Saying it all again

There may well be a limited number of ways to keep saying the same thing but I’ve not quite found that limit yet:

So, free trade in the G-7 is a great idea. And the benefits of trade go to the importers. So, therefore, it’s possible to gain all the benefits of that free trade even if we’re the only people in the G-7 doing it. If the U.S. is the only country that abolishes tariffs and barriers, then the U.S. is the place (more accurately, Americans are the people) benefiting from that free trade. Which means that it doesn’t matter what everyone else does. Unilateral free trade is something we can do without anyone else’s agreement and it also makes us richer. So, obviously, we should do it.

This has in fact already been tried. Friedrich Engels (Karl Marx’s buddy) noted that the Industrial Revolution hadn’t benefited the British working classes much. So much that the way in which wages didn’t rise very much for the first hundred years of that industrialization is called the “Engels Pause.” All the money went to the capitalists — the 1 percent, the landlords, the rich bastards. Then in 1846, Britain declared unilateral free trade. No tariffs, no barriers, on anything. Real wages started their rise, the working class — you, me, and Joe Sixpack today — were the people who made out like bandits from it. It’s also you, me, and Joe Sixpack that the economy ought to be run for.

10 thoughts on “Saying it all again”

  1. I dunno. Soyboy’s subsidisation of Quebec dairy farmers more than doubles the price of milk and cheese for consumers north of the border. I think Trump’s salvo was aimed at them because getting a good trade agreement depends on them dumping the part time drama teacher’s policies.

  2. The free trade of 1846 is not the free trade of today though is it? It was pure – no regulation on how things were made or how much the workers got paid, or what method was used to produce the product. So the main driver of who was ‘best’ at producing something was a raw material/energy equation, with maybe a bit of knowledge base as well.

    Whereas today the free trade is more a case of why countries are prepared to screw their workers and environment over and who isn’t. If you’re in the former you’ll have a competitive advantage over the latter, by and large. So its not a case of Country X having more coal and iron ore and thus being better at steel making, its a case of Country X not caring what damage making steel does to people and environment, while Country Y passes all manner of laws hamstringing steel production within its borders. The ore and coal can (and do) come from Countries A B and C for the same price, the main competitive difference is regulatory not cost.

    So the workers in Country Y face losing their jobs, not because they’re any worse at making steel, but because their own government puts them out of a job in the name of ‘free trade’. Its not free trade if the imports are made in conditions that would not be allowed in the importing nation. Its just exporting all your externalities onto someone else, and putting your own workers at a disadvantage.

    Hence Trump, hence tariffs on countries such as China that are competing not on ability to produce but who can trash their country (and workers) the most.

  3. Trump has revealed Free Trade is his desire. However, he knows USA voters won’t support uni-lateral free trade. Thus, he is using his big stick to bludgeon the G7 six dwarfs into dropping their tariffs. Japan appears to support this.

    He’s playing the dwarfs.

  4. ‘Screwing the workers’ is a question of supply and demand. When the supply of workers exceeds demand, workers compete to lower wages. When demand for workers rises, wages rise and it’s harder to screw them. Free trade tends to raise demand in those places where wages are low, raising the wages of those who need it most, at the expense of those who need it least.

    ‘Screwing the environment’ is a matter of priorities and trade-offs. Survival comes ahead of looking after the environment. Where workers are competing for the few jobs available, an easy way to reduce costs is to compromise on environmental and worker safety. Nobody wants to see rivers being poisoned, but poisoning rivers is better than watching your children starve. Again, free trade addresses this problem by creating more demand where it’s most needed, raising the wages of those most in need, and thus allowing them to consider priorities beyond survival.

    It’s called the environmental Kuznets’ curve. As industrialisation progresses, pollution first increases as the volume of industry rises, but then starts dropping soon after the supply of workers is saturated and wages start rising. Environmentalism is a consequence of wealth.

    It’s an especially bloody form of environmentalism that holds the poor down on the wrong side of the Kuznets peak to prevent them passing through the dirty industrial transition to wealth. But it’s long been said that environmentalists often seem to hate humanity even more than they like nature. (As in “If I were reincarnated, I would wish to be returned to Earth as a killer virus to lower human population levels.”) Although perhaps it would be more accurate to say they hate the wrong sort of humanity – it’s rather rarer that they include themselves.

    In any case, barriers to free trade are mostly about those who have finally escaped poverty kicking away the ladder.

  5. OK, I’m dense & would like someone to mansplain it to me very simply as though I were a fem.

    Suppose Germany charges 10% tariff on US cars while we charge 2.5% on German cars & then Trump raises tariffs on German cars to 10% matching Germany. I fully understand we lose while this exists but suppose the German politicians are also dumb & “feel hurt” by us “only hurting ourselves” while throwing some German workers out of work, resulting in capitulation so that US & Germany reduce tariffs back to our 2.5% (to avoid the argument we’re better by going to 0% regardless of Germany). Why are we not better off? Some US autoworkers might be enabled to import more from abroad if that is somehow better than a KY worker importing more stuff from TX.

    Why are we not better off if we can force lower tariffs on others? Seems like more stuff gets produced making the world richer.

  6. @ Jim
    Don’t fall for that Trumpist bollocks. Free trade is free trade. Government persecution of business and/or workers is government persecution of business and/or workers.
    If China allows smog to poison everyone living in Beijing except during the Olympics, that doesn’t hurt anyone in the USA (no – global warming would be greater if China improved environmental standards on smog as it would take more energy to produce as much steel). You just *cannot* export that sort of externality across the Pacific [“acid rain” in Sweden caused by pre-privatisation CEGB power stations is not really comparable if it actually existed (lefties now claim that it didn’t)].
    If the environmental costs loaded on the US steel industry exceed the benefits that is not China’s (or Mexico’s or Canada’s) fault. If they don’t, and US steel prices are still higher than imports of the same quality, production of steel isn’t adding to the quality of life in the US – unless (i) the companies are making excessive profits and they could, actually, sell for less than the price of imports or (ii) you have to lay off lots of people and the cost of paying them unemployment benefit is greater than the cost differential between domestic and imported steel.
    Dumping steel (or anything else) at below cost is generally handing money to the purchaser but is occasionally justified if it saves bigger costs in redundancy payments to workers laid off [did anyone tell you that compulsory redundancy payments are a government-created burden on industry?]. Dumping is something that one can stop quite quickly under WTO rules by imposing defgensive tariffs (unless one is the UK and Brussels says that the EU bureaucracy wants to spend N months thinking about it while our leading steel plant closes down – so the North-East voted for Brexit.)

  7. @tex, June 12, 2018 at 11:57 pm

    Your post is more or less saying what I did.

    Trump is the most powerful businessman on earth and is using his power rather than being a diplomatic politician.

    As BoJo said, if only Trump was representing UK on Brexit

  8. Pcar, Thanks for your response, but it has not satisfied my curiosity. I believe Worstall is against Trump’s efforts to achieve free trade. An economist that usually makes a lot of sense, MJ Perry, U MI, has been on a rant with unending posts from him & other economists lambasting Trump’s efforts. I’m no economist & curious why it is SO BAD to use tariffs as a tool to try to lower or eliminate tariffs.

    Am I so delusional to think Trump may make things better for us or are economists delusional to not CONSIDER horse trading.

  9. @tex,

    As you say, Mr W is an economist that usually makes a lot of sense. However, he does have a lack of science & engineering knowledge. Also some prejudices – his support of the Global Warming CO2 is evil scam being one.

    On Trump, I believe Mr W and many others treat his words/actions as one would a politicians. He’s not. That many do not realise this is good for Trump. I’ve said too much.

    imho you’re correct, not deluded.

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