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Free Trade, NAFTA, and abolishing the tariff

Jifpop09
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4/10/2014 10:49:22 PM
Posted: 2 years ago
I'm sure Progressivedem will disagree with me here, but I've always believed in free trade. I think its problematic when the government tries to control the flow of goods, and is restricting economic growth.

I find myself at odds with the coming election. While Hillary Clinton is the only plausible democrat candidate, I disagree with her stance on trade. She opposes free trade agreements of any sort, and is an advocate for actually increasing the power of the tariff.

The tariff can be a powerful tool sometimes, but in most cases, its to risky to use. When politicians attempt to understand individual markets, problems always arise. They simply are not experts in these area's.

I don't know what to do. Hillary wishes to offset decades of progression in trade freedom, and I actually hope to extend the agreements to more countries. A popular movement has actually been to abolish the tariff entirely, and I think that's true freedom. Tariffs should only be applied in political situations.

So, that's what I'm wondering. Do we need more trade agreements like NAFTA, or do we need less?
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progressivedem22
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4/11/2014 7:11:39 AM
Posted: 2 years ago
Actually, I support free trade lol.

And I'm not a fan of Hillary Clinton at all, but to my knowledge, she only said she wanted to renegotiate NAFTA. Honestly NAFTA itself would more of a foreign policy tool than anything, so this really wouldn't be a bad idea. Protectionism, though, is utter bullcrap that oddly enough hurts the same domestic industries the government was intending to protect.
Jifpop09
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4/11/2014 7:40:45 AM
Posted: 2 years ago
At 4/11/2014 7:11:39 AM, progressivedem22 wrote:
Actually, I support free trade lol.

And I'm not a fan of Hillary Clinton at all, but to my knowledge, she only said she wanted to renegotiate NAFTA. Honestly NAFTA itself would more of a foreign policy tool than anything, so this really wouldn't be a bad idea. Protectionism, though, is utter bullcrap that oddly enough hurts the same domestic industries the government was intending to protect.

She said quite vocally she wants to be rid of it. NAFTA has done little as a tool for foreign policy though. The thing that really makes me mad though, is how she voted against about 4 other trade agreements.

Anyways, I assumed you would disagree, because of your anarcho-communist spectrum.
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progressivedem22
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4/11/2014 9:27:58 AM
Posted: 2 years ago
At 4/11/2014 7:40:45 AM, Jifpop09 wrote:
At 4/11/2014 7:11:39 AM, progressivedem22 wrote:
Actually, I support free trade lol.

And I'm not a fan of Hillary Clinton at all, but to my knowledge, she only said she wanted to renegotiate NAFTA. Honestly NAFTA itself would more of a foreign policy tool than anything, so this really wouldn't be a bad idea. Protectionism, though, is utter bullcrap that oddly enough hurts the same domestic industries the government was intending to protect.

She said quite vocally she wants to be rid of it. NAFTA has done little as a tool for foreign policy though. The thing that really makes me mad though, is how she voted against about 4 other trade agreements.

Anyways, I assumed you would disagree, because of your anarcho-communist spectrum.

"Anarcho-communist"....

Dude, we agree on most things lol, but I would go a bit further than you and have a $15 rather than $11 minimum wage. That's not anarchism or communism, but socialism -- yes, I'm a socialist, but isn't everyone?
progressivedem22
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4/11/2014 9:32:30 AM
Posted: 2 years ago
Also, when did Clinton say she opposed NAFTA? I must not have seen that.

To be fair, though, every prominent "progressive" -- Warren, Grayson, Sanders, etc. -- oppose free trade because they're painfully ignorant of the actual economics of it. Frankly, I was in the same place until I actually studied it.

But, anyway, here's the basic economics of it because I have a final in a few weeks and want to gloat -- and maybe this will help someone:

1. Tariffs and quotas do nothing but raise domestic prices and start a trade war.
2. Jobs "saved" by protectionism are few, and it's plausible that net jobs actually fall if tariffs propel a trade war
3. Tariffs are technically illegal under the WTO
4. There is no disparity between the price of imported goods and domestic goods; domestic goods will fall to meet the cost of the imported good in order to compete, or rise to the cost of the imported good after a tariff
5. The VER under Reagan with the automobile industry was an absolute bloody nightmare that literally raised prices -- taxed consumer essentially -- and sent the proceeds to Vietnam.
6. Macro policies -- e.g., a $15 minimum wage -- are much more effective to combat the inevitable outsourcing, wage cuts etc. which will result from free trade.

I think that pretty much covers it...
ClassicRobert
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4/11/2014 10:15:00 AM
Posted: 2 years ago
At 4/11/2014 9:32:30 AM, progressivedem22 wrote:
6. Macro policies -- e.g., a $15 minimum wage -- are much more effective to combat the inevitable outsourcing, wage cuts etc. which will result from free trade.

In what way does that combat outsourcing? It exacerbates the problem by making our labor more expensive then the labor of foreign countries, effectively encouraging companies to outsource.
Debate me: Economic decision theory should be adjusted to include higher-order preferences for non-normative purposes http://www.debate.org...

Do you really believe that? Or not? If you believe it, you should man up and defend it in a debate. -RoyLatham

My Pet Fish is such a Douche- NiamC

It's an app to meet friends and stuff, sort of like an adult club penguin- Thett3, describing Tinder
progressivedem22
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4/11/2014 10:19:27 AM
Posted: 2 years ago
At 4/11/2014 10:15:00 AM, ClassicRobert wrote:
At 4/11/2014 9:32:30 AM, progressivedem22 wrote:
6. Macro policies -- e.g., a $15 minimum wage -- are much more effective to combat the inevitable outsourcing, wage cuts etc. which will result from free trade.

In what way does that combat outsourcing? It exacerbates the problem by making our labor more expensive then the labor of foreign countries, effectively encouraging companies to outsource.

Well, this thread isn't on the minimum wage and that's a separate category entirely, but I'll try to explain the logic of it nevertheless.

The case is essentially that outsourcing will result from free trade, particularly among low-skilled workers. But what this does is provide not only a cushion against the thread of downward wage pressure, but provides a persistent demand stimulus to offset job losses.

And, the case that you made about rising labor costs is virtually irrelevant. Australia has a higher minimum wage than us, yet lower unemployment. The point is, wages translate into demand, as low-wage workers spend 100% of their income in order to survive -- what David Ricardo called a subsistence wage.

But the fundamental point is, protectionism is a counter-productive failure -- the minimum wage is largely ancillary to this.
ClassicRobert
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4/11/2014 10:31:02 AM
Posted: 2 years ago
At 4/11/2014 10:19:27 AM, progressivedem22 wrote:
At 4/11/2014 10:15:00 AM, ClassicRobert wrote:
At 4/11/2014 9:32:30 AM, progressivedem22 wrote:
6. Macro policies -- e.g., a $15 minimum wage -- are much more effective to combat the inevitable outsourcing, wage cuts etc. which will result from free trade.

In what way does that combat outsourcing? It exacerbates the problem by making our labor more expensive then the labor of foreign countries, effectively encouraging companies to outsource.

Well, this thread isn't on the minimum wage and that's a separate category entirely, but I'll try to explain the logic of it nevertheless.

Right, we're talking about the minimum wage in relation to free trade.

The case is essentially that outsourcing will result from free trade, particularly among low-skilled workers. But what this does is provide not only a cushion against the thread of downward wage pressure, but provides a persistent demand stimulus to offset job losses.

Sure, some outsourcing is going to happen regardless, but you said it yourself- low skills workers are the main people harmed by that. When you make them even more expensive to hire on an international stage, that makes it so even more jobs get outsourced and the low skills workers are harmed even more. If you are hiring workers in a job that can be outsourced, the workers here cost fifteen dollars per hour and the workers in India cost five dollars per hour, who are you going to hire? Not having a minimum wage as high as 15 dollars offsets that. That's not demand stimulus. Demand stimulus would require a net gain, not a net loss. When free trade is achieved, a fifteen dollar minimum wage has all of the same harms as protectionist policies, if not more.

And, the case that you made about rising labor costs is virtually irrelevant. Australia has a higher minimum wage than us, yet lower unemployment. The point is, wages translate into demand, as low-wage workers spend 100% of their income in order to survive -- what David Ricardo called a subsistence wage.

And we don't outsource to Australia nearly as much as we do to cheaper countries, like India and China.
Debate me: Economic decision theory should be adjusted to include higher-order preferences for non-normative purposes http://www.debate.org...

Do you really believe that? Or not? If you believe it, you should man up and defend it in a debate. -RoyLatham

My Pet Fish is such a Douche- NiamC

It's an app to meet friends and stuff, sort of like an adult club penguin- Thett3, describing Tinder
progressivedem22
Posts: 1,304
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4/11/2014 10:50:09 AM
Posted: 2 years ago
At 4/11/2014 10:31:02 AM, ClassicRobert wrote:
At 4/11/2014 10:19:27 AM, progressivedem22 wrote:
At 4/11/2014 10:15:00 AM, ClassicRobert wrote:
At 4/11/2014 9:32:30 AM, progressivedem22 wrote:
6. Macro policies -- e.g., a $15 minimum wage -- are much more effective to combat the inevitable outsourcing, wage cuts etc. which will result from free trade.

In what way does that combat outsourcing? It exacerbates the problem by making our labor more expensive then the labor of foreign countries, effectively encouraging companies to outsource.

Well, this thread isn't on the minimum wage and that's a separate category entirely, but I'll try to explain the logic of it nevertheless.

Right, we're talking about the minimum wage in relation to free trade.

The case is essentially that outsourcing will result from free trade, particularly among low-skilled workers. But what this does is provide not only a cushion against the thread of downward wage pressure, but provides a persistent demand stimulus to offset job losses.

Sure, some outsourcing is going to happen regardless, but you said it yourself- low skills workers are the main people harmed by that. When you make them even more expensive to hire on an international stage, that makes it so even more jobs get outsourced and the low skills workers are harmed even more. If you are hiring workers in a job that can be outsourced, the workers here cost fifteen dollars per hour and the workers in India cost five dollars per hour, who are you going to hire? Not having a minimum wage as high as 15 dollars offsets that. That's not demand stimulus. Demand stimulus would require a net gain, not a net loss. When free trade is achieved, a fifteen dollar minimum wage has all of the same harms as protectionist policies, if not more.


I think you're conflating a few different things here. To suggest that there isn't a demand stimulus -- which the CBO would disagree with you on, by the way, at least for a minimum wage of $10.10 -- you're suggesting a net job loss, i.e., more jobs lost or outsourced because of either trade or a minimum wage. My entire point is that this isn't so because price of labor is not the only factor considered, but quality. Workers in India may be paid $5 an hour, yet you don't see every single company moving to India. The same goes for China et al. There are a number of other factors to consider and the academic literature on this subject is pretty vast, and points to the fact that low wages ipso facto are not the primary cause of cash inflows. Not to mention, there's evidence that low wages leads to lower productivity, apathy toward the position, etc., which costs companies in the long run.

And, the case that you made about rising labor costs is virtually irrelevant. Australia has a higher minimum wage than us, yet lower unemployment. The point is, wages translate into demand, as low-wage workers spend 100% of their income in order to survive -- what David Ricardo called a subsistence wage.

And we don't outsource to Australia nearly as much as we do to cheaper countries, like India and China.

That doesn't even remotely address my point. Outsourcing is inevitable; it's simply a matter of how we combat it.

Let me ask you this, though: let's say that Indian workers own $5 per hour. Are you honestly suggesting that we should have a race to the bottom and lower the minimum wage to, say, $2 per hour? I don't think you're considering that, especially at a time of debt deflation where the paradox of flexibility is live and well, there is actually a strong case for some type of wage controls.
progressivedem22
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4/11/2014 10:50:22 AM
Posted: 2 years ago
At 4/11/2014 10:50:09 AM, progressivedem22 wrote:
At 4/11/2014 10:31:02 AM, ClassicRobert wrote:
At 4/11/2014 10:19:27 AM, progressivedem22 wrote:
At 4/11/2014 10:15:00 AM, ClassicRobert wrote:
At 4/11/2014 9:32:30 AM, progressivedem22 wrote:
6. Macro policies -- e.g., a $15 minimum wage -- are much more effective to combat the inevitable outsourcing, wage cuts etc. which will result from free trade.

In what way does that combat outsourcing? It exacerbates the problem by making our labor more expensive then the labor of foreign countries, effectively encouraging companies to outsource.

Well, this thread isn't on the minimum wage and that's a separate category entirely, but I'll try to explain the logic of it nevertheless.

Right, we're talking about the minimum wage in relation to free trade.

The case is essentially that outsourcing will result from free trade, particularly among low-skilled workers. But what this does is provide not only a cushion against the thread of downward wage pressure, but provides a persistent demand stimulus to offset job losses.

Sure, some outsourcing is going to happen regardless, but you said it yourself- low skills workers are the main people harmed by that. When you make them even more expensive to hire on an international stage, that makes it so even more jobs get outsourced and the low skills workers are harmed even more. If you are hiring workers in a job that can be outsourced, the workers here cost fifteen dollars per hour and the workers in India cost five dollars per hour, who are you going to hire? Not having a minimum wage as high as 15 dollars offsets that. That's not demand stimulus. Demand stimulus would require a net gain, not a net loss. When free trade is achieved, a fifteen dollar minimum wage has all of the same harms as protectionist policies, if not more.


I think you're conflating a few different things here. To suggest that there isn't a demand stimulus -- which the CBO would disagree with you on, by the way, at least for a minimum wage of $10.10 -- you're suggesting a net job loss, i.e., more jobs lost or outsourced because of either trade or a minimum wage. My entire point is that this isn't so because price of labor is not the only factor considered, but quality. Workers in India may be paid $5 an hour, yet you don't see every single company moving to India. The same goes for China et al. There are a number of other factors to consider and the academic literature on this subject is pretty vast, and points to the fact that low wages ipso facto are not the primary cause of cash inflows. Not to mention, there's evidence that low wages leads to lower productivity, apathy toward the position, etc., which costs companies in the long run.

And, the case that you made about rising labor costs is virtually irrelevant. Australia has a higher minimum wage than us, yet lower unemployment. The point is, wages translate into demand, as low-wage workers spend 100% of their income in order to survive -- what David Ricardo called a subsistence wage.

And we don't outsource to Australia nearly as much as we do to cheaper countries, like India and China.

That doesn't even remotely address my point. Outsourcing is inevitable; it's simply a matter of how we combat it.

Let me ask you this, though: let's say that Indian workers own $5 per hour. Are you honestly suggesting that we should have a race to the bottom and lower the minimum wage to, say, $2 per hour? I don't think you're considering that, especially at a time of debt deflation where the paradox of flexibility is live and well, there is actually a strong case for some type of wage controls.

*earn
progressivedem22
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4/11/2014 10:59:00 AM
Posted: 2 years ago
Oh, and here's an interesting piece on outsourcing that I just found: http://outsourcemagazine.co.uk... -- some pretty interesting stuff, actually, that I hadn't considered.
ClassicRobert
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4/11/2014 11:06:35 AM
Posted: 2 years ago
At 4/11/2014 10:50:09 AM, progressivedem22 wrote:
At 4/11/2014 10:31:02 AM, ClassicRobert wrote:
At 4/11/2014 10:19:27 AM, progressivedem22 wrote:
At 4/11/2014 10:15:00 AM, ClassicRobert wrote:
At 4/11/2014 9:32:30 AM, progressivedem22 wrote:
6. Macro policies -- e.g., a $15 minimum wage -- are much more effective to combat the inevitable outsourcing, wage cuts etc. which will result from free trade.

In what way does that combat outsourcing? It exacerbates the problem by making our labor more expensive then the labor of foreign countries, effectively encouraging companies to outsource.

Well, this thread isn't on the minimum wage and that's a separate category entirely, but I'll try to explain the logic of it nevertheless.

Right, we're talking about the minimum wage in relation to free trade.

The case is essentially that outsourcing will result from free trade, particularly among low-skilled workers. But what this does is provide not only a cushion against the thread of downward wage pressure, but provides a persistent demand stimulus to offset job losses.

Sure, some outsourcing is going to happen regardless, but you said it yourself- low skills workers are the main people harmed by that. When you make them even more expensive to hire on an international stage, that makes it so even more jobs get outsourced and the low skills workers are harmed even more. If you are hiring workers in a job that can be outsourced, the workers here cost fifteen dollars per hour and the workers in India cost five dollars per hour, who are you going to hire? Not having a minimum wage as high as 15 dollars offsets that. That's not demand stimulus. Demand stimulus would require a net gain, not a net loss. When free trade is achieved, a fifteen dollar minimum wage has all of the same harms as protectionist policies, if not more.


I think you're conflating a few different things here. To suggest that there isn't a demand stimulus -- which the CBO would disagree with you on, by the way, at least for a minimum wage of $10.10 -- you're suggesting a net job loss, i.e., more jobs lost or outsourced because of either trade or a minimum wage. My entire point is that this isn't so because price of labor is not the only factor considered, but quality. Workers in India may be paid $5 an hour, yet you don't see every single company moving to India. The same goes for China et al. There are a number of other factors to consider and the academic literature on this subject is pretty vast, and points to the fact that low wages ipso facto are not the primary cause of cash inflows. Not to mention, there's evidence that low wages leads to lower productivity, apathy toward the position, etc., which costs companies in the long run.

In regards to the CBO, there is a monumental difference between $10.10 and $15, and the CBO was only looking at with regards to economic policies currently in place. Right now, we aren't dealing with world competition to nearly the same degree as we would be under free trade- under free trade, we're dealing with competition from the entire world. Yes, price is not the only thing that is significant, however, it is one of the hugest influencers of economic action we have. And right now, low-skills U.S. labor price is the 7.25 minimum wage (with exception to states that have heightened minimum wage). That is the price people seem willing to pay for. A 15 dollar minimum wage is doubling the price for little to no increase in worker quality. Firms are going to go for the cheaper option in the world you set up (free trade and 15 dollar minimum wage). You'd see massive outsourcing happen- to a much higher degree than we have now, or that we would have with the current minimum wage under free trade.

And, the case that you made about rising labor costs is virtually irrelevant. Australia has a higher minimum wage than us, yet lower unemployment. The point is, wages translate into demand, as low-wage workers spend 100% of their income in order to survive -- what David Ricardo called a subsistence wage.

And we don't outsource to Australia nearly as much as we do to cheaper countries, like India and China.

That doesn't even remotely address my point. Outsourcing is inevitable; it's simply a matter of how we combat it.

Outsourcing is inevitable, but the degree to which it happens is on our policies. Keep the minimum wage where it is now, and we obviously would have much less outsourcing than we would if we had a fifteen dollar minimum wage.

Let me ask you this, though: let's say that Indian workers own $5 per hour. Are you honestly suggesting that we should have a race to the bottom and lower the minimum wage to, say, $2 per hour? I don't think you're considering that, especially at a time of debt deflation where the paradox of flexibility is live and well, there is actually a strong case for some type of wage controls.

I'm not saying that. I'm not arguing for removal of the minimum wage.
Debate me: Economic decision theory should be adjusted to include higher-order preferences for non-normative purposes http://www.debate.org...

Do you really believe that? Or not? If you believe it, you should man up and defend it in a debate. -RoyLatham

My Pet Fish is such a Douche- NiamC

It's an app to meet friends and stuff, sort of like an adult club penguin- Thett3, describing Tinder
Jifpop09
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4/11/2014 6:12:47 PM
Posted: 2 years ago
At 4/11/2014 9:32:30 AM, progressivedem22 wrote:
Also, when did Clinton say she opposed NAFTA? I must not have seen that.

To be fair, though, every prominent "progressive" -- Warren, Grayson, Sanders, etc. -- oppose free trade because they're painfully ignorant of the actual economics of it. Frankly, I was in the same place until I actually studied it.

But, anyway, here's the basic economics of it because I have a final in a few weeks and want to gloat -- and maybe this will help someone:

1. Tariffs and quotas do nothing but raise domestic prices and start a trade war.
2. Jobs "saved" by protectionism are few, and it's plausible that net jobs actually fall if tariffs propel a trade war
3. Tariffs are technically illegal under the WTO
4. There is no disparity between the price of imported goods and domestic goods; domestic goods will fall to meet the cost of the imported good in order to compete, or rise to the cost of the imported good after a tariff
5. The VER under Reagan with the automobile industry was an absolute bloody nightmare that literally raised prices -- taxed consumer essentially -- and sent the proceeds to Vietnam.
6. Macro policies -- e.g., a $15 minimum wage -- are much more effective to combat the inevitable outsourcing, wage cuts etc. which will result from free trade.

I think that pretty much covers it...

After her Husband went out of office, she said vocally over press conference her disappointment on the conditions of NAFTA. Actually she's been vocal several times. She also voted against the central american free trade agreement.
Leader of the DDO Revolution Party