Fair Trade is Masochistic
Fair trade, is in fact, an unjust, self-sacrificing policy, for it involves a government choosing to impose on its own citizens the same harms that are imposed by foreign governments on their citizens.
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Yes. Let other countries elect master negotiators to figure out whom the people should trade with. Let their people enjoy all the benefits that supposedly come with that. Let American people make their own decisions.
So, I just dont get it. It looks like the government gets a windfall tax increase paid for by our customers, our output falls due to higher prices along with employment of the people who assemble our stuff. The chinese economy stays pretty much the same since we keep buying from them, and US companies sell less to china since the prices of US goods is higher.
So, I repeat. None of this makes sense. Government should just get out of the way.
Americans are the most creative, productive labor force in the world, and if we had been able to stay in a real competitive market, the Chinese goods you buy may have been even cheaper by now, if made by an American firm seeking to get ahead of competition.
1). Chinese workers work harder and for less money than entitled and lazy American workers who refuse to accept they are outbid in the labor market
2) our govt took us off the gold standard which allowed them to print money while temporarily hiding inflation. A gold standard would have prevented the continuation of an imbalance in trade like we have now by weakening the dollar and making Chinese prices relatively higher
3). Tariffs are essentially domestic taxes which just slow down trade both ways
4) tariffs will result in less economic activity in total
The fair trade crowd is trying to implement tariffs which is what you point out in 3 and 4 as being negative things.
The fair trade crowd may have as a stated goal to ultimately lower tariffs but there means is to INCREASE governmental intervention and control into the interchanges between individual people. Thus, it is a bit masochistic. At least in the short run. If it achieved a long run lowering of tariffs and other barriers, then perhaps the ends will justify the means. We shall see.
All I see with tariffs is that they arent designed to result in lower tariffs for everyone. They are designed to protect certain pet industries, and as a side benefit they bring in $$ to the governments that institute them.
Once applied, I say that they are likely to be never removed. For example, if ALL countries had a 25% tariff on everything, the governments would be much happier than if there were 0% tariffs on everything. Plus, if all countries put on 25% tariff, the countries that wanted to be protectionist would go about placing supplemental tariffs on their pet products anyway.
There is really no push for zero tariffs that can gain traction.
Retaliatory tariffs are all too likely to get implemented and then ignored as focus moves on to the next crisis.
I have had business associates tell me to watch the quality on the stuff from china, but my experience over 7 years or so of buying is that they are just not correct on their impression.
I would argue that if chinese quality was not good, walmart and other big companies would not deal with them.
There are literally hundreds if not thousands of container ships operating between china and the USA, filled with chinese goods. That wouldnt be the case if quality issues like the people of India seem to be complaining about were so pronounced
But, when one specs what you want carefully (and I will admit that one has to do this consistently), they are really good at delivering. Its a bit scary in that the more they understand our markets, the bigger competitors they will be in the future.
I think they are much more into customer service, less entitled, and certainly less lazy. I can contact them pretty much anytime, as they answer their emails pretty much all the time, and answer right away.
I get circuit boards made to our spec, populated to our spec that they source locally in china, machine parts made to our spec, and electronic control units prety much made to their spec.
Contact is “candy”. Chinese sales people take American names to make it easier for American customers
Send email in English. They understand
It may be usual in the industry or for that kind of part, but you still have to put it in the spec.
Chinese are fast learners and very competitive, also among themselves. Maybe THAT is what scares US. Mfrs
If China stops it's people from buying foreign goods, and a second country that buys Chinese goods has no tariffs, which country's citizens are getting the (possibly unfair) benefit?
So long as the international diplomatic scene is benign, reliance on foreign suppliers isn't a problem, but if, for instance, the Chinese decide it's time to punish us for our refusal to recognize the entire offshore developed area as Chinese property, they could easily make life very uncomfortable for us. The fact that some of their own industries would struggle to find other buyers would be less important than teaching us that we best not defy their hegemony.
As with most elements of international economy, it isn't always about the money and bargains for the consumer.
I don't know. When it comes to gov't, I think it's all about getting out of the way so individuals can make money, bargains, or whatever they like.
I say so what if they tariff my goods. I don’t have a right to sell to Chinese consumers if the govt they support discourages it. It’s their loss
As to our tariffs, I say our government is acting as my agent but without my approval and hurting my business I choose to buy parts from a Chinese supplier. If our government offered to tax a competitive product from China to “help” me I would refuse
I think it’s the business of the Chinese people to control its governments tariff policies, and the us should stay out of it
I understand your position, because you rely on low cost Chinese components, and as an objectivist, all that counts is your self interest - no criticism warranted. However, Our government has sat on its hands for decades, watching one industry after another destroyed by patently distorted trade practices by other nations. Of course our own government hasn't been innocent in that destruction, creating crushing regulations to add to the problem.
We need to try to level the playing field and create a freer market internationally. Tariffs are only one element of trade that Trump is using to get our trading partners to recognize the pain they bring, with the intent of arguing in favor of a global reduction in artificial barriers. This tactic worked with the EU and Mexico, and Canada appears to be coming around. Sooner or later, China needs to recognize that without some serious revisions in its trade practices, it can't sustain the economic growth it desperately needs.
I do think a gold standard is critical with no money printing allowed at least in our side. If we had a gold standard we couldn’t have massive trade imbalances without running out of gold. The prices of Chinese stuff would have risen in real terms long ago
If a country “dumps” aren’t we the winner? Take advantage of their cheap items
Trump can only ask for the others to be less protectionist under threat of tariffs. Tariffs might work to cut their sales only IF the relative pricing differences are of something like 20%.
But with China the price disparity is huge, like 3 to 1 on the stuff we buy. So tariffs wontvwork
After WWII the U.S. had an amazing advantage over other countries because it had ramped up industrial production for the war and had pretty much the only undamaged industrial production in the world. We loved free trade, we could make stuff and everyone could buy it. By the 1960's the rest of the world started to recover and had newer, more efficient, factories. They protected their markets with barriers and took advantage of the lack of barriers to the U.S. markets.
By the early 70's people were talking about a post-industrial information society where we would develop IP and the rest of the world would produce goods. We had moved beyond manufacturing just like we had moved beyond agriculture. Of course it's a fallicy, we never moved beyond agriculture, we just became so good at it that we can make more than enough food with fewer people. We didn't decide that we would let the rest of the world grow our food, but we did decide that it was OK to let them make our goods.
And, of course, IP only lasts until they steal it
The traditional concept that subsidizing foreign production benefits U.S. consumers only works so long as the U.S. consumers still have their jobs. If they no longer work at the steel mill but have to get a job at McDonalds then the lower priced foreign goods will not be cheaper in terms of their labor. We are becoming a nation of fast food and hedge funds.
However, in the short run, the beneficiaries of the subsidy can be made much better off. And in the long run we are all dead, as the saying goes.
Statists like to change the word market into what the government dictates may or should be produced and exchanged rather than individual choices.
Then we get to eat the gloriously wonderful pourage and tasty cakes when we are "good".
It'll be more like a "Game of Thongs".
(yes I said: thongs)...they are sexually perverted you know.
[now you might understand what "Throne" they sit upon.]...
Control of metals that are used in military equipment as well as other components is part of the issue , IMHO. A quality Reardon steel type is what we need for our military not a defective or knock off product for our planes and bridges.
Protecting our steel industry from subsidized dumping and for those reasons may be in our self interest.
I also believe Having a strong independent vibrant agriculture Industry is also in our self interest.
I feel better about what President Trump is doing in regards to this countries future than I have over the last thirty years.
Absolutely not! The author begins by excoriating the self-flagellation of altruism, then goes on to praise the altruistic nature of unilateral free trade! If the trading field is not level, one is by definition agreeing to be taken advantage of! What is more but they are condoning and even praising such action! What a load of rubbish!
"When other government slap tariffs on their imports, they are taxing their consumers."
Agreed. As you point out "they are sacrificing their taxpayers and consumers for the benefit of their cronies." While its great just to think about the consumer, in this case it is the producer - specifically the Chinese producer - who is getting taken advantage of because the wealth is going to Chinese bureaucrats rather than the producers. If you are going to complain about altruism, you have to be concerned about it on both sides.
I think you have the altruism side on the wrong side of the coin, so to speak.
Not at all. Who benefits from cheap Chinese goods? American consumers perhaps, but the bigger one is the Chinese government. Who suffers? The Chinese manufacturers and laborers. Why? Because their profits and wage rates are being held artificially low by the government and what would be going to those manufacturers and laborers is instead being rerouted to corrupt government officials.
My dad was a consulting engineer (he speaks fluent Mandarin Chinese). He would find US manufacturers needing parts sourced and would take their designs to China to have them mass-produced. But the business he operated and ran was actually in the name of a Chinese national. Why? Because part of every business deal involved bribes, and US business law forbids the payment of such. So the business partner (as his only contribution) would pay the bribes to the local (and sometimes regional) officials in order to obtain the necessary government approvals for the jobs.
You are correct in that no one is being forced to purchase the cheap goods. The point you overlook is that there are people being forced to manufacture those cheap goods and who do not commensurately benefit from their individual labors. The communist state is a slave state. Trade with them is support of that state.
A value judgement as to whether one should trade with a group/society that one finds abhorrent is a different question. Do you sacrifice the benefits of any trade for your own citizens in order to not associate with what is properly considered an enemy?
Removing tariffs and trade restrictions would still leave such trade as unjust.
"Do you sacrifice the benefits of any trade for your own citizens in order to not associate with what is properly considered an enemy?"
Ultimately, it comes down to a question of morals, I completely agree! Do you hold to the line that altruism is unacceptable or do you take a bit here or a bit there because it is monetarily profitable? That's a personal judgment call - or a policy one at a governmental level. What I point out is the moral hypocrisy on the part of the author to excoriate altruism in one paragraph and yet call for its exploitation in the next!
"Removing tariffs and trade restrictions would still leave such trade as unjust."
The situation will remain unjust until the Chinese government alters its state of affairs. The real question is "will the imposition of tariffs encourage the political change necessary to affect the Chinese government's policies." No one knows for sure. There is one other question, however: will the Chinese government continue to raid other nations' intellectual property until they are forced to change? That one is a resounding YES.
Then get all tariffs and barriers repealed and let the free market deal with it.
In the case of china, if there was a gold standard, the value of the chinese yuan would have risen relative to the dollar as out trade deficit with china automatically made it happen. Chinese prices rise in terms of US$, and our purchases shift back to the USA automatically.
When Nixon abandoned the gold standard for the USA in 1971, HE started this mess. We printed money but the chinese helped us escape the inflation we should have had when we printed the dollars. Now, the inflation will come back as the chinese spend those dollars they have been hoarding right here in the USA.
There is no free lunch that someone doesnt have to pay for.
The concept of mutually beneficial should be brought up more often in our political discourse.