I will take the arrows. I'm a free trade Democrat.

[DemocratSinceBirth]

The only time tariffs or barriers to enter our markets is justified is when a nation or corporation is deliberately devaluing their currency, selling their goods below production value to gain an unfair competitive advantage, have oppressive working conditions, or they are being subsidized by the nation they are producing goods in.

Tariffs are ultimately a tax on consumers.

[Le Gaucher]

1. Riccardian trade model shows than on net , both trading countries have

To gain.

But there will be losers in both nations.

Where Globalism fails is it's inability to compensate people at the short end of the deal.

[DemocratSinceBirth]

3. Then help the losers find jobs in other industries.

[Le Gaucher]

8. Easier said than done.

Say USA has a trade advantage in high tech.. and all 50 year old machinist can do is operate a lathe and his job is replaced by a robot .. he can't retool very easily at that age.

Plus new jobs that he can be trained for might exist in a state across the country..

[DemocratSinceBirth]

10. It goes back to your previous point

"...But there will be losers in both nations..."

The benefits of free trade are dispersed. The costs are concentrated.

[pampango]

11. I think it is not globalism (or isolationism) that fails to compensate

people at the short end of the deal.

It is the national will to take care of people who need help for whatever reason - too much trade, too little trade, industry changes, automation, illness/injury, etc.. Modern liberal countries - Scandinavia, much of Europe, Canada, Australia, Japan, etc. - all trade much more (as a part of their economy) than the US yet have stronger safety nets that can help people on the short end of any deal.

We just lack the national will to do the same.

[leftstreet]

14. +1

This right here

[Ferrets are Cool]

2. Whether you love him or hate him...

he is still the smartest person I know and here is what he says about free trade...

It worked for a long long time.

[ooky]

33. Thom makes a good general point about entrepreneurship; however,

in this case we are not talking about "parts". We are talking about the raw material, the steel, in which the amount of capital for fabrication facilities required for entry into the steel markets makes it very restrictive for new entrepreneurs. Do not expect new steel mills popping up all over the place from this tarriff. Its much more likely we see new, and higher, steel industry pricing, which in turn is going to drive higher prices on all goods made with steel.

[Ferrets are Cool]

43. Very true.

[Mosby]

4. the tariffs are only passed onto consumers

Last edited Thu Mar 22, 2018, 03:22 PM - Edit history (2)

When elasticity of demand is low.

The vast majority of imports have high elasticity, so the producer absorbs the tax.*

This issue is about our values:

Liberals think that pollution is bad, free trade allows foreign companies to pollute as much as they want.

Liberals think that people should earn a living wage, free trade allows companies to pay employees next to nothing.

Liberals think employees should be safe at work, free trade allows companies to ignore workplace safety.

It's time we started globalizing workers rights.


*

PEDs, in combination with price elasticity of supply (PES), can be used to assess where the incidence (or "burden&quot of a per-unit tax is falling or to predict where it will fall if the tax is imposed. For example, when demand is perfectly inelastic, by definition consumers have no alternative to purchasing the good or service if the price increases, so the quantity demanded would remain constant. Hence, suppliers can increase the price by the full amount of the tax, and the consumer would end up paying the entirety. In the opposite case, when demand is perfectly elastic, by definition consumers have an infinite ability to switch to alternatives if the price increases, so they would stop buying the good or service in question completely—quantity demanded would fall to zero. As a result, firms cannot pass on any part of the tax by raising prices, so they would be forced to pay all of it themselves

https://en.m.wikipedia.org/wiki/Price_elasticity_of_demand

In the short term the large majority of imported products made in China, Taiwan etc have lots of alternatives and substitutes, along with very robust margins. Producers can't afford to pass on the tax to consumers, because it would decrease overall revenue.

[Hoyt]

17. I'm not sure about that. One thing I am sure of is the USA polluted and ravaged more than our share

of the world's wealth and resources. Now, we want everyone else to pony up. Sorry, that is not fair.

I know for a fact, some poor dirt farming Mexican who was making less than $0.50 a day 10 years ago, is and feels better off working in a new Audi plant making $8 an hour.

I do agree that we should do everything we can to encourage foreign countries to improve working conditions, reduce pollution, etc. But refusing to trade, imposing tariffs, holding them to a standard that has taken us hundreds of years and a lot of cheating the world to achieve, etc., is not helping them. It's trying to improve our lot relative to the rest of the world, and that ain't right. America Firstism, protecting coal, punishing the rest of the world by imposing tariffs or other means to trade among ourselves, and the like, will harm us long-term.

We better find better ways of protecting our own than going to economic war with other countries, or we will suffer.

[Mosby]

20. Tariffs create incentives for global companies to do better

Because the tariffs would be tied to formulas that either reward or punish coporate decisions about pay, workplace safety, emissions, building standards etc. When companies raise wages, the tariff would decline. That kind of system would help the people of the producing country and the people of the import country. Its a win-win.

[Hoyt]

21. Somehow, I don't think that is what trumpers have in mind.

[Hortensis]

5. :) I've never taken a stand on baking soda v powder v nothing.

All used in appropriate amounts when useful and left waiting on the shelf when not.

Both have been given very bad names by amateurs controlling policy, but the choice isn't between not using any tools at all or smothering economies under protectionism. Free trade and protectionist economists alike keep a full range of regulatory tools on their shelves and believe in using them often, just differing by situation and proportions. And of course, very much by goals.

These days even protectionist economists are more pro free trade than in the past. Mercantilism is incompatible with democracy.

[msongs]

6. "free trade" is never free. the system is gamed in favor of producers nt

[FarCenter]

7. So you don't think a semi-skilled worker in Atlanta should make more than one in Dhaka?

[DemocratSinceBirth]

12. So the wealthiest nations get to set the price of goods, putting them out of the reach of many ?

[FarCenter]

15. Yes, unless you want to subject Americans to a race to the bottom.

Global GDP at Purchasing Power Parity is $17,156.

US GDP at PP is $59,609.

That's a long way for the standard of living to fall.

Global energy consumption is about 550 quadrillion BTUs / year, while US is around 100 quads / year. The US is 4.4% of world population. To bring the global population up to US standard of living would require an increase to 2,270 quads / year, or about a 4-fold increase in energy consumption.

That's a lot of greenhouse gas.

[DemocratSinceBirth]

19. If you imposed tariffs to compensate for differences in wages

If you imposed tariffs to compensate for differences in wages how much would a refrigerator, a microwave oven, a tshirt, a 50 inch flat tv screen cost ?

[FarCenter]

23. Around 10 to at most 15 % more

Suppose a $200 retail American microwave leaves the factory FOB for $50 (since the other $150 is warehousing, distribution, transportation, marketing, and retailing).

The $50 is maybe half labor and the other half materials, plus general and administrative expense allocations. So US labor content is about $25.

Suppose that the same microwave leaves Dhaka for $25 FOB with the labor cost essentially zero. Ad back $5 for extra shipping, extra paperwork for international trade, cost of money for goods while in shipment, etc. So now it is $30 at the port of entry. Add back the $150 of other costs and you have a $180 retail microwave.

So the advantage of making it in Bangladesh is $20 or a 10% price advantage.

Conversely, the increase to make it in America would be 100 (200-180)/180 = 11.1%.

To equalize the cost, you need a tariff that collects $20 on the $25 FOB microwave or 100 (20)/25 = 80% tariff.

[DemocratSinceBirth]

24. So the cost of these items would go up 15% or the producers would absorb the cost ?

[FarCenter]

25. 15% at most -- see the arithmetic

[DemocratSinceBirth]

27. That seems like a lot, especially for a car.

[FarCenter]

30. What low wage countries, other than Mexico, do we import cars from?

South Korea may also be relatively low wage, but Germany and Japan probably don't qualify.

Lots of the imports from Mexico are GM and Ford brands from their factories down there. GM seems to be the most interested in importing from China.

[Demsrule86]

42. It is not about their workers for Japan, Korea and Germany...it is about their

refusal to take our cars and other products. And China forces us to manufacture there and takes 51% of every company...thus far those cars are sold only in China.But that may change. Why should they have access to our markets while not granting us access to their markets? And Japan would lower the prices here to the point they lost money and then make it up in Japan where they faced no competition and could charge higher prices...trade is racket and needs to be looked into.

[ooky]

34. Too often in today's business environment the producers do not absorb the cost.

They reduce other costs to compensate, including OUTSOURCING other components.

[mvd]

9. Free trade should not overtake worker's rights and safety

That said, Trump's tariffs are just careless.

[DemocratSinceBirth]

13. I addressed that- " have oppressive working conditions"

[mvd]

16. Thanks for that. The expansiveness of the Con's tariffs..

is definitely a problem.

[yallerdawg]

18. A tariff is a tax. Period.

The consumer - WE - pay the taxes.

Now we get to pay a tax because some dickhead asshole wants to diddle his voting base some more?

Shit.

[NCTraveler]

22. Then you are for tariffs according to the body of your text.

Like most of us, you are just in favor of them as a larger package. That is the only way to intelligently use them in this age.

[ooky]

35. Yes, but not as a larger package but for specified reasons

i.e. if a specific country is dumping its products into our markets then that specific country and product should be assessed a corresponding dumping penalty.

[Demsrule86]

40. That is exactly right. Hillary actually had a plan.

[grantcart]

26. Also a free trade Democrat because it is in the best interest of workers

When there are issues of currency manipulation or other violations that violate the basis of a free trade agreement they should be settled in the WTO where the US has an outstanding record of winning when it was wronged.

The problem with your exception is that it allows the "plaintive" to be the judge and jury. If we have a case, sometimes we do and many times we don't then it should be settled by an objective multilateral process.

The one thing that is most admired by the rest of the world about the US is that while it has big advantages over the last few decades it submitted adjudication to a multilateral process rather than dividing and picking on other markets on a bilateral basis.

And the one thing that has not been mentioned by any economic pundit: Putin doesn't just want to create a wedge between US and Europe but also between the US and China. This trade war is exactly what Putin wants.

[Demsrule86]

39. Well steel workers in Youngstown are making $8.50 an hour. in many cases..free trade is only in the

best interest of the greedy companies.

[PaulX2]

28. Tax Eco Destruction By Throw Away Produced Garbage

We are squabbling about trade while the planet is dying and the ice is melting.

Tax all Eco damage first. Then discuss trade if there is any 3rd world produced garbage left.

[Chickensoup]

29. You are not alone .

Free trade is in our interest, no doubt.

[Demsrule86]

38. Not as practiced now. And if Democrats run on trade, they will lose the rustbelt permanently.

[GulfCoast66]

31. It has been fun on DU reading post from protectionists

Bending themselves into pretzels trying to explain how Trumps Tariffs are ‘different’ or ‘more wreckless’ than the ones backed by the policy their favored ones float.

Well, they are not. Trump is doing exactly what anti-trade leftist promised to do from tearing up NAFTA to lowering the boom on China.

And the economic destruction it will result in is the same no matter who does it.

Economic Nationalism is Economic Nationalism. Does not matter who pushes it. They both set up an ‘us against them’ mentality which generates fear to get votes.

[Mosby]

32. do you support workers rights?

In America, China, India, Russia?

Howard Dean on trade:

Q: What do you make of NAFTA?
A: We ought to change NAFTA. We’ve only done half the job with globalization. You’ve globalized the rights of big corporations to do business anywhere in the country, but what we now need to do is globalize the rights of workers, labor unions, environmentalists and human rights. If you do that, you raise the standard of living in other countries. And what happens is our jobs stop going away because the cost of production goes up.

Q: Should the US seek more free or liberalized trade agreements?
A: I want strong, enforceable trade agreements and a trade system bound by clear, continually improving rules. I will push for solid, enforceable labor and environmental standards in all existing and future trade agreements. I will vigorously enforce the agreements we enter into and defend U.S. trade laws when our competitors challenge them.

Q: America’s farmers need open markets for their crops around the world, but other American workers want a level playing field. How would you balance those interests?
DEAN: There’s no reason we can’t do both. NAFTA and the WTO only globalized the rights of multinational corporations, but they did not globalize the rights of workers. They are not going to globalize human rights, environmental rights, the right to organize. That needs to happen. And if it doesn’t happen, NAFTA and the WTO simply aren’t going to work. Right now, we’re exporting jobs.
We need to have a level playing field. We need to have the same kinds of environmental protections, labor protections, human rights protections and worker protections if we’re going to have open borders. That will not disadvantage exports.

-snip-

Q: What about free trade?
A: We’ve gone the first mile. I don’t disagree with the premise of the free traders. But we need an emerging middle class in these countries, and we’re not getting one. So now is the time to have labor and environmental standards attached to trade agreements.
Q: What if they say no?
A: Then I’d say, “Fine, that’s the end of free trade.”
Q: What do you mean, that’s the end of free trade? Then we slap tariffs on these countries?
A: Yes.
Q: So you’d be in favor of tariffs at that point.
A: If necessary. Look, Jimmy Carter did this in foreign policy. If you can’t get people to observe human rights, and say that we’re going to accept products from countries that have kids working no overtime, no time and a half, no reasonable safety precautions-- I don’t think we ought to be buying those kinds of products in this country. We’re enabling that to happen.

-snip-

Unfortunately, our free trade policies have also had the effect of hollowing out our industrial capacity, and most worrisome, undermining our own middle class. All through this country, including in Vermont, I’ve seen factories move to China and Mexico, leaving American workers to learn new skills & earn lower wages.
Free trade must equal fair trade. We are subsidizing the sometimes awful environmental practices of our trading partners, and we are subsidizing the profits of multinational corporations by not having international labor standards. If free trade allows General Motors to set up a plant in Mexico, free trade should allow the UAW to organize that plant under conditions similar to those in the US. This isn’t wage parity; I am asking for shared ground rules.

http://www.ontheissues.org/celeb/Howard_Dean_Free_Trade.htm

[Demsrule86]

37. They are reckless because he tariffed steel but didn't consider autos...

Thousands of workers may lose their jobs in Ohio as a result...you need a manufacturing plan...and I am all for tariffing countries like Germany, Japan,China and Korea who have access to our markets but deny us access. But you have to smart about it, and a tariff should be the last resort if negotiation fails.

[former9thward]

45. It has been fun on DU reading posts from free traders.

Bending themselves into pretzels trying to explain how they are different than libertarians or the Wall Street Journal editorial page.

[Demsrule86]

36. I don't like the way Trump handles tariffs but a tariff is useful for those countries who

have a super cheap labor force and who are screwing us...we need manufacturing

[PufPuf23]

41. You should also include environmental considerations. nt

[Adrahil]

44. Tariffs are regressive...

Costs WILL be passed onto consumers.... or the workers in the domestic companies. The only sure thing is the investor class will NOT absorb the hit. They never do.