NYT: Beyond the Noise on Free Trade (McCain related)

[bicentennial_baby]

No issue divides economists and mere Muggles more than the debate over globalization and international trade. Where the high priests of the dismal science see opportunity through the magic of the market’s invisible hand, Joe Sixpack sees a threat to his livelihood. This gap in perspective grows especially wide whenever the economy experiences short-run difficulties, as it is now. By all indications, the issue could come to dominate the presidential campaign.

Economists are, overwhelmingly, free traders. A 2006 poll of Ph.D. members of the American Economic Association found that 87.5 percent agreed that “the U.S. should eliminate remaining tariffs and other barriers to trade.”

The benefits from an open world trading system are standard fare in introductory economics courses. In my freshman course at Harvard, we start studying the topic in the second week, and we return to issues of globalization throughout the year. The basic lessons can be traced back to Adam Smith of the 18th century and David Ricardo of the 19th century: Trade between two countries creates winners and losers, but it leaves both nations with greater overall prosperity.

The general public, however, is less likely to take its cue from Adam Smith than from Lou Dobbs. In December, an NBC News/Wall Street Journal poll asked Americans, “Do you think the fact that the American economy has become increasingly global is good because it has opened up new markets for American products and resulted in more jobs, or bad because it has subjected American companies and employees to unfair competition and cheap labor?”

When this question was asked a decade ago, the public was almost evenly split. In the recent poll, however, only 28 percent endorsed globalization, while 58 percent opposed it. As the economy continues to weaken from problems in the housing and credit markets, you can expect to hear more about foreigners stealing American jobs, regardless of the true merits of the case.

This shift of public opinion toward economic isolationism may well become a political problem for John McCain. Compared with those of either of his possible Democratic rivals, his track record shows him to be a more unequivocal free trader. Here are some examples:

much more:

http://www.nytimes.com/2008/03/16/business/16view.html?_r=1&ref=business&oref=slogin

[aquart]

1. Free trade ain't free. It has cost us our economy.

Way too expensive in my book.

[bicentennial_baby]

2. I somewhat agree....

As an Econ major, I understand the fundamental theory behind it, and I agree with Smith and Ricardo, in the abstract. However, those theories were devised long in the past, and don't apply to our situation in the 21st century. Regardless, we can't go back in time, and we have to work within the framework of what trade and globalization have produced, and figure out ways to make it more equitable. Fair trade.

And yes, trade isn't free, I agree.

But, I think the point in the article about McCain is relevant. :hi:

[SpiralHawk]

3. Screw so-called 'free trade.' We need fair trade...

Wiki:

"Fair trade is an organized social movement and market-based approach to alleviating global poverty and promoting sustainability. The movement advocates the payment of a fair price as well as social and environmental standards in areas related to the production of a wide variety of goods. It focuses in particular on exports from developing countries to developed countries, most notably handicrafts, coffee, cocoa, sugar, tea, bananas, honey, cotton, wine, fresh fruit, and so on...

http://en.wikipedia.org/wiki/Fair_trade

[Bandit]

4. It wasn't free trade that cost our economy it was lack of credibility

The USA is not a country that can be trusted, in all sense of the word trust.Republicans got their deepest wish, when they say they would rather "America be feared than loved". Believe me America is feared in the same manner an insane man with an axe is feared..

[ljm2002]

5. I forget where I read it but...

...I do remember reading some history on the matter of trade between nations, and it was pointed out that all of the great economic powers -- including the US and the UK -- started out having very strict protectionist laws, until their economies became strong on the world stage. Only then did they open up their markets with little protectionism if any. Yet now, we require newly developing nations to start out without protection for their own industries. So even in theory, what we are asking does not wash.

"In theory, theory and reality are the same. In reality, they are different."

[bicentennial_baby]

6. Yes, this is accurate. Manufacturing, especially the textile industry,

grew rapidly in the early 19th century, beginning with Jefferson's trade embargo of 1807, and the protectionism continued through the war of 1812, in the form of tariffs. Protectionism has its benefits and its costs. In the right environment, it can foster economic growth and technological progress, which benefits society as a whole.

However, it also costs jobs in certain sectors of the economy. It's difficult to enact protectionism in this day and age, for the less developed nations, both because of the global economy and extreme interdependence, and also because of the stranglehold of IMF/WB policies. That's my .02

:hi: