America's massive trade deficit: Why BIG tariffs won't hurt the United States

[Zalatix]

America is running a trade deficit with almost the entire world.

Here is a list of important nations with which we run deficits:

http://www.census.gov/foreign-trade/balance/c1220.html
Trade in Goods with Canada:
2012: -17,418.3 (so far)
2011: -34,456.9
2010: -28,542.5

http://www.census.gov/foreign-trade/balance/c2010.html
Trade in Goods with Mexico:
2012: -33,923.4 (so far)
2011: -64,486.9
2010: -66,434.9

http://www.census.gov/foreign-trade/balance/c0003.html
Trade in Goods with European Union:
2012: -51,866.3
2011: -99,881.0
2011: -79,611.5

http://www.census.gov/foreign-trade/balance/c5800.html
Trade in Goods with Korea, South:
2012: -7,245.7
2011: -13,246.7
2010: -10,028.9

http://www.census.gov/foreign-trade/balance/c5330.html
Trade in Goods with India:
2012: -9,698.1
2011: -14,651.5
2010: -10,282.5

http://www.census.gov/foreign-trade/balance/c4621.html
Trade in Goods with Russia:
2012: -9,413.2
2011: -26,332.8
2010: -19,684.7


Put succinctly, this means that all the major nations of the world, plus the EU, are exporting more goods to America than they are importing. This means that Globalism is generating jobs over there, and draining jobs from over here.

Globalism is not generating jobs for the United States. We're running big trade deficits with both so-called free trade nations like Europe, Mexico and Canada, and we're running big trade deficits with mercantilist nations like China.

America is generating jobs for the world, and the world is thanking us by draining jobs from us. Free traders like to deny this, but they cannot. The facts show that this is true.

You must ask yourself now, has America's working class been better off with low tariffs than they were without? Look at these charts and see:

[img][/img]
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Notice the correlation between shrinking tariffs and shrinking union membership and the middle class? That's because Globalization, by its nature, empowers employers to use cheap foreign labor to bust unions. They busted unions by closing union factories here and opening cheap labor factories in places like Mexico and China. This is a historical fact. Globalization is nothing short of a SUPERWEAPON against the working class. It is as effective against the working class as nuclear weapons are in war.

History shows in specific detail that offshoring, or global labor arbitrage, is destroying America's working class.
http://businessfinancemag.com/article/economic-amp-business-focus-global-labor-arbitrage-resets-wages-0401

Offshoring will flatten wages in the United States and other advanced economies.
Global labor arbitrage -- the practice of constantly replacing expensive labor in one location with cheaper labor in another -- has been a cornerstone of corporate strategy for more than a century. This strategy matured over the past decade as technology and higher levels of development in the low-wage nations enabled their workers to take on service jobs and knowledge work; no longer is the practice limited to low-level production jobs. As developing countries provide an increasingly skilled workforce, developed nations' ability to differentiate themselves is dissolving, and the companies operating in those countries no longer need to pay their workers a premium. The most widespread and lasting impact of the maturation of global labor arbitrage is the decline in real wages in the developed nations. CFOs of U.S. companies can prepare now for a permanent resetting of wages for many workers in the upper salary ranges.

Increased global competition and low pricing power are driving the more aggressive forms of arbitrage: overseas sourcing, offshoring and foreign direct investment. In the IT industry, these practices are already moving into their second generation; Indian companies that took work from the United States and Europe are now offshoring less-skilled jobs to lower-cost locations such as China and Malaysia. IT wages in the United States dropped by an average of 3 percent in 2004.

Outsourcing to foreign countries has eliminated high-paying manufacturing jobs and replaced them with low-paying service jobs. In fact, right now we are seeing an explosion in low paying jobs as part of the post-2008 recovery. High paying work? Not so much.


Now how do we get out of this? There are two ways out of this. The voluntary way is by tariffs.

Free traders bring up the Smoot-Hawley myth whenever the issue of tariffs is brought up. Do note, for one, that when the Republican-led Smoot-Hawley tariffs were passed, trade dropped at a level COMPARABLE to the drop in economic activity that occurred as a result of the Great Depression. Trade went down not because of Smoot-Hawley, but because everyone was poor and were more interested in keeping their goods and resources at home to consume. Smoot-Hawley neither caused the Depression, nor did it exacerbate it. The drop in trade would have happened if Smoot-Hawley never occurred. Furthermore, trade increased and America's trade surpluses did not occur because Smoot-Hawley was dropped. It occurred because America emerged as the lone manufacturing superpower. The United States also devalued its currency by inflating away its postwar debt in the late 1940s. Which is exactly what China has been doing. America's dollar skyrocketed thereafter against the world's currency, and tariffs dropped. Globalism then proceeded to go to work on the American economy like colonies of Formosan termites, and now we see the damage that it has done.

There is one other thing that free traders have forgotten when it comes to the Smoot-Hawley myth: America wasn't running the kind of monster trade deficits that we're running now. Make no mistake, had America been running gargantuan trade surpluses in the 1930s and the Depression was NOT in effect, Smoot-Hawley might have been disastrous. MIGHT HAVE BEEN.

Free traders fear to talk about this basic fact: When you are running hundreds of billions of dollars in trade deficits with other nations, it hurts you less to put up tariffs than it hurts them. Especially when you have the kind of manufacturing capacity that the United States has.

Big tariffs, big enough to totally cancel out mercantilist advantages, mean prices go up for America, but jobs disappear elsewhere. China, Europe, Mexico, India, etc., their job growth in part depends on exports to America.

Cutting off those imports means we stop bleeding out jobs. No more factories closing, no more tech jobs leaving the country, no more of that bullshit. Period. Full stop.

Let me repeat: cutting off cheap labor imports means a FULL STOP to the exodus of jobs out of the country. FULL. STOP.

I'll let you think about that for a second.





Right now, if you explain this to a free trader, if they're wily enough, they'll hit you with "but... IMPORT SUBSTITUTION!!!" So what is import substitution? It means, basically, the replacing of imported goods with domestic production. If clothes made in India cost $5 today and tariffs make it $50 tomorrow, import substitution means it'll be made in America instead.

Free traders are arguing, when they use the import substitution argument, that when BIG tariffs are slapped on India, the cost of clothes will go up and America will go without clothes instead of buying higher-priced clothes. They often add to this that tariffs will drive the cost of clothes up to $50 when it is Made in the USA.

The errors in their argument go from bad to laughable. The bad logic is that Americans won't go naked. They'll still buy clothes, and they'll be made by Americans. The laughable part is that clothes will go way up in price. You can find Made in the USA clothes quite cheap now.

Let's also take a look at consumer electronics, like Apple's iPad. The iPad's price is not mainly wages, it is profit.

http://www.forbes.com/sites/timworstall/2012/02/15/chinese-workers-get-only-8-from-each-apple-ipad-2/

As Apple desperately tries to repaint itself as a caring company when it comes to workers’ rights, news has emerged that employees in its suppliers’ Chinese factories get just $8 of the $499 sale price of each iPad 2.

Apple's profit margin off each iPad sale is better than 50%. That's a nice fat margin to make off kicking people like YOU out of work and sending the jobs over to a cheap labor place like China.

Now you know who REALLY benefits from this trade deficit.

Using tariffs to bring iPad jobs back to the USA would create 67,000 American jobs on the spot.
http://www.forbes.com/sites/timworstall/2011/12/18/if-apple-onshored-ipad-production-it-would-create-67000-american-manufacturing-jobs/

That’s the conclusion reached in this study here, that if Apple brought the assembly line for the iPad onshore into the US, that it would create 67,000 manufacturing jobs right here in America.

You'll notice, at the end of that last cited article, that the author mentions jobs lost elsewhere to pay for jobs gained by the working class. As you will all remember, the upper elite who own most of Apple's worth, aren't spending much. THAT IS WHY we have no good job growth. 67,000 American jobs means that people who typically spend money, will spend more of it. Money that trickles from the bottom up circulates more than money that trickles from the top down. 67,000 new workers with jobs will rev up the economy more than 67,000 without jobs and 5 investors a total of $1.8 billion saved by outsourcing to China (as the article calculates).

Think about that for a second... putting 67,000 Americans to work. Just for iPads. Henry Ford knew this was a good idea a century ago.



Again, I'll let you think about that for a second.








Despite these facts, however, free traders keep saying tariffs are evil and we owe the third world a living. They argue that we should lower our standard of living so the third world can "have a chance". So what if we have Americans living in squalor for want of a job? Free traders could give a rat's ass about them. They're just filthy Americans, after all. Which brings me to the next issue: the same free traders who accuse the anti-offshoring MAJORITY in America of hating foreigners, couldn't be bothered to piss on an unemployed American if he was on fire. Save the world, to hell with Americans. When you argue with a free trader in real life, be sure to tell them about their attitude and watch them shrug. Catch it on video and Youtube it so the rest of America can see just how disdainful they are of America's working class.

Anyhoot.

So, if we don't run this free trade mentality out of America, we absolutely must come to the second, and unavoidable way out of offshoring: the collapse of the dollar. This is something that free traders will never want to discuss. Try it, bring it up with them. Watch the subject get changed, quickly.

Fact #1: A large trade deficit devalues the United States dollar.
http://www.frbsf.org/education/activities/drecon/1999/9910.html

Fact #2: A large trade deficit increases the national debt, particularly foreign-held debt.
http://www.pbs.org/newshour/businessdesk/2009/03/why-is-the-trade-deficit-impor.html

In short:
Our massive trade deficit is devaluing the US dollar, and eventually it will devalue the dollar to the point that imports will become impossible anyway.

In fact, the Von Mises Institute, a major supporter of offshoring, says that this is already happening.
http://mises.org/daily/2883

The slowdown of the American economy and the ensuing devaluation of the US dollar deliver gloomy headlines as timely as weather forecasts. The weakening currency may excite entrepreneurs anticipating increased exports. As well, it might have a stimulating effect for American professionals who are paid in return for our services.

China, mind you, is doing its best to prevent the devaluing of the dollar against the Yuan. The way they are doing it is complicated, but it falls under the term "sterilization accounts", and basically it means China is propping up the US dollar. Artificially. As we all know, such tactics are not sustainable.


So, basically, if your friendly neighborhood free trader closes their ears and goes "LA LA LA LA LA LA LA LA" about the benefits of tariffs for America, you can explain to them this:

Globalization will eventually devalue the dollar until imports become impossible. A devalued dollar is the most powerful form of natural tariff, and trade deficits are the most natural way to achieve a devalued dollar. Foreign outsourcing, or global labor arbitrage, is the ultimate form of economic Ouroboros. The only question is how long it'll take: as in, how long can China keep propping up the dollar?

Globalization will end. We the People will either euthanize it, or it will eat itself alive. The only question for the free traders is: how do you want it to end?

[xchrom]

1. On an individual level - no one would make a bad bargain.

That's what free trade is a bad bargain.

[sabrina 1]

78. For the American people it is a bad bargain. But not for Global Corporations

I think this was the plan, to depress wages across the globe, same thing in Europe, and to turn First World countries into sources of cheaper labor, without Unions like third world countries.

These policies are truly turning back the clock to the dark ages when there was only the rich and the poor. America's creation of a middle class was a huge threat to Big Business. Labor laws, livable wages etc.

We are watching the demise of the Middle Class and I do not think it is by accident. Who is going to fight against all of this? I think some on the Democratic side think they are helping the poor in other countries, hoping that wages will rise slightly in Third World nations but go down here, equalizing wages across the globe. Third Way Dems I mean.

It seems to be a new philosophy they have not been open about.

[former-republican]

2. I know the argument is increase tariffs

and companies would open manufacturing here.

What is your plan to get them back?
They are there because they pay no health insurance for employees.
They pay less taxes or NO taxes..
They don't have to follow tough EPA enforcements that would in some instance's cost billions in their profits.

The only thing tariffs would do is cost the consumer more money at the register.

that's it........

[Zalatix]

4. It would also create jobs, which offset the higher prices.

Did you not even read the OP?

Edit: Oh, I see, this is another drive-by talking point-fest. You won't even bother to address the fact that the devaluing dollar will eliminate offshoring anyway.

[former-republican]

5. tell me how it would create jobs?

did you read mine?

How do you get manufactures to open up new plants or move their operations back ?

[Zalatix]

8. Ah, so you totally ignore my OP but I am required to answer your questions?

Sorry, but from here on you can talk until you're blue.

You get no further response until you address my OP.

Mainly, you are going to see an end to offshoring one way or the other - either by tariffs, or by the dollar devaluing.

Which do you want?

You can answer that or this'll be my last response to you.

[former-republican]

14. That's not a fact that our dollar will eventually devalue more.

We can bring our currency back by stronger regulation on the federal reserve.

Having a sound fiscal policy in place by our elected leaders.
Getting our deficit spending under control.

You sound like it's hopeless.
I don't feel that way.

[Zalatix]

21. That is absolutely wrong. No amount of regulation of the Federal Reserve will stop that.

Show us the regulations that will stop the dollar from devaluing. You can't.

We can't get our deficit under control when we have a solid $400 billion yearly trade deficit. You have no solutions that can cover this.

You want American workers not to have jobs.

Tariffs stop jobs from leaving the country. FACT.

[former-republican]

26. FACT

300 BILLION of that deficit is oil every year.


You must hate to have Democrats in control and want to see them propose the stupidest idea ever in this economy

[Zalatix]

31. FACT!!! 250 BILLION of that deficit is imported non-oil goods.

You must hate to have a middle class. Your arguments are not only stupid but history has shown they have KILLED the middle class.

And as I said, without tariffs, our devaluing dollar will destroy free trade. You have NOTHING to say to that.

[former-republican]

38. Are you in 3rd grade?

Do you know how many of those products have fossil fuels in them as one of the main contents in it to produce?

[Zalatix]

42. Did you even MAKE it to third grade?

Fossil fuel dependency IS PART OF OUR PROBLEM.

Do you even comprehend the concept of global warming or peak oil? Well? Do you?

[Zalatix]

36. Show us the regulations that will stop the dollar from devaluing. Can you answer that?

You don't have to have a defeatist attitude. You just have to come to grips with reality.

[former-republican]

40. There is none, that's the problem

So you think there shouldn't be any?

To get back to your original thoughts.
You want massive tariffs on imports.

Since OVER 300 billion is oil imports ( closer to 320 billion actually)

You want the Democrats to propose a massive increase in tariffs especially on Oil imports ?

Do I have that right?

So now not only oil will increase , heating costs , fuel at the pumps
Also every OTHER product that has fossil fuels as one of their main contents goes up in price in this country.

That's your plan

great plan

[Zalatix]

43. Hey, at least you admit you can't support your own argument.

You: "We can bring our currency back by stronger regulation on the federal reserve."
Me: "Show us the regulations that will stop the dollar from devaluing. You can't."
You: "There is none, that's the problem"




Once again you fail basic economics and also science.

Once again I will repeat to you: we have passed peak oil. Oil prices are going to go up, regardless.

Furthermore, the COST of using oil goes far beyond the price at the pump. I'm sure that you got out at some point and heard about the drought? That's called global warming, and it's caused by our burning of fossil fuels. You do know this, right?

You do know that our use of fossil fuels means we're filling the oceans with carbon dioxide and making the ocean more acidic, which is killing plankton, right?

Our use of oil is our undoing. Your crying and whining about oil going up in price MEANS ABSOLUTELY NOTHING when our use of oil is destroying our crops!

We
Need
To
Stop
USING
OIL!!!

Do you get it yet?

[former-republican]

51. Yea let the federal reserve run wild.

I'm sure you are one of the ones that didn't support an audit also.

I feel like I'm lecturing a school science class.




Tell me exactly what you don't understand about the thousands of products that incorporate fossil fuel in their production?

Your Einstein plan is to incorporate massive tariffs on Oil imports .
Raise prices on heating oil , gasoline , everything made by petroleum in it's ingredients.

Have the Democrats use that as a platform .

Sorry America gas is going up because of tariffs ..... and yea by the way ALSO food because in addition to the drought.

Due to these tariffs , cost of trans porting the food is going up also.

brilliant!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I think Obama should use your idea tomorrow night.

[HiPointDem]

53. Similarly, the high dollar policy that the United States has pursued since the Clinton years

has the effect of destroying jobs and lowering wages in sectors of the economy (most importantly manufacturing) that are exposed to international competition. The high dollar policy is a major factor redistributing income from the bulk of the workforce to those who have the political power to largely protect themselves from international competition (e.g. doctors and lawyers).

http://www.cepr.net/index.php/blogs/beat-the-press/washington-post-and-kaiser-conceal-role-of-government-in-economy


Romney's statement about the Fed fits in the latter category, because he said that he would pick a chair who supports a "strong dollar." The implication is that he wants the Fed to run policies that keep the dollar overvalued relative to other currencies, making U.S. goods uncompetitive in international markets.

The arithmetic on this is fairly simple. If the dollar is 20-percent above its proper value, then it means that prices of goods produced in the United States are effectively 20-percent higher than those of goods produced in other countries. This strong dollar effectively makes imports 20-percent cheaper than goods produced in the United States. That naturally means that we will purchase more goods produced in Mexico, China, and other countries and fewer goods produced in the United States.

On the flip side, this strong dollar means that our exports are 20-percent more expensive to people in other countries than would otherwise be the case. This is equivalent to putting a 20-percent tariff on everything that we export. Needless to say, this will seriously depress our exports to the rest of the world.

The overvalued dollar is by far the main reason that we have a $600-billion (4 percent of GDP) deficit with the rest of the world. This deficit implies a loss of more than 6 million jobs, the vast majority of which would be in manufacturing.

http://www.huffingtonpost.com/dean-baker/romney-pledges-a-fed-that_b_1834980.html


what are you babbling about this audit for? the main way the fed impacts trade is through managing the value of the dollar.

Unfortunately, there is no debate or even discussion of Fed policy and the dollar. Part of the reason is that both parties largely agree on the policy. After all, the strong dollar first became official policy under President Clinton, when Robert Rubin was Treasury Secretary.

what are you babbling about this audit for? the main way the fed impacts trade is through managing the value of the dollar.

[Zalatix]

58. He doesn't care about jobs, or American workers.

[Zalatix]

57. You are getting very confused. Let's recap what you said.

You: "That's not a fact that our dollar will eventually devalue more. We can bring our currency back by stronger regulation on the federal reserve."

Naturally, one would expect that you could tell us what kinds of regulation you're talking about, which would prevent the dollar from devaluing.

Therefore, I asked you:
"Show us the regulations that will stop the dollar from devaluing."

You proceeded to attack my educational level - a personal attack, mind you - during which you angrily went off-topic for a while. Ultimately you answered my question with this:
"There is none, that's the problem."

You are not worthy to lecture anyone. First you need to back up what you say with facts, and so far you have not done so.

I will get back to my point in the OP, the one you keep running away from:

If you don't want tariffs, fine. What you will invariably get instead is the devaluation of the dollar, and imports will become impossibly expensive anyway.

The Von Mises Institute has acknowledged that the dollar devaluation has already slowed the rate of foreign outsourcing.

I'm going to keep pointing this out from here on. No more taking this off-topic.

[former-republican]

63. Let me asking a very simple question

In your opinion

Why has our currency devalued so much in the last 12 years?

Please please don't bring up the Von mises institute.

What I'm asking is why your $1 buys less product now that it did 10 or so years ago?

Not 20 years , 50 years .... I'm asking 12 years?

One other thing

Why are so much against regulating the fed?

[Zalatix]

68. Why not bring up the Von Mises Institute? They're correct about the dollar/trade relationship.

They also defend foreign outsourcing, just like you do. So you really should like them.

Now as I said before, if you don't like tariffs, fine. You absolutely will get a severe dollar devaluation instead.

I'm not going to go off-topic.

[former-republican]

70. that's fine

don't answer
I know that you know the answer.

[Zalatix]

74. Of course I do. If you don't like tariffs, you will get devaluation instead.

And a severely devalued US dollar will STOP offshoring dead in its tracks.

I feel this is a good thing. It will bring jobs back to America.

Moreover, if our dollar devalues enough, it will mean that other nations will outsource to us.

I know you'd hate to see that!

[former-republican]

77. It's not about liking or disliking

It's you don't kick a man when he's down.

get it......

Anything that raises prices on consumer goods , food , prices at the pumps.
Is so astronomically politically wrong it defies comprehension for a party to advocate it right now.

[Zalatix]

81. Like I said, if we don't do tariffs, we will see devaluation instead.

You cannot avoid both high tariffs AND currency devaluation.

You must pick one or the other will come to you regardless.

So perhaps your solution is to allow foreign outsourcing to die in the pressure cooker of devaluation? Hey, at least we didn't use tariffs!!!

Devaluation is good in my book. It stops ALL imports. It's far more effective than tariffs!

[former-republican]

84. good , now that we have that out of the way

Answer my question from before.

Why did US jobs leave the country ? And how will your plan make manufaturing jobs reopen plants , move plants back in the country?

You seem to think it's all about currency value now.


2 part question..

[Zalatix]

87. But which would you choose? Devaluation or tariffs?

US jobs left the country because of cheap labor abroad.

Plants will reopen here because businesses still want to sell to Americans. Or they'll die and be replaced by others that do. As I said in my OP, Americans won't go naked. Clothes will get made, and so will other goods. I also explained the example of the iPad in the OP.

If you had read the OP you would already have the answers to your questions.

[former-republican]

90. Do you have any idea how long a plan like that takes to implement?

Do you really think they left only because of cheap labor ?
Those plants abroad have no EPA standards to meet.
textile industries , chemical , porcelain , rubber , glass , etc...

Why do you think we don't build any more refineries?

It costs billions for these plants to meet the EPA standards here.

They are never coming back here

[Zalatix]

91. Cheap labor is the biggest factor.

Your calculations are way off. More important than the EPA is the wage differential.

Now, since you brought up the EPA...

If you call yourself a FORMER Republican, you would support HUGE tariffs for companies that build stuff and don't meet EPA standards. You would support this because, if you were a FORMER Republican, you would understand how big a price that pollution exacts upon us as a species. If you were a FORMER Republican, you would understand that screaming about CHEAPER PRICES rings hollow when pollution is destroying our FOOD SUPPLY and causing GLOBAL WARMING.

If you were a FORMER Republican you would understand the relationship between factories avoiding the EPA, and the DROUGHT we're having now.

Perhaps you should bone up a little bit on the fact that we've outsourced heavy pollution overseas, and how that is exacting a much heavier price upon humanity than your bugaboo fears of price increases.

You have a lot to learn about the high price of heavy pollution.

[former-republican]

92. Wage is a small part of it

Another cost was health care.

My company pays roughly $14,000 per employee for blue cross anthem.

I'm not making an argument about the environment.

We were discussing why manufacturing left .

There's a host of reasons and wages are just a small part.

[Zalatix]

93. You've got to be kidding me, that is not just inaccurate, it's CRAZY inaccurate.

$14,000 per employee for health care? PER EMPLOYEE? You've got your reason right there why companies left. That's WAY BIGGER costs than what they pay out for EPA compliance.

Your argument fails to explain, furthermore, why we have Japanese car factories in America, despite the EPA, and why some even use their eco-friendly production as a selling point!!!

Our devaluing dollar has already brought some factory production back here. Your argument has no basis in fact.

And the other problem with your argument about the environment is you made a PERFECT CASE for pollution-based tariffs. But yet you hate tariffs. I can see why you want to avoid talking about that even though you brought up the whole EPA thing.

[former-republican]

104. Yearly not Monthly

That is for a single person.
If you have dependents on the policy it's more per dependent.

[former-republican]

106. holy cow

Take a breath

No where did I say EPA was the only reason.
I said there are a HOST of reasons wages only being a small part.

TAXES
EPA
WAGES
COST OF HEALTH CARE

You can't comprehend that?


And as to your post about car companies.

The products they install are finished products.
It is ASSEMBLY , DO YOU UNDERSTAND THAT?


It would cost Billions for those companies that make plastic and rubber to meet EPA standards in this country.
Also regulations change yearly and made tighter so upgrading to EPA STANDARDS
AGAIN COST companies BILLIONS .

It's not hard researching this. Spend sometime ............

[Zalatix]

107. Holy cow back at you.

Your understanding of economics and trade is so terrible it's becoming a joke trying to keep up with your errors.

The cost of health care is rolled in with wages, under compensation. That's your first error.
Your second error is that compensation outweighs taxes and the EPA combined as a cost of hiring in America.

Can you not comprehend THAT?

The products they make ARE NOT JUST FINISHED PRODUCTS. CAN YOU UNDERSTAND THAT?

Your estimates of what it would cost companies to make plastic and rubber here are grossly overstated.


Your research sucks. Badly.

[former-republican]

125. It is clear to me you have no understanding of the automobile industry

I'm going to try typing slower for you this time.

Walk outside and get inside you car. Open your eyes and look at your dash board , your seats , look underneath and look
at all the funny wires and fuses , ALL those materials are made OVER SEAS ...GET IT

The textiles for your seats are shipped then they construct the seats. I really can't believe I have to explain this to you.
None of those textiles are made here .

As to the cost of health care rolled into compensation so is unemployment insurance , workers comp , no kidding Sparky......
ALL federally mandated ALONG with EPA regulations .

I guess you haven't head about the concrete manufactures , GUESS what most will be doing ?? closing up shop in the next couple of years in the U.S

Tens of thousand of jobs are leaving the COUNTRY AGAIN.
Reason........ the NEW EPA standards that go into effect after 2013
When you go to home depot to buy some concrete ...guess what it's going to say ? MADE IN CHINA again

Stop just being a mouth breather and do some research on your own.

I grow weary of you now.
have a good day

[Zalatix]

126. It is clear that you get your facts from an alternative universe.

Not an ounce of what you said has any basis in fact. You can't even provide a single cite.

Probably because your arguments come from fantasyland.

And please, get weary. I'm tired of putting up with your made-up alternative universe "facts". I'm tired of you flinging crap and hoping something sticks. And I am tired of your temper tantrum personal attacks, too. "Mouth breather"? That's funny coming from someone who writes like they're oxygen-deprived.

Worst of all? All of your arguments, as way off-base as they are, make a GREAT CASE for why we need BIG, BIG TARIFFS.

Are you weary of telling falsehoods yet?

[RedRocco]

95. huge tarrif on finished goods.. subsidy for imported raw matierials

[Zalatix]

128. His whole argument is faulty, and it's self-destructive, too.

He's arguing that the EPA is one of the big things driving jobs out of the country.

Notice how he totally ignored the fact that his own faulty arguments provide a justification for tariffs based on reducing pollution.

America is a BIG exporter of pollution.

[tkmorris]

136. Both of you should be ashamed

You had an opportunity to have a conversation, but instead you just insulted each other. What a waste of time.

[Zalatix]

138. Wasn't a TOTAL waste of time for me.

I learned a whole new weakness in the free trade argument, one that I will relentlessly exploit.

[abumbyanyothername]

23. Simple

If you want to sell it here, you make it here.

Or pay the tariff.

And trust me US labor and manufacturing would be competitive with a 30% tariff.

[Zalatix]

24. Our productivity will take care of the difference there.

[abumbyanyothername]

28. Not to mention

Transportation and speed to shelf advantages.

[unlawflcombatnt]

54. Wrong--Goods would become MORE affordable for American workers

If those pseudo-American multinationals had to pay high enough Tariffs when they shipped goods back into the United States, it would make it relatively cheaper to produce them here.

The point of Tariffs is to offset whatever advantage a foreign country has in producing goods and shipping them into the US. And that applies even more to American-owned companies.

Reducing the use of foreign labor would increase demand for US labor, thus increasing wages here, and increasing the buying power of American workers.
Thus goods would become MORE affordable to American workers as a result.

[HiPointDem]

64. Except if the US has a strong (overvalued) dollar, that means it's able to buy up other countries'

resources on the cheap while not providing a market for those countries (weaker currencies) goods.

Which means we would be systematically impoverishing those countries.

Which would likely mean they'd throw up retaliatory tariffs (= trade war + actual war). Which would mean tariffs on raw materials would increase the cost of production domestically.

Historically, tariffs have been used by weak currency economies to protect their nascent industries from competition from more efficient producers. When countries get to be top dog, they start touting 'free trade' and there are obvious reasons why that's the case.

When domestic capital starts accumulating surpluses, it wants to export the capital overseas -- new markets, new 'investments', new fields of exploitation.

Capital confined = capital at the end of its tether.

[davidpdx]

98. No..no..they'd never throw up retaliatory tariffs.

[Zalatix]

113. Let them hit us with retaliatory tariffs.

We run a trade deficit with them. That's net NEGATIVE exports. We lose a negative. That means either zero, or a positive. In either case, it is an improvement.

Or we could drop tariffs and go with competitive devaluation. That's even more effective than tariffs in making imports go away!

[unlawflcombatnt]

131. Amen

"Retaliatory Tariffs" only hurt if they're actually importing finished goods from us. With the exception of Canada, practically no country is importing any significant amount of finished American goods.

Those countries that appear to be importing from us are simply importing sub-parts for the manufacture of goods that they ultimately sell back to the US.

[unlawflcombatnt]

130. So what?

Retaliatory Tariffs only hurt if we're selling goods to that country.

Since we're selling almost nothing to China, and almost all of that is raw materials for the manufacture of goods exported to the US, it would hurt us none whatsoever.

The same is true of all 3rd world countries we import from. Retaliatory Tariffs would make essentially 0 difference, since they're not buying anything from us to begin with.

Did any of you guys even look at the trade statistics posted by the OP poster?
Have you looked at any of those from China, Vietnam, or Mexico?
They purchase almost nothing from us.

And with the exception of rare earth metals and aluminum, we already HAVE all the raw materials we need in this country for manufacturing. Our manufacturing would survive without any problems if 0 raw materials were imported.

[HiPointDem]

132. You have your facts wrong.

https://www.uschina.org/statistics/tradetable.html

china is the third-largest recipient of US exports, after canada & mexico.

http://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_the_United_States

Besides which, as I linked before, the majority of Chinese exports are actually the exports of foreign companies using china as a manufacturing base.

It's not chinese capitalists you'd be fighting so much as your own capitalists.

There is no "we" in these matters.

[Zalatix]

112. Exactly. The math cannot be beaten.

Nobody can afford a $100 Chinese TV on $0 an hour.

If an American-made TV is $300 but you're earning $13 an hour... you have a chance to afford that TV.

Basic math.

[Lasher]

3. Free traitors have sold us out.

Tariffs: The Smoot-Hawley Fairy Tale

[pampango]

18. Smoot-Hawley was just the last of 3 republican tariff increases from 1921-1930. FDR opposed it.

Others may have exaggerated the negative effects of Smoot-Hawley, but FDR thought that it was bad enough to oppose it.

I trust FDR's opinion on Smoot-Hawley more than I do that of the republican politicians who enacted it.

The House bill passed on a vote 264 to 147, with 244 Republicans and 20 Democrats voting in favor of the bill. The Senate bill passed on a vote of 44 to 42, with 39 Republicans and 5 Democrats voting in favor of the bill.

http://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Act

Is there some reason that you post a defense of a policy enacted by overwhelming majorities of republican legislators and signed by a republican president which was opposed by FDR? I find that a bit surprising.

[Zalatix]

22. Your arguments completely ignore basic facts that I posted in the OP.

1) Smoot-Hawley did not harm trade. The DEPRESSION harmed trade.
2) The dropping of Smoot Hawley didn't help America. The devalued dollar and the emergence of America as the only surviving manufacturing base did. The devaluation of the dollar after WW-II also helped. Low tariffs did not.
3) The 60 year drop in tariffs post-1945 coincides with the collapse of the Middle Class.

I already know why you avoid these points. I made them in the OP and every time you post this Smoot Hawley lie I will keep coming at you with the facts again. Count on it.

[pampango]

39. FDR thought that Smoot-Hawley was bad for the US. If you disagree with him that is your right.

"Smoot-Hawley did not harm trade." The republicans behind Smoot-Hawley certainly thought that high tariffs would 'harm trade'. That was their goal. It was logical to expect that high tariffs would affect trade. That's precisely why you argue for them, isn't it.

FDR thought S/H was bad for the US which is why he opposed it.

I have never made a case that S/H caused the Depression. It was other republican policies that did that. I have made the case that FDR opposed all of the republicans high tariffs of the Coolidge-Hoover era.

I know you don't agree with FDR's opposition to high tariffs nor with his planning for low tariffs after the war in order to promote more trade.

The 60 year drop in tariffs post-1945 coincides with the collapse of the Middle Class.

Surely you do not think that the middle class collapsed right after 1945. Low tariffs and a strong middle class coexisted until the 1980's in the US (and still do in many progressive countries). What caused the middle class to collapse after that was the dismantling of FDR's progressive legislative legacy - strong unions, high/progressive taxation, effective corporate regulation and a dependable safety net. (I understand that those are non-factors to you. Only tariffs matter.)

Not coincidentally in countries where this FDR legacy (progressives in many countries realize that FDR knew something about progressive governing) has not been dismantled the middle class is still strong and the distribution of income amazingly equitable.

[Zalatix]

44. History disagrees with the claim that Smoot-Hawley was bad for America.

THAT is the issue you're avoiding.

Smoot Hawley did not cause the Depression. And, as I said, it did not make it worse.

Surely you do not think that the middle class collapsed right after 1945.
That's not what I said, and you know that.

I will repeat, after 1945 the United States enjoyed two big counter-weights to low tariffs: we were the only industralized power base left, and the dollar was devalued. As those facts changed, our middle class imploded. The failure of low tariffs caught up with us in the 1980s.

Do you deny that employers use overseas cheap labor to bust unions? Don't even bother responding unless you answer that. I'm just going to keep bringing it up.

[pampango]

102. FDR disagreed with your version of history that Smoot-Hawley was not bad for America.

THAT's the issue that you are avoiding.

FDR never said, AFAIK, that S/H caused the Depression, but he believed that S/H (and the other republican high tariff laws that preceded it) made recovery from the Depression more difficult which is why he worked to lower tariffs once he was in office. If you believe that FDR was wrong in his opinion of S/H (and high tariffs in general) and that Herbert Hoover (and the republicans in congress) was right, be my guest, but that does not change the fact that FDR thought high tariffs were bad for trade and that trade was good for America.

"Surely you do not think that the middle class collapsed right after 1945.
That's not what I said, and you know that."

Here's what you said: "The 60 year drop in tariffs post-1945 coincides with the collapse of the Middle Class." Perhaps I missed the part of that sentence that explained at what point in the "60 year drop in tariffs" the collapse of the middle class actually did begin. What you meant might have been ""The 60 year drop in tariffs post-1945 coincides with the collapse of the Middle Class after a 35 year lag time."

My version of your sentence would be: The 30 years following the 1980's dismantling of FDR's progressive policies - republicans' success at cutting taxes for the rich, deregulating corporations and the financial sector, breaking unions and shredding the safety net - coincides with the collapse of the Middle Class."

"I will repeat, after 1945 the United States enjoyed two big counter-weights to low tariffs: we were the only industralized power base left, and the dollar was devalued."

"the only industralized power base left" - certainly true
"the dollar was devalued" - so the currency of the only country with "industralized power base left" was weak? I thought your oft-repeated point was the weak economies cause devalued currencies. Shouldn't relatively strong economies (like the US after 1945) have had a highly valued currency? Do you have a link to show that "the dollar was devalued" after 1945? Whose currency then was strong right after 1945?

Do you deny that employers use overseas cheap labor to bust unions? Of course not. Do you deny that employers use cheap labor from nonunion right-to-work states to bust unions? Of course they do. Do you deny that employers use contract and temporary labor to bust unions? Of course they do.

But you know what? Employers are able to bust unions because our laws and culture allow them to. Canada trades more than we do and their workforce is almost 30% unionized compared to the US' rate of 11%. Why? Because they are a progressive country and their laws and culture protect unions. Sweden trades more than we do and their workforce is 68% unionized. Why? Because they are a progressive country and their laws and culture protect unions. The same is true for Germany (18.5%), the UK (26.5%), Australia (18%), Norway (54%). I could go on.

Progressive countries do not have laws that allow right-to-work states/provinces in them so that employers can bust unions without even leaving the country. (Our employers had been doing this for decades before Mao died and China joined the world economy.) Do you deny this?

Progressive countries do not have national governments that break unions (like PATCO) which convinces private employers that is a viable strategy to pursue. Progressive countries protect their unions period. But they do not fear trade. It is a much larger part of their economies than it is of ours and yet unions are much stronger in them than they are here. Do deny this?

[Zalatix]

110. History is more credible than FDR. History disagrees with FDR.

Once again nobody's saying the issue is about whether Smoot-Hawley CAUSED the Depression.

The point here is that history shows Smoot-Hawley did not EXACERBATE the Depression. You keep mis-reading this. I wonder why.

As for the drop in tariffs, the devalued dollar and America's standing as the only manufacturing power FORESTALLED the collapse of the middle class. Without that, lowering tariffs would have killed the middle class MUCH sooner.

I thought your oft-repeated point was the weak economies cause devalued currencies. Shouldn't relatively strong economies (like the US after 1945) have had a highly valued currency? Do you have a link to show that "the dollar was devalued" after 1945? Whose currency then was strong right after 1945?

The United States had big post-war debts after World War II. We inflated away the debt.

http://www.economist.com/blogs/freeexchange/2009/12/eroding_the_debt

That's right, one of the principle ways the country addressed its debtload was to inflate it away. Could, and should, something similar be done today?

^^^ Answer: Yes, but with great difficulty.

Question to you: What does the dollar do when you inflate away the debt? What happens to the price of imports?

But you know what? Employers are able to bust unions because our laws and culture allow them to.

You're kidding, right?

If you're an employer, you can close a union factory and move it overseas. Please show me the law in Canada that says you cannot do that. All your other arguments about Canada, Germany, etc. are pretty much irrelevant if you can't show where they actually forbid closing down a factory and moving production overseas.

As long as we have Free Trade, if we eliminate right to work laws, employers will just close up and move overseas. If you don't pass laws stopping that, unionization is irrelevant because Free Trade lets you circumvent unions altogether. Do you deny this?

[pampango]

117. I disagree with your interpretation of history and will continue to side with FDR, not the repubs.

At least you are clearly coming down against FDR and his interpretation of history in favor of your own. That is enough for me.

I don't know if it is the legal structure in countries like Canada and Germany that allow them to maintain strong and widespread unions or whether it is a part of their national culture that accomplishes it or both.

The fact is that those countries have strong trade and strong, widespread unions. If this fact seems like an impossibility to you that is not my problem. It is still a fact.

If you expect me to research national laws in different countries to show you legislation, well you are in for a disappointment.

By your logic, if we don't pass laws against right-to-work states which were stealing union jobs from the North and MidWest decades before overseas outsourcing even existed, unionization is irrelevant because right-to-work lets you circumvent unions altogether. Do you deny this?

[Zalatix]

123. You'll continue to side with the US Chamber of Commerce, not the working class or history.

I come down on the side of history, which contradicts you robustly about Smoot Hawley.

You don't need to research national laws anywhere to know that none of these countries have laws against closing a factory and moving it overseas.

We need to pass laws against moving jobs overseas BEFORE we do away with the right-to-work laws. Then we can nuke the right-to-work laws.

[pampango]

140. As I said in #115: "I will not ask you to say hi to your 'friends' in certain conservative groups

Last edited Fri Sep 7, 2012, 09:00 AM - Edit history (1)

with whom you share certain towards trade. ("Strange bedfellows" are hard to avoid in this discussion.) I know that your motivations are totally different from theirs and I acknowledge that any shared attitudes you happen to have with them are for entirely different reasons than theirs."

"You don't need to research national laws anywhere to know that none of these countries have laws against closing a factory and moving it overseas."

You don't know that any more than I know the opposite. Many progressive countries have policies regarding the closing of factories for any reason. (That's why republicans argue that companies won't build factories in some progressive countries, saying it is because they are too hard to close when they become 'uncompetitive'.)

AND the fact is that these countries have strong and widespread unions at the same time that they trade much more extensively than the US does. That may seem illogical to you, but facts tend to have a logic of their own whether you agree with that logic or not.

"We need to pass laws against moving jobs overseas BEFORE we do away with the right-to-work laws."

You didn't really explain WHY we should go after foreigners before we go after Americans who have been weakening our unions for decades. Are foreigners (kind of the classic "them" in the "us vs. them" mindset) just a more inviting target? AND if it is really the corporations (not, let's say, Kenyans, as an ) that we are targeting, why not go after both overseas and right-to-work outsourcing at the same time?

I come down on the side of history, which contradicts you robustly about Smoot Hawley.

I think you and I actually agree that S/H did not had little if anything to do with the Depression. It had started already and was caused by other republican policies like deregulation of the financial industry and Wall Street. I think you agree that FDR believed (erroneously in your opinion) that, regardless of the insignificant role that S/H played in causing the Depression, high tariffs would make economic recovery more difficult so he worked to lower tariffs.

What we might not agree on is the role that the republican tariffs passed in 1921 and 1922 (right after they won the presidency and control of congress; their answer to all problems back then was to raise tariffs - just like their answer to every problem now is to cut taxes) played in creating a society that by 1929 had the highest income inequality in US history (only to be surpassed in the bush era of tax cuts for the wealthy, deregulation, deunionization and dismantling of the safety net). It is not like high republican tariffs in the 1920's created a strong middle class and strong unions. That would happen under FDR and his successors at least until the 1980's.

On edit: Of course the Chamber of Commerce supported the republican bills raising tariffs in 1921, 1922 and 1930. While that would have put you on the side of the Chamber at the time these tariffs were passed that hardly would have made you a "friend" of the Chamber since your reasons for supporting the bills would have been much different from theirs.

It seems to me that you and I believe what we believe regardless of what policy the Chamber happens to be in favor of at any particular moment. The Chamber has been the one that has changed its stance on tariffs not you and I. Whether anyone is a 'friend' of the Chamber at any point in time depends on the ever-changing position that the Chamber happens to take.

[Zalatix]

142. Oh I know these countries don't have laws against moving factories overseas.

I've done plenty of research on that and have found nothing of the sort. Of course you can do your own research and prove something exists that I say doesn't. Be my guest. And none of the countries you mention produce the TVs or computers that they use, and few produce cars. Of course if you find examples where I'm wrong, feel free to cite it. I know you cannot. As you said, facts have a logic of their own.

Yes, it is us versus them. We need to take care of our own workers first. If you don't like that, then feel free to move and be among "them".

I feed my family first before I try to take care of others. I do not ever apologize for that. I take care of my country first. And fuck yeah I am all for attacking both offshoring and right-to-work laws, simultaneously. Zealously.

And once again, S/H did not affect the economic recovery. I showed you charts that provided you with the numbers that dispel your Smoot-Hawley myth. As you said, facts have a logic of their own - the numbers clearly show a LACK of even basic correlation between S/H and the LENGTH of the Depression.

1) The drop in trade mirrored the drop in GDP.
2) We were not running deficits back then the way we are now.

Smooth Hawley did not hamper the recovery. The facts show this.
Smooth Hawley did not hamper the recovery. The facts show this.
Smooth Hawley did not hamper the recovery. The facts show this.

[pampango]

144. And yet they have strong and widespread unions and a strong middle class.

Do you have a theory on why unions and the middle class prosper in such countries in spite of their lack of the relevant legislation?

Smooth Hawley did not hamper the recovery. The facts show this.
Smooth Hawley did not hamper the recovery. The facts show this.
Smooth Hawley did not hamper the recovery. The facts show this.

From my post which you were responding to:

"I think you and I actually agree that S/H did not had little if anything to do with the Depression. It had started already and was caused by other republican policies like deregulation of the financial industry and Wall Street. I think you agree that FDR believed (erroneously in your opinion) that, regardless of the insignificant role that S/H played in causing the Depression, high tariffs would make economic recovery more difficult so he worked to lower tariffs."

You seem hung up on proving that FDR was wrong (and perhaps coincidentally that the republicans and Chamber of Commerce of the day were right) in his conviction that high tariffs impeded our economic recovery. If I stipulate that FDR was wrong about this and you are right, can we move on? Do you have an opinion on why the republican high tariff bills of 1921 and 1922 did not create a prosperous middle class and equitable distribution of income?

Yes, it is us versus them. - Thank you for putting it so clearly. The "us vs. them" strategy is a popular everywhere. Always has been and probably always will be. I thought it was primarily used by the other side of the political spectrum in the US.

By definition, of course, every group creates “Them”— they are all the ones who are not in our group.

But most groups have some set of outsiders—some particular slice of the vast population that is “them” –that serves a very special symbolic function in their cosmos. These are members of other groups that believe things or advocate things that our group opposes. They are the enemy.

We take “us and them” for granted and fail to reflect upon the terrible political implications for everybody when groups are not playing nice together. Throughout history, political elites have manipulated social groups to achieve and maintain power. ... And in the last two generations Republicans have masterfully used wedge politics-- pitting us against them -- to gain and keep power and to implement policies that a clear majority of the populace dislikes, but apparently cannot find any effective way to change.

Although we live in an irreducibly pluralistic world, we have yet to learn how to function as a pluralistic democracy. Sadly, even those of us who belong to groups that are pledged to tolerance and inclusiveness can drop the ball as readily as those who are self-consciously exclusive.

http://www.alternet.org/belief/us-vs-them-simple-recipe-prevent-strong-society-forming?paging=off

A competing philosophy - "We are all in this together" has received some mention in speeches at the DNC this week.

I suppose that an "us vs. them" (UVT) philosophy that is based on nationalism is considered by some to be a 'good' form of UVT (indeed a form of patriotism), while ones based on race, gender, ethnicity, national-origin or sexual orientation would definitely be "bad" forms of UVT, at least from a liberal point of view (though certainly not from a conservative one).

Of course a person is born with a particular nationality just as he or she is born a certain race, gender, ethnicity or sexual orientation. Any form of UVT based on a birth characteristic is questionable at best - outside of, as you say, our family whom we would all go out of our way to protect.

Perhaps the answer to that is that there must be SOME way of dividing humans on the globe up so that we can protect "us" from "them" and nationality is the only criteria left that is acceptable in liberal circles. If the 300,000,000 people in the US were the entire population of the globe would we be one big, happy family (other than the 99% vs the 1%) or is an UVT based on the 'geography of birth' so strong that 'we' Ohioan would start being very suspicious of 'them' Californians? Since 'nationalism' would not matter any more, perhaps not.

[Zalatix]

145. You are STILL trying to argue that S/H hampered the recovery. It is STILL wrong.

"I think you and I actually agree that S/H did not had little if anything to do with the Depression." - this is totally irrelevant to the discussion.

"I think you agree that FDR believed (erroneously in your opinion) that, regardless of the insignificant role that S/H played in causing the Depression, high tariffs would make economic recovery more difficult so he worked to lower tariffs."

And I showed you a chart that proves that FDR's beliefs were unfounded. So what are you going to believe, someone's opinion or the historical facts? The charts show S/H didn't exacerbate anything. You keep trying to get around this by screaming "But FDR SAID!!!!!!"

Your argument about this being a pluralistic world is bullshit when this "pluralistic" world means excluding American workers from the global job market. Americans are being excluded, discriminated against.

You can quote as much alternet and everything else that you want to, but you will never convince a majority of people in America to sacrifice their livelihoods for globalism. Keep on posting that shit. No one is listening anymore.

Go take it up with the UN. Nobody wants your "Sacrifice American workers for the world" propaganda here.

[pampango]

147. You certainly portray yourself as a committed "us vs them" adherent.

The chart you are relying on shows that trade and the economy declined proportionately during the early part of the Depression. It also shows that trade and the economy grew together after 1934 when FDR's Reciprocal Trade Agreements Act (RTAA) of 1934 was passed. This gave FDR the ability to lower tariffs which he did.

During the first 4 yeas of the Depression from 1929 to 1933 the GDP dropped 46% from $103.6 billion to $56.4 billion, while trade decreased 66% in that period. From 1933 to 1937, the next 4 years, the GDP increased 63% while trade increased 105%.

Before the RTAA was passed the economy was crashing and trade was an increasingly smaller part of the economy. After the RTAA and the lower tariffs that FDR negotiated, trade became a bigger share of the economy which itself recovered quite dramatically.

You might want to double check your 'history' that S/H had nothing to do with hampering our economic recovery. In a way, though, you are right. After FDR emasculated S/H in 1934 its role in the recovery became a moot point.

"Do you have an opinion on why the republican high tariff bills of 1921 and 1922 did not create a prosperous middle class and equitable distribution of income in the 1920's?" Perhaps you just forgot to address this in your focus on the error of FDR's ways.

[Zalatix]

149. And you certainly are committed to "throw US under the bus".

"Do you have an opinion on why the republican high tariff bills of 1921 and 1922 did not create a prosperous middle class and equitable distribution of income in the 1920's?"

High tariffs in 1921 and 1922 were more than overwhelmingly countered by de-regulation. Re-regulation won't help. In fact, your compadre in arms "Former-Republican" screams upthread that regulations drive jobs out of the country. Both of you can't be right!

"Before the RTAA was passed the economy was crashing and trade was an increasingly smaller part of the economy. After the RTAA and the lower tariffs that FDR negotiated, trade became a bigger share of the economy which itself recovered quite dramatically."

So you admit there was no correlation between S/H and the lack of a recovery. You have yet to show even correlation between the RTAA and the actual 4-year recovery (which ended in 1937). Trade went up because the economy went up, not vice-versa. Again, dropping S/H didn't affect anything.

Typically, trade goes down very fast when an economy collapses, and roars back when an economy recovers. That's because in the downturn people want to keep their goods at home because everyone's starving. Your propaganda that the RTAA saved us, fails. You don't even get CLOSE to causation. There is also the bust that happened in 1937. I won't troll you and claim it was the RTAA that killed the recovery - it was, in fact, austerity.

BTW absolutely none of your arguments address the fact that China's economy exploded under its protectionist policies of currency devaluation and a 25% tariff against American goods.

If they can do it, so can we.

[pampango]

150. "So you admit there was no correlation between S/H and the lack of a recovery." - No.

With S/H trade crashed and the economy crashed. After FDR emasculated S/H in 1934 the economy grew and trade grew even faster.

The correlation is: trade played a smaller and smaller role in a falling economy, while is played a larger and larger part of a rising economy. Correlation is not causation but, to answer your question, there was a correlation.

"Trade went up because the economy went up..."

Even you seem to see a correlation between rising trade and a rising economy. Now you are arguing causation, not correlation. If high tariffs discouraged trade to the point that it improved the economy (which seems to be your policy recommendation) then why would a rising economy be correlated with even faster rising trade. I think the architects of S/H would have thought that as trade decreased the economy would get stronger.

"You don't even get CLOSE to causation."

Never said that I did. I was responding to your contention that there was no correlation. Exploring causation would require much more than a chart. A chart doesn't prove that a rising economy causes exploding trade (again, S/H supporters would logically think that exploding trade should be linked to a falling economy). Neither does it prove that exploding trade causes a rising economy. It just shows that they go together.

"Typically, trade goes down very fast when an economy collapses, and roars back when an economy recovers."

Again, S/H supporters would logically believe declining (not 'exploding') trade would be tied to a improving economy. The whole point of higher tariffs is to reduce trade which (in S/H's view) will lead to a stronger economy. Logically the more trade declines the stronger the economy gets.

If higher tariffs caused a stronger economy the chart should show a correlation that declining trade was at least correlated to a rising economy. And it should show that as FDR lower tariffs the economy should have gotten weaker. Your chart shows he exact opposite correlation.

Again, a chart does not prove causation but in terms of correlation, it would seem that FDR was right that rising trade is correlated with a rising economy. It certainly does not show that as trade declines the economy rises.

"High tariffs in 1921 and 1922 were more than overwhelmingly countered by de-regulation. ... I won't troll you and claim it was the RTAA that killed the recovery - it was, in fact, austerity."

We agree here. In terms of producing a prosperous middle class and strong unions, regressive government policies like deregulation and austerity can overwhelm trade policy. I would add that regressive policies like tax cuts for the rich, union bashing and slashing the safety net overwhelm trade policy as much as deregulation and austerity.

"And you certainly are committed to "throw US under the bus". Not self-proclaimed at any rate, as is your commitment to "us vs. them". I post my policy preferences, as we all do. I leave the determination of my motivations to the arbiters of DU like yourself.

So now opposition to high tariffs is a matter of patriotism not a policy choice. (FDR should be posthumously prosecuted as "unpatriotic".) Wave the flag much.

"China's economy exploded under its protectionist policies of currency devaluation and a 25% tariff against American goods.

If they can do it, so can we."

That's what I want - for the US to be more like China, not more like Canada or Germany or Sweden.

[Zalatix]

153. Your S/H "correlation" is weak, tenuous, and that's being generous.

The downturn came before S/H; S/H was a leaf in the wind. That denies your theory of correlation. Correlation depends on an event precipitating something, or at least happening concurrently. Neither condition exists in the outset. Your attempt at correlation when Smoot Hawley was passed, totally fails. It did not contribute to the length or severity of the downturn.

Trade went up because the economy went up - not because of the end of S/H. On the ass end you present at best a weak correlation, much less anything substantial, and nothing close to causation. Your attempt at correlation here is as solid as saying that Fridays fall on the 13th. But hey, at least in this case, the end of S/H came at or before the recovery. You at least met THAT condition! You are still light years away from causation.

And you don't have to proclaim your policy of throwing American workers under the bus. Your actions speak loud enough. You have been a reliable voice for policies that take away American jobs. And you betcha that I wave the American flag... what other flag do you expect me to wave? And I didn't call FDR unpatriotic - I said that his views are contradicted by history.

The 1930s was also a far different world than trade in today's world. America did not run monster deficits like we do now. You keep ignoring this basic fact. Logically speaking, it is possible that Smoot-Hawley COULD damage the economy if it is passed by a nation that exports as much as they import, even though in reality it did not. Smoot-Hawley cannot at all hurt a nation that imports more than it exports unless that nation lacks the materials to build their goods at home, and America is in no way lacking. We did it before and we can do it again.

"That's what I want - for the US to be more like China, not more like Canada or Germany or Sweden."

How many TVs does Canada build in Canada? How about cell phones, computers, etc.?



Also, you're arguing a straw man. Nobody's saying that declining trade would lead to an improving economy. You just made that up as a smokescreen.

[pampango]

156. You said that trade and the economy went up together and down together. That's correlation by

definition. The graph does not prove causation one way or the other but it certainly shows the correlation.

The downturn came before S/H; S/H was a leaf in the wind. That denies your theory of correlation.

Since I has said many times that S/H did not cause the downturn/Depression either you are agreeing with me or vice versa. The correlation that the graph shows and which you have stated - that the economy and trade go up and down together - does not show that S/H caused the Depression - which neither of us believes anyway.

"You are still light years away from causation."

Agreed, but we both are. A graph that shows that trade and the economy went up and down together over the course of the Depression does not by itself prove that one (either one) caused the other just that they moved in tandem. Looking at the graph, one side can say "Look when the economy goes up trade follows." The other side can say, looking at the same graph "No. When trade goes up the economy follows." To prove causation - that one caused the other - would take a lot more research than a mere graph.

"And you don't have to proclaim your policy of throwing American workers under the bus. Your actions speak loud enough.

Once again I yield to the Great Arbiter of DU who knows all and determines all. One disagrees with the Great Arbiter and one can be designated as unpatriotic - perhaps even a "Chinese-lover" or "foreigner-lover". But again, I yield the determination of the motives for my policy preferences to the Great Arbiter.

"How many TVs does Canada build in Canada? How about cell phones, computers, etc.?"

My answer is that if given a choice between living in a country that has effective national health care, progressive taxation, strong unions and a strong safety net (even if it does not produce its own cell phones and computers) or a country that makes its own cell phones and computers (but has no health care, regressive taxation, weak unions and little in the way of a safety net), you can probably guess which country I will choose to live in. If you would choose the country that makes its own cell phones and computers, then we will not be neighbors. And that probably does not break your heart.

"Nobody's saying that declining trade would lead to an improving economy."

What are you saying then? That declining trade would lead to a declining economy or that there is no connection between trade and the economy?

[redonaire0013]

151. other way

make it cleare now

[mythology]

129. You didn't actually list a fact that Smoot-Hawley didn't harm trade. You stated an opinion

To begin to prove it, you'd have to have far more evidence including at least some quantifiable regression analysis. You have at best shown there might be a correlation, but correlation isn't the same as causation.

Also you discount any other opinion simply because it disagrees with your viewpoint. You're unlikely to convince others if all you do is browbeat them. Zealots are rarely popular outside of other believers.

[Zalatix]

133. The Smoot Hawley Zealots have not shown any evidence to support their claims.

The burden is not upon me to show evidence when the other side has shown none at all. "Correlation isn't the same as causation" applies more to them than to me.

As for convincing others? The DU used to be dominated by free traders. Since I've gotten here, COINCIDENTALLY, it has become the exact reverse. Granted, I was lurking most of the time that this change occurred and I've had little to do with the change, but that just goes to prove - the pro-offshoring zealots don't have much influence anymore. Them's the breaks.

Now, since you mentioned correlation and causation, there isn't even an effective correlation relationship between Smoot Hawley and the drop in trade.

[img][/img]

As you can see from this chart, I mentioned in my OP that during the Depression, we did not run a trade deficit during the Smoot-Hawley years. This is supported by the historical charts. The conditions during the Smoot-Hawley years were fundamentally different than what's going on now.

And you can also see that the drop in trade during Smoot-Hawley wasn't disproprortionate to the drop in GDP.

Thus, the Smoot-Hawley fairy tale fails to even establish correlation.

The pro-offshoring zealots fail. Miserably.

[Lasher]

27. Hoover opposed the bill.

Does that make Smoot-Hawley good?

[Zalatix]

34. Pampango refuses to recognize the fact that Smoot Hawley didn't even occur under the same situation.

His was just another drive-by post that totally ignored the differences that I pointed out.

[pampango]

37. Hoover signed the bill. His opposition must have been pretty weak. n/t

[Lasher]

41. Read the Wikipedia article you linked upthread.

Hoover opposed the bill and called it "vicious, extortionate, and obnoxious" because he felt it would undermine the commitment he had pledged to international cooperation.

http://www.democraticunderground.com/?com=view_post&forum=1002&pid=1278409

[Zalatix]

45. Both Presidents had to sign legislature they initially disliked.

It is not in any way beyond credibility that Hoover did this. Presidents have had to do this throughout history.

I don't see why your point is so hard to understand...

[pampango]

100. FDR also viewed Smoot-Hawley as "vicious, extortionate, and obnoxious" AND he opposed it.

If you want to give credit to Hoover for saying that he didn't like the bill then signing it anyway, go right ahead. He could have vetoed it and let the republican congress pass it over his veto if he felt so strongly that it was a bad bill. He chose to sign it instead. Sometimes actions speak louder than words.

I am sure that you will give FDR equal credit for saying bad things about the bill AND actually opposing it AND lowering tariffs when he got into office.

[Lasher]

114. So Smoot-Hawley was not strictly a Republican bill

This is inconsistent with your upthread characterization.

[pampango]

118. FDR opposed it. Almost exclusively republican congressmen passed it. It was signed by a republican

president.

Yes, it was strictly a republican bill.

Are you contending that because Hoover said something bad about the bill right before he signed it that it is not strictly republican bill? If so, you are giving ol' Herbert more cover than I will give him.

[Lasher]

120. Hoover expressed his opposition.

That is plain to see.

[pampango]

121. Actions speak louder than words. FDR expressed his opposition to S/H and followed it up with action.

If Hoover had the courage of his convictions he would have vetoed the bill. If his complaints before signing the bill make it seem a little more 'bipartisan' to you that is fine with me. He gets no credit from me. I don't see that Democrats, certainly not FDR, had anything to do with this bill so portraying as not a republican bill seems like a stretch.

[Lasher]

122. Actions do speak louder than words.

And truer as well. I concede that point.

[Zalatix]

127. Plenty of Presidents have caved just like Hoover did.

I can cite a few that Obama has caved on. As well as Clinton, along with George H W "Read my lips, no new taxes" Bush and Reagan.

Signing laws you don't like is a malaise of all Presidents. They have to do it in order to pass laws that they want.

[Zalatix]

143. BTW China used trade barriers bigger than Smoot-Hawley and they were successful for them.

What gives China the right to hit us with 25% tariffs and to devalue their currency, while we're forbidden to?

It was when they had all this protectionism that they rose to economic power.

[TheKentuckian]

152. Like Obama and closing Gitmo, He signed the bill preventing such.

I'll buy your argument but it better be consistent in the "you sign it, you own it" department.

[Odin2005]

29. FDR was a CLASSICAL Liberal until the day he died.

Classical liberals, and their Neo-Liberal sucessors worship Free Trade as if it were a god. The only reason FDR supported government intervention in the economy is because he was willing to bend his principles for political reasons and because the Elites, of which he was one, were terrified of a Communist revolution.

Also, after WW2 the US was in the position to use it's hegemonic power to force it's exports down the world's throats.

[pampango]

105. Indeed he was. I have never read that he "worshiped Free Trade as if it were a god" but he did

believe that trade was good for the country and the world. He certainly did not agree with the republicans of his era on that.

Is being a "CLASSICAL Liberal" now a bad thing here? The revisionist view is now that FDR was not a progressive Democratic leader whose policies produced a strong middle class until Reagan dismantled his policies in the 1980's? Now he was just a member of the Elites who rammed free trade down the world's throats out of fear of a communist revolution?

The odd thing is that the progressive countries in the world today still embrace FDR's policies of high/progressive taxes, strong safety nets, strong unions, tighter corporate regulation and, yes, lots of international trade. And those policies have produced, as FDR knew they would, strong middle classes and equitable distributions of income.

[Lasher]

116. I take it you do not include the USA as one of the world's progressive countries.

If we are progressive, we have become less so during the last 30 years. And our neoliberal Free Traitor agreements have contributed heavily to this decline.

[pampango]

119. You are correct. We have become less progressive in the last 30 years.

We only disagree on the cause of that. I fault republican cutting of taxes for the rich, shredding the safety net, deregulating everything under the sun and breaking PATCO and other unions. The countries that really are progressive did none of that and had strong middle classes and an equitable distribution of income.

[Zalatix]

134. They also have barriers against imports, too.

http://export.gov/Germany/MarketResearchonGermany/CountryCommercialGuide/TradeRegulationsandStandards/index.asp

Import Turnover Tax

All industrial imports into Germany are subject to an "Import Turnover Tax" of 19%, which is charged on the duty-paid value of the import article plus the customs duty, which varies by item. (Exemptions: certain agricultural and a few other products, which are taxed 7% ad valorem.) The Import Turnover Tax is designed to place the same tax burden on imported goods as goods produced domestically, on which is levied a 19% "Value-added Tax" (VAT). The German customs authorities collect both customs duty and Import Turnover Tax.

It is important, however, to collect and present all invoices as originals in order to deduct any VAT charges from one's own tax liability or to get reimbursed by the German Ministry of Finance, if eligible.

Trade Barriers

Germany's regulations and bureaucratic procedures can be a difficult hurdle for companies wishing to enter the market and require close attention by U.S. exporters. Complex safety standards, not normally discriminatory but sometimes zealously applied, complicate access to the market for many U.S. products. U.S. suppliers are well advised to do their homework thoroughly and make sure they know precisely which standards apply to their product and that they obtain timely testing and certification.

[pampango]

139. Not the "VAT as a tariff" argument again.

"The Import Turnover Tax is designed to place the same tax burden on imported goods as goods produced domestically, on which is levied a 19% "Value-added Tax" (VAT)."

Everything made in Germany has a 19% VAT applied to it so that a German consumer pays 19% more to buy that product than if there was no VAT. The proceeds from this rather hefty tax are used to fund Germany's safety net and other progressive policies. If imports into Germany did not have to pay a 19% "Import Turnover Tax (ITT)", imports would be that much cheaper than a local produced equivalent.

If the US or any other country wants to apply an Import Turnover Tax, all we have to do is enact a VAT (hopefully we too would use it to fund our safety net and progressive policies rather than defense and corporate welfare) of say 19%. That bring in lots of revenue but it would make everything that we make in the US cost consumers 19% more (of course, for those who believe "we don't make anything anymore", that would be fairly painless), but it woud allow us to charge 19% to all of our imports. While a VAT might be good for funding progressive policies (if we used the revenue that way) it would not be a barrier to imports since domestically-produced goods and imports would both cost consumers 19% more after we enacted a VAT and applied the ITT to imports.

[Zalatix]

141. I didn't say "tariff", I said TRADE BARRIERS.

I was referring more specifically to this:

Complex safety standards, not normally discriminatory but sometimes zealously applied, complicate access to the market for many U.S. products. U.S. suppliers are well advised to do their homework thoroughly and make sure they know precisely which standards apply to their product and that they obtain timely testing and certification.

By the way you do agree with higher TARIFFS against countries that allow rampant factory pollution, right? Or do you not give a crap about the environment?

[pampango]

146. All countries should agree that pollution should be punished. Of course, the US creates 3 1/2 times

the pollution per capita that is produced in China. China produces more total pollution because it's population is 4 times bigger than ours. So the US could be subject to some kind of cost from other countries due to the pollution we create.

But I agree that the world should take action on pollution and the trading associated with it. I would much rather see multilateral action - a global climate treaty with effective enforcement provisions against those governments that don't meet their commitments - rather than the US acting unilaterally or other countries acting unilaterally against the US.

I know there are a lot of 'national sovereignty' folks out there in every country who would inevitably say "That (whatever the global climate enforcement agency were called) cannot tell us here in (fill-in the name of country) what to do. We are a sovereign country." The only way that global climate change will ever be dealt with (if it is not too late already) is for the world to come together in an enforceable treaty with adequate penalties for violators.

The whole idea of multilateral governance of trade which came into being after WWII was to avoid country A saying to country B: "I don't like your pollution (or your president or your car company or "I'm running for reelection and need a scapegoat&quot . Here's a tariff." Then country B says the same to country C and country C says it back to country A. The concept for multilateral governance of trade was for the politicians in countries A, B and C to agree on a trade framework and then take its administration out of the hands of those and later politicians as much as possible. Of course, this angers the national sovereigntists who rue the day that their politicians agreed to a deal that now keeps their country from doing what it wants, when it wants for whatever reason it wants. IOW, it makes unilateral action more difficult for countries.

[Zalatix]

155. To hell with treaties.

I say we take the LEAD in pollution reduction. Make up our own laws that exceed that of every other nation, and make them race to keep up. If they want to sell to our market without tariffs, they'll do their best to keep up.

As for your per capita figures, that includes all the non-industrialized farmers in China, who put out probably 0%. Readjust those per capita figures for those who work and live in the cities and I bet you'll find China's pollution is far worse.

[pampango]

157. That's what Bush's attitude was. To hell with treaties or what any other country wants.

Let's take the lead. Make up our own laws and force the rest of the world to live with them. Unilateralism rules!!

Obama's desire to negotiate treaties with other countries and abide by them is so, what's the word, weak. We should tell other countries that we have just decided what the new rules are and you had better learn to live with them.

My per capita figures include all Chinese and all Americans. If you want to adjust them by selectively removing some groups go right ahead.

Would our trading partners use your adjustments to the pollution figures or go with internationally recognized per capita figures when determining what tariffs to charge against American exports? And if they don't us the figures that we like, do we pass a law and force them to use our 'officially adjusted' figures? America rules!!

[Zalatix]

158. I never said for the world to live by my rules.

They don't have to abide by my rules, and I don't need to trade with them.

Going by our trade deficit, they need me more than I need them. America generates jobs for them, not vice-versa.

You and your Chamber of Commerce buddies have your game totally confused.

[dkf]

6. How much of that is oil?

I think we should slap a large tax on fossil fuels to encourage transition. But so many here go crazy at that idea.

[Zalatix]

7. Fossil fuel tax? That's nuts.

It's much more affordable to put up with huge droughts, rising water levels, coastline cities going underwater, and oceans turning acidic.

(Do I need a sacrasm smiley here?)

[dkf]

10. Here's where we get our oil.

Notice Canada, Mexico and Russia.

http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbbl_m.htm

[Zalatix]

13. We need to stop using fossil fuels.

[former-republican]

9. You want to guarantee republicans stay in power

let the Democrats propose that and watch what happens.

[dkf]

11. Well that is what the OP is proposing by talking up tariffs

I also don't mind positive incentives to encourage transition.

[former-republican]

17. I don't either , tax credits for converting to solar , wind

but to hit people at the pumps by more taxes is dumb at this time.

[Zalatix]

20. So we instead choose to hit them with droughts, acidic oceans and wars over oil?

These are all direct consequences of our fossil fuel-based economy.

You take great pains to ignore all those costs. Why is that?

[Zalatix]

12. You keep intentionally ignoring a critical point in my OP.

If we don't raise tariffs, the dollar will NATURALLY devalue until imports become too expensive.

This is already happening.

Why are you avoiding addressing this fact?

[former-republican]

16. I'm avoiding nothing

I don't take a defeatist attitude.

[Zalatix]

19. You did avoid it. You're avoiding it now.

I cited to you specific facts:
1) Our trade deficit is devaluing the dollar.
2) It is increasing our national debt.
3) It is already resulting in a slowdown of offshoring.

These are the facts. If we don't put up tariffs, trade will stop anyway.

You have no counter argument. It is reality.

[Zalatix]

35. Still waiting for a response. You haven't addressed the OP argument at all.

If we don't raise tariffs, the dollar will NATURALLY devalue until imports become too expensive.

This is already happening. Your friends at the Von Mises Institute have pointed this out.

Why are you avoiding addressing this fact?

[woo me with science]

15. Now included in the 2012 Democratic platform: The Trans-Pacific Partnership free trade agreement

Alongside Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam, we are on track to finalize the Trans-Pacific Partnership, a historic high-standard agreement that will address new and emerging trade issues, lower barriers to the free flow of trade and investment, increase exports, and create more American jobs.blhttp://www.democrats.org/democratic-national-platform

Now removed from the Democratic Platform: The 2008 language vowing support for Card-Check, to make it easier for unions to organize.

No support for card-check. In 2008, the Democratic platform pledged to “fight to pass the Employee Free Choice Act,“ also known as the card-check legislation that would make it easier to organize a union. Despite a lot of flowery language on unions in the 2012 platform, there is no pledge to take another bite at the apple on EFCA, which was stymied by Republicans in Congress.
http://www.commondreams.org/view/2012/09/04-11

[Zalatix]

25. We must beat the TPP to death at the grass roots, like we did SOPA/PIPA.

[Odin2005]

30. There has never been a country that has industrialized under low tariffs

a country only goes "Free Trade" when it's elites feel they are powerful enough to dump their exports on the rest of the world, Which is why we cut tariffs drastically after WW2, we had the power to dump our exports onto other countries.

When the IMF imposes low tariffs on 3rd world countries it destroys any incentive for industrialization and development because of the law comparative advantage. Industrialization in the US was hobbled by the Planter Aristocracy hatred of tariffs and only after the Civil War broke the political power of the Planters and allowed tariffs to be increased and then industrialization take off in the US. The combination of resource richness and protectionism made the US the largest economy in the world by the late 1800s, a status we have held ever since.

[Zalatix]

32. You mean TARIFFS saved America after the Civil War? What ever will the tariff-hating crowd say?

Good point. I totally forgot about that.

[upi402]

33. But the 1% are getting filthy rich

and they control both parties.

Great post.

[Populist_Prole]

46. I vehemently agree

It's the most logical way to level the playing field. Devalued Chinese currency sure works wonders for their own trade surplus with the US. Also, make no mistake: Despite what the ivory tower econs say, there is no way in hell the US is going to arrest the trade deficit, let alone reverse it by: "Exporting our way out of it", being more "innovative" or all that other pollyannish bullshit. The economies of scale precludes it.

Yes to tarriffs. If one just must have a foreign made product; they should pay through the nose for it. Yes, that's what I said.

[HiPointDem]

47. us has a strong dollar policy, which is the ultimate source of our deficit in trade and budgets.

[Zalatix]

48. Yup, look what a strong currency did to Japan.

[HiPointDem]

49. what?

In short, because a high dollar leads to high trade deficits, it means that the country must run large budget deficits to sustain high levels of employment. In other words, a high dollar means a high budget deficit.

Does Robert Rubin know that his strong dollar policy directly contradicts his fixation with low budget deficits? Who knows and who cares? Either he is ignorant of the fundamentals of economics or he is dishonest. Either way, he is not the sort of person who should be taken seriously in economic policy debates. He belongs well below either Reverend Wright or Bill Ayers on the White House invitation list.

http://www.huffingtonpost.com/dean-baker/big-deficit-bob-rubin-and_b_279849.html

[Zalatix]

50. My point was that Japan's strong yen hurt their exports and made offshoring explode.

Their system of lifetime employment died in favor of importing foreign labor and outsourcing to China, etc. All because of their rising yen.

America is not the only country to get stung by a strong currency.

[HiPointDem]

52. ok, i get it. i thought you were being sarcastic. yeah, japan's boom years were weak-yen.

[HiPointDem]

55. a strong dollar AND tariffs? doesn't compute.

There are few areas of economics more boring than accounting identities. This is really unfortunate, since it is virtually impossible to have a clear understanding of economic policy without a solid knowledge of the underlying identities.

The debate over the value of the dollar against the Chinese yuan is the latest episode in this silliness. The Washington tribal elite has been on the warpath against budget deficits in recent months. They have worked themselves into such a frenzy that nothing will stand in their way: neither concerns about unemployment, nor concerns about the well being of our elderly, nor even concerns about basic economic logic.

The central problem stems from the simple accounting identity that national savings is equal to the broadly measured trade surplus. A country with a large trade surplus will also have large national savings. Conversely, a country with a large trade deficit will have negative national savings. These relationships are accounting identities – there is no way around them.

This brings us to the next part of the story; where trade deficits come from. At a given level of GDP, the main determinant of the trade deficit is the value of the dollar in international currency markets. This is very basic supply and demand. If the dollar is higher in value relative to other currencies, then our exports will cost more to people living in Germany, Japan, and China.

If a car sells for $20,000 in the United States, then the price of this car to people living in other countries will depend on how much of their own currency (euros, yen or yuan) they must pay to get a dollar. The higher the dollar relative to these other currencies, the more expensive the car is to foreigners. And, the more expensive it is to foreigners, the fewer US-made cars they will buy. This means our exports will fall.

The story works in reverse on the import side. If the dollar is high and therefore buys lots of foreign currency, then imports are cheap. This means that we will buy lots of imports.

If we have low exports and high imports, then we will have a large trade deficit. End of story. We can train our workers to be more productive, urge our firms to invest more and try to improve our public infrastructure, but realistically, none of these factors can come close to offsetting the impact of a currency that is 20-40% over-valued. A severely over-valued currency virtually guarantees a trade deficit.

http://www.guardian.co.uk/commentisfree/cifamerica/2010/oct/06/economy-economics


A weak currency and tariffs is the historically successful path to development. The US used it, Japan used it, & I believe England used it (not so sure on that).

As countries become more technologically developed & efficient in manufactures, their currencies appreciate. That is the point at which historically, they start pumping for 'free trade'.

What are the ramifications of having both a strong currency (meaning you can buy assets listed in weaker currencies more cheaply) AND high tariff barriers (which means those same weaker currencies can't sell you their products)?

They appear to be kind of noxious, imo. High tariffs in the strong currency countries would mean impoverishment of the weak tariff countries and retalitory tariffs + war (as i'd expect the us to go to war to maintain access to resources).

[Zalatix]

59. Next, tell 'em about competitive devaluation.

China learned the concept of that, big time.

[HiPointDem]

62. i don't get your drift. and i think you missed my addendum:

A weak currency and tariffs is the historically successful path to development. The US used it, Japan used it, & I believe England used it (not so sure on that).

As countries become more technologically developed & efficient in manufactures, their currencies appreciate. That is the point at which historically, they start pumping for 'free trade'.

What are the ramifications of having both a strong currency (meaning you can buy assets listed in weaker currencies more cheaply) AND high tariff barriers (which means those same weaker currencies can't sell you their products)?

They appear to be kind of noxious, imo. High tariffs in the strong currency countries would mean impoverishment of the weak tariff countries and retalitory tariffs + war (as i'd expect the us to go to war to maintain access to resources).

[Zalatix]

66. Competitive devaluation

It's when a country actually weakens their currency in order to achieve higher exports. I am in favor of this tactic. Now tariffs and devaluation... that's what China did. That literally TURBOCHARGED their economy.

The point of my OP is, however, that devaluation is inevitable. If we reject tariffs, then that's okay! We will most certainly see a dollar collapse and the end of imports, regardless.

The only REAL argument here is how which method of death should offshoring choose? Tariffs, or inevitable currency devaluation. We can choose, or economics can choose for us.

[HiPointDem]

69. i understand the meaning, i just don't see your point. china intentionally keeps the yuan WEAK.

and it's not a particularly high tariff country, i don't think. all sorts of foreign capital there (unlike, for example, the case in japan during its boom years). so much that you can make the case that china is actually an offshore manufacturing platform for foreign capital.

what is the problem with currency devaluation without tariffs?

seems like you want your cake (jobs) and to eat it too (cheap resources from overseas, cheap vacations overseas).

[Zalatix]

73. China used to have high tariffs against the US, along with a weak Yuan.

I am against a strong dollar specifically because of the history lesson of Japan's strong Yen destroying its job market and China's weak Yuan creating an economic boom for their middle class. We should do what China did.

There's nothing wrong with a currency devaluation without tariffs - a true currency devaluation is good enough to stop offshoring. I was just noting how China weakened their Yuan AND raised tariffs at the same time... making imports insanely expensive.

I do NOT feel we need cheap resources from overseas. It only means we can plunder the rest of the world and leave them without resources. That's not right.

We should devalue our currency and import jobs, not goods. Or else our currency will devalue by itself. That, to me, is a good thing.

[HiPointDem]

75. as is typically the case with developing economies and makes perfect economic sense.

however, as i said, foreign capital penetration in china is quite high, so whenever that period was, it seems to be long gone.

most electronic exports out of china, for example, aren't 'chinese' at all; they're wholly owned for foreign capital.

But proponents failed to consider the effect of China’s entry on foreign direct investment (FDI) and outsourcing. FDI has played a key role in the growth of China’s manufacturing sector. China is the largest recipient of FDI of all developing countries (Xing 2010) and is the third-largest recipient of FDI over the past three decades, trailing only the United States and the United Kingdom.

Foreign-invested enterprises (both joint ventures and wholly owned subsidiaries) were responsible for 52.4 percent of China’s exports and 84.1 percent of its trade surplus in 2011 (Ministry of Commerce, China 2012).

Outsourcing—through foreign direct investment in factories that make goods for export to the United States—has played a key role in the shift of manufacturing production and jobs from the United States to China since it entered the WTO in 2001. Foreign invested enterprises were responsible for the vast majority of China’s global trade surplus in 2011.

http://www.epi.org/publication/bp345-china-growing-trade-deficit-cost/


Manufacturing platform for foreign capital.

[Zalatix]

79. True, but why should China be bothered by being a platform for foreign capital?

Their workers sure as heck aren't suffering.

If America had an export:import ratio like China's, would it really matter what companies were managing it? They'd be hiring Americans.

[HiPointDem]

82. their workers aren't suffering? what? of course they are, in multiple ways.

[Zalatix]

85. I'd rather have a job in China than be homeless and jobless here.

A job is everything. It means the difference between survival and starvation.

[HiPointDem]

89. Spikes Under Chinese Overpasses To Prevent Sleeping Homeless?

Recently, new “landscaping” has appeared under the overpasses in Guangzhou and Shenzhen, featuring a lot of individual pyramid-shaped pointy-little pieces of cement covering the entire overpass floor. Some netizens say this was done by chengguan to guard against homeless sleeping under the overpasses and affecting the appearance/image of the city, but the city management officials deny this.

http://www.chinasmack.com/2012/pictures/spikes-under-chinese-overpasses-to-prevent-sleeping-homeless.html


Not to mention that for a whole lot of chinese workers, 'home' looks like this:





(two workers per bed)





A worker at the stone quarry in Xinjiang taking a break next to his bed

Couple arrested for selling mentally-disabled men into slavery in Xinjiang

http://www.whatsonxiamen.com/news17001.html

[Zalatix]

94. So you'd rather be a jobless worker here?

Where do you think jobless workers go? Out onto the street, eventually.

[HiPointDem]

96. the point being there are homeless in china -- & everywhere. what i'd rather is to end the beggar

your neighbor 'economy' that is capitalism.

you appeared to believe there were no suffering workers or homeless in china.

[Zalatix]

97. No, what I believe is that being jobless sucks way too much

that it doesn't matter WHAT country you're in when you can't find a job.

And yeah, Capitalism itself is an Ouroboros.

[abumbyanyothername]

56. The point is this:

1) The US is now a dumping ground for world excess productive capacity. (Think about that! The world is capable of producing way more than it can consume. And people call that a problem. Or in economic speak, a recession.)

2) Population control in many places in the world is structure around the work/wage/eat triangle. This is no accident. Populations were intentionally herded off subsistence farms and into cities. Populations were convinced that this represented progress.

3) The populations must be kept employed or they will revolt.

4) The elites, whether corporate or oligarchs, are skimming as much as they can off the top.

5) Meaning the population cannot consume 100% of the output. But the elite cannot make up the gap with conspicuous consumption because . . . well ask Mittens, it's hard to spend a nine-figure fortune. Let alone 10 or 11.

6) The world depends on US consumption much more than its military for political stability.

7) The US world debt is simply the price they must pay to keep their populations employed. I doubt that the Chinese, for example, expect to be repaid on their holdings of US debt. I am almost certain that the Japanese know that they will not.

8) The Bush tax cuts were designed to reignite US debt and keep the world political order stable. The Clinton surpluses scared the wits out of almost everyone in the elite class everywhere in the world.

9) If you need us that badly, you simply should have to pay to play.

10) High tariffs and a collapse of world trade can hardly be a bad thing for a nation running massive trade deficits.

Fair disclosure: All that from a guy sitting in CA wearing a hand made suit ordered over the internet from a tailor in India who delivered a fabulous fitting product I might add.

[Zalatix]

60. Basic. Fact. Of. ECONOMICS.

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[HiPointDem]

61. who is 'us' in this sentence?

'If you need us that badly, you simply should have to pay to play.'

and why can't 'high tariffs + collapse of world trade' be a bad thing for a nation running trade deficits?

i think they could be quite a terrible thing, actually. trade is not only in manufactures, but also in resources. collapse of world trade = war.

[abumbyanyothername]

65. us = US

And while it could lead to war in places like China or India or even moreso, Saudi Arabia and such, it would have exactly ZERO effect on the 99% in the US. Or actually a positive effect. Would we care who won in China v. India if we had no need for anything that they controlled or produced?

All the gains from the free world trade movement have gone to the elites. Not just in America, but everywhere.

A lack of resources is a good thing for America. It will force us to do what Jimmy Carter tried to tell us to do: use our brains to get the same output out of less input. In a world of $10/gallon gasoline I can guarantee you that 100 mpg autos will begin to appear. Zero Energy Design homes and other buildings are currently technically possible and probably even cheaper than standard designs.

I have faith in American ingenuity to find substitutes for imported resources. And they probably will be better and cheaper too. The only reason that we are using the old resources that are no longer ours in a near monopoly is because companies like BP (Standard Oil) are too lazy to become true energy companies and are satisfied to remain oil companies -- and have infiltrated government to protect their monopoly.

[HiPointDem]

67. huh? it could lead to war versus china, and it would have a major effect on americans.

it would be the US trying to maintain access to resources as other countries instituted retaliatory tariffs. why should the US be able to buy other countries' resources on the cheap and simultaneously close their markets?

as i understand things, the computer industry, for example, is dependent on certain metals that can only be mined in africa.

your scenario might play out -- i've often wondered about how capitalism would fare if it were limited geographically to its home territory. it would be an interesting experiment, but i'm not so sanguine about the outcome.

[abumbyanyothername]

71. Eventually we will devolve back into a decentralized society.

The only question is how we do it.

As to war with China, they are not ready yet. And so perhaps now would be the time before they get ready. Also bear in mind that without US markets, China has a basically unmanageable domestic situation that would prevent them from engaging in too much in the way of international escapades. They already have about the size of the US workforce in unemployed people, mainly young men. They also have a big imbalance of men vs. women.

As to resources/computer components, etc. That which must be done, will be done. The international trade route is simply the current path of least resistance (given the elite power structure, etc.) to solving these engineering problems. There are possibly infinite solutions to every engineering problem. Certainly more than one.

Also no one is saying that we have to use a DU keyboard jockey blunt stick on a tariff plan. The tariffs could be phased in to give all the economies a chance to adjust. Of course, even our party is drifting the opposite direction these days.

Nevertheless, the US worker would be a big net winner in a high tariff environment. Robert Reich has a youtube video on tariffs, I believe.

As for my economic philosophy, google swadeshi. As the example of my suit shows, I am not always perfect at living up to my economic moral obligations. But I try.

[HiPointDem]

72. no time soon. the signs point in the other direction: an increasingly centralized global society

wherein the bottom lives a chaotic, insecure existence while the top is increasingly insulated by the police state which protects its title to all resources and means of production.

[Zalatix]

76. Capitalism is already limited to its home territory - Earth.

Which is why all the whining and crying about isolationism (aka isolationism-bashing) is bullshit.

Closed economic systems don't automatically fail - the Earth is already a closed economic system.

If we devalue our currency and make it impossible to import anything, and we can't get certain metals from Africa. But with a strong dollar we can bleed Africa dry and leave them with nothing. Their resources are finite. They'll run out, and we'll stop making computers. This is inevitable; we'll run out anyway.

Might as well devalue now and find another way to make computers. We will have to learn eventually. Sadly, this won't get through many people's heads - because no one thinks long term.

You can't bleed foreign nations of resources forever, because they'll run out. And they can't bleed us of jobs forever, because we'll run out.

[HiPointDem]

80. ah, yes, but it hasn't as yes marketized every available niche.

strong dollar not only implies ability to buy up other people's resources on the cheap; it also implies the ability to maintain a huge military to force the issue.

you can bleed people for a very long time indeed. especially when modern technology means you don't really need to bleed as many people as before & they can die with no great loss.

[Zalatix]

83. Hasn't China been building up its military with its weaker currency?

If the world is importing from the US we take their money and build warships with it. China's been doing exactly this.

Imagine a sufficiently devalued dollar, coupled with American productivity, coupled with our existing military. Then imagine restructuring our military into a defense system instead of a global plundering system... we'd be more efficient, less spread-out, and stronger. All funded by foreign nations pouring currencies and their jobs at us.

We would have to restructure the military because foreign resources would be too expensive to keep plundering...

[HiPointDem]

86. china reportedly spends 2% of its gdp on its military.

http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ms_mil_xpnd_gd_zs&idim=country:CHN&dl=en&hl=en&q=china+military+spending+percent+gdp

v. 4.7% in the us:

http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures


it's my memory that it spent more, percentage-wise, under communism.

[Zalatix]

88. How much do we spend on plundering resources from other nations?

I believe that will stop when the dollar devalues. We will be forced to restructure to defend our own turf and nothing else. I like that scenario if it happens.

I would love to see the breakdown of that 4.7% of GDP - as in, how much is spent defending America versus maintaining a bullshit global empire?

[davidpdx]

99. So you are essentially saying we should bail on the WTO and all free-trade agreements

which we have currently signed? Is that correct?

[Zalatix]

101. Either that or let the FTA's sink our currency.

Me, I prefer a massive devaluation of the dollar. It'll render the WTO and all FTA's irrelevant.

It might come as a shock to you, but the trade deficits we're running will make the devaluation scenario inevitable.

[pampango]

103. Don't know about the poster you are responding to but that is certainly what the teabaggers and

libertarian wing of the republican party want to see.

Iowa GOP platform:

11.2 We do not recognize the authority that FEMA, EPA, UN, NAU, WTO and NAFTA have to legislate and force their will upon the citizens of the United States. If a treaty is the basis for the supposed authority of such organizations, we demand that U.S. immediately withdraw from the treaty.

11.9 We oppose so-called “World Government” and support full constitutional sovereignty of the U.S.A.

[Zalatix]

108. You should get tired of that inaccurate poll getting smacked down, over and over again:

http://abcnews.go.com/blogs/politics/2012/07/made-in-america-policies-hugely-popular-survey-shows/

“On the federal level if we can expose where we can see tax dollars leaking overseas we can reverse it because there is the political will to do that,” said Scott Paul, the executive director of the Alliance for American Manufacturing.

Overwhelming majorities of people from all political parties said they supported “Buy America” policies that would mandate that taxpayer money can only be used on goods that were made in America.

Nearly 9 out of 10 Republicans and Independents and 91 percent of Democrats said they support “Buy America” preferences, according to the survey,which was conducted by the Democratic-leaning Mellman Group.

[pampango]

109. I've decided to keep posting Pew polls even though you judge them to be 'inaccurate'.

And you are the only one who "smacks it down" by saying that you dont' accept it. I am hoping that the Pew organization can recover from their disappointment at your refusal to accept their poll.

I'm glad to know that the Alliance for American Manufacturing has a better methodology for their polling in your opinion. (Or is it that you just like their results better? ) I think Pew has a pretty good reputation too. I try to 'accept' polls that are done well whether I agree with their results of not.

[Zalatix]

111. I've decided to keep responding to you with polls that reflect reality.

You should know I've been fighting offshoring for 10 solid, hard, tireless years.

Your viewpoint used to be the majority. It isn't anymore. At some point you will come to accept the fact that nobody in America wants free trade anymore. Not in either party.

You and I will both outlive free trade.

Say hi to your friends at the US Chamber of Commerce. They and the Plutocracy love to see you fight for their cause and against America's working class.

[pampango]

115. I have not asked you to stop posting the polls. Nor will I disparage them unless they come from a RW

organization, which yours do not.

"Your viewpoint used to be the majority. It isn't anymore." Whether you want to acknowledge it or not, the Pew poll I posted supports exactly the point you are making. (Does this make that poll more 'acceptable'? ) I have never posted that I believe I am in the majority on this and that poll shows I am in the minority.

"You and I will both outlive free trade." Another of your statements that I agree with. (I've got to be more careful with this too much agreeing, dont I? ) The trend is certainly in the direction that will make you happy. History shows that eras of 'free trade' have come and gone as have eras of high tariffs and protectionism. Nothing - be it good or bad - seems to last forever. I suspect you are right that we will both live to see the end of 'free trade'.

Here we part company again. I will not ask you to say hi to your 'friends' in certain conservative groups with whom you share certain towards trade. ("Strange bedfellows" are hard to avoid in this discussion.) I know that your motivations are totally different from theirs and I acknowledge that any shared attitudes you happen to have with them are for entirely different reasons than theirs.

[davidpdx]

124. The OP pretty much indicated that was what he/she was advocating

[Zalatix]

135. The WTO & GATT have undermined the United States on the environment. Case in point:

http://www.asil.org/insights120307.cfm

Environmentalists have great reason to oppose the WTO. The Tea Party hates the EPA; I want to see the EPA strengthened.

I also want to see tariffs or outright bans on products produced by heavy polluting nations. If you believe in protecting the environment, you will, too.

Where do you stand on this?

[davidpdx]

137. I agree the environmental standards need to be improved worldwide

I've seen the pollution in China and it is terrible.

[4th law of robotics]

148. It shouldn't be that hard to come up with an approximate value

for reduced environmental/labor standards and government incentives compared to products produced here and set a tariff to compensate for that.

So if China can sell widgets at 20% less than us because 12% of that is lower labor costs, 5% is lack of enviornmental regulations and 2% is covered by government subsidies then we can charge a 19% tariff on them.

/I'm giving them a 1% benefit of the doubt there assuming they actually do have a competitive advantage for some reason in widget production beyond those three issues.

[Zalatix]

159. I bet Obama could do that and beat them in the WTO.

He has in fact won against China in WTO disputes... a rarity.

[northoftheborder]

154. Was going to respond to post, but then saw the long arguments.....

Excellent essay am bookmarking to save.