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/

[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.

[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.

[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.

[mjs]

I agree we need to level the playing field, but I'm talking a world apart from you. If making OSHA standards cost textiles mills an extra 10%, then we add a 10% import to any textiles from a plant that can't make OSHA standards. If making EPA standards costs an American plant an extra 5%, then we add a 5% import to goods from any plant that can't make EPA standards. We use our power as consumers to influence other nations to treat their citizens and the world better. If they rather pay the tariff, so be it. If they rather have plants here, so be it. If we still can't compete, then its not a matter of having an unfair advantage, now is it?

[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.

[Lorax]

I agree we need to level the playing field, but I'm talking a world apart from you. If making OSHA standards cost textiles mills an extra 10%, then we add a 10% import to any textiles from a plant that can't make OSHA standards. If making EPA standards costs an American plant an extra 5%, then we add a 5% import to goods from any plant that can't make EPA standards. We use our power as consumers to influence other nations to treat their citizens and the world better. If they rather pay the tariff, so be it. If they rather have plants here, so be it. If we still can't compete, then its not a matter of having an unfair advantage, now is it?

You're not talking a world apart from me, as I agree in what you say here. I've always said a level playing field is best. Problem is, American coroprations would rather ruin the employment potential of their own countrymen than lobby to craft laws that create that level playing field. OSHA and EPA standards certainly add to the bottom line, and when proposed as you say, would create such a level playing field.

When it's easier to move operations overseas to take advantage of the cheap labor, than it is to keep manufacturing here, there is a disconnect that is very anti-American. I don't happen to think it's in the best interest of our country to abandon the workforce in favor of cheap foreign labor. It's especially distressing to expect Americans to embrace the products they produce returning to our shores without duties levied.

This coupled with a credit based consumer, and the current economic crisis unfolding, spells disaster for any products, whether foreign or domestic.

The rampant greed in the system has brought the current capitalist construct to it's knees. Unless swift change back to the best of what we operated with in the past, combined with new ideas for the future, we won't be doomed to repeat our errors, we're just doomed.

There is no getting this wrong the next time around. We will have sealed our fate as a permanently stagnated economy. There will be no doubt then that America is a nation in decline.

I have said this for thirty years, when any group, whether it's Americans, Republicans, Democrats, what have you, begin to eat their own, then all bets are off, and nothing good can come of if.

[mjs]

When it's easier to move operations overseas to take advantage of the cheap labor, than it is to keep manufacturing here, there is a disconnect that is very anti-American. I don't happen to think it's in the best interest of our country to abandon the workforce in favor of cheap foreign labor.

I said nothing of labor costs. I knew we were worlds apart. However, I think we agree that a Toyota or Honda plant in the US is better than importing vehicles from a GM or Ford plant outside of the US?

It's especially distressing to expect Americans to embrace the products they produce returning to our shores without duties levied.

Please rephrase this. I've read it several times and can't understand what you had meant to say.

Unless swift change back to the best of what we operated with in the past, combined with new ideas for the future, we won't be doomed to repeat our errors, we're just doomed.

We won't get fooled again? Ok, it sounds like George Bush is talking. Can you also rephrase this so I can understand what you had meant to convey?

[DetroitDad]

You're not talking a world apart from me, as I agree in what you say here. I've always said a level playing field is best. Problem is, American coroprations would rather ruin the employment potential of their own countrymen than lobby to craft laws that create that level playing field. OSHA and EPA standards certainly add to the bottom line, and when proposed as you say, would create such a level playing field.

When it's easier to move operations overseas to take advantage of the cheap labor, than it is to keep manufacturing here, there is a disconnect that is very anti-American. I don't happen to think it's in the best interest of our country to abandon the workforce in favor of cheap foreign labor. It's especially distressing to expect Americans to embrace the products they produce returning to our shores without duties levied.

This coupled with a credit based consumer, and the current economic crisis unfolding, spells disaster for any products, whether foreign or domestic.

The rampant greed in the system has brought the current capitalist construct to it's knees. Unless swift change back to the best of what we operated with in the past, combined with new ideas for the future, we won't be doomed to repeat our errors, we're just doomed.

There is no getting this wrong the next time around. We will have sealed our fate as a permanently stagnated economy. There will be no doubt then that America is a nation in decline.

I have said this for thirty years, when any group, whether it's Americans, Republicans, Democrats, what have you, begin to eat their own, then all bets are off, and nothing good can come of if.

Then you have the whole peak oil argument, which actually deserves it's own thread after the recent article by Orlov. The U.S. simply isn't going to be able to import oil anymore, and we gave away and off-shored the industries used to turn the raw materials into tangible things to sell back to them. Honestly, when they own the factories and raw materials, what are they going to need us for? Add on the likelihood of a global economic collapse, and you realize that we have nothing but already consumed garbage and infrastructure, and they have brand new factories, limited raw materials, and the ability to manufacture alternative energy methods.

Are mentioned other countries going to look at us with pity, or look at us as a wasteful people who paid them slave wages so we could get cheaper salad shooters, killed ourselves by eating a bunch of chemically modified Mc garbage, and killed their planet by causing global warming and refusing to change our lifestyles to stop it? Even if they do have some pity on us, our model is unsustainable. The alternative energy sources cannot sustain the suburban model.

We are idiots if we don't rebuild and repopulate our cities, and start building new production facilities now, that means policy changes that may be unpopular.

[mjs]

American corporations would rather ruin the employment potential of their own countrymen than lobby to craft laws that create that level playing field. OSHA and EPA standards certainly add to the bottom line, and when proposed as you say, would create such a level playing field.

Say I own a company with several plants, some here, some overseas where goods go to that country and ours. I pay higher costs here for EPA, OSHA, and labor. A tariff is proposed that will make it cheaper for me to continue to follow OSHA guidelines at my overseas facilities, why am I against it? Why is the American company across the street against it even if their overseas plant isn't as safe as their domestics? Can't they just pass the cost along since every market provider has to pay this cost? Why doesn't this make it easier for me to put all my plants in the US so I can watch over all my plants closer and cut down on shipping costs, employee travel costs, relocation costs, incentives to move overseas, etc? I'm trying to understand why my underlings told our lobbyist to work against tariffs tied to specific acts. We do have domestic plants afterall. What confuses me even more is that I work for an American owned international corporation and our lobbyists and executives are constantly looking for ways to push politicians to increase tariffs. Which anti-import American owned companies are you referring to?

[Lorax]

I said nothing of labor costs. I knew we were worlds apart. However, I think we agree that a Toyota or Honda plant in the US is better than importing vehicles from a GM or Ford plant outside of the US?




Please rephrase this. I've read it several times and can't understand what you had meant to say.




We won't get fooled again? Ok, it sounds like George Bush is talking. Can you also rephrase this so I can understand what you had meant to convey?

Sure, I can agree that a foreign auto maker in the US is better than importing our own vehicles from foreign soil. However, I'd prefer to have foreign wages on par with American wages, which a tariff system would rectify.

Gee, this takes so much energy, but suffice to say, it's distressing for Americans to embrace the idea of being forced to buy foreign goods made with labor which supplanted American jobs. Is this any clearer. Perhpas you can clarify my thought for me?

As for comparing my statements to Tush, don't even go there.

All I was saying was that we aren't going to have a second chance to right the ship. Obama doesn't go far enough as far as I'm concerned, and is being too conservative in allowing banks to remain doing business as usual, waffling on the public option to health care, etc, and as a reslult, we will find ourselves on that road to creeping economic paralysis.

We're only going to have one chance, and will find ourselves in a permanent state of decline if we don't make the system work for the people again. This involves tough choices which few, including our president, I fear, are willing to make.

I find it so surprising that you of all posters need such detailed explainations of my writing. I thought you'd have a better grip on general concepts than that.

[Lorax]

Say I own a company with several plants, some here, some overseas where goods go to that country and ours. I pay higher costs here for EPA, OSHA, and labor. A tariff is proposed that will make it cheaper for me to continue to follow OSHA guidelines at my overseas facilities, why am I against it? Why is the American company across the street against it even if their overseas plant isn't as safe as their domestics? Can't they just pass the cost along since every market provider has to pay this cost? Why doesn't this make it easier for me to put all my plants in the US so I can watch over all my plants closer and cut down on shipping costs, employee travel costs, relocation costs, incentives to move overseas, etc? I'm trying to understand why my underlings told our lobbyist to work against tariffs tied to specific acts. We do have domestic plants afterall. What confuses me even more is that I work for an American owned international corporation and our lobbyists and executives are constantly looking for ways to push politicians to increase tariffs. Which anti-import American owned companies are you referring to?

Now it's me who is going to need a little further explaination of what you mean, but I'll jump in and try anyway.

The situation is quite simple to rectify using your metric- Increasing tariffs on those imported goods will render the productivity level of both on and offshore factories the same.

It's a shame the American owners of the foreign factory opened it in the first place, but it was probably to pump up the bottom line by avoiding the US standards.

With tariffs on those incoming goods making the cost of the products equal, then there is no advantage to going overseas in the first place. And that is the point.

Now, if the American corporation wishes to export those foreign made goods to another country other than the US, they are free to do so, but I would hazard to guess the only reason for opening overseas in the first place was to take advantage of the American lack of tariffs on incoming goods.

Really very simple. It will piss off alot of corporations who invested in foreign plants and workers, hoping to sell to US consumers, but then again, with the economic crisis as it is, and credit drying up all around us, there isn't much of a market for goods here either. Not at the moment.

[oladub]

Question: If tariffs add cost to the price of imports by adding taxes what do you call the opposite; a tax added to domestically produced products making them more expensive relative to imports?

Answer: Cap and Trade

It is estimated that one of every six US refineries will close because taxes on US produced gasoline will be ten times as high as gasoline refined in countries not covered by Cap and Trade laws.

[mjs]

Exactly my point Oladub. If we must have Cap and Trade, raise the tariff high enough to offset its costs and ensure no jobs move from any country to any other. We look good in international eyes because we are getting closer to Kyoto and forcing other nations to do so as well. With help from threats by the State Department, we can leverage that to get Europe to protest nations like China by refusing to buy goods processed at highly polluting sites or highly dangerous sites.

The US is like a like a market leader in a highly concentrated market. The market leader raises his price and if the rest are smart, they all follow his lead rather than try to steal market share. All the participants get higher profits, but no one ever communicated so there are no antitrust violations. If you don't have antitrust laws to worry about, its even better. The one guy that does try to increase his market share will get his ass kicked by the rest for lowering the price. If the US raises the standards, Europe will follow, and all State has to do is convince them to help us kick a little financial ass. What's China going to do? Let the Four Tigers steal their share of American imports? Offered the right deal and those guys will play ball.

Democrats get Cap and Trade with less political liability and Republicans get China to have to eat the costs of writing better environmental and safety laws. If Lorax and I can agree on it, it sure sounds easier to get democrats and republicans to agree.

In the end, the customer is always right and the United States is definently the world's richest customer.

[Lorax]

We have agreement.

[rb336]

Question: If tariffs add cost to the price of imports by adding taxes what do you call the opposite; a tax added to domestically produced products making them more expensive relative to imports?

Answer: Cap and Trade

It is estimated that one of every six US refineries will close because taxes on US produced gasoline will be ten times as high as gasoline refined in countries not covered by Cap and Trade laws.

estimated by whom?

[oladub]

estimated by whom?

Everyone except the Sierra Club.

The Obama answer to energy independence and job creation-
http://www.bloomberg.com/apps/news?p...d=avLVPogS6lh0