The Infamous Free Trade Thread

[Nolan Void]

As per Warlady's excellent suggestion, here is yet another thread dedicated to the purpose of arguing the merits (or demerits) of international free trade. Can free trade survive the free exchange of ideas?

To get the ball rolling, here is an article by Daniel Griswold (http://www.washtimes.com/op-ed/20030817-105449-5018r.htm) featured on washingtontimes.com

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The logic of trade

By Daniel T. Griswold

Whenever an expert touts a totally new theory, invention or miracle medicine, a healthy dose of skepticism is called for. The recent writings of Paul Craig Roberts fit the mold. He claims that two centuries of economic thought in support of free trade, dating back to Adam Smith and David Ricardo, have been overturned by new developments and his own unique insights. But reality is more straightforward, and far less ominous, than he depicts.

In his Aug. 6 column, "Seeking Jobs in the U.S.A.," he claims that American workers face an unprecedented threat from low-wage countries such as China and India, where an endless supply of workers can now substitute for millions of middle-class American workers at a fraction of the wage. What has changed, Mr. Roberts asserts, is the mobility of labor through the Internet. It is no longer only manufacturing jobs that are in danger, but "almost the entire range of knowledge jobs," including "stock analysts, accountants, researchers, designers, engineers, radiologists..."

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[Nolan Void]

Ok. I get it, when I disagree it's because I deliberately misinterpret you, because I'm an ideological liar and therefore my lies don't qualify as legitimate responses. Well, I'll try to...conceal it better?

*plots fiendishly*

Now then, on to the (hopefully) non-trivial...

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Well let's see, were to begin.

"He claims that two centuries of economic thought in support of free trade, dating back to Adam Smith and David Ricardo"

That's it, NEVER PRACTICED, just thought. "Free Trade" has only been in actual practice for just over 13 years.

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Even if you refuse to acknowledge his point, I don't. To suggest turning away from such long established and successful ideas should be treated with skepticism, though I'm open to considering new ideas that are presented well.

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"The United States can continue to reap tremendous gains from specializing in what we do best and importing what other countries do best."

What do we do best? Export our capital goods, technologies, industries and jobs so that we can become burger flippers and store clerks.

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I realize you exaggerate to make a point. I believe he was referring to our culture of entreprenuerialism, and our leadership in innovation, invention, scientific research and discovery, etc. Yankee ingenuity and competitive drive, the result of our (relatively) free market economy. By specializing in what we do best we can fill the world demand that wants the products of our specialties, while saving ourselves the trouble of mucking about in what we don't do best.

The increase in burger flipping is more (IMO) a result of a socialist induced dependency (learned helplessness) counterculture, (and the very real need for qualified burger flippers.) That's why I want to keep most of our industries off the government needle, so that we don't continue to encourage that mentality in our labor force and corporate culture.

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"His theory utterly fails to explain why most capital leaving the United States, including manufacturing investment, flows to other high-wage countries, such as Canada and Europe."

Red Herring argument. The REAL POINT "most capital leaving the United States, including manufacturing investment". And it makes a rat's ass worth of difference whether it's to China or Europe.

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Hmmm. I see a difference. If cheap labor were so important, then why doesn't most of it go to those areas? Also, we must consider all the reasons why capital should leave at all: they almost all are related to the reasons why capital should leave your savings account when you spot an attractive opportunity (so that you may capitalize on it). It takes money to make money after all. The point is that when people are allowed to operate freely within the bounds of agreed upon laws, and in their own interests, it best serves the common interest.

A trade imbalance doesn't necessarily mean we are getting screwed, it means (in our case) that we have more money to spend, and more reasons and ways to employ it. You (I believe) say that our imbalance is almost entirely the result of blind greed and consumption, fueled by borrowing and debt. I think it's fueled largely by the fact that we actually possess and attract more capital, and stimulate the growth of new capital (as value is added in successive stages of production) here faster than everywhere else (because of higher productivity), and that this is because our system IS (and has been for some time) more open, and fosters healthier competition that further promotes productivity and innovation that keeps feeding the trend.

Now I can see some common ground with you, as in the case with Cuba et al., how we can use the lash or lure of tightened or relaxed trade restrictions to entice other powers and entities to make policy changes that we feel will benefit us. I also see how certain highly sensitive industries should enjoy some national protection and oversight for reasons of our national security, such as in defense industries. But these cases must meet strict standards and not enjoy a monopoly, or it defeats the original intent and is subject to exploitation. I'd also love to be convinced that this isn't necessary, but until such time...

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"the United States has been a net recipient of an annual average of $20 billion in foreign manufacturing investment?"

[b] Let's $20 Billion In, $9.2 Trillion out over 60 years, yep that's about even.

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When you say $9.2 Trillion out, are you assuming there has been no return on those investments? While I admit that there is waste, are we just super-nice-guys? Our fear inspiring reputation sure doesn't show it. I'm sure the $20 billion we receive annually is, on the whole, employed smartly and rewarded nicely. I'm sure if the world could free up $10 trillion to invest with us that they'd risk it.

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"Mr. Roberts' theory also fails to explain America's continued export success in world markets. Americans remain the world's leading exporters of manufactured goods. The United States today accounts for a steady 12 percent of global exports, the same share as two decades ago, and three times China's share. Chinese exports to the United States have indeed grown rapidly in recent years, but at $125 billion last year, they represent just above 1 percent of America's gross domestic product of almost $10.4 trillion."

Defining a $480 Billion Trade Deficit as an "Export Success"? This man needs to put the crack pipe down. And again with the GDP which is nothing more than a measure of money changing hands.

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Yeah. We're exchanging paper money for real goods. Inflation also favors us slightly in the short-run. But please understand that trade benefits both parties. Win-win. There cannot be a loser from trade if both parties are satisfied with the exchange.

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"Manufacturing output in the United States remains 40 percent higher than it was a decade ago, and double what it was in the 1970s."

Yes but in the 70's we exported double what we export today so let's put the proper qualifier upon this; Manufacturing output for Domestic Consumption, which also includes Foreign owned Industries in the U.S., is double what it was in the 70's.

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We export more FRN's now, and they get invested back here, buy our
exported goods, and pay back our foreign loans. It's not foolproof, as excessive inflation can bite us when the dollars make their way back home, but that's not a trade problem - it's part of the hard task of managing the money supply. This was my big problem with the Fed, but as Esty points out, come up with a better way. Also, the trade imbalance helps to curb inflation by introducing more goods to compete for dollars. More goods = less inflation.

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"Trade with China allows our economy to shift production to those products and services where we enjoy an even greater advantage, raising our overall productivity."

Yes, America has the Best Discount Stores and food chains in the world and our lawn care industry is second to none.

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Very funny and point taken. Don't blame it on trade though, blame it on government intervention which stifles the economy, and makes it harder for Americans to create new jobs to replace the old ones that are no longer competitive in our high-wage demanding and overregulated economy.

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"Erecting new barriers to trade and investment with China would restrict the liberty of Americans and would weaken our economy by reducing competition and raising prices. It would benefit the few at the expense of the many. "

And here we are, the same damn lie that has been disproved by just under 200 years of economic history.

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How could barriers limit choices, raise prices, reduce competition, and weaken our economy! That's exactly what they do, how can you call that a lie? Barriers by definition limit freedom.

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"American workers retain huge advantages when competing in the global economy. When we shake off the current slowdown, as we have every other postwar recession, American workers will be more productive than ever. As the unemployment rate falls and worker compensation continues to rise, I predict that the supposedly revolutionary theories of Mr. Roberts will quickly be forgotten.
"

I can just picture him, pom poms flailing in the air as he enthusiastically predicts the rosy future.

While we're in a predicting mode; I predict that as more and more Americans become more and more angry watching their economic futures packed up and shipped offshore there will come a time of great reckoning.

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Ha ha. I just hope you don't enjoy that picture of an economist in chearleader-drag a little too much, eh? Seriously though, I don't think optimism here is irrational. The worst thing we can do as a nation of investors (even a laborer is a kind of investor) is invest poorly, wasting our abilities, time, and capital. The worst thing the government can do is get in our way, and fail to protect us from real threats like terrorists and crooks.

[Nolan Void]

" ...you do have a very bad habit of taking what I write and twisting it to suite your ideology.

I sure am lucky you’re so patient and understanding! /ubbthreads/images/graemlins/tongue.gif

"For example; "Producing the goods? Carl, I could never produce all the goods I use." ...was totally out of context, not what I would expect from someone who is supposedly wanting to participate in a serious debate.

I do stand by that comment, but I don’t wish to argue it here at this point in the discussion.

"You know a funny thing about words, even the simplist of them have a meaning and a purpose. And I did addressed his point. He specifically stated "two centuries of economic thought", if he had meant two centuries of economic "practice", I believe he would have stated it as such and I would have addressed that as well. Now take your response; "To suggest turning away from such long established and successful ideas". How can an Idea be considered successful when it has never been tested beyond our borders?

Those centuries old ideas have been tested and attacked by mercantilists, communists, socialists, fascists, and protectionists continuously, and were themselves based on centuries of refined observations and inductive reasoning. Without EVER being fully implemented, those ideas have proved successful whenever or wherever they are used in the formation of economic policy, and can be shown to have almost single-handedly been responsible for our current economic preeminence today. All the man said is that skepticism is required of any new thinking that would challenge ideas of that caliber.

I felt your pointing out that Free Trade has never been fully practiced was a straw man, because no one said it had. But of those ideas that have been used to make policy, they have proved themselves to our opponents sure enough. I thought this was a throw-away opening line at best (even though I get his point), and that it's better for us to focus on his supporting statements. I'd like to eventually whittle down these many paragraphs into the major points of contention, and focus on those.

"Your response here, lost all connection to reality. Waxing poetically about intangible assets that may or may not materialize out of some future circumstance and treating them as if they are real, universally possessed and employable across the entire working population, is................... backs out of room slowly, slams and locks the door. You have left the field of economics and entered the realm of faith based ideology.

It is not I.... /ubbthreads/images/graemlins/libsoffmeds.gif.gif.......who have suspended rational thought!
Do you deny our entreprenuerial culture and history of achievement in innovation and technological prowess? /ubbthreads/images/graemlins/patriot.gif

Market forces, like gravity, are invisible; but their effects can surely be seen. I make no guarantees of future success and will not allow you to characterize my argument in that way. What I can promise is that if we ignore market forces they will certainly not ignore us.

" It [ increases in unskilled positions such as burger-flipping] has nothing to do with "socialist induced dependency", it has everything to do with real world, real people.

Nothing to do with it? I certainly didn't say it explained everything, but to say that socialism-induced learned helplessness has nothing at all to do with it is to ignore a serious problem. It also dampens the positive effects that competition can have on accurate allocation for division of labor in free markets, because people aren't taking the initiative that they could.

This also seems like a good time for me to once again denounce what I think of as the "dreaded zero-sum fallacy", which states that there are a fixed number of jobs and a fixed amount of wealth in the world. I say that there aren’t a fixed number, and say instead that when some lose their higher paying unionized manufacturing jobs, or just choose easy money over what they perceive as hard or boring work, a kind of learned helplessness often insidiously prevents those who have been (fairly or unfairly) dislocated or jobless, from seeking new ways to better themselves, who then often look to even more support from government and also tend to settle for lower skilled and lower paying employment rather than doing whatever it takes to make themselves more employable in more specialized ways, or creating their own positions outright. This creates the feedback loop that favors increasingly interventionist government and steady economic decline as politicians exchange promises of security for the votes of the growing dependency types.

The solution, in part, is a little conservative compassion or “tough love”, that by reducing leftist/collectivist practices increasingly favors and promotes self reliance and the aforementioned culture of entreprenuerialism and innovation, over the counterculture of dependency and learned helplessnes. I am not suggesting anything drastic or cruel, but a gradual process of reforms in government and education.

As for fixed numbers of jobs and wealth, I will say it again, “there is no such thing”. If that were the case then populations would not have ever grown from a fixed number, and the world supply of goods and monies would not have grown to accommodate the demands of these increasing numbers of people. Things grow on a world (and in a universe) that supports life. Whenever you see a bare patch of earth, or an unplanted seed, or a mature tree not hewn, or a hungry person (or even a fat person), or a sick one or even a bored or idle or uneducated one, or a thing broken or incomplete, then you know there is a job to do or something to be invented or made.

(Time for some uplifting Edison quotes)

"There is no expedient to which a man will not go to avoid the labor of thinking." "Opportunity is missed by most people because it is dressed in overalls and looks like work." "To invent, you need a good imagination and a pile of junk. --Thomas A. Edison

Future inventions are not tangible it is true, and some in the past have denied that our knowledge of the nature of things was incomplete and that no new patents would be secured, or new songs or books be written, that science and art was dead, and on and on. They are the pessimists and the nay-sayers, and they serve a purpose too. They point out the problems, and the innovators and developers solve them, for our mutual benefit. It is because of our free market system and that associated national character of ours that we have had so many "Edisons" and led the world in wealth production, innovation, and discovery for so long, as history so plainly shows. You can ridicule my confidence and optimism, but it is those who look aggressively to the future who are in position to spot the next trends and make adjustments before progress leaves them "jobless".

"For the most part, capital is leaving because we owe and because investment capital that was used to build and update industries in the U.S. is now being used offshore, netting our economy ZERO.

Inflation favors the debtor over the creditor. How we spend borrowed money is not an international trade issue so much as it is a personal one. When we buy goods, the seller is buying our money. That’s a wealth for money exchange and does not signify a loss of anything unless we buy overpriced or unusable goods ("bads"). It shows that we’re cash rich and want durable goods and they need liquidity more than actual wealth.

Industries enticed or forced offshore by intrusive government and/or foreign competition reward US stockholders by being more profitable, provide cheaper goods to US consumers, open new markets to US-based companies, and would otherwise have died unless being put on even more costly artificial life support. That nets the economy a lot, rather than the actual drain that would be created by taxing US consumers to prop them up.

"The trade imbalence demonstrates that we have more products coming in than going out. The trade imbalence also demonstrates that we have more money going out than coming in. Our economy is fueled by Credit based consumption. We do not have more money to spend, we borrow more money to spend. "Blind Greed" are your words, not mine. We are doing the best we can with what we have left.

I’ve addressed this previously, but what the heck. The trade imbalance is not really an imbalance. We generate and attract more wealth and money in the US than anywhere else. We’re like a fountain and they’re all too often more like a drain or a puddle. The richer you are, the more money you can borrow, because your credit is good. How money is spent is not a trade issue but a personal one, and profits are the measure of viability. If you never said “blind greed” directly, then perhaps I am at fault for getting that impression, but perhaps not (I'll check into it, and if I owe you an apology you'll get one; if not then I won't mention it if you don't). Personally, I don't think we'll be doing the best we can until the mass of voters realizes the destructive effects of overregulation and bloated central government.

"There is a BIG DIFFERENCE between Earned Income and Invested Capitalization. The first is OUR MONEY, the second is SOMEONE ELSES MONEY. The first has NO OBLIGATION ATTACHED, the second has OBLIGATION ATTACHED.

When you borrow, it’s always someone else’s money. The obligation to the lender is always the same (pay it back with interest). More lenders means better rates and more access to investment capital. Borrowing itself is not bad, and the access to foreign capital is not a threat, because the lender is banking on the fact that it's better in our hands than theirs.

"There is only one way an income can be earned and that is by producing a product that others will buy. There is no legal way to circumvent this fundemental law of economics, all esoteric rationalizations notwithstanding.

Uh huh, and have I ever said otherwise? What I have said is that we don't have to make every kind of product that we use, and that we should focus on the ones that we can make most profitably, and sometimes that means Americans may choose to develop factories or businesses in other countries to take advantage of economic opportunities.

"And this is why the Trade Deficit is so important; it demonstrates beyond a shadow of a doubt that the United States of America is not earning a living and hasn't been for quite some time.

No it doesn’t. See the above section on wealth creation. Perhaps we need to discuss the difference between wealth and money, and the problems of bullionism. We are making wealth and money here, the debt to GDP ratio proves it, and freer trade promotes it. We could sure stand to reduce government spending and intervention though, and then we'd be doing even better.

"No, there hasn't been any real or economically meaningful return. That $9.2 trillion represents the lost technologies, industries, jobs and income that have been siphoned out of our economy over the past 60 years. And let me reiterate; INCOME, not investment.

That is debatable. Why don’t you get more specific with a few examples that illustrate how trade itself is to blame for any real or perceived losses, rather than sheer incompetence or corruption, because I'm not familiar with those statistics and might draw some different conclusions than one that suggests doing business is bad for business.

"I've said it before and it's worth repeating here again: The day when other nations and their business' start taking our used goods instead of cash as payment of our debts, that will be the day I will stop arguing over open markets “Free Trade”. And besides, your argument is nonsensical. We're not "trading" currency for goods, we're "buying" goods with currency, currency that we have to "earn" back.

The deal is, we’d rather have the goods. That’s why we bought them in the first place. When it gets so bad that we have to hold a national garage sale to pay our debts is the day I renounce free trade and civilization. It boggles the mind how you (The Enemy of the State) could support anything that even remotely resembles a state planned economy. How do you reconcile this?

And my argument that we trade currency for goods is the literal truth. It may seem counter-intuitive to suggest that we “sell” our currency, but that doesn’t make it nonsensical. That just puts so-called trade imbalance in proper perspective.

"OK, it's already established that Foreign investments into our economy is not income and our trade deficit demonstrates that we're not earning enough income to pay our debts and as more and more investment capital is being drawn out of our economy to build factories in Mexico, China etc. and, as we all know, money don't grow on trees or else we would all be rich, and the money has to come from somewhere which leaves us with only two options; the Fed has to 1) borrow or 2) print more money to pay our balence (or the interest on the balence) and for us to use to keep our economy going.

Hopefully I’ve established that we generate wealth here, without needing for it to come from other nations, which is one fatal flaw of bullionism and mercantilism, and so protectionism which is a vestige of that antique notion. We make $$$ right here, so domestic production is just as important as domestic exports for growth in net income, and a trade deficit need not represent a net loss of wealth at all, for that reason alone. See the section on Zero-Sum to recall how wealth actually does “grow” on trees, and lots of other ways. While the Fed does print money to pay the government debt, the government debt is largely related to fiscally unsound spending and economically damaging intrusiveness, not trade. This is getting repetative, but the answer is always the same.

International trading helps grow our economy, generating more tax revenue as a result, for all the reasons already provided again and again (availability of goods, cheaper prices, healthy competition, division of labor, economic growth, fighting inflation, new and growing markets...), and there is never a loser between trading partners. The losers are those (businesses) who are edged out of the trading picture, through personal failings, natural and unpreventable misfortunes, or government intrusion.

Protectionism, on the other hand, hurts everyone. Even developing economies are not served by closing their markets. When a developed economy tries to profit by nationalizing or subsidizing its industries, they actually lose money and transfer real wealth to the other trading powers. Money that could have been kept inside their economy by letting the industry fend for itself. The only ONLY way that a government can help the economy is by enforcing contracts, punishing criminal behavior, and generally getting outta the way by creating as little burden or restriction on the economy as possible. But when we ourselves attempt to manipulate or otherwise abuse the free market system or ignore the power of market forces, it harms us directly and only encourages similar forms of misguided protectionist retaliation abroad. Lose-lose.

"Compared to the rest of the modern nations of the world, America is the least regulated of them all, yet you do not see their industries packing up and moving out of their economies. The United States of America has sole proprietorship to this little phenomenon. Why do you suppose that is?

When they are as fully developed and have the international standing, means, and economic experience & know-how, then they will too, as the situation demands. We are a truly global trading power, and are not as dependent on local manufacture to the degree that others are. Either way, our ability to do this is yet another advantage that we enjoy almost exclusively for the time being, and should be exploited.

"Furthermore; an economically viable Industry, packing up and moving out of our economy, setting up shop offshore then shipping products back into our economy has ABSOLUTELY NOTHING to do with trade. It is 100% pure unadulterated, government sanctioned, greed and it is killing us economically.

If a truly viable industry packs up and leaves, then there is an economic reason for it. Unless it is somehow based upon fraud or criminality, then the government has no authority in the matter. Greed is pathological and self-limiting. Profitability is a sign of economic health. Unless they damage themselves, then we should prefer them to do what they want, content in the knowledge that America can remain the best place to live and work, because of its freedom and resultant prosperity.

"And if I had it my way I would impose an import tariff of 150% on every product they tried to import back into our economy, ban their stock from being traded in the United States and confiscate all of their remaining assets. Treasonous, greedy bastards.

Damn Carl... Tell us how you really feel! /ubbthreads/images/graemlins/deadsheep.gif

" America's greatest economic expansion occurred between 1810 to 1900, with tariffs and import quotas applied. And again from 1940 to 1973, with tariffs and import quotas applied. What you are expressing as the "norm" is taken from the extreme cases where showcase politics got involved. The vast majority of tariffs and import quotas where very efficient and unnoticeable, Americans could buy products from all
over the world and at fare market value.

You said this in response to the “Great Lie” of free trade. While it’s certainly nice to know how well America can work while in chains (or rusty burdensome armor and a crutch for a weapon) it doesn’t actually explain how they were helpful, or why removing them won’t produce even better results. It doesn’t justify calling his assertion that protectionism “benefits the few at the expense of the many” a lie.

"Besides, True Freedom is not measured by how many superfluous gadgets you can buy.

Well, while freedom is certainly much more than that, it certainly would include that.

""A nation of investors", what a quaint picture, totally unrealistic, but quaint just the same. Back to reality, we have become a nation of shopkeepers, obligated to those who provide us the products we sell.

It is an insulting exaggeration to say we are a nation of shopkeepers, especially as retail is being transformed yet again. Witness the new self check-outs and smart-carts that eliminate superfluous cashiers.

We are not all producers in the classic sense, but we are all consumers and investors. Every act, including consumption, requires time. How you spend your time is either profitable or not. It is either a positive investment or a negative one, and truly makes us a nation of investors. I prefer that label to one that glorifies consumerism. This awareness is the secret of personal and economic growth, and in a free market system that choice is always ours.

[Estragon]

BWAHAHAHAHAHAHAHA!!!


Nolan, meet Carl. I see you're finding out what a "debate" with him entails.

Carl invents his own theories to justify his positions. He defines terms in ways that you will never see them defined elsewhere.

His philosophy entails the preposterous belief that the economy can never change. Any change is bad in Carl's eyes. He believes we haven't "really" grown since the 1960s. All the new businesses, homes, and roads you see are completely imaginary.

No economist has ever endorsed the policies Carl insists are the only correct ones. When challenged to provide anyone who agreed with his views, he linked to far-left websites. He did find Lincoln's Secretary of Commerce, a political hack without even a degree, who did promote his protectionist nonsense 140 years ago.

Carl holds the record for number of posts on a subject of which the poster is completely ignorant. Yet, he receives a "A" for perseverance in his ignorance. Regular visitors understand that you may take whatever he says, and safely believe the opposite.

[Nolan Void]

Your statement is nothing more than an egocentric personalization of the subject that falls flat on its face when it's even moderately scrutinized. It starts in the middle of the economic equation with the assumption that money magically appears out of thin air. In the real world where the rest of us live, we don’t [poop] money, we have to earn it. And here is another vital clue that differentiates your fantasy from reality: The reason money has value is because it is in a limited supply, that is why we actually have to work to earn it. It doesn’t grow on trees and it doesn’t magically spring to hand every time someone thinks they have a good idea.

I'll address this further down.

Do you work to earn the money that buys you those goods that you are so enamored with, or are you on welfare and your money is given to you, or did you inherit yours? If you work, then you’re selling your production to your employer for a profit, to earn a living. If you own a business, then you’re selling your production, as well as your employee’s production, to your customers for a profit, to earn a living, not only for yourself but also for your employees as well. Either way, you’re producing goods. Every working person in the world starts with the only commodity readily available to them that can be turned into currency, that can then be used to buy other commodities, and that commodity is labor. Labor is a commodity, a good, that every person not institutionalized, on welfare or inherited wealthy, sells on the open market to earn a living, and every person from Bill Gates to the stock boy at Wal Mart does it, including you. That is, of course, unless your money is given to you, maybe in the form of credit?

I work (some would say play) for my wealth, and my wealth and money are made to work for me. I make treasure for pleasure and for profit, and would do it at any level of wealth because it is enjoyable, healthy, and beneficial to society.

"Without EVER being fully implemented, those ideas have proved successful whenever or wherever they are used in the formation of economic policy"

Do I really need to point out the inherent flaw in that reasoning?

There would have to be one in order to do so.

If only bits and pieces of an economic ideology called "Free Trade" have been implimented at any given time then "Free Trade" as an economic ideology has Never Been Tried and remains, Just A Theory.

Free Trade is not an ideology, nor is it even an economic discipline. It is a policy that acknowledges fundamental human rights that you would deny. The opposite of Free Trade isn't fair trade, it's SLAVE Trade. The only way for trade to be fair is for it to be free, and everthing between free and slave is defined as "unfair". What passes for fairness these days is nothing more than socialist redistributionism, which is little more than legalized theft.

Again, you cannot logically claim in totality the "Success" of an economic ideology if only bits and pieces of it have been or are being used. One could logically argue that the bits and pieces that you claim as and indicator of success, are just a coincidence of similarity and have nothing to do with the ideology. Oh, and pointing out the obvious flaw in the writers opening premise is not a "straw man" argument. If his opening premise is wrong then his following arguments in support of that premise are also wrong.

And in your argument, the obvious flaw was made of straw. There is no ideology of free trade, and the man wasn't referring to Free Trade policy in that opening, but to the mainstream dominance of capitalistic thought. What there are, is a collection of observations about how our economic system works, that began to be introduced over two hundred years ago and have proven themselves to be accurate, by unplanned economies outperforming planned economies.

This system was not invented 200 years ago, but was observed to have been in existence. Our economic system is called "a free market system", "a free enterprise system" or "capitalism". The mechanisms of the system exist independently of government and are akin to natural phenomena, and that is why it is the only true economic system in existence. The characteristics of capitalistic, or free market economies, are: personal freedom, private property rights, innovation, division of labor, a price system, profits, and generally accepted rules.

Just because the nations have not fully implemented policies based on all of the above ideas which have described it, does not mean they're untried, because they work in economies of any scale, such as in a city, where they get tested all the time. As Adam Smith said, "What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom." And that was why you failed to acknowledge the man's point, and introduced a phony argument attacking an assertion that was not made. International free markets do not yet exist, but free market economies do, and have always outperformed planned economies in terms of the wealth they can create and the quality of life enjoyed by free citizens rather than state subjects.

Your response here, lost all connection to reality. Waxing poetically about intangible assets... You have left the field of economics and entered the realm of faith based ideology. In all of the materials presented, that was one you should have left alone. We'll let the readers decide which argument represents reality. Oh, and I did not "characterize your argument", you did. I just put words to that characterization.

You were referring to the point describing division of labor. It was mentioned that when jobs are lost because they have become uncompetetive in the market, that this drives people into more efficient use of their labor, by necessity, unless their inefficiency is subsidized by taxation (redistribution theft). That in a free enterprise system such as ours, people eventually do what they are best at (minus socialism). You made a derogatory comment about Americans being best at McJobs and store-clerking, and I assumed you were exaggerating to make a point, and replied that America has proven itself the leader in industry, and was aided by our very system which has helped shape our national character. You then accused me of insanity. In order to give you a chance to explain yourself, I asked if you denied our culture of innovation and entrprenuerialism, to which you have not replied, and instead suggest that I should have left the subject alone. I'd say the fact that you have decided to leave my question alone in favor of silence, speaks volumes. We'll let the readers decide that too.

Nolan said: I certainly didn't say it explained everything, but to say that socialism-induced learned helplessness has nothing at all to do with it (poverty) is to ignore a serious problem... The solution, in part, is a little conservative compassion or “tough love”, that by reducing leftist/collectivist practices (so-called War on Poverty) increasingly favors and promotes self reliance and the aforementioned culture of entreprenuerialism and innovation, over the counterculture of dependency and learned helplessnes. I am not suggesting anything drastic or cruel, but a gradual process of reforms in government and education.

So, in other words; all we have to do is indoctrinate the people into the proper way to think, believe and act, and everything will work as "your ideology" dictates it should. Shades of Marxism! And you wonder why I refer to your "Free Trade" as a faith based ideology. There is ABSOUTELY NOTHING even remotely connected to being Conservative in your ideology.

How is it Marxist to be anti-Marxist? Is education the same as indoctrination? Is reducing the practice of redistribution-theft an increase in Marxism?

Zero-Sum asserts no such thing.

Zero-sum and Non-zero-sum are offshoots of game theory. According to zero-sum games there is always a win, lose, or draw outcome for individual players like in chess or poker. In a poker game it is impossible for every player to finish with more than he began with. In non-zero-sum games, such as trade, every voluntary exchange benefits him that chooses to make it, so all players can finish "the game" in a better position than when they started, if they choose. That is also why the "money changing hands" reflected in GDP is good, even when spent to repair damage. To assume otherwise would be to say that neglect and stagnation (or worse) is the solution to problems that arise, rather than employing capital for improvements. Not all human choices are healthy, but any other policy position would rob individuals of their right to personal/economic freedom and ability to engage in mutually beneficial activity, and it is generally assumed that people will tend to choose to do what is in their best interests, over time.

Jobs and wealth can be infinite, what is limited, and with good reason, is CURRENCY. Currency is the reason there are jobs and why we work and currency is the measure of wealth, basic Capitalism. If currency weren't limited it would have no value, no worth.

We use fiat money (latin: "let it be"). That means its value is literally "made up" and might as well appear by magic as off a printing press. Just as there is no technical limit to the amount of goods that can be produced (during the boom phase of business cycles there is a tendency to overproduce, decreasing demand and market value which halts production, closes factories, and lays off workers during recessions) so there is no practical limit to the amount of money the Fed can produce (as long as there are trees), and indeed the inflationary policy of the Fed shows that there is no attempt to self-regulate a "fixed" upper limit at all (so it continuously depreciates in value as a consequence). Please do not mistake my stating that fact for a criticism, as I have already been challenged (by the formidable Estragon) to provide a realistic alternative to the Fed and have chosen to reasonably halt production of my criticisms toward it (until some profitable alternative occurs to me.)

Indeed, the vital point that you have overlooked is that there is only one truly limiting factor. Only one commodity that is in limited supply. Time. That is why productivity is so important and is indeed the true measure of economic advancement for practical purposes. That is why free market policy is so important, because it allows businesses to fail if they cannot compete with the more productive. That is the "measure" of wealth potential and real power, because time mediates the whole economic "equation", and why the most productive nation on Earth has become the most wealthy. You wittingly or unwittingly seek to oppose this, by maintaining your protectionist position.

And quoting Edison will not change those fundemental facts of capitalist economics.

Hopefully you see that good sense does not change any facts, it recognizes them to its advantage.

Goods are not wealth, they are the generators of wealth. The value of goods, measured in currency, is transiant and that transition is almost always down. The only real value or wealth is represented in the currency, that's why we use currency to buy goods and that's why others produce those goods to get currency. Capitalism 101.

Now here's a lesson for the would-be teacher: an economy is that part of society that produces wealth. Wealth is the total produce of goods, such as from agriculture or manufactoring. Without products there is no wealth (try eating money). That means that money is not wealth but the economic equivalent of wealth. It has no "use" value other than as currency, unless you're a coke-fiend out of straws or you're out of toilet paper or something. The needs of society are met by goods, which is the true wealth of an individual or nation. If you were able to satisfy all your needs by producing your own goods you wouldn't even need money.

So, goods are wealth. Printing presses are the generators of inflating fiat currency. The generator of wealth is production, and the factors of production are capital, which consists of money, land, buildings, and machines. A capitalist, whose money is losing purchasing power due to inflation, is one who invests his money in the other factors of production to engage in profitable enterprise and stave off inflation. Putting money to work, by exchanging it for actually useful assets. The idea is not to hold on to the money, but to get other people to hold on to it and keep passing the bucks. Cash Flow. When the presses stop printing, and money becomes relatively scarce, supply and demand make holding money more profitable by raising "interest" rates. So, to recap: we generate more wealth, we print more money to offset the rise in supply of goods, possess more capital, and can afford to consume more goods than we are forced to sell. Sort of like that trade deficit I've been running against Wal Mart, which has saved me a bundle, while benefitting our nation and those with whom it trades. Win-win-win.

83% of all stocks traded in the U.S. are owned by the top 10% of the population so please excuse me when I say; I could give a rat's ass less whether or not stockholders are more profitable at the expense of the economy.

You are wrong to suggest it is possible to profit at the expense of the economy, unless it is through fraud, or socialistic programs (like protectionism and all forms of welfare).

Secondly; "Industries enticed or forced offshore by intrusive government and/or foreign competition, provide cheaper goods to US consumers." There is absolutely no evidence to back that assertion, however, there is an abundance of evidence the demonstrates that U.S. industries who move offshore continue selling their products at the same price as when they were made here.

I guess the evidence is that's one way they can compete with native industries. Their natural advantage can be cheaper production costs that allow them to sell for less to grab more market share. Our advantages should be higher technological sophistication at all production levels, and hopefully superior quality of product, as well as a wider array of competitive choices. And don't forget that those dollars that travel abroad help grow developing markets for us to sell goods which they cannot provide for themselves. This is why we want them to open their markets even further. We can always maintain our advantage so long as we encourage more trade.

But most importantly; the stock markets are not representative of the overall health of our economy, especially when they represent industries that are no longer a part of our economy. Maytag and Westinghouse of Mexico are excellent examples of this. When anyone buys stocks in these companies or any of the other companies that has deserted our economy, they are supporting those other economies, not ours. Whenever anyone purchases a product from any of those companies, the proceeds go to supporting those other economies, not our economy. These companies represent a financial drain upon our economy and do far greater damage than anything Sony or Philips could ever do.

You see this as a national contest, and that is a serious and harmful mistake. Trade is not warfare. We want to be able to be beaten at things, to force us to change and grow. Fortune favors the brave. If we coddle our industries we do no one any favors, and real harm to ourselves and our allies.

You see, at least we can trade with Japan and the Netherlands to recoup our money but what can we do to recoup our losses from a corporation that has deserted our economy and is tied to nothing? And with more and more of these economic parasites re-incorporating offshore, we're loosing everything we invest into them and every dollar we use to purchase products from them.

What have we lost? We have gained their useful products in exchange for depreciating paper! If you have invested in them, how do you lose your investment when they prosper? And do they not still need components and various other products and services that only we can provide? Are they not still our partners in trade? Do they not employ poorer people who can themselves prosper and will wish to buy things only we can supply? Does it not magnify by several times the profit potential for countless US companies who can trade with the developing markets? Does it not provide incentives for people to not seek to flee their own nation for our shores? Win-win-win-win.

These Corporations are nothing more than floating Corporate/Colonialists who practice mercantilism with deadly precision. They are of no benefit to our economy and represent no nation or economy but themselves. Oh, and that "That nets the economy a lot, rather than the actual drain that would be created by taxing US consumers to prop them up." That's a load of overly embellished crap that has been disproved by nearly 200 years of economic history.

They do not engage their competition directly as mercantilist nations once contended with eachother. Competing corporations trade with consumers and not with eacother. In trade, both parties seek their own advantage and are partners of necessity or convenience. Businesses try to keep overhead low. That means finding the cheapest resources available without sacrificing essential qualities. When this can be done, it should be done. If they don't, they will fail against those that do, or require redistributionist support, which is even more costly to the nation that must finance it.

An economy can only generate as much wealth as it has currency to support. Every dollar we send out of our economy is one less we have to work with. Using other nation's savings, in the form of investments, to keep our economy going is little more than an expensive stop-gap measure, but not as expensive as having the Fed print more money or having the government borrow more money to keep us going. The only way we can gain our currency back from offshore is by selling products offshore.

Some would say that they would prefer those who possess our currency to burn it. This would not signify a loss of wealth for us, and would actually raise the purchasing power of all remaining US currency, rather than flood our economy with even more notes. Non-zero-sum thinking allows us to say we would rather they spend it buying our surplus goods, or paying off their massive loans. Don't forget that we should also wish other nations to prosper, so that they can buy and sell more than they presently can (and the feeling should be mutual). The problem (problems ) is/are not trade. Self-destructive behavior is not caused by trading. It is not the cause, and so we should not hinder ourselves by attacking the wrong problems. There are more important things to worry about.

The richer you are, the more money you can borrow, because your credit is good.

Yes, and there are over one million people filing for bankruptcy each year because they fermily believed that nonsense. If money is spent offshore it becomes a trade issue, not a personal issue.

Again, trade is not the cause nor the symptom of that phenomenon. The problem of self-destructive behavior is beyond the reach of legitimate governments to intervene, unless there is theft, fraud, or violence involved. They are primarily issues the market system should be free to regulate for itself and not promoted, catalysed, and enabled by even *more* government intervention. In many of these cases the *only* problem is too much government itself.

"profits are the measure of viability" That is exactly correct, and as our trade deficit demonstrates, America isn't making a profit and hasn't been for quite some time.

Both sides profit from any trade, regardless of the flow of currency. Again, the trade imbalance is not harmful. If those nations didn't exist, if we were alone, we would still have needs and still produce goods and print currency to exchange amongst ourselves. We would still profit, prosper, and grow. Our revenue does not have to come from abroad at all, and we still grow no matter the direction of the flow of goods. All sides prosper so long as there is trade. Now if we went to war, that would cause the actual loss of wealth and capital, as well as human life on both sides. Building trade partnerships supplies us with more than just larger markets; potential allies in war. Free trade relationships are the BEST way to ensure our sovereignty, by keeping us and our allies that complement us economically strong.

Your response is a total obfuscation of the point. We are not discussing "Personal Finance", we are discussing our Nation's Economy.

The national economy itself is actually a fiction in a free-market society. It is really a collection of local economies on the scale of cities, and wealth is created locally although resources can come from anywhere. This ties different economies together through trade, but the health of the locality can be very different from others within the same nation. The GDP does promote the illusion of a national economy, but the reality is that the economies of individual cities can have very different characteristics and standards of living. The word economy itself is derived from a Greek word meaning "household management" and in a free market economy the differences between households can be extreme. It is therefore only of marginal usefulness to study economic health on the national scale. Therefore Smith's statement can be seen in its proper context that, "What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom."

" I " never said we had to "make every kind of product that we use".

And with a simple twist of the English language we switch the subject from our nation’s lack of making a profit to an ambiguous and personalized "profitability".

"What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom."

With those words mercantilism was undone. Our profits are not dependent upon us running trade surpluses with other nations. Period. What is necessary is that individuals be profitably employed, and that is accomplished through having the most productive division of labor, which can be augmented by linking our economies with those from abroad, through trade and market forces.

Well, I've already addressed that little fanticy of "wealth and money" and what in the wide world of sports does "bullionism" have to do with the subject??

Bullionism was the erronious belief that currency or specie was wealth, and that a nation became wealthy by establishing a trade surplus that brought currency into the "national" economy. This had the opposite effect, because the amount of currency became devalued due to supply and demand, driving the purchasing power of currency below its previous levels and causing a general increase in the price of all goods. Backfire.

GDP is a measure of money that has changed hands. 9/11 raised the GDP, forest fires in California raised the GDP, crime and violence raises the GDP, prisons to house the criminals raises the GDP, government spending our money raises the GDP, the point is; there are about as many things that raise the GDP that have a negative impact upon our economy as there are things that have a positive impact, so using the GDP as a measure of economic health or for anything else is suspect at best.

Previously addressed: see non-zero-sum. Summary: GDP represented development and repair, which is the profitable employment of capital resources. These mostly all signify positive changes and signify cooperative trade events and overall positive economic health. If the GDP actually fell consecutively, that would be a drastic sign of poor economic health effecting multiple economic centers. Only a major catastrophe or series of them could actually cause us to become poorer, "as a nation". Hence the notion of the USA not earning a living is easily dismissed.

Trade isn't the blame and I never said it was. But your open markets ideology which misuses the word "Trade", along with our State Department using our economic resources as foreign subsidies are to blame. And no matter how cute you try to be with your responses, I'll always be there and I'll always be one-step ahead of you.

Carl, I don't control the State Dept. and so I can't answer for them. How am I misusing the word trade?

"A State Planed Economy" is a figment of your clichéd belief doctrine, but if you want to talk "state planning" then; how about the Federal Reserve Board, the State Department, WTO, GATT, NAFTA, World Bank, World Court and the United Nations? For an economic system that is supposedly "Free" it sure comes with an awful lot of State controlling, bureaucracy.

Either you're for free markets or you aren't. Interventionist protectionism presumes to decide which favored industries will enjoy state sponsorship, which is a form of state planning. Whether it is a tariff or a direct subsidy it is the taxpayer and consumer that foots the bill.

As for all those extra-national agencies, whatever made you think they had anything to do with Free Trade? Free trade is not "managed trade", that's the whole point. Free trade policy would make such agencies or arrangements irrelevant, and in most cases illegal. The only way to utterly stop them is to support real free trade, no exceptions. In the United States, the Framers enforced free trade among all the states in the union in Article 1, Section 9, of the Constitution: No tax or duty shall be laid on articles exported from any state. No preference shall be given by any regulation of commerce or revenue to the ports of one State over those of another: nor shall vessels bound to, or from, one State, be obliged to enter, clear, or pay duties in another. 54 words, this was all it took. That's the real North American Free Trade Agreement. The one that passed in 1994 was a sick joke compared to that. Free trade is free trade, and it works. It's simplicity itself. If you truly oppose those control freak extra-nationals Carl, then let me assure you we agree wholeheartedly on that subject. Case closed.

The money the Fed prints is not only for Government use, it is for OUR use as well! And the only reason our money has value is because it is a Limited Supply. From what you say, you believe that with every transaction, with every new product, with every idea, currency is magically printed and whisked to whomever is transacting, producing and thinking! That's foolishness!

TIME. Every new idea that increases productivity buys us more time. Time is money. But it's so much more than that. I hope you always spend yours wisely.

[Nolan Void]

Carl said:

[ QUOTE ]
OK Nolan,

I puzzled over your self-contradicting rationalizations and realized, I could never explain reality to a person that so readily intermixes fantasy with reality by addressing his posts one point at a time so, I wrote this in a way you might understand.
…………………………..

[/ QUOTE ]

That's a cop-out. Either demonstrate the contradictions or concede the points. To make it easy I'll summarize them for you:

1. The characteristics of capitalistic, or free market economies, are: personal freedom, private property rights, innovation, division of labor, a price system, profits, and generally accepted rules.

2. Free Trade is not an ideology but a policy that recognizes the moral necessity and economic superiority of the above characteristics.

3. Division of labor maximizes productivity and free trade maximizes division of labor, because competition spurs innovation and forces specialization.

4. Trade is a non-zero-sum activity, meaning that voluntary trade allows partners to exchange resources for the greatest mutual advantage. Trade between economies (whether national or international) profits both economies regardless of the flow of products or currency.

5. Products are wealth. Without products there is no wealth. The value of wealth is subjective and affected by supply and demand.

6. Currency is a medium of exchange; it is not wealth, but a wealth equivalent, today regulated or limited only by monetary policy. It is possible to trade wealth without currency (barter). The value of currency is that it makes trading more efficient, and it's also affected by supply and demand.

7. Wealth is created within economies through production, and the factors of production are capital (money, land, buildings, and machines).

8. Time is the limiting economic factor, which makes productivity the ultimate measure of economic strength.

9. Free markets are self-regulating. Government intrusion inhibits and distorts markets.

10. There is no national economy but a collection of local economies, on the scale of cities, with different characteristics and standards of living that are linked through trade.

Each of these points not only make the case for free trade and other forms of reduced government interventionism, but also explain why the United States became the uncontested economic leader of the world and how it can remain so. They also warn against the perils of protectionism (and all other forms of state planning of the economy) and how trade barriers designed to protect a few will do greater harm to the many.

This thread is specifically about free trade (its merits or demerits), so please stick to the original points which I have now conveniently summarized.

The rest of your latest post doesn't make the case for government protectionism and the only trading seemed to be sex for money! And you say I need to get real!! If you really think that analogy of yours paints a true picture of some flaw in our economy that begs for some protectionist remedy then I suggest you start a new thread with it and propose some legislation that would address it within the context of the analogy, or label it within the confines of the above points (such as trade deficits - covered by point #4) and show why such behavior should be subject to government intervention (again within the context of the analogy.) Just remember that trade deficits are only one of the many points under discussion.

[Nolan Void]

Wasn't trying to make the case for "government protectionism", that's your choice of words, not mine. I'm trying to make the case for reality, which aparently keeps slipping out of your grasp.

Carl, it doesn't make your case more effective to say that it is for "reality". That explains nothing. It is valueless and only weakens your position and overall effectiveness. If you have now officially denounced protectionist policies (perhaps in favor of focusing on removing the government overregulation and illegitimate taxation that makes our native industries artificially less competitive) then I'm very glad to hear it. Nationalized, subsidized, and tariff protected industries weaken our economy. Period. If something needs that kind of support in order to stay afloat then it is cheaper for our citizens to import it than to pay inflated prices that could otherwise have been turned towards actually profitable uses.


1. The characteristics of capitalistic, or free market economies, are: personal freedom, private property rights, innovation, division of labor, a price system, profits, and generally accepted rules.

Name one other "Free Market" economy in existence in the world. Hell, Name ANY!

So then, you disagree with the characteristics in point #1? Which one or ones do you reject? How many pure free market economies there are is irrelevant, because even in planned economies the black markets reestablish the market system. In that sense all populations experience degrees of economic freedom that exhibit these characteristics. Those places where markets are most free can be their most productive, and when themselves linked through trade to other economies (the freer the better) are even more potentially productive. We can't force them to be so, we can only allow it by not interfering with the process.

2. Free Trade is not an ideology but a policy that recognizes the moral necessity and economic superiority of the above characteristics.

It is if you blithely apply it wrongly and blindly follow it to the detriment of our nation's economic health.

How is it possible to apply personal freedom, private property rights, innovation, division of labor, a price system, profits, and generally accepted rules wrongly? People are free to err in any system. Free trade at minimum allows people the choice of making the best possible decision for themselves, and no other policy position can. The heart of point two is that the opposite of "free trade for all" is "slave trade for the benefit of a few" and all points in between are unfair and artificially enforced upon us (barely even qualifying as a voluntary exchange because otherwise existing choices have been forcibly removed). There is only one position that acknowledges our rights as sovereign individuals and not as mere state subjects.

3. Division of labor maximizes productivity and free trade maximizes division of labor, because competition spurs innovation and forces specialization.

Pure Speculative Theory with No Supporting Evidence.

Boy, the way you say it one might think you could even refute it! So why don'tcha?

4. Trade is a non-zero-sum activity, meaning that voluntary trade allows partners to exchange resources for the greatest mutual advantage. Trade between economies (whether national or international) profits both economies regardless of the flow of products or currency.

Pure Speculative Theory with No Supporting Evidence.

Boy, the way you say it one might think you could even refute it! So why don'tcha?

5. Products are wealth. Without products there is no wealth. The value of wealth is subjective and affected by supply and demand.

A Giant Leap Right Into The Middle Of The Economic Equation, Totally Ignoring All Economic History That Came Before and Oblivious To All Consequences That May Follow.

Think "hunter-gatherer". The most essential of our needs are not man made products at all. The beginning (as in "not the middle") of the equation shows that wealth grows or is formed naturally, on trees for instance, and is only further modified, multiplied, and value-enhanced by human industry. Wealth forms with or without us, but we can change the rate, quality, and degree of productivity. What gives wealth it's ultimate value is the demand for it, and what others are willing to trade for it, proving its subjective value.

I can't believe you would even try to deny that without products you cannot be anything but in dire need of products. I can't believe it so I can only guess that you aren't denying it. Therefore you must be agreeing with point #5. If not, then...somehow...refute it.

6. Currency is a medium of exchange; it is not wealth, but a wealth equivalent, today regulated or limited only by monetary policy. It is possible to trade wealth without currency (barter). The value of currency is that it makes trading more efficient, and it's also affected by supply and demand.

Agreed.

Point #6 is considered a principle that we both understand and agree upon.

7. Wealth is created within economies through production, and the factors of production are capital (money, land, buildings, and machines).

Agreed, as long as you are refering to production as being Tangible, Resalable Products.

Sure. As in things that satisfy and enrich human life. An apple is produced on a tree and might be worth 30 cents. The same apple can be traded for 3 grade A eggs that are produced by chickens. Combined with other natural products and an organizing design (a recipe) they can be converted by labor into a product (a pie) that is worth more than the market value of the sum of the ingredients as well as the same amount (or more) of calories expended by a less skilled form of labor in the same (or more) amount of time, such as apple picking.

However, the recipe itself is perhaps what you might call intangible but can be written into a chemical formula and production blueprint that can be so highly prized that it is kept secret or traded in exchange only for a great deal of wealth or money in comparison to the production of a single pie. Teach a man to fish... (Skills and abilities are a kind of wealth that determines the market value of a person's time to a significant extent.)

8. Time is the limiting economic factor, which makes productivity the ultimate measure of economic strength.

You know your Neoliberal Economics Well. I Totally Dissagree.

If I can make and/or sell more pies than you at the same (or even less) profit margin then I will be economically stronger than you. If my axe is sharper I can cut more wood, etc. If you disagree then do us both a favor and disprove point #8.

9. Free markets are self-regulating. Government intrusion inhibits and distorts markets.

Enron. Global Crossing.

Is that your refutation? You can take your time on these you know. No need to rush. I'd say the markets would have delt with the Enron's just fine and the justice system (ideally) can handle any criminal or civil claims that result from fraud or breach of contract. The market will punish dishonesty either way. But government intrusion (say from regulation) forces companies to do things that interfere with voluntary exchange (such as minimum wage laws) that drive up costs artificially and forces people out of the marketplace. Protectionist policies distort markets by creating aritificially high prices that drain capital from all national consumers/taxpayers or cause prices to be artificially low and so transfers net wealth to international consumers. The ultimate consequence of market distortion? Extinction.

10. There is no national economy but a collection of local economies, on the scale of cities, with different characteristics and standards of living that are linked through trade.

Totally, And Without Reservation, Dissagree.

I know. Thing is, I already demonstrated my criteria for the assertion and eagerly await your refutation. Even with automobiles, jets, phones, and the internet and all sorts of diversification... geography (and geology and weather and local custom, etc.) dominates the majority of how we do business.

My guess is you're thinking in terms of federal tax revenues and available defense budgets and the strength of related industries, advanced technologies, available resources, Fed policy, etc. But that paints a false picture, because those industries are spread out in very different regions and the resources can come from anywhere (but should come from where they are cheapest). The national economy concept just isn't accurate and isn't helpful in addressing the overall concern.

None of your points make the case for "free trade" as it is expressed within your ideology (neoliberalism). What you are arguing has next to nothing to do with Trade of any kind, "free" or otherwise. What you are advocating is the dissolution of the sovereign state and the commingling of separate economies into one.

Neoliberalism? Never heard of it. Ever hear of laissez-faire capitalism? I don't recall advocating anything other than freedom Carl. I don't think it's efficient (or even possible ) to try to merge all economies into one (that's your manuever with the "national economy" fallacy) but only link them through unfettered trade and let the markets do their beautiful thing. It's not utopia Carl, it's just the best and only moral policy.

I've been saying that free trade is the best way to preserve our national sovereignty by ensuring our sovereignty as free individuals first and foremost, because that free environment has made us the strongest of all for all the above reasons. Freedom. You've yet to present a credible challenge to any of the fundamental principles that demonstrate the effectiveness of what I see as simple human freedom and its tendency to best advance the common interest by allowing people to pursue their individual ones.

[DesertFox]

In true capitalism, Carl, you don't have to believe in anything. You can opt out if you please. You participate only when you wish. If you prefer to starve, you can do that.

No beliefs to it. It's the way nature works.

What astounds me is that YOU were the first one I saw to say just this. You did it on this board over a year ago. I was struck by the simplicity of it; I'd known that but hadn't said it myself. YOU did.

And now you say what you're now saying.

I fear thee, ancient Mariner.

[Nolan Void]

First off, let me apologize for the delay in my response to your last post.

For me this subject hinges greatly upon the points (1-10) that have been outlined recently. In order to refute the policy of free trade successfully it is necessary for you to disprove those assertions, as each one is a description of critical components of our capitalist system that form the basis of the policy position.

This latest from you seems centered around points 5,6, and 7 (wealth, currency, and capital.) Very fitting as the fallacy of bullionism, itself one of the tenets of mercantilism, is centered on the failure to distinguish between these three things. It can indeed be confusing, as the same kinds of things can often be used for each purpose. An egg is wealth if allocated for consumption, it is currency if universally accepted in trade, and a fertilized egg is capital if allowed to mature into a chicken.

Do you know why I disagree with open markets “Free Trade”?
Because it’s not just an economic philosophy, it’s an All Encompassing Ideology.

Again, it's not either of those. It is a policy position (see point #2), not a philosophy or ideology itself. If you believe in the human right of private property then you must support the free and voluntary exchange of private property between people. To disagree with the general policy of free trade is to disagree with the philosophy that people have a right to possess private property (see point #1). The ancient problem is to determine which kinds of property people have a legal right to possess. Once that's established and generally agreed upon, they should be allowed to exchange their property as they see fit, else they don't really possess it after all.

Just like communism, socialism, fascism, Islamism and all the other self-contradicting -isms that give people no choice in the matter, it too chooses to impose a belief that all people have to do, first and foremost, is Believe...

Just the opposite actually. It is by definition the only policy that doesn't limit the freedom of choice of individuals (within generally accepted limits). It requires no extraneous beliefs or understandings of any kind beyond that point, only that what you rightfully possess is yours to do with as you see fit. To think otherwise is to impose YOUR beliefs upon otherwise free people and force them to obey the whims of yourself or some other potentially corruptible authoritarian power, and that predictibly will be contrary to OUR best interests. There's no two-ways about it Carl.

..., follow its tenets and everything will be made right, and everyone will be made wealthy. And just like all of those other -isms that are based in a “belief system”, it shuns the critical eye.

Straw man. No one made or implied such claims. On the contrary, a free trader realizes that people must be allowed to fail in business. Free trade doesn't guarantee wealth and success, it guarantees economic freedom.

First off, in the long list of silliness, is the notion that Wealth is created in the production of goods, that goods, in and of themselves, are wealth. This totally ignores the medium of exchange used to purchase those goods.

It is useful to distinguish between a resource and the means of acquiring a resource. If a fish is a kind of wealth, and the knowledge of fishing is an even greater kind of wealth, as a body of water containing fish is a kind of wealth, and a boat, rod, and reel, etc., they are not all exactly the same in terms of fish-value. A dead fish might be instantly consumed for raw material, such as proteins, fats, and minerals. Then it is a consumable kind of wealth, but not a form of capital in the classic sense (to a bacteria, however, it is capital...think about it.). Lots of creatures enjoy and even require the consumption of fish. You might say a fish is an essential product.

But a dead fish in the form of bait can be used to acquire many more fish, provided one has the technology to use it and the knowledge of where and how to fish. Then the bait, the rod and reel, the fisherman and his skill and the body of water and its propogating fish are themselves capital, or the factors of producing more fish into your potential stockpile. So when you are able to use something to directly satisfy a need or desire, then it is wealth. (See point #5, the needs of society are met by wealth, without products there is no wealth, wealth and trade exist in the absence of currency, therefore currency is not wealth but a wealth-equivalent.) But beyond a certain point I cannot use dead fish faster than they decompose, so it behooves me to limit my fishing, and to instead secure a means of acquiring fresh fish as needed. The time it takes me to do this determines my productivity in that regard. I can do it directly, by fishing, or indirectly through trade, and usually the most productive or pleasing method will decide the matter for me.

Now you can buy a fresh fish with currency (if someone will trade for it) but as we know currency is not required. Currency can be a very useful thing, not to be ignored at all, so please stop saying that it has been ignored. Talk about fresh, why its very name is "currency". We might as well call it "freshency". It can be thought of, when stockpiled, as delayed-consumption. It's decomposition is slower than that of a fish, and it is more easily transportable and measureable, and hopefully more widely accepted in exchange for other things. Currency makes trading more efficient and its existence establishes a very accurate and useful pricing system.

But remember that currency has only one actual use, and that is for spending. Hidden under a rock it does nothing but will likely depreciate (if not decompose). Even transferring it between the pockets of your pants is not enough stimulation to cause any growth (depending on your technique). At some point it must leave your possession to be of any use at all. This distinguishes it from classical wealth which is something that you actually need to survive like food, clothing, and shelter, or luxuries that you enjoy or desire, etc. So spending currency is never a loss when you are satisfied with the purchase, it is always matched by a gain in some form.

Secondly, it admits the medium of exchange, currency, the measure of wealth, is in limited supply yet, everyone can become wealthy. One can only assume that without a limitless source of currency, which would make the medium worthless, that what they are calling wealth creation is actually debt creation, which is also measured in currency.

Nonsense Carl. Debt creation? That means waste or loss. Just how does our increasing ability to satisfy our needs signify a loss, or productivity gains signify an increase in wastefulness?

Next; as everyone knows, if you don’t work to garner enough currency to pay your debt, your wealth in goods will be confiscated and sold to recoup that currency. If that’s the case, which it is, then the accumulation of goods is not an accumulation of wealth, but of objects that may appear to represent wealth but actually represent debt. This also means that there is no real value in these objects unless they are used in the direct pursuit of currency. Of course, there is a system where the production, accumulation and exchange of goods are considered wealth in and of itself, it’s called the Barter System, but the banks can’t make a profit in that.

Money (like all capital) represents potential wealth, and useable goods (like some capital) are actual wealth. Achieving the correct balance of personal possessions is money well spent and signifies the positive acquisition of wealth, not debt.

Next, is the notion that wealth can be created out of nothing and that everyone who participates can become wealthy.

Of course, the best things in life are still free. The most essential products are still natural products. Wealth is a relative term, but relatively speaking everyone can technically become wealthier than they are now if they are allowed to do so. The idea here is not to stand in the way of this.

This notion defies all capitalist logic. Currency, the measure and means of wealth creation, is in limited supply.

Your statement is incomplete and misleading. Capital includes the factors of production (the means of wealth creation) of which money is only one. Currency is in fact the most fluid and necessarily the most expendable form of capital (that's what it's for - spending). Time is what is in limited supply (because everything has a life-span). Products are actual wealth, Supply & Demand determines the value of wealth, and productivity determines the supply potential of wealth over TIME. Currency is issued by fiat, and ideally it's a reflection of total wealth, not itself the determinant of wealth.

Goods, created for the sole purpose of pursuing currency wealth...

Stop the tape! Goods are produced to satisfy needs and desires, not to pursue currency. Currency is the expendable bit-player here, what is important is any kind of utility and profitibility. Call it semantics, but phraseology is all-important in this instance. I've seen enough of this error in your posts to merit a more thorough explanation of just why it is wealth is created in the first place, beyond that it is simply in demand, and how successful trading must benefit both trading partners. Trade is about cooperation.

What we know as economics has been occurring in nature for innumerable years. There are many ecological niches and they each contribute in their own way to the entire system. Some relationships are predatory or parasitic, and some are symbiotic. Flowers, for instance, make nectar (a product) that attracts birds and insects which will facilitate the cross-pollination of the flowers. Flowers make their product (nectar) to satisfy the needs of these creatures that will then satisfy the flower's reproductive needs through the service of pollination. Products and services. Other plants produce fruits that are eaten by animals and their seeds are diseminated in the animal's waste products. A termite's digestive system provides an environment (real-estate and raw material) for bacteria which then provide (in exchange) the products and services (in the form of enzymes) that the termite needs to enable its metabolization of cellulose taken from ingested wood.

These kinds of symbiotic relationships are synergistic and perfectly illustrate the non-zero-sum nature of voluntary trade that is conducted in human economies every day. While competition is an essential component of free markets, the way we compete successfully is by being the most cooperative, useful, and efficient.

Currency as we know it is a latecomer in this equation. Amassed currency represents deferred consumption, but it's the act of consumption itself that drives all life. All life-forms are consumers. However useful a development the advent of currency has been, only a fool makes products for the sole purpose of pursuing currency. What they eventually find out is that they had their priorities backwards, and having the correct order of priorities should be of the highest priority.

Solve people's problems and you get their attention; do it most efficiently and you get their business. Sham products and scam artists just don't survive long in the marketplace because nobody really likes parasites or predators. They don't even like eachother.

... is now the measure of wealth and currency is just a medium used to get to that wealth. If Currency is the only thing holding the world back from becoming wealthy in goods then, wouldn’t it be logical to just print more currency? No wait, if we did that then currency would become worthless as a medium of exchange and nobody would want to exchange something for nothing so, goods are not wealth after all, wealth remains to be the domain of currency accumulation and because currency is in limited supply, not everyone can become wealthy. If goods represent wealth then why won’t the electric co. accept my toaster as payment of debt?

Do you like toast? If you like it, why not hold on to the toaster? That way you can make toast very quickly and consistently (rather than using a camp-fire.) The time you save (and toast you don't burn) will allow you to earn more money doing what you do best, perhaps selling "Toast-On-A-Stick". If toast is your game, then you are better off with the toaster than without it. Keep your stuff, and sell your expendable currency to the Electric Co. If you no longer want the item then sell it on eBay (maybe as a postmodern sculpture), give it away, or toss it out (it's taking up real estate).

Here’s one of their examples of “wealth creation” that was used on me. I have $10 in my pocket, I pay someone $5 to mow my lawn. I now have $5, the person who mowed my lawn has $5 and the value of the mowed lawn is $5 which gives us a total of $15. Their logic states that $5 in new wealth was “created” in the exchange.

Hold on a sec. What do you make a year? (I'm being rhetorical here.) If your time is worth $200 an hour, you should absolutely not mow your own lawn. If you took an hour of time mowing your lawn to save a lousy $5 you screwed yourself out of $195. Get it? (See point #3) Now you can use and enjoy your lawn to relax or exercise, and the clippings will yield a nice mulch. Your lawn is an exercise yard, a recreation center, and a mulch and compost factory (price out the equivalent annual mass of mulch available in retail stores). That lawn of yours provides (once it is mown) a priceless environment for relaxation and recreation, which is why you work so hard in the first place. Now your head is clear so you can be your most creative, your limbs are exercised and strong so you can act on your many ideas, you can spend your valuable time doing what you most enjoy or do best, and the lawn service people (who probably should mow their own lawns) can do likewise.

To carry this logic forward...

Ah yes, let's go farther still...

... you buy a car for $30,000 you pay the dealer $30,000. Let’s see; that’s $30,000 in value for the car plus $30,000 you’ve paid which gives us a total of $60,000 dollars!

Actually, you buy the car for 30K, he buys your money in exchange for the vehicle. Fair exchange totalling 60K in value ($30K in dollars + $30K in car) , but the wealth was created prior to the exchange.

You’ve just “created” $30,000 in new wealth, never mind the fact that you’ll be under contract for the next 4 to 6 years, paying back a total of around $37,000 for the $30,000 you just spent…. No wait, that’s wrong. Let’s see, that’s $30,000 in value plus $30,000 in car plus $37,000 in debt repayment, wow! With that single transaction you’ve managed to create $67,000 in new wealth! No wait, that’s wrong. That’s $67,000 plus your payments of $580 per month plus the receipt for $580, which totals $1,160 per month, that’s another $580 per month in additional new wealth creation……….

Wealth won't actually be created with the money until it is spent towards the manufacture of more cars or otherwise invested. The resale price of the car will depreciate as soon as you drive it off the lot, but depending on how the vehicle is used will determine how much wealth the vehicle helps you to create once you begin using it. If you are highly productive and enjoy the car then as transportation it is instrumental in getting your wealth-generating arse to-and-fro safely and on time.

The question (assuming you can afford the car) is should you finance the car or pay cash? Your existing prospects and the financing terms should answer that for you.

With logic like that, it is little wonder that over one million Americans file for bankruptcy each year.

Yes, with your attempt at logic it is little wonder.

In the first example where the value of the mowed lawn is added to the total; it ignores the fact that I had spent that $5 value already when I paid the guy for mowing my lawn and I cannot spend that $5 value twice. But If we study the second example closely, strip away the irrational logic, we can see where “wealth” was actually “created”; by and for the bank in the form of interest added, promissory debt or as I refer to it, Debt Currency.

As I've shown above in the case of the lawn, the wealth comes from an efficient division of labor and resultant increases in productivity (you saved $195 or whatever you make an hour by paying someone else to do it for you) and the gaining of the use of the yard to stimulate the priceless health of body and mind, and the produce of organic material which is not insignificant.

In the case of the car the wealth is the car itself. It is a form of capital, a useful tool, that can enable you to generate revenue far in excess of the value of the car. If you are a salesman for instance, you'll find an attractive vehicle may be a requirement for cultivating the proper image needed to maximize sales. Maybe it was a work truck and you're a contractor who uses the truck to haul material to job-sites. Or maybe you're a vascular surgeon and that car drives you to the hospital so that you can perform life-saving medical procedures. The point is, without the service of the lawn mowing or the product of the car, you can't be as productive (or as fulfilled) as you can be. How many lives can you save if everyone travels on horseback? By walking?

Debt Currency, like taxes, is nothing more than legal theft of real wealth and productivity. It is a banking illusion that ups the inflation anti with every transaction. Debt currency is an obligatory contract that gives you the false impression that you have currency to spend and the bank has currency to loan, where there is none. Because they’ve created contract currency where no real currency existed, they’ve created a lean against the value of real currency which lowers its value, creating inflation. With real currency loosing value, you have to up your productivity to compensate, until you are spending all of your time working in contracted service to your debt. That, by the way, is also the key to understanding America’s “Wealth Creation” and “Increased Productivity” over the past 30 years. It also explains why you’re paying $30,000 for about $2,500 worth of value added, reusable materials (the car).

Wow. You're just making it needlessly complicated. Wealth. Currency. Capital. Credit. Debt. You just love to contaminate words. Currency-wealth? Debt-currency? ...Phony-baloney.

Just what are you saying, that borrowing is always wrong? Then don't do it. For you it probably is always wrong. When people borrow money it should be to expand their revenue base, which by definition increases productivity and profits. The whole point is that the borrowed money should ultimately profit both the borrower and the lender. Are you proposing something different?

But where this example of value inflation, dollar depreciation is at it’s ugliest, is represented in the house you buy. Let’s suppose that you brought a $30,000, value added, house in 1970 and you decided to sell it in 2002. You would have to sell it for at least $139,112 just to recoup the original $30,000 value, never mind the additional $21,560 in 1970 depreciating dollars of compound interest. In total, you would have to sell that $30,000 house for about $161,000 just to break even with what you’ve given to the bank. In this light, a home doesn’t sound like that good of an investment deal after all.

So don't buy a home, or better yet don't sell it if you aren't comfortable with the market price. Maybe you think renting is a better deal, eh? Really, buying and selling homes is like any commodity. It can be risky but if you're sharp you can make millions in real estate.

Next, it assumes that Increased productivity combined with lower production costs, automation and mass production lowers the final consumer price, which means you can earn less and still afford the goods you want. So, when a goods producing facility moves out of Ohio to Mexico and you trade your $18 per hour job w/benefits for a $6 per hour job w/no benefits, the theory goes that you’re actually better off because those goods that you were helping to manufacture will be coming back from Mexico at a lower, more affordable price, one that you can still afford with your new job. Well, we all know that’s a big fat lie. Debt currency, added inflation, plus labor deflation plus dollar deflation plus across the board price leveling plus inherent greed, defeats the entire theory.

Look, nobody forces anybody to take a $6 per hour job. They decide that themselves. The fact is that moving a company out-of-area should be done in the best interest of the company. No company, no product, no wealth. If they need to move to compete then so be it. If that competition results in cheaper goods, then it benefits everyone because more money is remaining in the pockets of consumers to invest in enterprises and technologies that can't be produced elsewhere. The capital is allocated more profitably than it was by the jobs that became unviable due to superior competition. (If the positions became unviable due to government interference then that should naturally be addressed as well, but this in no way makes the case for trade barriers which only do even greater harm.) Those who got layed-off are now free to get $20 dollar an hour jobs or $200 dollar an hour jobs. It's their responsibility and I wish them all the best.

The flexibility that allowed the company to transfer allows people to buy and sell their products from all over the world for the best prices and the highest volumes possible. For the great majority of people that increases their opportunities in ways that nothing else can.

Next, it assumes that there is but one single economy in service to the entire world and not a collection of smaller economies interacting with each other via trade.

Why, I think that statement is in conflict with point #10. Care to refute it?

Under the Single Economy Theory...

Is this your theory? You are confusing an economy with a marketplace.

...it makes little difference where a product is manufactured or where it is sold, that each party benefits in the transaction, “we’re simply trading value (currency) for value (product)”. This notion totally ignores the fact that each country has its own government, currency, taxing structures, valuing systems and economic standard of living, not to mention the little fact that, I can’t possibly spend or pay my taxes with the hard drive I brought from Taiwan but they can, most assuredly, spend the money that I paid to them.

Prove just how removing trade barriers "ignores" the fact that different countries have different governments, etc., and how this negatively impacts us. As for that little fact of your hard drive, why can't you pay your taxes with the money you earned from the increases in productivity that computerization has made available to you? In less pretty language, "Are you lazy or simply ignorant?" Why did you buy the danged thang in the first place if it's of no use to you? It's your responsibility to learn how to earn money, but it is assumed you bought the device because it solved one of your problems and that more than made up for the cost of the unit.

Next, it assumes that goods are the beginning and it works towards a goods based utopian end.

Well, did not goods predate currency in history? At least while you can own private property and do as you see fit you have a chance to make your patch of Earth a kind of personal paradise, but I doubt there will ever be a universal guarantee of that so long as people are also free to err. A necessary trade-off.

It denies the medium that gave impetus to the creation of goods in a capitalist based society in the first place, the desire to accumulate gold and silver, which was replaced by a gold and silver based currency, which was replaced by bank held hard assets currency, which is now being replaced by debt currency. It jumps right into the middle of this equation and claims itself to be the beginning, not unlike Marxism. And just like Marx, it sees the redistribution of wealth, now represented in goods, as the means to an end. Labor for the good of the whole is replaced with Labor for the goods and debt, the end in both being a utopia of material opulence for all.

That's a stretch. You confuse capitalism, which is really just the behavior of all life-forms, for mercantilism and communism which is just the behavior of predators and parasites. The impetus for production is always the ultimate satisfaction of needs and desires, as stated often enough above. It's not about the money.

The heart of real capitalism is, and shall ever be; “Show Me The Money”, followed closely by; “Money Talks, Bullshit Walks”.

Heh. So what are your solutions Carl? Or is all you have criticism, pessimism, and protectionism?