Tumbling Towards Global TRADE WARS

[DetroitDad]

From another message board;

"Tumbling Towards Global TRADE WARS:
In the latest sign of friction over trade, on June 23, the US and the European Union [[EU) raised the stakes
in a growing dispute with China by lodging a joint case at the World Trade Organisation [[WTO) over
export quotas on raw materials. The US has already introduced controversial “Buy American�
legislation. Now, China has responded with its own near carbon copy “Buy Chinese� provisions. Beijing
has banned all its local, provincial and national government agencies from buying imported goods except
in cases where no local substitute exists. It did so in words similar to the trade provisions in the US.
A Short Economic Take On Protectionism:
All attempts at protectionism are attempts to insulate local producers from wider competition and [[it is
claimed) to boost local employment. Protectionism is easily economically refuted. If an internal
producer has the choice of buying its resources at an international price of 80 or an internal price of 100,
it will, if free to do so, choose the lower price. Having bought, it stands with 20 left over with which to
invest in other things. But if it is forced to buy internally at 100, it will not have that extra 20 and
therefore it will not be making any other internal purchases. The internal economy must contract.
Global politicians were dumbfounded by this plain economic principle in the early 1930s after they had
raised tariffs to “protect� internal jobs from the infernal waves of cheaper imports from other places.
They then compounded their first economic mistake by hammering export subsidies in the form of
borrowed funds and taxpayers’ money in behind their own exports, trying to “undersell� the tariff barriers
erected by other nations. That never lasted long. Other countries quickly slapped countervailing duties to
match the export subsides of their trading “partners�. Global trade shuddered to a near halt.
As Usual - Nothing Has Been Learned:
Once this stage of “competitive subsidies/duties� had been reached in the early 1930s and trade had all
but ground to a halt, the huge internal public works programs began. Sound familiar? Massive internal
infrastructure programs began in all counties, paid for with newly borrowed money. Budget deficits
exploded all over the world. Unemployment stubbornly refused to fall and became a permanent feature.
Taxes on high earners and the wealthy were raised massively to cover the enormous costs of all this.
When companies failed or went broke under these additional burdens, other bureaucrats stood ready with
government subsidies to keep them running - even if now bankrupt. Does THAT sound familiar?
Now, in the US and many other countries around the world, everybody is waiting for the stimulus."

Sorry this a private newsletter so I cannot post a link to the full article.

[Johnlodge]

With a trade deficit of nearly $270,000,000,000 with China, I think they have a lot more to lose in that situation.

[rb336]

The US has already introduced controversial “Buy American�
legislation. Now, China has responded with its own near carbon copy “Buy Chinese� provisions. Beijing has banned all its local, provincial and national government agencies from buying imported goods except in cases where no local substitute exists. It did so in words similar to the trade provisions in the US.

They already have rather restrictive import laws, just like the rest of asia/pacific

[Johnlodge]

Just for fun.

http://blogs.wsj.com/chinajournal/20...nearly-intact/

[DetroitDad]

Just for fun.

http://blogs.wsj.com/chinajournal/20...nearly-intact/

Made in China; a sign of quality.

I bought or received three DVD players this past year that were made in China or Taiwan. The first broke, and the other one only plays certain DVDs, and the other skips badly.

[ccbatson]

Free and just trade solves all issues without the complexity. It even spills over to help correct domestic problems, like organized labor run amuck.

[Lorax]

Love the idea of a little nationalism brought back to our trade. Thanks to Ronald Raygun, we destroyed our largely tarrif based economy in favor of "free trade" which as we all know, is anything but free.

Time to start slapping import tarrifs on this cheap Chinese crap coming in, and charging more, or perhaps cutting off the export of our natural resources. Strengthening our unions, trustbusting Walmart, and other large companies that seek to destroy our way of life, and it's a good start.

[jiminnm]

Love the idea of a little nationalism brought back to our trade. Thanks to Ronald Raygun, we destroyed our largely tarrif based economy in favor of "free trade" which as we all know, is anything but free.

Lorax, do you any references for this ludicrous claim? Federal revenues [[if that's what you mean by economy) haven't been based on tariffs for about 90 years. Within 5-10 years after the 16th amendment was enacted, the amount of federal revenues from tariffs fell from about 90% to about 5%. It's slid from there to about 1% today.

That excludes a minor increase after the Smoot-Hawley tariff Act was passed in 1930 until it was eliminated post-WW2. There are a substantial number of economists who think that Smoot-Hawley hastened the onset of the Depression, made it deeper and expended its length. In response to Smoot-Hawley, other countries implemented their own high tariffs and world trade ground to a halt until WW2 began.

[mjs]

Jiminnm, I wasn't sure what you were talking about at first. Good, well cited piece in wikipedia on Smoot-Hawley providing facts and background and arguing for and against your point and providing a few links to the State Department's official view of it. Liberals will love whats at the end of the article. Learn something new everyday. Thanks.

http://en.wikipedia.org/wiki/Smoot-Hawle~~~ariff_Act

[Lorax]

Lorax, do you any references for this ludicrous claim? Federal revenues [[if that's what you mean by economy) haven't been based on tariffs for about 90 years. Within 5-10 years after the 16th amendment was enacted, the amount of federal revenues from tariffs fell from about 90% to about 5%. It's slid from there to about 1% today.

That excludes a minor increase after the Smoot-Hawley tariff Act was passed in 1930 until it was eliminated post-WW2. There are a substantial number of economists who think that Smoot-Hawley hastened the onset of the Depression, made it deeper and expended its length. In response to Smoot-Hawley, other countries implemented their own high tariffs and world trade ground to a halt until WW2 began.

I apologize for any confusion, I was thinking specifically of the auto industry, and our manufacturing base, broadly.

We didn't respond to the high tariffs imposed on our products by raising tariffs on incoming products, such as Japanese automobiles. Reagan blew the doors open by allowing this pattern to continue, until, as you say, we let just about everything in. We still do.

Doesn't change the fact that we need to start imposing tariffs, level the playing field, and retain what's left of our manufacturing base. We have no electronics industry, no textile industry, and barely an auto industry left, all of which would have been saved by a level playing field.

[mjs]

Do you see a trend change when administrations changed? Once again, pure hatred of a political affiliation is blinding you to reality. Follow the campaign money. Everyone gives to both sides.

[Sstashmoo]

Said this:

""Thanks to Ronald Raygun, we destroyed our largely tarrif based economy in favor of "free trade" which as we all know, is anything but free."'

Now claims to have meant this:

""I apologize for any confusion, I was thinking specifically of the auto industry, and our manufacturing base, broadly. ""

LOL

[Lorax]

Said this:

""Thanks to Ronald Raygun, we destroyed our largely tarrif based economy in favor of "free trade" which as we all know, is anything but free."'

Now claims to have meant this:

""I apologize for any confusion, I was thinking specifically of the auto industry, and our manufacturing base, broadly. ""

LOL

I still stand behind my statement, Sparky. Are you still in junior high? Just wondering.

[ccbatson]

That is the point, we will not escape the financial consequences of this tax whether foreign or domestic.

However, if you, as a consumer, have a choice to buy the same gas for 10 cents less what are you going to choose.