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Response to TomCADem (Reply #11)

Wed Jun 1, 2016, 01:51 AM

12. Smoot Hartley is a red herring and omits nearly 50 years of a successful history under GATT

-General Agreements on Tariffs and Trade - that was replaced by the WTO (World Trade Organization) in 1995.

In models, tariffs and trades reduce economic activity; but in practice, adjustments between nations and specific markets while reducing tariffs as a general principle is a more realistic and workable model (and is what occurred under GATT).

The Free Trade model works in theory but not in situ. General welfare and economic productivity are maximized if markets are free (including freedom from monopolies and cartels and labor is fairly compensated) and all parties cooperate in good faith. Also other items such as patents and mutual defense and so on .. are grafted into the legislation and treaties further weakening the theoretical model. So fortunes are made at a cost to labor and the environment and trade deficits and surpluses swing out of control -- what we have now.

Under GATT there was the concept of Most Favored Nation and under the WTO this has been replaced by the associations within various free trade agreements. The free trade model is a neo-liberal rather than Keynesian model.

Under WTO workers in developed and developing but natural resource rich nations have been harmed and there is a short term rush on easily to extract natural resources. The rich (nations or individuals) get rich and the poor poorer and all the wars and rumors of wars and financial shocks and meltdowns lead to even more instability and there are less firewalls between national economies than under GATT; the trans-national corporations rule and have scant alliance to nations. Maybe a unified global system is best and a future certainty but I doubt that we will ever reach such a utopia because it clashes with human nature and is too complex a system to maintain, especially when individuals and organizations are out to game the system.

The Chinese are smart and have built a large trade surplus but are not playing fair. The USA obtains cheap Colombia coal and exports environmental impact and in Colombia an elite only benefits.

Some items may be more expensive domestically but there will also be more income for purchases and paying taxes and income has a multiplier effect of fueling more jobs and income and then demand and more taxes.

One problem is that the concept of full employment is no longer operative. With all the technology and efficiency, there is no reason for everyone to work. But I believe anyway that folks should have a guaranteed income and surety of food, education, medical, and shelter plus reasonable transportation and some discretionary income. The income and wealth is there, just not shared.

I am surprised you brought up Smoot Hartley as that is bull shit and ignores GATT which was instrumental in the long period of post WWII prosperity.

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Arrow 31 replies Author Time Post
TomCADem May 2016 OP
hollysmom May 2016 #1
larkrake May 2016 #2
TomCADem May 2016 #3
JDPriestly Jun 2016 #17
Armstead Jun 2016 #21
Recursion May 2016 #4
JDPriestly Jun 2016 #16
PufPuf23 May 2016 #5
PufPuf23 May 2016 #7
EndElectoral May 2016 #8
PufPuf23 May 2016 #10
TomCADem Jun 2016 #11
LineLineLineLineLineReply Smoot Hartley is a red herring and omits nearly 50 years of a successful history under GATT
PufPuf23 Jun 2016 #12
JDPriestly Jun 2016 #14
PufPuf23 Jun 2016 #18
TomCADem Jun 2016 #20
Armstead Jun 2016 #22
TomCADem Jun 2016 #23
Armstead Jun 2016 #24
PufPuf23 Jun 2016 #29
TomCADem Jun 2016 #30
PufPuf23 Jun 2016 #31
JDPriestly Jun 2016 #15
pampango Jun 2016 #28
PufPuf23 May 2016 #9
jillan May 2016 #6
CrowCityDem Jun 2016 #26
pampango Jun 2016 #27
JDPriestly Jun 2016 #13
pampango Jun 2016 #19
AgingAmerican Jun 2016 #25
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