We need more "trade" PDF Print E-mail
Written by Stumo   
Wednesday, 16 April 2008

Robert Samuelson is a Washington Post op-ed guy.  His free trade world-view is crumbling around him.  He used to be in the comfortable majority, but now is in an embattled minority still defending the NAFTA-like deals that started the huge increase in imports that overwhelmed exports.

I would bet a donut that he has never read a trade agreement, to see what they really say. 

Samuelson continues the intentionally vague and misleading rhetoric that more "trade" is good.  It's like a failing airline saying it increased "commerce," including soaring expenses within the definition of "commerce." Shareholders would appropriately punish the CEO and the stock.

But Samuelson does not recognize net trade.  Only trade.  It is all the same.  As reflected by his core, ludicrous point:

Only through expanded trade can the economy thrive and manufacturing stage a comeback.

This stupid statement used to be rhetorically smart.  Do you want to contract trade, you silly goose?  Samuleson's false truism puts trade change proponents in the position of arguing against "expanded trade", when they are really looking to correct the trade deficit and outsourcing problems.  

The net trade result has been record deficits.  Kinda like corporate losses.  They are devastating.  The economic foundation crumbles.  Wall Street's imaginative bundling of debt to trade those and create wealth that was debt can no longer obscure the point.

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written by tomlin , April 22, 2008
A "balance trade" will be a painful pill that America may have to swollow. A nation that consumes far more than it produces can not pin its problem on developing nations. We are the nation that's been killing the environment for the past 50 years and now we are complaining about China's pollution when we are the one consumming most of China's products. Why are jobs out-sourced? Why are more products made in developing nations? Having been overseas for many years, I know we have lost the competitive edge. Let's say a foriegn worker produces the same amount as the American worker. The foriegner shares a 1 bedroom apartment with 3 other family memebers/workers and spends about 70% of his earning and saves 30% to invest. The American lives in a 4 bedroom house because every kid needs to have their own bedroom. He spends 98% of his earnings and puts away 2%. But the Taxes that he pays doesn't pay for all his government's expenses so the American government borrows 10% for him and uses another 10% to pay interest for the government's debt. Now he is in the hole for 18%.

How do we fix the problem? Changing a few free trade agreements ain't going to close the gap much if any, considering some of the negative impacts. Get American to change their spending habit? That's not going to happen. clamp down on government spending and turn our trade imbalance around and pay of the deficiet? That's something only an authoritarium government like China can do. My view is not what we can do... it's more about what will happen eventually. We will be forced to pay our debt through further devaluation of dollar (hopefully not a collapse), hyper inflation, lower living standards (not every kid can expect a private bedroom any more.). The highly productive nations that have benefited from and carried our burden for the past 20 years, lending to us and producing for us to keep our inflation checked are all going to pull back when global market expand beyond American's dominance of the cosummer market. At which time, we will be forced onto a level playing field where we can no longer expect to spend like there is no tomorrow without consequences.
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