in the US, consumers enjoy lower prices on impored goods -- but workers don't like the lost jobs. Given that consumers and workers are ultimately the same people, this means they lose more as workers than they gain as consumers. There is no theorem in economics that guarantees the gains of consumers outweighs the loss of workers.

There are fatal flaws to free trade that are fixable. Many more problems exist that, because of space limitations, I will try to cover in future Rounds.
Debate Round No. 2


Comparative Advantage

Con quotes economist Krugman [Con's ref 1, C1] that trade reduces the wages of many in the U.S. So is Krugman opposed to free trade? Krugman says, "So am I arguing for protectionism? No. Those who think that globalization is always and everywhere a bad thing are wrong. On the contrary, keeping world markets relatively open is crucial to the hopes of billions of people." [C1] Krugman is arguing that dislocations should be ameliorated by government. As a leftist, he argues that welfare should be given to displaced workers; right-wingers generally argue that aid should be given in retraining.

Krugman said that "perhaps most" workers in the U.S. might have reduced wages. That cannot be squared with over 80% of workers being in industries not subject to foreign competition. Moreover, trade effects are transient. Consider those workers sewing underwear in North Carolina. Foreign competition puts competitive pressure on the business, driving he wages of underwear sewers down. What happens is that the economy reacts to move capital from labor intensive textile manufacturing to other areas. In North Carolina, pharmaceuticals and high tech were alternatives. Government attempts to support non-competitive textiles prolong the dislocation.

Con claims that there is growing consensus among economists that the theory of comparative advantage is wrong. Really? I provided data that over 90% of economists agree the theory is correct. The 9% who do not agree are not a consensus, and there is no evidence their numbers are growing. Paul Krugman agrees with Milton Friedman the theory is valid.

Free trade leads to displacements. Progress of all types leads to displacements. Computer printers have destroyed the market for typewriters, displacing all the workers who made typewriters. The remedy for the displacements by progress or by free trade is the same: shift jobs to competitive industries. Germany has a positive trade balance, and much of their positive balance is from manufactured goods. The Germans manufacture things that require high levels of worker skill.

U.S. Trade Deficits

The reasons that the U.S. runs chronic trade deficits include:
      • A policy of unlimited immigration of unskilled labor with tight restrictions on skilled labor
      • A basic education system that provides high school graduates who cannot read well or do mat
      • A higher education system with students who spend on 14 hours a week studying [10.] and in which useful professions are downplayed in favor of liberal arts
      • A policy of not developing oil resources; despite having three times the oil reserves of Saudi Arabia [11.], we choose to import rather than export
      • An entitlement system so pervasive that for many people work is optional
      • Government overspending that takes capital out of productive enterprise
Protectionism solves none of these policy problems. These are policies that inevitably lower wages. High tariffs make matters worse by subsidizing inefficient production. Comparative advantage is always beneficial, but to yield strong positive trade balances government policies must favor a first-world economy, and they do not.

Con points to the Federal budget deficits as a looming problem and attributes the problem to free trade. Not one penny of the Federal deficit is owed as payment for goods or services bought from outside the United States. The Federal deficit is due entirely to the Federal government spending more than it takes in, not buying foreign goods. The deficit is indeed a monstrous problem, but wild deficits are run independent of free trade policies. Con complains that half of the traded government debt is owned by foreigners. (The non-traded debt is basically money the government creates.) the government could refuse to let foreigners buy Treasuries, That would dramatically raise interest rates because all the money would have to be sucked out of the U.S. economy as government competes with private industry for the available capital.

Con claims I agreed that free trade caused the deficits. I did not. In what Con references I cited the size of the trade deficit to the total economy. The Federal deficit is not a part of that equation.

Con sites several studies that claim that the economy would have grown much faster if there were no trade deficits. The studies only assert that having deficits is bad, which is true. However, protectionism would make the economy worse than it now is rather than better. By illustration, if we all agree that tornadoes are bad, that does not endorse buying an expensive magic amulet to ward them off. Tornadoes would remain bad and we would be out still more money. That trade deficits are bad is an argument for fixing the list of policies that make the country less competitive. The Germans do it; we choose not to.

Con argues that the US exports substantial quantities of non-renewable resources. He must be referring to out vast oil exports. No wait, we are importing oil. We export lots of timber. That's renewable. So what?

No one likes pollution, not even Communists. Prosperity from trade provides the money to fight it.

Con argues that if the price of imports go down, the price of exported goods must go up. If so, then if we import underwear then the price of airliners, a major export, must go up. That's not true because the airliner market is competitive just like the underwear market. We are better off because we can compete more profitably in the airliner market, not because the prices rise. In fact, prices for airliners drop because a competitive market forces innovation and efficiency, while protected industries languish. that's why Hindustani Motors did not prosper and Toyota did.

Counter theories

Con's later references [C5. C6] work from a wrong scenario. They assume that if cheap goods are allowed in domestic manufacturers must lower wages to compete. That makes the evil manufacturers richer, because they pay lower wages, but the larger number of worker suffer from lower wages. The error is that manufacturers do not continue in non-competitive industries, they abandon them in favor of competitive industries. Textiles are discontinued in favor of pharmaceuticals, or whatever.

Data supporting the erroneous theory can be mined from industries in the process of being phased out. The textile industry does not die overnight in the face of foreign competition. Typically governments try to keep them alive with various tax subsidies and public expenditures. During that time the workers will have the lower wages. manufacturers will be on an upward trend as capital is moved to more profitable domestic or overseas operations.

Our government should get ahead of the changes. America's future is not in sewing underwear. Anticipating the long term outcome, policies of education and taxation should be aimed at aiding transition. Or at least government could not fight it.

Trade promotes peace

Free trade benefits both sides of the trading partnership. "... in 1748, Baron de Montesquieu observed that 'Peace is the natural effect of trade. Two nations who differ with each other become reciprocally dependent; for if one has an interest in buying, the other has an interest in selling; and thus their union is founded on their mutual necessities.'" [11.] Con offered no counter.


It's easy to catalog examples of free trade working, as Friedman did. If the theory were wrong, then Hong Kong and Singapore should be failures, and China better off in Maoist trade isolation. Con avoids discussing the great and numerous examples. Academicians instead focus on the U.S. economy and try to make a case that the failures from wrong policies in education and government are somehow due to free trade.


Pro argues that a survey of "83 responders" in 2006 is evidence that free trade is agreed to by the majority. But Pro's sample is unrepresentative and outdated. In March 2012, Harvard economist Dani Rodrik writes that, in "real surveys with representative samples," "respondents favor trade restrictions by a two-to-one margin." [7]

Pro sometimes argues against particular protections. But to the few arguments I made for protections, Pro offers no counter. Pro does not even mention my argument for balancing trade via Buffet's "import certificates."

Peace and Human Rights

War is waged regardless of trade policy, usually on ideological grounds. Britain has fought more wars than any other nation, sometimes openly with the aim of imposing free trade on reluctant nations (that's how Hong Kong became British). Post-WWII Japan has been blatantly protectionist, but has had a more peaceful foreign policy than free trading America. The U.S. is also the biggest terrorist target, regardless of its free trade policy.

In The Shock Doctrine, Naomi Klein exposes free trade and its relation to human rights violation. Besides some obvious examples like South Africa and China, she provides the US-backed Pinochet regime in Chile: by the early 80s, the Milton Friedman-prescribed policies had led to a huge “crisis of corruption,” “rapid de-industrialization, a tendfold increase in unemployment and an explosion of distinctly unstable shantytowns.” The only way to keep free trade going was human rights abuse.

Comparative Advantage

Pro claims that "progress of all types leads to displacements," and that "lost jobs" from free trade are simply the displacement of "jobs to competitive industries."

Pro's reasoning is dubious. Pro assumes workers can move easily between industries. If they can't, 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. There are workers without the right skills or who don't live in the right place to move between industries -- those will be left unemployed.

The problem is compounded because of relatively low minimum wage and hire-and-fire labor laws in the United States. As a result, we often see a decline not only in the quantity of jobs but in the quality of jobs. We see $28 an hour ex-autoworkers making $8 at a video rental store. Economist Robert Skidelsky argues that this is what happened in Russia: "about one million scientists have moved into non-intellectual occupations since 1991." [8] In Moscow, there were physics PhD's who were driving taxis. The human cost is obvious, but there is an economic one as well: when skills that cost money to acquire (for example, physics) are never used again, the economy negates large investments in human capital.

These losses put the whole economy at risk. As Yale economist and Nobel Laureate James Tobin famously put it, "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 (plainly, these are 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 small compared to the huge cost of not running our economy at full capacity due to imports and lost jobs.

Trade Deficits

Pro admits that trade deficits are bad. Pro also concedes the results of studies proving the possibility of a better U.S. economy if we end deficit trading.

Pro insists trade deficits are not related to free trade, and completely ignores the fact that free trade allows deficit trading to happen in the first place. Let me go through the logic step-by-step:

1) Nations engage in trade
2) One cannot get goods for free
3) When the value of imports is not covered by the value of exports, nations must make up the difference by sellling their assets or assuming debt.
4) Free trade allows trade deficits.

The correct trade policy is to end free trade by pragmatically balancing trade. If the United States adopts a policy of free trade, then government allows deficit trading. Pro agrees the consequences of deficit trading are unacceptable. Pro understands that, when a nation exhausts its ability to sell assets and assume debt, it ends up poorer than it would have been if it had not had free trade to begin with.

The U.S. prefers short-term consumption as opposed to long-term variety. Americans consume more than they produce, maximizing imports by assuming debt and selling assets. The evidence is not subtle, including a staggering net foreign ownership of $3.5 trillion in American assets and an ever-increasing debt.

Pro claims the federal deficit is independent of trade deficit. No. When trade deficits produce debt, the U.S. pays interest on that debt, which is calculated as part of the federal deficit.

Pro argues that our trade deficit is a savings problem in disguise. Pro misunderstands the hard economics, and assumes that the arithmetic relationship between trade deficits and saving rates is a causal one. In national income accounting, our savings are the excess of our production over our consumption. Trade deficits are the exact opposite, occurring when we consume more than we produce. We can see clearly that saving rates and trade deficits are exactly the same thing expressed in a different way. There is no causal relation between the two. The decision to eat a cookie does not cause the decision to not save the cookie -- it is the same decision.


Free trade cannot account for negative and positive externalities. Because environmental damage is not factored into equations, free trade encourages pollution when it offers a cost advantage. There are other externalities like technological spillover. Pro offers no response.


Pro claims that non-competitive industries will be discontinued in favor of "high-tech" competitive industries. It turns out that airlines, which are Pro's single well-chosen example, is the only "high-tech" good the U.S. is a net exporter of. [9] The U.S. is a net importer of every other high-tech good, including spacecraft. This raises the question of where the jobs have gone? Pro does not give any evidence of new jobs or increased income from free trade.

How can the U.S. cover the cost of imports? There are three options: increasing the price of exports, selling assets, or borrowing on credit. The first dramatically raises the price of domestic goods; the other two produce a trade deficit. Either way, consumers and workers lose.

Income Inequality

Pro misunderstands the Stolper-Samuelson theorem and its results. It says that, as a result of free trade, people who draw most of their income from returns on capital (the rich) gain, while people who get most of their income from labor (the rest of us) lose. Because the U.S. has more capital per person, and fewer workers per dollar capital than the rest of the world, free trade tends to hurt American workers.

For skilled jobs, foreign labor is just as expensive as American labor, so there is no impact on American wages. The occupations that suffer are those whose products are easily produced by cheap labor abroad. This includes most blue-collar jobs, which accounts for the majority of U.S. workers. This means that even if free trade performs in other respects (it doesn't), it would still leave most Americans with lower incomes. And even if it increased our economy overall (it doesn't), it would still unfairly increase poverty and income inequality.


Pro claims I have no evidence. Besides other examples like Chile, take Pro's example of Brazil: from 1987 to 2005, it was found that trade liberalization contributed to poverty and inequality in urban areas where the rich now live side-by-side with Third World squalor. [10]

Debate Round No. 3


Thanks to Con for a vigorous debate on a controversial topic. I think readers interested in the subject will benefit.

It boils down to tree trade producing winners and losers. Theory predicts and experience bears out that overall prosperity increases dramatically under free trade. The opposition is based upon the equality of poverty achieved by protectionism. Countries get to choose whether they want the prosperity and inequality of Hong Kong or the uniform poverty of Maoist China. I claim prosperity is better.

Comparative Advantage

Con quotes a survey of the general population [C7] saying that the populace favors trade restrictions. I never made a claim about what the general public favors. I presented the theory of comparative advantage and cited data that professional economists believe the theory works in practice. Con cited leftist Nobel economist Paul Krugman, but it turns out that Krugman favors free trade. It's no accident that Krugman favors free trade he received his Nobel prize for work on international trade. [12.] Right-wing Nobel economist Milton Friedman favors free trade. Wikipedia summarizes, "The academic debate among economists is currently settled in favor of free trade, with a consensus having existed since at least the 1960s ..." [1] Perhaps Wikipedia is biased, but since left and right agree, we don't know which side they might be biased towards.

The general public is suspicious of free trade for the reason I cited in R2, the benefits are spread among all consumers, but dislocations are acute and easy to point to. The general public often holds contradictory opinions. If we asked the public if they wanted a substantial increase in prices to keep non-competitive companies in business, it's a safe bet thy would be as opposed to that as they are to unrestricted trade.

Comparative advantage ensures that workers indeed benefit overall from free trade, The benefits come as generally lowered prices.

The theory of comparative advantage is so well established that it isn't necessary to refute each and every type of trade restriction. Buffet's plan tries to pass the burden of balancing trade to individual importers industry. What, for example, would Exxon export in return for the certificates needed to import oil? They have nothing, so they would simply stop importing and let gasoline prices skyrocket. The particulars of trade restrictions need not be argued.

Trade Deficits

If one allows that traffic accidents are bad, does that concede that automobiles ought to be banned? By Con's logic it should. If we banned automobiles, we would have no traffic accidents. That would save all the money spent treating injuries from accidents and on buying automobiles and gasoline. The costs, of an immobile society are more difficult to calculate, but we know they are greater. Similarly, banning free trade to force a trade balance is certainly a net loss because the logic of comparative advantage is sound.

Con argues that because trade deficits cannot be run perpetually, then trade restrictions should be put in place to ensure they never occur at all. Con works from the notion that trade deficits can only be paid for by exhausting finite natural resources, and those resources will necessary run out. But if a country lacks natural resources, forcing a positive trade balance will not solve the shortage. If a country needs oil, for example, forbidding imports of oil doesn't solve that problem. A country lacking natural resource must adopt policies that make it competitive in areas that do not depend on natural resources to generate trade. such policies are evident, with Switzerland and Hong Kong being good examples of countries that do quite well without natural resources.

I did not argue that the trade deficit is a savings problem in disguise. I argued that the trade deficit is the result of government policies that restrict immigration of skilled workers, produced failed basic and higher education systems, ban development of natural resources, and government overspending that sucks up capitol. If people saved more to support government spending the capitol would still be locked up in non productive use. Con did not dispute my list of policy reasons.

Con argues that the Federal government pays interest on the trade deficits. No, the Federal government pays interest on the debt it has accumulated from overspending. Trade deficits are entirely private.

Free trade is sustainable indefinitely because if deficits by a company accumulate, eventually the interest rates rates lenders charge the company rise, discouraging further buying. If Wal-Mart buys goods from China it can pay for them with overseas earnings as well as U.S. earnings. If their ability to pay becomes doubtful, they won't be permitted to buy.


Con's implies that aircraft is the only significant high tech export from the U.S. That's wrong. The top ten U.S. exports, in order, are: aircraft, semiconductors, autos, pharmaceuticals, auto parts, fuel oil, industrial machines, auto parts, organic chemicals, telecommunications, and plastics. Fuel oil and plastics are essentially manufactured goods, since the us is a net imported of petroleum used to produce the products. [13.] The list continues with many agricultural products, but even those products have a large technological component, because the U.S. is competitive in those products due high levels of automation.

The net balance of trade in any particular area is not an important indicator because U.S. companies get the benefits of overseas manufacturing:

"However, a country’s gains from productive activities are not fully captured by a location-based measure of production, such as GDP. Many U.S. companies produce abroad and import a substantial proportion of their final product to U.S. markets (e.g., Nike). Such production logistics contribute dollar-for-dollar to our trade deficit. However, they are in no way an indication that we are consuming more than we are producing. Rather, the trade deficit fails to account for U.S. gains from U.S.-owned production overseas."[14.]

It's better to have rich people than not, because the rich invest, and because the rich can be taxed. We should seek prosperity, not economic equality.


Chile and Brazil are greatest success stories in Latin America, and their success is a result of adopting policies of free trade. Oddly, Con points to the regime of Allende in Chile as an example of the success of trade restrictions. Poverty was pervasive, so there were fewer difference between rich and poor than there are under the modern era of prosperity under free trade. One might as well use Mao's China as a shining example of economic equality. Chile is enormously better off with the prosperity brought by free trade. [15.] The same is true of Brazil and other countries now prospering from free trade. The equality achieved by universal poverty is lost, while the country as a whole gains dramatically.

Con does not dispute the long list of free trade success stories, ranging from Hong Kong and Singapore to India and China.

Right to buy products

In R2, I argued that consumers have a right to buy competitively priced products. Moreover, if the they are denied that right, government must set up a process by which it determines which uncompetitive industries will be supported and by how much. That government process is inherently both inefficient and corrupt. It's inefficient because bureaucrats must be employed to set prices which free markets do without cost. It's corrupt, because industries must attempt to curry government favor to get the best subsidies. Con has not adequately respond.

The Pro case is made. The U.S. should embrace free trade policies.



Many thanks to Roy for proposing we debate this "controversial" topic, it has been a pleasure. In closing, I will offer a brief summary of the debate, followed by some responses to Pro's claims in the final round.

Pro's case

At this point, I assume drops are concessions. Pro concedes the following points:

1. Results showing the U.S. economy would be at least 13% larger without trade deficits
2. The problem of externalities, including pollution and technological spillover (See R2)
3. Evidence that free trade leads to human rights violations
4. Evidence that free trade has been a catalyst for war/violence (by desire to impose free trade on other nations)
5. Free trade is a win-lose policy (Pro admits to "free trade producing winners and losers")
6. The general populace favors trade restrictions
7. Free trade increases income inequality and thus poverty
8. Factors of production do not move easily between industries
9. The whole economy is at risk when investments in human capital are negated by free trade
10. Short-term consumption at expense of long-term prosperity

Recall Pro accepts the BoP. What, then, is left of Pro's argument that could possibly outweigh the negative effects of free trade and thus satisfy the BoP? According to Pro:

11. Comparative advantage is sound (after Pro's concessions, is this not free-trade fundamentalism?)
12. Lower prices from competition
13. Historical record supports free trade

Each of these is dubious. At the outset, it is already questionable whether (11) and (12) outweigh the negative economic effects, lost jobs, income inequality, trade deficits, etc. Any time an economic change creates both winners and losers, as Pro admits free trade does, the judgment of whether the change is good or bad for the group as a whole is problematic. It becomes a matter of moral philosophy, not number crunching. Economists, as a result of their training, have no more claim to know what is good for the country than any other citizen. Pro's outdated surveys (from 2006) of economists won't help us here.

Free trade makes a minority of the country better off, but hurts the majority. Even if the total gains to the few winners are sufficiently large (they aren't) that they could hypothetically compensate the losers, why would it be obvious that Americans as a group are net winners? In R2, I stated: "no theorem in economics guarantees the gains of consumers outweighs the loss of workers." Pro never contests this statement, Pro does not even provide evidence that savings from lower prices outweigh the economic and human loss from lost jobs and lower wages. Hence, Pro has not met the BoP.

By way of response, in R2 and R3, I also challenged (11) and (12) with the counterargument that comparative advantage depends on the assumption that factors of production move easily between industries. Pro argued in R3 that the resources employed in one industry will be employed in a more competitive industry with higher returns. I argued that the reality is different. The economic investment in human capital (the skills workers pay money to acquire) is totally lost. Physical resources of production (for example, blast furnaces in a bankrupt steel mill) are also lost. As a result, you see physics PhDs as taxi-drivers.

Pro dropped these arguments, effectively conceding that comparative advantage is false. Yet Pro continues to support (without any counterargument) the theory of comparative advantage. Pro writes, "The theory of comparative advantage is so well established that it isn't necessary to refute each and every type of trade restriction." Considering the large number of esteemed economists that question comparative advantage (most famously, Dani Rodrik), Pro's statement is clearly false. If a pragmatic trade restriction is discovered that solves all the problems with free trade without posing new problems, it would be necessary even for the free-trade fundamentalist to refute it if free trade were to continue.

Pro argues import competition leads to lower prices on imports. Pro fails to realize that imports are fundamentally paid for by exports, the price of which must rise to generate the increased sales. Higher prices on domestic goods are certainly bad for domestic consumers who spend a greater proportion of their income on domestic products, such as drugs and food.

Against the hard economic facts, Pro insists prices for domestic products will not go up. How does Pro propose we pay for increasing value of imports? Pro offers no answer. The only answer is deficit trading. When we import a greater value of goods than we export, it produces a trade deficit. Pro admits deficit trading is bad for the economy overall. Pro ignores the double bind here, and instead continues to claim (by ignoring my arguments) that lowered prices from imports are worth the cost of lost jobs, trade deficits, higher prices on domestic goods, and dramatically increased inequality. But Pro has not proven that competitively priced imports are worth the human, moral, and economic costs.

Brief responses to the rest of R4

The evidence: Japan is blatantly protectionist. In Chile human rights violations were required to keep domestic demand high and free trade going. Both China and India keep their manufacturing tariffs above 30% (protections). Hong Kong does not count, it was British (not an independent state).

In protectionist Latin America, per capita income in the 60s and 70s was growing at 3.1% per year. After the continent embraced free trade in the 80s, per capita income dropped to 1.7%. [11] Likewise, in Africa living standards fell dramatically after free trade policies were introduced. The evidence favors trade restrictions.

Pro claims he did not say anything about savings, but half his argument is about savings. Savings from lowered prices. Government overspending. In economic theory, both of these are known as savings problems.

For example, Pro states, "the Federal government pays interest on the debt it has accumulated from overspending." In R3, I explained why overspending (savings rates) and trade deficits are the same thing. Pro drops my argument, and claims no argument about savings was made, even though Pro explicitly refers to "overspending" throughout the debate.

Pro dismisses Buffet's plan by stating that particularities of protections are irrelevant. I disagree. As stated earlier, if a particular protection is economically sound, it should not be dismissed without consideration. According to Warren Buffet, the trade deficit is the most urgent economic problem our nation faces. His solution:

"We would achieve this balance by issuing what I will call Import Certificates (ICs) to all U.S. exporters in an amount equal to the dollar value of their exports. Each exporter would, in turn, sell the ICs to parties--either exporters abroad or importers here--wanting to get goods into the U.S. To import $1 million of goods, for example, an importer would need ICs that were the byproduct of $1 million of exports. The inevitable result: trade balance." [12]

Trade is balanced through free-market forces. If Exxon had nothing to export, it would acquire ICs from other exporters, allowing Exxon to legally import oil. Exxon itself has no need to export anything, but to keep the quantity of other exports in mind so that trade is ultimately balanced. Pro misunderstands Buffet's plan. Buffet's plan solves a great deal of problems with free trade (deficit trading) while retaining everything Pro argues is beneficial: competition and free-market economics.

Hence, Pro practically concedes the debate by dismissing Buffet's plan in R3 and R4. It is a relatively simple solution to the problems of free trade that merits serious consideration. It is a better trade policy than free trade.

As my summary has shown, Pro has not met the BoP. The resolution is negated.

Debate Round No. 4
30 comments have been posted on this debate. Showing 1 through 10 records.
Posted by RoyLatham 3 years ago
If a bailout is used to keep "free trade industries" afloat, then by definition that is not free trade. Under free trade, the lowest cost producer makes a profit and the high-cost producers retool to make something that the can make profitably. No one gets a bailout.

I grant that there can be a transition problem and that government can legitimately play a role in retraining or other ways to ease the makeover. North Carolina had a big industry sewing underwear. That went to Mexico, and North Carolina turned to pharmaceuticals and finance industry. Hawaii was producing cane sugar for 23 cents a pound when the world market was four cents. when subsidies ended, tourism and crops like coffee and macadamia nuts filled the void. Failed industries should make room for new ones.
Posted by ray.tapajna 3 years ago
Free trade has a history of failures back to 1956. This was the year, the U.S. Federal Government sponsored the moving of factories outside of the U.S. as a temporary program that never ended. It first evolved into the Maquiladora factory programs in Mexico. By 1992 more than 2,000 U.S. factories were moved to Mexico. After President Clinton and a Democrat controlled Congress, passed the NAFTA trade agreement, the number doubled to more than 4,000 factories quickly. About a year later, President Clinton had to rush billions of dollars to Mexico to save the peso and the Mexican economy. So, the first stimulus package needed to bail out free trade was to a foreign government and it set the stage for all the bail outs and stimulus packages required to keep not only the free trade process afloat but the whole U.S. economy too. President Obama bailed out the money sources and investment community and in essence put future generations in bondage. The bail outs act as tariffs on generations to come. Free trade is the main cause behind our economic crisis and it is economic insanity to continue this history of failures. See by Ray Tapajna
Posted by FourTrouble 4 years ago
I agree, it is a real shame that a serious debate like this gets so few votes when a bunch of troll debates end up getting 10+ votes.

And Roy, just want to point out, I'm not as opposed to free trade as you tend to think. More than anything, I'm a pragmatist. I admit free trade is a good ideal to achieve given certain other economic and social conditions, but I don't think it's the right choice for America at this time. Americans consume far more than they can afford to, and that problem carries with it unacceptable consequences of a kind that harms the economy more than it benefits.

Also, the fact that you agree transitions should be gradual means that you are not fully opposed to free trade. You admit change must be pragmatic -- free trade is an ideal to be worked towards, not a policy to blindly implement without consideration of other factors.
Posted by RoyLatham 4 years ago
the voting on this debate was, well, let's call it said. With all the professed free market libertarians on the site, only one bothered to vote. Only one of the socialists and other far leftists voted. It makes doing a serious debate a waste of time.

Of course America can run a trade surplus. Germany runs a trade surplus with no significant reliance on selling oil or anything like that. So do Taiwan and South Korea. In order to run America into the ground, it takes a comprehensive program of bad education, out-of-control regulation, and rewarding failure while punishing success. Trade barriers are just the icing on the cake.

I agree all transitions should be gradual. That's the principle that people plan their futures based upon continuity of laws. Libertarians wrongly advocate revolutionary change. But America has been going downhill for decades by virtually every measure. Protecting industry from competition guarantees perpetual non-competitiveness.
Posted by FourTrouble 4 years ago
I disagree. Free trade is not ALWAYS fair. For example, in Chile, introducing free trade as a "shock" was unsuccessful. Chile was not ready. When it was introduced gradually through restrictions, free trade was ultimately successful. It was the combination of restrictions and free trade that made Chile successful in the LONG-TERM.

Free trade is good sometimes, not always. In the case of the United States currently, it should be tempered with strategic restrictions. The reason: Americans can't help but run a trade deficit, so the government should help to balance trade. Allowing pragmatic restrictions where they are necessary is better than free-trade fundamentalism. You think I'm a socialist, but I'm actually talking about something else -- pragmatism.
Posted by RoyLatham 4 years ago
Of course free trade is all about government control. The government must decide what industries to protect and by how much. One case I recall had to do with protecting US producers of ball point pens from cheap foreign competition. Doing so requires government setting the minimum price of ball point pens, done through the wisdom of an army of government bureaucrats. The same is true of every product or service facing foreign competition. he higher the price set by government, of course, the less of the product will be consumed.

Authoritarian regimes can allow free markets. Taiwan and South Korea had authoritarian governments for a long time. They nonetheless prospered greatly because free markets were allowed. China now has a severely authoritarian regime, but their new prosperity comes from the freeing of markets. No one has completely free markets, but prosperity is invariably proportional the amount of market freedom. For example,Taiwan and India protected their automobile producers while freeing other areas. That's why their auto industries are where they are today.

You say Chile bungled the transition to free trade. No matter, they are now an outstanding example of the success of free trade policies.

Does fairness require blocking the sun as unfair competition to candle makers? No, free markets define fairness.
Posted by FourTrouble 4 years ago
Larz, thanks for explaining your reasoning, it offers a lot of insight, and helps me understand what I could have done better.

Roy, for some reason you are equating restrictions on trade with socialism or authoritarianism, when that is not what we're talking about here. Absolute equality is not the goal. And even if it were, equality does not imply poverty. The issue here is procedural fairness. If wealth is distributed through a fair process, then everyone is happy. Free trade is not fair.

Chile is a really interesting example. The Milton Friedman had a central role in developing their free trade policy, but the immediate results were disastrous. Besides the human rights abuse, as a result of deregulation, the entire economy collapsed in 1982-1983. They were forced to nationalize the banking sector to recover. After the recession, in 1985, the government instituted a staged lowering of tariffs, beginning with 35%. They went through five different exchange-rate policies, gradually approaching a floating exchange-rate and free trade. What is so interesting about Chile is its a perfect example of how free trade destroys an economy if it is done the Friedman way (the famous "shock" doctrine). But Chile is also an example of the way free trade could be successfully introduced through gradual change.
Posted by larztheloser 4 years ago
Roy, I absolutely agree that the issue of prosperity versus economic inequality deserves a separate debate, and that this debate raised too many issues. I might take you up on that debate offer tomorrow if I can finish a bit more work.
Posted by RoyLatham 4 years ago
I think the issue of prosperity versus economic inequality deserves a separate debate (larz?). The only way to ensure economic equality is to make everyone poor. Thus North Korea has most people equal, South Korea does not. Maoist China had more equality, modern China less. In equal countries, the government prohibits success, enterprise, and private capital formation, so it's not a coincidence that equal countries are poor -- always with the exception of a small ruling elite. The poor countries of Africa have achieved economic equality on a broad scale.

A key part of the fable that equality is better is believing happiness is proportional to wealth. That's not true. Studies show that above a low level of subsistence, added wealth does not make people happier. The goal therefore ought to be to raise as many people as possible above the subsistence level, and never mind if some people are rich. The equality goal is like believing that if we cut down the redwoods, the forest will be better off from he resulting equality.

A problem with the current debate was that it raised too many issues to resolved in one debate. There was no space to debate prosperity vs. equality.

My view is that the high level argument on free trade is completely resolved by the data. Both rich and poor benefit. It's not a zero sum game. The more free markets, the better off a country. No one in their right mind believes that China or Brazil or Chile were better off with protected markets. It's not possible to overcome that fact with theoretical arguments. Still, there are lots of detailed issues. I think the most likely possible exception to free trade is the infant industry argument. If that works at all, it is only for a short time. It didn't come up in our debate.
Posted by larztheloser 4 years ago
I'm letting con win 4:3, my points do not correspond to the criteria at the side but simply what I think would be fair. I want to give both debaters as many points as I can for what was truely a very excellent debate. I feel absolutely enlightened to have read it.
4 votes have been placed for this debate. Showing 1 through 4 records.
Vote Placed by TUF 4 years ago
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Reasons for voting decision: okay this was a hard debate to judge. Both debaters countered each others points efficiently, and provided great sources (don't see why there is so much debate on the sources). I feel Pro upheld his BOP, and made succesfull arguments. What it came down to was: 1. Promoting peace. 2. Given that the Free trade is mutually beneficial to promoting peace, and securing wages,I feel that Pro wins arguments.I give conduct to con, because of the evidence debate. His sources were substantial in this ar
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Reasons for voting decision: I think pro won by a slight margin, but don't think enough to justify the arguments points.
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Reasons for voting decision: Will put my reasoning into a long series of comments.
Vote Placed by PARADIGM_L0ST 4 years ago
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Reasons for voting decision: This was a monster debate, with both sides vigorously defending and attacking suppositions. I was impressed by how informative each subsequent round was. I'm having a very difficult time accurately judging which side argued better. At this time I have them in stalemate, which is subject to change upon further reading.