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The Bankruptcy of Free Trade Ideology
Michael Porter on the Charlie Rose Show last night talked about his fear that the United States is getting to be protectionist in its attitude on trade. I don't why academics like Porter are so committed to free trade ideology considering what is happening to this country in the recent economic crisis. The reason why America is so dependent on the unstable financial sector for growth is due the fact that it no longer produces anything. Also America's free trade economy has not really been that great for countries such as China,Germany, and Japan since they have become heavily reliant upon exporting products into the United States and are doing little to reform their own domestic economies. A larger tariff in the United States would allow it to develop a strong industrial base and make the European and East Asian countries invest more in creating a consumer economy at home.
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The problem is not Free Trade but rather that what the politicians have been calling Free Trade is in fact restricted trade.
December 17, 2008 9:24 AM | Reply | Permalink
Trade is fine, but it would be really good to be at least a little bit self-reliant.
December 17, 2008 12:05 PM | Reply | Permalink
This is post couldn't be further from the truth. We are not so dependent on the financial system for growth. There are plenty of non-financial types in this country which create great ideas. And I don't blame them for actually producing the product wherever across the globe it makes the most financial sense. Look at Apple - Americans invented the iPod and make a lot of money selling them. But I couldn't care if the iPod is manufactured in Singapore, China, etc. Do you want to force Apple to make iPods in America? Do you want to force Samsung to make its flatscreen TVs in Asia?
The fact that things are produced here hasn't all of a sudden forced creative and smart people to pursue careers in banking.
December 17, 2008 1:18 PM | Reply | Permalink
I am generally sympathetic with the idea of free-trade, and free markets generally. I do tend to believe it has helped America and much of the world to get better goods and services at better prices.
However, like ANY idea, it is only good as long as it's good. Like any idea, it can be carried to excess - at which point, it becomes a liability, and something different must be done. A water-heater is a great invention, but only to the point that it doesn't overheat and blow-up your house. We place controls on them to keep that from happening.
In my opinion, we are close to blowing-up our house if we don't do something to resurrect the American automobile industry in viable form. I won't again belabor the many reasons WHY that is the case, but I think any reasoning person can understand that cars and the general heavy-manufacturing sector they represent are not the same as TV-sets or tennis shoes.
December 17, 2008 2:10 PM | Reply | Permalink
I'm not persuaded that the economic advantages of the international division of labor to day are at all comparable with what they were......Experience accumulates to prove that most modern mass producton processes can be performed in most countries and climates with almost equal efficiency
Besides not believing we are saved already, we each would like to have a try at working out our salvation. We do not wish therefore to be at the mercy of world forces working out , or trying to work out some uniform equilibrium according to the idea principles of laissez-faire
capitalism.
I can not tell a lie. I'm actually quoting
Keynes. But I wish I had said it. Doesn't that count?
December 17, 2008 8:14 PM | Reply | Permalink
It isn't 'free' or distorted 'half-free' trade that has hurt the US... it's simply the fact that we aren't competitive at making THINGS that people want to buy at prices they want to buy them.
How can you really expect to support the middle-class lifestyle we came to expect after WWII - when the US was in a historically unique and privileged position - in a world where most people are willing to do as good a job for a much more modest return?
December 17, 2008 8:28 PM | Reply | Permalink