Sigh

They’re never going to believe this but it is true all the same:

The existence of Walmart is positive sum for Americans. That’s why so many of us go shop there. The existence of imports is positive sum for Americans. That’s why so many of us buy them. And just as insisting, as some areas of the country do, that Walmart will never be allowed to sell nice cheap stuff there makes those areas poorer so too does insisting that imports will never sully our purple mountains make all the inhabitants of the fruited plains poorer.

21 comments on “Sigh

  1. For many Americans, having a Walmart within 10 miles of where they live causes serious status anxiety. Walmart is where the poor folks shop…

    The petite bourgeoisie will gladly trade being poorer for retaining their status as petite bourgeoisie. It’s what makes them petite bourgeoisie in the first place.

  2. “so too does insisting that imports will never sully our purple mountains make all the inhabitants of the fruited plains poorer.”

    Thats not strictly true though is it? The workers in factories making the things that are being imported instead are most definitely losing out, as are the people who relied on the wages from those workers for their businesses. Being able to buy cheap shit from China doesn’t help you much if you’re out of a well paid job because of the cheap shit imported from China.

  3. It’s about ambition, Jim. One generation works for Walmart. The next should at least aspire to work for Trader Joe.

  4. Yes yes I notice you are perfectly happy to let the illiberal elite go around telling everyone that every BMW we buy makes a fairy die …or “ruins the balance of trade”.
    Should you not be shouting about the lovely inward investment we are going to lose thanks to you and your “kind” ( * he said darkly referencing The Yob * )

    Huh ? Well ?

    ( Tim is a bit scared of me btw )

  5. @ Jim
    If Tim was writing to English people in English English instead of to Americans in American English the sentence would be “so too does insisting that imports will never sully our purple mountains make the inhabitants of the fruited plains poorer in aggregate.” I don’t think that “all” means “each and every one” which how an English pendant, like me, would interpret it if the context didn’t make it obvious that was an inappropriate meaning.

  6. @ Newmania
    Your post does not make sense.
    The illiberal elite include a substantial number who are quite happy to buy BMW cars, especially those with a RR badge on them.
    We don’t seem to be losing much inward investment.

  7. When my local Asda was a Netto on Saturday mornings the surrounding streets would be jammed with cars from the nice leafy Conservative-voting suburbs.

  8. I’ve never met a Yank who seemed to have really absorbed the point of free trade. I suppose that may be because historically they used to live in a continental economy that didn’t do all that much international trade. Anyway, whatever the reason, the observation stands.

    Mind you, that is the nation where people believe that Ford paid his men high wages so that they could afford to buy his cars. Maybe every country has a stock of popular economic fallacies. Come to think of it, mercantilism is pretty popular in France and Germany too.

  9. Tariffs and trade restrictions are not the answer. But I sure would love to see the US made more attractive through easing of regulations and reduction of corporate taxes.
    It’s hard to build anything in the US because enviros are free to block your project by claiming that your site is the only habitat acceptable for some subspecies of bug. If such a claim is made, it must be addressed at great cost in legal fees and time. Also, if you have an employee who gets behind in his payments to multiple creditors, you will find yourself responsible for garnishing that employee’s wages while making sure that you leave him with some minimum amount which you are responsible for calculating, based on various arcane federal, state, and local regulations. All the accounting costs for these calculations are borne by you, because apparently the employer apparently now stands in loco parentis to his employees. Given these conditions and many more, being an employer is just not a very attractive proposition.

  10. Dearie me, the point about trade deficits being fundable ad infinitum is well understood even in Germany. As is the point that funding it means selling most of your capital city to Arabs at prices that local millionaires can no longer afford.

  11. Actually, if one thinks about it, the ‘free trade’ that exists between the West and developing world is not free at all, because different standards apply to the nature of production in each location. As mikesixes points out, building a factory in the US is not the same as building a factory in China, regulatory cost wise. So we are not talking about free competition between nations, where one may have a natural advantage in a certain sector (weather, energy sources, skill set of workers etc), what exists today is the West exporting its production externalities onto people who are less squeamish about them than they are. But the West is still wanting cheap stuff, ie having your cake and eating it, but to the detriment of those who used to make the cake in the West.

    If the same rules applied to making widgets in the US as China, then if the Chinese widgets are cheaper then hard luck on the US widget maker. Become more efficient or go bust. But if US environmental protection rules shut the US widget factory down, while still allowing in widgets made in the non-environmentally sound ways in China, then is that really free trade?

  12. Yes, because poorer places should have lower environmental standards. Kuznets curve and luxury goods and all that.

  13. “the ‘free trade’ that exists between the West and developing world is not free at all”: brilliant; misunderstanding emphasised by scare quotation marks.

  14. Isn’t the problem here that the benefits, although bigger, are diffuse and hard to show or see, while the pain is local and very visible / easy to show?

  15. “Yes, because poorer places should have lower environmental standards. Kuznets curve and luxury goods and all that.”

    That’s OK, Tim, but a lot of the imposed overheads on domestic industries are things like the carbon taxes, you’re so keen on, which have a global slant to them. So the domestic industry is paying to reduce “global warming” (increasing environmental standards) in those poor places. One could also say they’re directly or indirectly labouring under the tax burden to pay for all the stuff their governments like to do in those far off places. Sorting their refugee problems, aid programs,supplying military support etc etc.
    The free trade argument’s perfectly valid if you start with a level playing field. But governments ensure it’s tilted before you begin.

  16. ““the ‘free trade’ that exists between the West and developing world is not free at all”: brilliant; misunderstanding emphasised by scare quotation marks.”

    Its not misunderstanding at all. The classic theory of free trade is between people free to produce as nature allows, not situations where one side of the trade are hamstrung by legal restrictions that affect them, but not the imports from their competitors. While benefits still exist from lop sided free trade, those benefits are eroded by every regulation placed on Western production that is not similarly placed on the import. We don’t know if flat screen TVs could be competitively produced in Stockport, rather than Shanghai, because we introduce artificial barriers to free competition between the two locations.

    If the government decided someone who was a competitor for your job could pay zero income tax, while you had to pay the full amount, and this led to you losing your job to him as he could accept a lower salary, would free trade exist between the two of you?

  17. I tend to agree with Jim. Free trade with a nation whose only advantage is that they can get their workers to work under worse conditions than yours will not end well.

    You can compensate for that with welfare, but the resultant society will be unstable. As Jerry Pournelle put it, you need to keep the left side of the bell curve ocupied or you will have discontent.

    Black Lives Matter, gang warfare, radical Islam, are all paid for by walfare, and none of that would happen if those guys were too busy making widgets.

  18. I look at like this: if there is X combined benefit for Nations A and B to allow unfettered free trade between each other, and that benefit is equally distributed if there are no restrictions on production in either nation, then as Nation A introduces regulations on its production the balance of benefits shifts progressively towards the unregulated Nation B. Eventually the vast majority of the benefit from the trade accrues to B, and little to A.

    I would say that in the case of the US and China that balance, while still just about positive for the US, has reached a point where enough people are on the deficit side to affect electoral outcomes, as we see with Trump’s anti-free trade rhetoric going down a storm with huge swathes of the country. It just isn’t good enough to say to a significant proportion of a population ‘Don’t complain your factory closed and went East, free trade is a net aggregate positive’ when the gains are reducing and the losses are increasingly concentrated in specific geographic locations and socio-economic classes. Its a recipe for societal breakdown.

    Its also not doing the Chinese any favours either, if their entire economy is predicated on being able to export cheap shit produced in iffy conditions to the US, rather than satisfying demand for products within their own borders. It makes them very susceptible to that main market being closed off and having no-one to buy their production. That wouldn’t end well for them either.

    Basically the lop sided nature of the free trade between the US and China has created instability in both countries.

  19. …as Nation A introduces regulations on its production the balance of benefits shifts progressively towards the unregulated Nation B. Eventually the vast majority of the benefit from the trade accrues to B, and little to A.

    But one of the benefits (that you are ignoring) is the improved quality of life in Nation A due to lower environmental impacts, or even the ability to garnishee wages (and so on). All of these regulatory costs are self imposed – somebody wants them, because we (collectively) keep electing people who impose them.

  20. “All of these regulatory costs are self imposed – somebody wants them, because we (collectively) keep electing people who impose them.”

    Yes, because those voting for the regulations aren’t the ones who will lose out (by and large) from them, and because the cheap imports don’t have to meet the new standards, they get to have their cake and eat it. Vote for carbon taxes, put steel workers out of a job, but still have cheap imported Chinese steel, made in far worse conditions than in the UK. Vote for bans on agrochemicals, get cheap grain from the Ukraine that could be treated with anything.

    This works right up to the point that you put enough steel workers etc out of jobs that they (and people who can see whats happening) become the majority, or at least numerous enough to swing elections. Then you get Brexit and Trump, and the free trade pendulum starts to swing in reverse.

    Wouldn’t it be better to have free trade between largely similar economies (ie ones that are at similar points on the political and economic development curve), with imports from lower regulation ones restricted until they reach at least some basic environmental and other standards? That might actually drive up standards in developing nations, rather than allowing them to get away with not making any progress at all.

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