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Tilting at Windmills

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December 13, 2005
By: Kevin Drum

LA TIMES OP-ED REVIEW....To my considerable surprise, the normally smarmy Joel Stein actually has a good column in the LA Times today. It's about Johnny Knoxville, his new film The Ringer, and whether or not it's OK to make jokes at the expense of people with mental disabilities. If, like me, you've been feeling vaguely guilty for thinking that the ads for The Ringer look pretty funny, read the column.

Elsewhere on the Times op-ed page, I came face-to-face with an op-ed by Paul Wolfowitz extolling the virtues of free trade, and it really drove home one of the big problems with having Wolfowitz as president of the World Bank: how do you deal with the cognitive dissonance of agreeing with him? I mean, roughly speaking, I'm in favor of free trade. On the other hand, Wolfowitz's record of being wrong about everything is almost unparalleled. So should I stick with my belief that free trade is good, or should I remember that Wolfowitz is always wrong and review my premises?

Decisions, decisions....

Kevin Drum 11:56 AM Permalink | Trackbacks | Comments (154)

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Comments

Oh, it's not so much that Wolfie is wrong nearly 100% of the time. It's that even when his idea is right, you can just about guarantee that the execution will be so screwed up that the idea might as well have been wrong.

Posted by: Derelict on December 13, 2005 at 11:59 AM | PERMALINK

Frist! are we still doing that?

I still can't get past that scene in the Michael Moore movie where Wolfy licks his comb. Yuck.

Posted by: the fake Fake Al on December 13, 2005 at 11:59 AM | PERMALINK

Kevin Drum: I mean, roughly speaking, I'm in favor of free trade.

Free trade doesn't sound so bad - when do we get it?

BTW, why are you in favor of what usually passes for free trade. What empirical evidence can you cite for its desirability?

I wish you'd post more on this. Judging by your reaction in a recent post to the consensus that it hurts already low paid workers, it honestly sounds like your not well informed about it. Perhaps the theory as promoted since the early '90's sounds good, but have you looked at the details and the empirical data?

Posted by: alex on December 13, 2005 at 12:03 PM | PERMALINK

Seeing as how "free trade" has come to mean a race for the bottom in wages and the outsourcing of almost all US manufacturing, I suspect that trade that's a bit less free would be better generally for the living standards of workers.

Posted by: Scorpio on December 13, 2005 at 12:05 PM | PERMALINK

Kevin: that was a little unfair to Wolfowitz. He actually has a history of being spectacularly right -- which is why his mistakes on Iraq stand out the more. In the 1980's he presciently condemned U.S. support for Hussein. He has supported Iranian dissidents for 25 years and back in the 80's when fear of Shiite extremism was all the rage warned that the Saudi Wahabis and the secular Baathists were the real long-term threats.
How he ended up so wrong on Iraq I don't know. But I have the utmost respect for him as a human being...consider him the Republican version of Jimmy Carter if you must.

Posted by: Nathan on December 13, 2005 at 12:06 PM | PERMALINK

Changing comments thread - my problem with The Ringer is that it was a fucking South Park episode. Whether it's offensive or not in theme, it's offensive in it's lack of originality.

My God, there are hundreds of people in Hollywood with good, original ideas, yet we always keep getting the same, worn-down trite we got before.

And while I'm on the subject - The Fantastic Four? Why the hell did so many people go to that fucking film? You're only encouraging them!

Posted by: Raznor on December 13, 2005 at 12:08 PM | PERMALINK

Joel Stein writes a good column once a year, like clockwork. I hadn't read one from him yet this year, so I knew it had to be coming. Thanks for pointing it out. Now I'll read him for another few weeks, realize he's a horrible columnist, and ignore him. Then, hopefully, when he writes his one good column next year, someone will alert me.

Posted by: MDS on December 13, 2005 at 12:09 PM | PERMALINK

Kevin,

You claim to be pro-free trade, but also pro-union, although unions are at the heart of the anti-trade movement. How can you and the Democratic party reconcile this?

Posted by: Observer on December 13, 2005 at 12:10 PM | PERMALINK

I also felt uneasy about believing in free trade but not believing in anyone who champions it. I finally figured it out.

I believe in free trade the same way I believe in productivity, efficiency, good nutrition, looking both ways before you cross a street and other generally good things.

THEY believe in free trade the same way I believe in free speech and freedom of religion. They would die (or better yet kill) for it. I would not.

Posted by: Andrea on December 13, 2005 at 12:14 PM | PERMALINK

...consider him the Republican version of Jimmy Carter if you must.

Eh. Wolfowitz was one of the architects of our attack against Iraq, despite the emerging evidence at the time of no existant threat to the United States. This resulted in at least 30,000 Iraqi deaths and over 2000 American dead.

If there is justice in this country, Wolfowitz' place in history will be as a defendant being tried in an American court for crimes against the peace.

Posted by: Wapiti on December 13, 2005 at 12:15 PM | PERMALINK

So should I stick with my belief that free trade is good, or should I remember that Wolfowitz is always wrong and review my premises?

Although it's possible that Wolfowitz read about free trade in a book or something, it's not clear what exposure to it he's actually had.
.

Posted by: Grand Moff Texan on December 13, 2005 at 12:15 PM | PERMALINK

You claim to be pro-free trade, but also pro-union, although unions are at the heart of the anti-trade movement. How can you and the Democratic party reconcile this?

I can answer that: no nation completely embraces free trade, it's just rhetoric, like "free markets." There's always some control, and the controls you pick demonstrate what you value.

The Bush administration is protectionist. All the unions want to see is some of that protectionism protecting American labor, not just agriculture in states that vote for Bush.

Again, it depends on what you value.
.

Posted by: Grand Moff Texan on December 13, 2005 at 12:17 PM | PERMALINK

Kevin,

Brand names are a useful but non-infallible way to save time when choosing among complex alternatives. Once you learn which brands you tend to like, you can choose based on brand name and usually end up happy. It is, of course, even better to do your own analysis and really look at the available evidence before making your decision. You have done this already with free trade by reading and thinking about it a lot over time, which allows you to think beyond Wolfie's negative brand and avoid a rare case of being led astray by it.

Posted by: A-ro on December 13, 2005 at 12:18 PM | PERMALINK

If there is justice in this country, Wolfowitz' place in history will be as a defendant being tried in an American court for crimes against the peace.

No, he should stand trial in the country in which his crimes were committed. I'm sure the Shi'ite theocracy that's going to control Iraq will give him a fair trial.
.

Posted by: Grand Moff Texan on December 13, 2005 at 12:19 PM | PERMALINK

Grand Moff Texan: I can answer that: no nation completely embraces free trade, it's just rhetoric, like "free markets." There's always some control, and the controls you pick demonstrate what you value.

Truer words were never spoken.

Posted by: alex on December 13, 2005 at 12:19 PM | PERMALINK

I'm not so much against free trade as I am against

1) out-sourcing of industry to foreign sweat shops with no environmental standards and

2) the development of a global economy based upon the assumption of cheap energy where apples, clothes, cows, marble, bricks, steel, plastics, grass seed, cheese, etc. get shipped an average of 10,000 km before consumption.

Posted by: ranaaurora on December 13, 2005 at 12:20 PM | PERMALINK

The Wolfie question is a good one.

Too bad there is never and has never been free trade or open markets, anywhere, ever.

Posted by: Gore/Obama '08 on December 13, 2005 at 12:20 PM | PERMALINK

How about a preference for FAIR trade?

Posted by: stumpy on December 13, 2005 at 12:21 PM | PERMALINK

Don't think about that. Just go over to MaxSpeak and read Dean Baker's piece on how the professionals of this country are hypocrites and how they employ protectionist measures at the expense of the lower classes.

Posted by: Brian on December 13, 2005 at 12:26 PM | PERMALINK

re: Wolfowitz and free trade...
Sometimes even a blind pig can find an acorn.

Posted by: Ara Rubyan on December 13, 2005 at 12:29 PM | PERMALINK

ranaaurora,


...I am against

1) out-sourcing of industry to foreign sweat shops with no environmental standards and

What do you have against sweat shop workers? If we "help" them by imposing our labor standards on them, most will be worse off. For example, many sweatshop workers are only able to avoid prostitution or grinding subsistence-farming through their factory job.

2) the development of a global economy based upon the assumption of cheap energy where apples, clothes, cows, marble, bricks, steel, plastics, grass seed, cheese, etc. get shipped an average of 10,000 km before consumption.

I agree. Properly pricing carbon-based fuels to reflect their environmental and greenhouse-gas related damage would help make this right.

Posted by: A-ro on December 13, 2005 at 12:30 PM | PERMALINK

how the professionals of this country are hypocrites and how they employ protectionist measures at the expense of the lower classes.

They also replace them with illegal foreign labor at every opportunity, and then manipulate said lower classes with the specter of the illegal labor they themselves brought in.

It's how northern industrialists used the Irish, or women, or how management in the south organized the Klan to combat unions. Same fucking story.
.

Posted by: Grand Moff Texan on December 13, 2005 at 12:33 PM | PERMALINK

Wolfowitz the only correct statement that George Will ever made, to wit, if Assistant Professors became politicians we will all be in trouble.

Posted by: edmund on December 13, 2005 at 12:35 PM | PERMALINK

Or instead of adjusting your views away from free trade because Wolfowitz likes it, you could look at the other areas of disagreement and consider adjusting your views to match his... just sayin'

Posted by: dave s on December 13, 2005 at 12:36 PM | PERMALINK

Preview! Preview.

Wolfowitz exemplifies the only correct statement that George Will ever made, to wit, if Assistant Professors became politicians we will all be in trouble.

Posted by: edmund on December 13, 2005 at 12:36 PM | PERMALINK

Free trade is horrible for the lowest 95% of us on the economic ladder.

C'mon, Kev. I thought you knew better.

Posted by: Chief on December 13, 2005 at 12:38 PM | PERMALINK

Properly pricing carbon-based fuels to reflect their environmental and greenhouse-gas related damage would help make this right.

Yes, but asking people to actually pay for what they use is contrary to the free market.

Somehow.

Weird.
.

Posted by: Grand Moff Texan on December 13, 2005 at 12:39 PM | PERMALINK

I think we should all go and buy cheap trinkets from China and use crappy software from India to help the poor in true spirit of this Chrismas season.

Posted by: winglee on December 13, 2005 at 12:40 PM | PERMALINK

if Assistant Professors became politicians we will all be in trouble

Yeah, if you want change, let the adjuncts run things. Then there will be blood in the streets.
.

Posted by: Grand Moff Texan on December 13, 2005 at 12:40 PM | PERMALINK

The problem with "free trade" is that it's a rhetorical term that has little to do with the implementation. NAFTA, the GATT, and other "free trade" agreements consist of thousands of pages of legalese, mostly written by corporate lawyers from the US and (in the case of the GATT) the EU. Many of the provisions actually impede trade (mainly the sections concerned with "intellectual property").

Another problem is with those who elevate the free exchange of goods over all other values, like whether those goods cause harm to the environment or were produced under near-slave-labor conditions. NAFTA and the GATT have already been used to blow major holes into the Clean Air Act, to give just one example.

"Free trade" as it is currently structured overrides self-determination. If a local group of people decides, democratically, that a particular traditional way of doing things is important to them, they should be allowed to continue the practice.

We also use the fiction, in these discussions, that nations are the actors in international trade. But an increasingly large fraction of international trade is intra-corporation trade, goods moving (often only on paper) between one corporate subsidiary and another, with the deals often structured to arbitrage between different tax laws, labor pay rates, etc.

We need international rules, and we need to trade. But the rules can't be set on the basis of trade promotion alone.

Posted by: Joe Buck on December 13, 2005 at 12:45 PM | PERMALINK

This is all swell and everything, but when can we get back to hating atheists and muslims?

Posted by: craigie on December 13, 2005 at 12:45 PM | PERMALINK

Wolfowitz the only correct statement that George Will ever made, to wit, if Assistant Professors became politicians we will all be in trouble.

And if pundits ever govern the country, then we'll see each other in hell pronto.

Posted by: frankly0 on December 13, 2005 at 12:46 PM | PERMALINK

"Free trade" as it is currently structured overrides self-determination. If a local group of people decides, democratically, that a particular traditional way of doing things is important to them, they should be allowed to continue the practice.

But the current vogue is to liberate money from democracy. Anything else would be communism, you see.

Some guy with a bow-tie told me, and he should know. He sounded all, you know, smart 'n stuff.
.

Posted by: Grand Moff Texan on December 13, 2005 at 12:47 PM | PERMALINK

If, like me, you've been feeling vaguely guilty for thinking that the ads for The Ringer look pretty funny, read the column.

I'm just confused at the idea that someone would think that the excerpts in the ads look funny -- with the possible exception of the confession and apparent response.

Elsewhere on the Times op-ed page, I came face-to-face with an op-ed by Paul Wolfowitz extolling the virtues of free trade, and it really drove home one of the big problems with having Wolfowitz as president of the World Bank: how do you deal with the cognitive dissonance of agreeing with him? I mean, roughly speaking, I'm in favor of free trade. On the other hand, Wolfowitz's record of being wrong about everything is almost unparalleled. So should I stick with my belief that free trade is good, or should I remember that Wolfowitz is always wrong and review my premises?

Probably the latter; first, start with noting that what World Bank types -- including Wolfowitz -- sell as "free trade" is only selectively free.

And then you might want to review the history of the actual effects of international "free trade" in exacerbating ethnic and class conflict, widening wealth gaps both within and between countries, and driving capital from developing partners to more developed partners in trade.

You want open trade? Get common, democratically accountable institutions regulating trade and other relations among the partners in trade, and allow people to be as free as goods and capital. Its not exactly a novel solution -- the framers of the Constitution nailed it -- but its still the right solution.

Posted by: cmdicely on December 13, 2005 at 12:47 PM | PERMALINK

We have had a great experiment involving free trade over the last 10 years. It is called NAFTA.

It has been a great success. Unprecidented numbers of manufacturing jobs have been shipped from ungrateful Americans to grateful Chinese. Unproductive Mexican farmers have been forced off the land because subsidized American corn has undercut their home grown efforts, and they are now productive illegal immigrants in the US, taking other jobs previously done by more ungrateful Americans.

I agree!! Free trade is tremendously successful. But, the work of free traders is not done. Some Americans remain in jobs which should be done by Chinese. We need to use the free trade system to eliminate the remaining American jobs, so that we can ALL be CEOs of fortune 500 corporations, and no longer need to do any manufacturing, production, or any other productive work.

Posted by: POed Liberal on December 13, 2005 at 12:48 PM | PERMALINK

and allow people to be as free as goods and capital

Definitely communism.
.

Posted by: Grand Moff Texan on December 13, 2005 at 12:49 PM | PERMALINK

And if you shoulder more of the tax burden, the Tax-Cut-Led-Growth Fairy will leave a better job under your pillow! Free capital and your ass will follow!
.

Posted by: Grand Moff Texan on December 13, 2005 at 12:52 PM | PERMALINK

Off topic: Does anyone have a good review of the structure behind the new Medicare Prescription Drug Benefit?

How does the federal government fund insurers and what decisions can the insurers make to increase profits?

What about drug coverage for diseases that typically require multiple drugs or flexible drug prescriptions (AIDS/HIV, drug resistant bacterial infections, malaria, etc.)? Companies have to cover two drugs in every "category" -- but malaria requires three and AIDS and severe infections requires everything they have. For folks with kidney or liver disease many drugs are not treatment options. Patients with drug allergies also require treatment flexibility.

What keeps companies from choosing to cover those drugs with highest rates of allergic reactions or severe kidney side effects in the hope that doctors will decide to prescribe an uncovered but safer alternative?

Posted by: ranaaurora on December 13, 2005 at 12:52 PM | PERMALINK

I think even the most vehement proponents of free trade would run screaming from it if they ever lived in a place that truly had absolutely free trade.

It's exactly like the idea of competition. Libertarians gush over how wonderful competition is, but when it comes down to literally putting their money where their mouth is and they avoid competitive markets like the plague.

Absolutely free trade and plentiful competition not only drives wages down it also drives profits down. Libbies and their ilk like their free trade in carefully fenced in arenas so they can maximize their profits and minimize everybody else's wages...er, their costs.

Posted by: Dr. Morpheus on December 13, 2005 at 12:54 PM | PERMALINK

Warning: Half-cocked woof ahead.

So, is Wolfie an economist? From the encomium above he sounds like a geopolitical strategist. And though he got a lot of things right in the 1980s, those didn't involve mixing military planning into the equation, eh, General Shinseki?

Likewise with economic policy, maybe he's trying to be a Renaissance Man by expanding into labor economics in a time a globalization. Not that he's all alone, here. No one I've ever read has been very persuasive in arguing that 'globalization does not mean a race to the bottom for lowest wages, least environmental regulation.'

If he weren't President of the World Bank, we could just nod along and wait for his French Cooking show or shiny new opinions on Global Warming.

All of which brings me to the relatives of Chickenhawkery. Is there a similarly colorful term for those who've never missed a meal or r-e-a-l-l-y depended on their wits in a free trade zone (say, not including local government eminent domain as a strategy for leveraging the value of a major league sports monopoly), yet extol the glories of the free market?

Just askin'.

Posted by: MaryCh on December 13, 2005 at 12:55 PM | PERMALINK

Off topic: Does anyone have a good review of the structure behind the new Medicare Prescription Drug Benefit?

How does the federal government fund insurers and what decisions can the insurers make to increase profits?

What about drug coverage for diseases that typically require multiple drugs or flexible drug prescriptions (AIDS/HIV, drug resistant bacterial infections, malaria, etc.)? Companies have to cover two drugs in every "category" -- but malaria requires three and AIDS and severe infections requires everything they have. For folks with kidney or liver disease many drugs are not treatment options. Patients with drug allergies also require treatment flexibility.

What keeps companies from choosing to cover those drugs with highest rates of allergic reactions or severe kidney side effects in the hope that doctors will decide to prescribe an uncovered but safer alternative?

Posted by: ranaaurora on December 13, 2005 at 12:56 PM | PERMALINK

"Fair Trade" is nothing more than a slogan. Can anyone produce a definition for free trade that involve more than 1/1000% of actually traded goods.

The reality is that any policy that brings foriegn workers out of povery will hurt US and European unions. The opposition to low wage manufacturing overseas has notning to do with concern for workers. They line up to apply for jobs. It has everything to do with protecting a voting base of the Democrat party


Posted by: Observer on December 13, 2005 at 12:59 PM | PERMALINK

Nathan,

Wolfowitz is always right? You've got to be joking. During the 1970s, conservatives were always complaining that the CIA was underestimating the amount of military spending by the USSR. When George Bush (41) became Director of the CIA, he invited a group of outside experts who became known as Team B to examine the intelligence, and lo and behold, they concluded that yes, the CIA was underestimating the amount of Soviet military spending.

After the collapse of the Soviet Union, Yel'tsin allowed Westerners access to Military of Defense archives. It turns out the CIA was not underestimating the amount of Soviet military spending, rather they were overestimating it, which means that that the Team B estimates were absolutely ludicrous.

Why do I recount this history? Because Wolfowitz as well as his ideological soulmates such as Libby and Perle were involved in Team B. This Team B mindset explains why Bush adminstration officials refused to accept intelligence on Iraq that went aginst their preconceptions.

Posted by: Vadranor on December 13, 2005 at 1:01 PM | PERMALINK

In theory, free trade is a good idea: Let each country produce what it's best at. But in the real world, it is often desirable to set up speed bumps, barriers, and obstacles to trade. In a world where 1.2 billion people live on less than $1.00 per day, in most "poor" countries, most people make a living through hard work. Maybe a plastic chair made in a Chinese factory can sell for less than a handmade chair, but if you live in Bangladesh and your business is making handmade chairs, maybe "free trade" with China means that your neighbors buy Chinese plastic chairs instead of your handmade chairs. So you're out of work and you can't afford to pay for your kids' books and school supplies, and they drop out of school and another generation doesn't get the education needed to escape poverty and transition the entire economy from labor-based to information-based.

The world is far too complex for macroeconomic models. There are real humans with real needs, both now and for the future, for adults and for children, for workers and for retirees, for men and for women, for people and for the environment. Macroeconomic models don't capture all those interests and nuances. Free trade may benefit consumers and the lowest-cost producers, but a little protectionism can go a long way to help in ways that gross national economic statistics don't begin to tabulate.

Posted by: Joel Rubinstein on December 13, 2005 at 1:02 PM | PERMALINK

POd lib,

You'll want to stock up on prozac. Paul is at the World Bank to push free trade and in coordination with GWB their 'Free Trade = less Poverty" sales pitch they'll be hard to stop.

Keep you eye on the current Hong Kong meeting of the WTO but don't expect a deal. It's not impossible but France is in such a tight economic straighjacket and Chirac so weak it's unlikely France will agree to lower farm tariff's.

Not to Worry.

GWB has been meeting with the leaders of the undeveloped world regularly, most often with India and Brazil, and has been getting Bono on board as regards Africa. If the WTO is unable to make progress GWB will move in right after them and make separate deals with the undeveloped world.

Posted by: rdw on December 13, 2005 at 1:03 PM | PERMALINK

A-ro: What do you have against sweat shop workers? If we "help" them by imposing our labor standards on them, most will be worse off. For example, many sweatshop workers are only able to avoid prostitution or grinding subsistence-farming through their factory job.

Who said "our" labor standards. Minimal international standards are sufficient. These include the right to organize, the right not to be locked in, and the right not to have labor "peace" enforced by guns. If you require these protections from all trading partners, then trade actually can help the poor. Oddly though these requirements are missing from our voluminous trade agreements (except for Cambodia - where it's worked). A requirement that countries actually enforce their own existing labor laws was nixed from CAFTA.

So are you still buying that line?

Properly pricing carbon-based fuels to reflect their environmental and greenhouse-gas related damage would help make this right.

The only way to account for such externalities is to impose taxes, quotas and other restrictions. Of course then the trade is no longer "free".

Posted by: alex on December 13, 2005 at 1:07 PM | PERMALINK

The only way to account for such externalities is to impose taxes, quotas and other restrictions. Of course then the trade is no longer "free".

Yes, and neither is the ride.
.

Posted by: Grand Moff Texan on December 13, 2005 at 1:14 PM | PERMALINK

POed Lib,

This weekend JP Morgan upgraded global growth estimates for the undeveloped world to 5.7% and sees 2006 coming in no lower than 5.4%. For the US they noted continuing jobless dropped by a stellar 194,000 the last two weeks and are projecting the next job report could show 250,000 job adds or more. In addition they reversed their predicion the rate would move up from 5.0% to 5.1% due mainly to temporary katrina adjustments. They are now hinting the rate could drop to 4.9%.

Over the last 6 weeks a majority of economists have revised 2006 GDP forecasts upward to the 3.5% area. If jobadds do come in 250,000 or higher expect them toget their pencils out again.

Consider if going into the 2006 elections we average 225,000 monthly job adds that'll be 2.25M for the year-to-date and well over 5M since the tax cuts. The unempoyment rate will be down around 4.3%. I'm not so sure your whinning about a lack of jobs is going to be very effective.

BTW: Think even longer term. We are headed into a severe labor shortage. The boomers are turning 60 in 2006. The labor market will be shrinking as jobs are added. Once we dip below 4.5% be might not rise above it for another decade.

I think your party might be a day late and a dollar short on this one.

Posted by: rdw on December 13, 2005 at 1:15 PM | PERMALINK

I feel like I'm repeating myself here, but let's go for it...

It strikes me as a rather strange position that Kevin takes on "trade issues". It is a trap that many Democrats have fallen into. The trap consists of the fact that most economists agree that ANY sort of government regulation or tax policy that has effect over a certain geographic area and which inhibits the free movement of goods, labor, or capital is a de facto "trade restriction".

A local government rent subsidy is, strictly speaking, just as much as a barrier to "free trade" as is an agricultural subsidy. A tax increase on goods sold within a city functions pretty much the same way as a tariff increase that is enforced on the border.

The problem with blithely saying you're in favor of "free trade" is that the free trade maximalists who actually run the institutions pushing for free trade may have a much more expansive idea of what "trade barriers" are. At the extreme ideological end of the spectrum are those libertarians who would argue that ALL government activity is by definition a trade barrier. And these people are quite numerous. They also have a point. It is the height of arbitrariness to say that only one specific kind of trade barrier (those that are erected along national borders as explicit tariffs or subsidies) should be attacked while other kinds are allowed to stand.

In reality, of course, each government program or regulation should be looked at individually, whether the program acts to restrict trade on the local, regional or national scale. Of course, in practice, this is what a lot of development experts actually do. Only when it comes time to shrilly defend "trade" in the abstract do they resort to bringing out tidy pictures.

Saying you're "pro free-trade" without specifying what that means is just punting the issue down the road.

Posted by: kokblok on December 13, 2005 at 1:17 PM | PERMALINK

...but if you live in Bangladesh and your business is making handmade chairs, maybe "free trade" with China means that your neighbors buy Chinese plastic chairs instead of your handmade chairs. So you're out of work and you can't afford to pay for your kids' books and school supplies, and they drop out of school and another generation doesn't get the education needed to escape poverty and transition the entire economy from labor-based to information-based.

True enough, and a real problem for the local industries. On the other hand, now the neighbors have chairs, and money left over that they wouldn't have had otherwise. Maybe they'll spend it locally. Maybe someone will start a new local industry that isn't as vulnerable to outsourcing (furniture repair?) Maybe they'll send their own kids to school with it. Or maybe they'll just buy more Chinese products. And what about the Chinese guy finally getting his own kids in school?

There's no quick and easy answer for this question. One reason centralized economies don't work is that economics is as complex as the ecology of a rain forest, and just as hard to manage from outside. Maximizing free choice isn't a bad rule of thumb when everything else fails.

Posted by: tbrosz on December 13, 2005 at 1:18 PM | PERMALINK

rdw: POd lib, You'll want to stock up on prozac.

While POed Liberal is getting their Prozac prescription filled, perhaps you can tell us how most Mexicans have benefited from NAFTA. Don't forget to cite facts and figures in addition to platitudes.

It's not impossible but France is in such a tight economic straighjacket and Chirac so weak it's unlikely France will agree to lower farm tariff's.

Maybe he'll do it after we offer to eliminate our sugar and orange juice tariffs, and eliminate our cotton subsidies. I recommend that GWB make such an offer, and embarass the piss out of Chirac.

If the WTO is unable to make progress GWB will move in right after them and make separate deals with the undeveloped world.

If you're a fan of GWB's on this, then you must have loved Bill Clinton. He pushed through NAFTA, WTO, PNTR for China and WTO membership for China.

Posted by: alex on December 13, 2005 at 1:20 PM | PERMALINK

While POed Liberal is getting their Prozac prescription filled, perhaps you can tell us how most Mexicans have benefited from NAFTA. Don't forget to cite facts and figures in addition to platitudes.

Alex, the answer is easy. You see France is really bad and part of Old Europe. GW Bush has invested billions in the economy of India and France is bad. We are along for the ride with India while France remains bad.

Posted by: whosays on December 13, 2005 at 1:23 PM | PERMALINK

At the theater the other night the order of trailers was:

1. The Producers, or "no, its really O.K., Nazi's are funny."

2. The Ringer, or "no, its really O.K., developmentally disabled people are funny."

and finally,

3. Something New, or "no, its really O.K., the reverse racism of black people when a black professional woman falls for her white gardener is really, really funny.

Now that's hard to top.

Posted by: hank on December 13, 2005 at 1:23 PM | PERMALINK

Alex,

Putting restrictions on countries' labor laws and the enforcement thereof is a soverignty issue outside the scope of free trade agreements, the purpose of which is to get everyone to agree to reduce their trade barriers. We should definately pressure countries to improve their human rights record, and conventions against slavery and the like are legitimate interferences with sovereignty. But making standards such as the right to organize part of free trade agreements will open a pandora's box of non-trade-barrier issues that will slow down progress on freeing trade.

Also, I'm pretty sure that carbon taxes that apply equaly to domestically and foreign-produced fuels would not be a violation of the letter or the spirit of free trade agreements.

Posted by: A-ro on December 13, 2005 at 1:23 PM | PERMALINK

But many free trade agreements are quite proactive in their DENIAL of traditional sovereignty in just those areas of labor rights and the environment. Doesn't that open the same Pandora's box?

Posted by: kokblok on December 13, 2005 at 1:32 PM | PERMALINK

my belief that free trade is good (Kevin)

You don't think that's a little simplistic? Free trade in itself is partly good and partly bad. There are a gazillion opinions on which parts are good and bad, and a gazillion opinions on the best ways to fix or mitigate the bad. Refine your opinion beyond "me Tarzan, free trade good"; learn the details of Wolfowitz's opinions; and you'll find all kinds of disagreements.

Posted by: Gary Sugar on December 13, 2005 at 1:32 PM | PERMALINK

A-ro: Putting restrictions on countries' labor laws and the enforcement thereof is a soverignty issue outside the scope of free trade agreements

Exactly which trade agreements have avoided impinging on national sovereignty? See, for example, NAFTA chapter 11. How about the current complaints in Hong Kong regarding GATS Mode 4 trade in services?

Sorry, but labor and environmental standards are the only infringements on national soverignty that trade negotiators worry about. Everything else is fair game.

BTW, the whole theory that free trade can lift people out of poverty is based on the idea that there is a free market in labor. So without labor standards requiring that, the whole thing is a farce.

Also, I'm pretty sure that carbon taxes that apply equaly to domestically and foreign-produced fuels would not be a violation of the letter or the spirit of free trade agreements.

Nonsense. They would articially increase the price of shipping goods, thereby inhibiting trade.

Posted by: alex on December 13, 2005 at 1:33 PM | PERMALINK

Alex,

I am a fan of Clinton for getting NAFTA passed and a little less so for China but he did nothing else and let free trade die otherwise. Once Monica was in the news he was owned by the liberal wing and could not fight them.

George is far more active in this regard as is he is in foreign affairs in general. George is completing the most significant realignment of US foreign policy since 1945. He is seeking closer relations with all of Asia especially Japan, Korea, India, Pakistn, Indonesia and Malaysia as well as major trade deals with South America and Africa.

The cold war alignment of NATO vs the USSR is finally being disbanded as the EU carves out it's space. George can see the lack of economic dynamism and is following US Corporations into Asia. It's to perfectly timed effort to capitalize on the regional concern of Chinese dominance as well as our shared aversion of islamic terrorism. At the same time we are still engaging China as we becmoe more mutually dependent on trade.

The bottom line is that as the US has become more conservative Old Europe has become more liberal and we have less in common. GWB recognizes that as time goes on Old Europe will be less of an asset. We will remain allies but distance is in order. We will avoid common entangements unless or until we have a key understanding of goals and methods BEFORE we will form any coalitions with them.

Slick Willie did some good stuff. He slowed Govt spending initially, spent money on prisons and cops, supported 3 strikes, mandatory sentencing and the death penalty as well as welfare reform. On some of that he didn't have a choice but he passed it anyway.

No president is perfect nor prefectly bad.

Posted by: rdw on December 13, 2005 at 1:39 PM | PERMALINK
Putting restrictions on countries' labor laws and the enforcement thereof is a soverignty issue outside the scope of free trade agreements, the purpose of which is to get everyone to agree to reduce their trade barriers.

No, it isn't. Or, at least, if it is, it is only because the authors of so-called "free trade"
agreements choose to exclude it from their scope. Its quite possible to include such restrictions in the scope of agreements that deal with trade, as in, for instance, the EU.

Those terms are "outside the scope" of "free trade" agreements, because "free trade" agreements are a tool conceived and deployed by the major holders of capital and their supporters in government to advance narrow class interests.

Posted by: cmdicely on December 13, 2005 at 1:39 PM | PERMALINK

tbrosz: Maybe someone will start a new local industry that isn't as vulnerable to outsourcing (furniture repair?)

If everybody switches to businesses that don't compete with imports, then what are we going to export?

BTW, our 2004 current account deficit was 5.7%, and it keeps going up.

Maximizing free choice isn't a bad rule of thumb when everything else fails.

How does that square with China's currency manipulation? Spending 15%/GDP on defending their peg to the dollar is gov't manipulation if ever there was such a thing.

Posted by: alex on December 13, 2005 at 1:42 PM | PERMALINK

George is completing the most significant realignment of US foreign policy since 1945.

That's one way to put it. Impoverishing, isolating, and humiliating his own country would be another.

For the US they noted continuing jobless dropped by a stellar 194,000 the last two weeks

194k over two weeks is hardly stellar, especially if YOU CAN READ A CALENDAR. Thank you.

Over the last 6 weeks a majority of economists have revised 2006 GDP forecasts upward to the 3.5% area.

Which, considering its overseas and military components, not to mention inflation, is anemic.

This is the kind of half-wit fluffery that drove thinking people away from the infotainment that passes for news. There is no need for you to regurgitate it here.
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Posted by: Grand Moff Texan on December 13, 2005 at 1:44 PM | PERMALINK

alex,

Forget carbon taxes. The US and most of the rest of the world hates taxes. The reason Kyoto is dead is because it's a liberal creation. Their love of big government, bureaucracies and high taxes is not shared outside the liberal world.

There is absolutely no chance any undeveloped nations will agree to pay one penny of any tax at any time to be spent or controlled by anyone outside their own government.

Posted by: rdw on December 13, 2005 at 1:46 PM | PERMALINK

The bottom line is that as the US has become more conservative Old Europe has become more liberal and we have less in common.

Indeed. In terms of distribution of wealth, trend lines in standards of living, and the use of ancestral superstitions as a political weapon, the US is much more like the third world than any nation in "Old Europe," whatever that means.
.

Posted by: Grand Moff Texan on December 13, 2005 at 1:46 PM | PERMALINK

Maximizing free choice isn't a bad rule of thumb when everything else fails. Posted by: tbrosz on December 13, 2005 at 1:18 PM

Tbrosz, free choice in a capitalist economy isn't free. And the person who pays isn't always the person who benefits.

Posted by: Dr. Morpheus on December 13, 2005 at 1:48 PM | PERMALINK

The reason Kyoto is dead is because it's a liberal creation. Their love of big government, bureaucracies and high taxes is not shared outside the liberal world.

If I wanted to see something very funny, I'd ask you to define liberal.

Kyoto is opposed here because it costs the people who matter too much money. The law is for sale here in the US.

As for big government and high taxes (for most people), I would direct your attention to the last five GOP presidents and the last decade of a GOP controlled congress.

Your talking points expired sometime in 2002 and tinkerbell is already dead.
.

Posted by: Grand Moff Texan on December 13, 2005 at 1:48 PM | PERMALINK

"my belief that free trade is good"

Good for whom?

Posted by: brewmn on December 13, 2005 at 1:50 PM | PERMALINK

GM Texan,

You are headed toward a meltdown my friend. 2006 is setting up to be ANOTHER very good year. if you thought supply-siders were arrogant before wait to see what's ahead. Our growth since the June 03 tax cuts has been the amazing and tops any 3-yr period under Slick Willie. You have to go back to Reagan.

The 194K is very significant and it is seasonally adjusted. It's possible there could be some residual Katrina effect in there but the labor Dept is confident of the data. The 250K forecast is not a shock considering last months 212K. It's not impossible we'll see the November report revised up to 250K and that end the year with 500K net adds.

The 3.5% GDP forecast is net of inflation and a very solid number. Trend in considered to be near 2.6%. We've had 3 years of strong growth DESPITE energy price spikes, the Iraqi War and chronically slow growth in Europe.

Your party wasn't able to make a weaker economy an issue in either 2002 or 2004. Do you really think they can make this work in their favor?

Posted by: rdw on December 13, 2005 at 1:55 PM | PERMALINK

"free trade" agreements are a tool conceived and deployed by the major holders of capital and their supporters in government to advance narrow class interests.

cmdicely,

This is not true. The poor would gain the most from the elimination of trade barriers (especially barriers to trade among poor countries). In fact, the biggest obstacles to free trade come from the lobbying efforts of "the major holders of capital", who want to protect their profits at the expense of poor countries (for example, big agribusiness in the U.S.).

In fact, reducing trade barriers has never resulted in a net loss for any country. (Free movement of "hot" investment capital is a different issue, historically but not inextricably related to lowerign barriers to trade.)

Posted by: A-ro on December 13, 2005 at 1:58 PM | PERMALINK

GM Texan,

I take it you didn't see todays Wash Post editorial and your buddy Gerhard Schroeder. Seems the big guy took a top job with the Russian oil company he has been getting favorable trade deals the last decade or so.

The Washington Post doesn't seem to think it's a coincidence. Kind of like how France, Germany and Russia voted on Iraq after being on Saddams payroll for a decade.

If there was any talk of Gerhard coming back in Germany that's over.

You can pin the blame for Kyoto being dead on anything you'd like but I'm glad to see you recognize it's dead.

Posted by: rdw on December 13, 2005 at 2:00 PM | PERMALINK

Yes, rdw, the rich are getting fabulously more wealthy while the middle incomes and the poor are trading water, at best.

That's hardly a great economy.

Oh, and St. Ronnie's performance on the economy sucked. I lived through the 80s and can speak of it first hand.

Posted by: Dr. Morpheus on December 13, 2005 at 2:00 PM | PERMALINK

GM Texan - don't take my word for it.

The Washington Post declares, "Gerhard Schroeder: Worse than you ever imagined."

Mr. Schroeder's decision to swap his job with the German government for a job funded by the Russian government should raise questions for German voters about their country's relationship with Russia. During his seven years as chancellor, Mr. Schroeder went out of his way to ignore the gradual suppression of political rights in Russia and to play down the significance of Russia's horrific war in Chechnya. Throughout his term in office, Mr. Schroeder thwarted attempts to put unified Western pressure on Russia to change its behavior. We can only hope that Germany's new chancellor, Angela Merkel, uses this extraordinary announcement as a reason to launch a new German policy toward Russia, one based on something other than Mr. Schroeder's private interests.

Posted by: rdw on December 13, 2005 at 2:01 PM | PERMALINK

Free trade has never been shown to be beneficial in an environment of global capital mobility. Smith and Ricardo never even contemplated an environment where there would be full capital mobility and trade freedom, but labor would continue to be limited in movement. It's amazing how many people are not honest about this, or are even aware of it since duped by those not being honest.

Free trade might be beneficial according to the theory if capital was largely limited to its home, as labor mostly is. Instead, we have a mixed environment where intrafirm transfers across borders constitute a lot of activity, and you have a system essentially run and managed by big capital interests with no real homebase to speak of. This loosely managed capital regime simply passes on costs to wherever is best for the particular self-interest involved, while setting up a capitalistic patronage system of sorts where geography is divided up into segments of extremely low cost labor that services the desires of the much smaller zones of consumer elite.

The influence of Big Capital on some of these smaller principalities cannot be overstated, and free trade will only be effective when it is implemented between free governments that are unaccountable to the people and thus concerned about their interests and welfare, and in an environment where capital is largely homegrown, or at least roughly equivalent in mobility to labor mobility.

Posted by: Jimm on December 13, 2005 at 2:03 PM | PERMALINK

Alex:

If everybody switches to businesses that don't compete with imports, then what are we going to export?

In the context of the original comment, we were talking about Third World countries. I doubt the guy used in the example was exporting a lot of his handmade chairs, either. On the other hand, a few small Third World groups and villages have make a pretty good living on a small scale exporting exotic or handmade items. There are places around here who specialize in such homemade imports.

There are a lot of people who are concerned about the possible loss of our domestic manufacturing capacity, and not all of them liberals by any means.

You could make a case for a certain level of tariff to protect the American middle classes, but the problem is that such tariffs would be applied and their levels set for political reasons, not economic ones, and we'd end up with the same dog's breakfast of trade laws we have now.

Most tariffs aren't there to protect jobs. Most of them are there because the protected industry crossed a politician's palm with silver.

See also tax laws, which are less about raising revenues than they are about swinging political power around.

Ironically, for much of the early history of our nation, the government was largely financed with tariffs.

Posted by: tbrosz on December 13, 2005 at 2:04 PM | PERMALINK

The influence of Big Capital on some of these smaller principalities cannot be overstated, and free trade will only be effective when it is implemented between free governments that are unaccountable to the people and thus concerned about their interests and welfare, and in an environment where capital is largely homegrown, or at least roughly equivalent in mobility to labor mobility.

Of course I mean "free governments that are accountable to the people and thus concerned about their interests and welfare."

Posted by: Jimm on December 13, 2005 at 2:05 PM | PERMALINK

You are headed toward a meltdown my friend. 2006 is setting up to be ANOTHER very good year.

Thanks for your thoughtful warning. It makes up for the point you don't have, or at least it would if you were among conservatives. You've recycled the same empty fluffery for years and you still don't have a single policy success to show.

Still waiting for results.

Yes, crawling out of the pit Bush dug for us using borrowed money and massive government spending tops any THREE YEAR period in the Clinton administration. Overall, there's still no comparison. Thank you for skewing the data. No, wait, you had to. No thanks for you. Thank you, also, for reminding us of Reagan's flame-out. That was a laugh-riot.

The 194K is very significant and it is seasonally adjusted.
Keep saying it, you might believe it. But even seasonal adjustments don't eliminate the temporary hiring spike of Xmas. You guys use this crap to prop up your weak little president every year.

By the by: if the weak economy that you say we don't have wasn't an issue then they why are you wearing your little cheerleader outfit? I think you're confused.

Debt, theft, and death. That's the only thing Bush is leaving us. There is no policy, only looting. Of course, since his friends own every broadcast network and every cable news network, that's easy to obscure. But, again, people who actually think for a living aren't impressed.
.

Posted by: Grand Moff Texan on December 13, 2005 at 2:05 PM | PERMALINK

Dr. Morpheus,

The 80's were great. It was Morning in America. Reagan dramatically reduced tax rates, cut unemployent in half, cut inflation in half, cut ALL interest rates in half and created an amazing amount of stock market and real este wealth all while defeating the socialists almost BY HIMSELF.

Ronnie is now ranks number 6 in recent polls of the Presidents by historains.

Posted by: rdw on December 13, 2005 at 2:05 PM | PERMALINK

RDW--
Wait, I'm getting a little confused here. From what I recall, most responsible development experts agree that one of the main problems facing governments in the third world is their inability to collect tax revenues (which makes it impossible for them to pay off their debts or engage in any other programs). All these guys like Wolfowitz, etc. have as one of their goals the creation of stable and rational taxation systems, systems that will no doubt actually raise the amount of the income that comes into the government coffers. I fail to see how this can be counted as destroying bureaucracy. Nor, really, do I see what it has to do with "free trade" as the word is normally used.

Hey, don't get me wrong, there are plenty of "anti-globalization" fools on the left. They are usually foolish because they overestimate the ideological coherence of their "opponents" in the World Bank, IMF, etc. They are more interested in striking a pose "against" something than pointing out how complicated a thing "free trade" really is. This, in turn, inspires political defeatism and a tendency to overestimate the omnipotence of these global actors.

But there are also fools on the right, who are more interested in being "against" the state in almost all its manifestations, and who are somehow blind to the many ways in which the growth of global structures have strengthened governments all over the world.

Posted by: Kokblok on December 13, 2005 at 2:08 PM | PERMALINK

rdw--
That Reagan post was a parody, I hope.

Posted by: kokblok on December 13, 2005 at 2:09 PM | PERMALINK

and free trade will only be effective when it is implemented between free governments that are accountable to the people and thus concerned about their interests and welfare,

I disagree. Free trade will only be effective when it is implied by governments that are accountable to the people, not merely between such governments. Democratically accountable, common institutions are necessary.

Posted by: cmdicely on December 13, 2005 at 2:11 PM | PERMALINK

The 80's were great. It was Morning in America. Reagan dramatically reduced tax rates, cut unemployent in half, cut inflation in half, cut ALL interest rates in half and created an amazing amount of stock market and real este wealth all while defeating the socialists almost BY HIMSELF.

What? Are you twelve? Those of us who actually remember the 80s also remember that Reagan had to hire a bunch of phonies to pretend the USSR wasn't falling apart so he could continue to launder tax dollars into the military industrial complex and pretend there was such a thing as "tax cut led growth."

Last I checked, even Laffer has to use a microscope to find a supply-side effect in ONE area of federal tax revenue in 1982 ALONE.

Reagan's boom was already bust as 1987 opened and I watched the economy of Texas crumble around me. Then again, maxing out the tax-payers credit card and blowing a bunch of smoke has to end some time.

Eventually, even Reagan had to admit that the USSR couldn't go on, and that his little boogeyman game was over. Thank God for Osama bin Laden. Now we've got the whole scam going again, this time on crack.
.

Posted by: Grand Moff Texan on December 13, 2005 at 2:12 PM | PERMALINK

Jimm:

If through some means (Larry Niven teleporters?) labor was much more mobile, and capital wasn't, the results would probably be the same. Millions of Third World workers would pour over to where the capital was, and wages would drop like a rock anyway.

The U.S. stood largely undamaged after WWII, while other Western nations dug themselves out of bomb craters. For some years we had the luxury of paying our workers large wages and benefits for turning a bolt on an assembly line. This resulted in a large and healthy middle class.

The rest of the world got better, and competition is fierce now. There is an enormous backlog of labor that lives in areas where cost of living is nil and wages can be rock bottom. And ALL of them can turn bolts quite nicely, thanks.

Now, add to that the recent phenomenon of people who can program computers who also live in areas where costs and wages are rock bottom.

I saw a cartoon once where someone outsourced the CEO's job. Funny, right? Laugh it up, CEOs. The more I think about this, the more I wonder how infeasible it is. What would a top-of-his-class graduate of a foreign business school--maybe a much better school than many American ones--be willing to work for?

Of course, in the long run, market forces always work, and the wages and prices will level off across the planet, and the middle class will become a worldwide thing. But that's in the long run. The short run looks pretty rough.

Posted by: tbrosz on December 13, 2005 at 2:13 PM | PERMALINK

GM Texan,

I take it you didn't see todays Wash Post editorial and your buddy Gerhard Schroeder.

And now you're picking "issues" at random? Run, little man, run.

Oh, and Angela Merkel represents the [what] party? Any clues?

Thank you for playing. That was fun! Why don't you pick some other random story so you can continue to run from the points you don't have about the economic history you don't know?

Like you do anything else.
.

Posted by: Grand Moff Texan on December 13, 2005 at 2:15 PM | PERMALINK

All these guys like Wolfowitz, etc. have as one of their goals the creation of stable and rational taxation systems, systems that will no doubt actually raise the amount of the income that comes into the government coffers. I fail to see how this can be counted as destroying bureaucracy.

Well they also talk about 'liberalizing' economies abroad while railing about 'liberals' at home, apparently without realizing what the word means.

Then again, we're talking about conservatives, here. Why would you expect the purveyors of cold-fusion economics and religious superstition to have anything intelligent to say? They certainly refuse to be held accountable.
.

Posted by: Grand Moff Texan on December 13, 2005 at 2:19 PM | PERMALINK

What would a top-of-his-class graduate of a foreign business school--maybe a much better school than many American ones--be willing to work for?

Last I checked, Brit CEOs made a little more than a third.

German ones actually work their way up in their companies a lot of the time, rather than going off to learn how everything is just widgets and so long as you maintain the appearance of shareholder value you can continue to attract hype capital while fucking your employees and customers.

How much would you pay for that?
.

Posted by: Grand Moff Texan on December 13, 2005 at 2:21 PM | PERMALINK

rdw: I am a fan of Clinton for getting NAFTA passed and a little less so for China but he did nothing else and let free trade die otherwise.

You forgot WTO - a biggie. Any one of the four I mentioned dwarfs CAFTA, let alone Monaco, Bahrain, etc.

Once Monica was in the news he was owned by the liberal wing and could not fight them.

PNTR for China was passed and signed in 2000. Nevertheless I agree that Clinton would have been a more effective president without the silly national obsession with a presidential blow job.

George ... is seeking closer relations with all of Asia especially Japan, Korea, ... Pakistan

Traditional American "allies" with whom we've long had close relations. Now if only Pakistan hadn't been selling nuke technology ...

India

The same India that's been sucking up to Iran? Sorry, India has always had very independent foreign policy and avoided close alliances. For example, they were at the forefront of the non-aligned nations movement.

as well as major trade deals with South America

Catch the coverage of Bush last month at the Summit of the Americas? I wouldn't hold my breath.

and Africa

Thanks, I forgot to add AGOA to my Slick Wille list.

is following US Corporations into Asia

What about US corporations in the US? Current account deficit of 5.7% in 2004 and growing rapidly. What do you think will happen?

At the same time we are still engaging China as we becmoe more mutually dependent on trade.

The US is becoming more dependent on imports from China, and on their funding our debt. Meanwhile China is consciously becoming less dependent on US trade, by concentrating more on European and Asian trade. You may think that Europe is dying, but China doesn't.

Slick Willie did some good stuff. ... No president is perfect nor prefectly bad.

We actually agree there.

Posted by: alex on December 13, 2005 at 2:25 PM | PERMALINK

Grand Moff:

The company I contract with now has workers all across the U.S., transmitting their output as necessary. I work out of my garage. My boss works in a home office. There are people in Seattle, Mojave, and other places. There are meetings at intervals, but not that many. We tried this some years ago, and it was a lot less successful when bandwidth wasn't anywhere nearly as good. That's not true any more.

I know of a billionaire who has run his shipping company from his home for years.

I suspect that many CEOs could easily do much of their job from somewhere other than that corner office at the top floor.

I think the executive class is in for the same shock the white collar workers have gotten in recent years.

Posted by: tbrosz on December 13, 2005 at 2:29 PM | PERMALINK

kokblok,

I agree with much of what you said.

I don't thnk Pauls 1st goal here is government tax receipts but markets for the poor farmers of Asia, Africa and South America so they can get better prices and a high standard of living. Paul and Bush are in fact loathe to see more money in the hands of these governments. They want an improved free market structure to allow individuals react to markets, not governments, to maximize their incomes. As a general rule the less of these governments the better.

Note a few things:

Here by free markets I mean freer markets. There has to be a transition and yes governments or NGO bureaucracies will have to help manage it. The goal should always be increased free market reforms at some optimum pace to balance the needs and well being of the population. At the end of the day the goal should be Hong Kong rather than France. (but I do accept the fact the people should decide if they want to have a more free or less free economy if they equate less free with more security)

The bureaucracy I was referring too was a UN group designed to collect carbon credits or a global tax of any kind. I would prefer the UN be reduced to 1/50 its current size. It's bloated, currupt and almost always counter-productive.

I am not blind to the advantages of western systems of government. IN fact I think the process of preparing for entry to the WTO, NATO or EU is very productive for those nations transitioning from the horrors of socialism. but I do think those nations entering the EU have to be very careful in adapting French tax rates. They should look to Ireland.

I was very serious about Reagan. Without a doubt the best President of my lifetime and clearly in the top 10. It's a fun argument to debate if 6 is to high as a recent poll shows or 9 was too low as a differenr poll showed but there's probably no time in our history when the national mood changed so quickly from the inept, weak malaise of Jimmy Carter to Reagans Morning in America.

Posted by: rdw on December 13, 2005 at 2:31 PM | PERMALINK

If through some means (Larry Niven teleporters?) labor was much more mobile, and capital wasn't, the results would probably be the same. Millions of Third World workers would pour over to where the capital was, and wages would drop like a rock anyway.

It should be obvious from what I read that I have no dispute with this statement, which is why I emphasized that capital and labor mobility should be roughly equal, and preferably low, at least in sustaining the conditions of Ricardo's comparative advantage.

Posted by: Jimm on December 13, 2005 at 2:32 PM | PERMALINK

I disagree. Free trade will only be effective when it is implied by governments that are accountable to the people, not merely between such governments. Democratically accountable, common institutions are necessary.

This has to be your oddest statement yet cmdicely. Obviously a statement saying that free trade should only take place between governments that are accountable to their people already includes the notion that each of the governments is accountably to their own people. I'm not talking about free trade inside a state, but between states, each state of which is a government by the people and accountable to them.

You've been making some weird protests lately. Get it together.

Posted by: Jimm on December 13, 2005 at 2:35 PM | PERMALINK

tbrosz--
I am heartened to see that you see more of the complexity of these phenomena than do many who favor free-trade.
Of course, it is the very fact that labor is much less mobile than capital that makes some sort of government labor regulation desirable and, well, inevitable. We can argue about what kind of regulation that might be, but what we can't do is pretend that there is currently or ever will be a "free market" for labor in the sense that there is a "free market" in securities or textiles.

Posted by: kokblok on December 13, 2005 at 2:37 PM | PERMALINK

I understand the point a little bit, but see that it should have been explained better. If say that free trade will only be effective between free governments that are accountable to their people, then obviously I'm assuming that these governments actually would be accountable to the people. I did not make any allusions to the real world, to any particular country, since we are discussing the theory of comparative advantage, and the conditions under which it is envisioned.

Posted by: Jimm on December 13, 2005 at 2:37 PM | PERMALINK

I am not blind to the advantages of western systems of government. IN fact I think the process of preparing for entry to the WTO, NATO or EU is very productive for those nations transitioning from the horrors of socialism. but I do think those nations entering the EU have to be very careful in adapting French tax rates. They should look to Ireland.

I was very serious about Reagan. Without a doubt the best President of my lifetime and clearly in the top 10.

Come on!!! Who is doing this??? Am I ruining the joke by pointing out that this is a parody?

I'm with frankly0 on the who parody business...it should probably stop.

Posted by: Pale Rider on December 13, 2005 at 2:38 PM | PERMALINK

Of course, in the long run, market forces always work, and the wages and prices will level off across the planet, and the middle class will become a worldwide thing. But that's in the long run. The short run looks pretty rough.

Please explain this "long run" tbrosz, and refresh my knowledge of the religious faith you are operating under (since obviously not based upon real world political and economic empirical data or observation).

Posted by: Jimm on December 13, 2005 at 2:40 PM | PERMALINK

alex I am out of time for now but I have to diagree on several things.

China is more dependent on the USA than ever. They do substantially more trade with the US than the EU and they are also more heavily invested in our currency. If for some reason the USA were to halt trade the chinese economy would collapse. If for some reason the dollar would collapse the Chinese would lose a fortune.

BTW: I think this is a very good thing. China is heavily invested in the USA. They need and want us to do well. The reverse is true. Mutual economic dependence is much safer than MAD.

The MSM coverage of GWBs South American trip was abysmal. Hugo lost his cool with Mexico because GWB picked his pocket. While hugo was preening forthe camera's GWb was meeting with the presidents of panama, columbia, peru, eduador and brazil (representing mercusor). Expect Panama to soon be folded into CAFTA AND for GBW to do a deal with a bloc of columbia, peru and ecuador. Hugo had visions of looking out his front door and seeing a free trade region extending from his piggies to the Santa's workshop.

So he cussed out Vincente Fox.

You did not know any of this did you?

Don't take my word for it. look it up!

Posted by: rdw on December 13, 2005 at 2:43 PM | PERMALINK

(but I do accept the fact the people should decide if they want to have a more free or less free economy if they equate less free with more security)

rdw, love that parenthetical head nod to the right of free people to politically organize as they see fit

please bring it out of the parentheses and put it at the forefront of your economic analysis

Posted by: Jimm on December 13, 2005 at 2:44 PM | PERMALINK

what we can't do is pretend that there is currently or ever will be a "free market" for labor in the sense that there is a "free market" in securities or textiles.

kokblok hits it on the head. we cannot muse realistically about economics in a vacuum, void of politics. economics always follows politics, at least amongst free liberal governments, since our first and ultimate choice is the political social contract by which we establish laws and fair exchanges, after which the economic market may operate under.

Posted by: Jimm on December 13, 2005 at 2:47 PM | PERMALINK

As I'm sure any conservative would agree, there must be a monopoly of force in the state. This cannot and should not be economically bartered. And, the theory of the "free market", of course, is that exchanges and transactions are "free", and not "coerced" by overwhelming force of one over another.

Posted by: Jimm on December 13, 2005 at 2:50 PM | PERMALINK

Globalization only occurs when there is a dominant military power (Rome, Britian, USA) to enforce globalization they way they want it.

The Enlcosures in Britian were a terrible thing. How is NAFTA, etc., different from the enclosures? People line up for unsafe, horrible sweatshop jobs because all alternatives have been taken away from them by the multinationals and the governments they bribe. Why should the choice be between sweatshops or nothing after your farm is no longer profitable? Farm subsidies used in free trade agreements force small farmers off their land and into the cities as a cheap labor source. Many citizens of the British Isles (including my ancestors) came to America to homestead new farms after the commons were taken from them.

If France drops agricultural tariffs, you can bet the winners will be Cargill and ADM, not small African farmers.

Those who forget history are condemmed to repeat it. I don;t see any reason at all why people alive now should have to suffer through what the Brits did in the 18th century. Immoral.

Posted by: la on December 13, 2005 at 2:55 PM | PERMALINK

rdw--
If the people of a nation decide they'd rather be like France than like Hong Kong, what's the problem?

Posted by: kokblok on December 13, 2005 at 3:00 PM | PERMALINK

definitely rdw parody

Posted by: whosays on December 13, 2005 at 3:02 PM | PERMALINK

Please explain this "long run" tbrosz, and refresh my knowledge of the religious faith you are operating under (since obviously not based upon real world political and economic empirical data or observation).

Not sure what you don't consider "real world" about market forces. As for "long run," I wish I knew, but the progression of Japan from a China-style junkmaker to a major high-tech industrial society took many years. I would say it would be measured in decades, but information tech is still advancing rapidly. It is becoming as easy to manage a factory on the other side of the planet as one down the street.

People find chaotic processes highly uncomfortable, which is probably why it seems to be so much easier for a nation to move into a controlled economic regime than the other way around.

Posted by: tbrosz on December 13, 2005 at 3:06 PM | PERMALINK

New Mobility is the best U.S. magazine aimed a wheelchair users. We get the magazine because my partner is a paraplegic (and a hottie, and an engineer, and a skiier . . . etc etc).

Last month's magazine listed Timmy from South Park as the winner (among disabled voters) of a poll for favorite TV character with disabilities. It's an interesting and funny article:

http://www.newmobility.com/review_article.cfm?id=1075&action=browse

"For better or worse, Comedy Central's controversial cartoon series, featuring a foul-mouthed batch of fourth graders in the "quiet mountain town" of South Park, Colo., is the iconoclastic source of the most progressive, provocative, and socially relevant disability satire ever presented on American television."

Lest anyone think crips don't have a sense of humor.

Posted by: lupe on December 13, 2005 at 3:08 PM | PERMALINK

I don't understand Drum's delemma. Chances are, if Wolfowitz's lips are moving, the sack of shit is lying. So agreeing with one of his lies is perfectly acceptable, because you are not really agreeing with the puke's REAL opinion. Odds are, if Wolfowitz is touting the benefits of free trade, he and his criminal cohorts in Monkey Boy and the Dick's camp are about to loot someone's coffers. Fear not, Drum, you are on solid ground endorsing free trade. Wolfowitz defines "free trade" as "I want it so I'll steal it". Kinda like Cheney's definition of "last throes", which translates to "eternal bloodshed". You just gotta know the lingo, man. "We do not torture" means "We always use a lubricant when we sodomize the evil doers". So hang in there Drum, all is not lost, you'll get the hang of interpreting weaselspeak, eventually.

Mission accomplished.

Posted by: Pissed Off American on December 13, 2005 at 3:10 PM | PERMALINK

rdw--

And what is this triumphalism about the fact that the US has worked out trade deals with Colombia and Peru (its only reliable allies in the region) as well as minor countries like Panama? I notice you say Brazil was represented in these wonderful talks, but then Brazil sneakily drops off your list of those who have joined the pact. Hmmm...what happened there?

As far as Chavez goes, I'm sure he's not terribly shocked that Peru and Colombia were uninterested in his trade pact, since those two nations have been strong opponents of his from day one and have always marched closest to the Washington line. As for Panama, well I don't think he spends many sleepless nights worrying about that one. In the meantime, he is working out agreements with China, one after another.

Posted by: kokblok on December 13, 2005 at 3:10 PM | PERMALINK

tbrosz: There are a lot of people who are concerned about the possible loss of our domestic manufacturing capacity, and not all of them liberals by any means.

It's not just possible, it's already happened and is still happening. Most of our trade deficit is in manufactured goods. Our vaunted trade surplus in services was always much smaller and has been steadily shrinking.

I certainly agree that "liberals" aren't the only ones concerned about this. All realists should take note.

You could make a case for a certain level of tariff to protect the American middle classes, but the problem is that such tariffs would be applied and their levels set for political reasons, not economic ones, and we'd end up with the same dog's breakfast of trade laws we have now.

As you just pointed out yourself, we have a dog's breakfast regardless of whether we claim to be free traders. That's what I find so dishonest about political promotions of "free" trade. They're really just talking about a different set of trade distortions when they say "free".

FWIW I don't think that high tariffs in general are a good idea, so long as the low/zero tariffs are reciprocal (China has average 30% tariff on US imports, US has average 3% tariff on Chinese imports).

What I'd like to see is for the dollar to decline in value, both in general and in particular with respect to the yuan. It will be somewhat painful, but with our ever increasing trade deficit putting it off will be much more painful. It worked in the mid-late 1980's (40% dollar drop resulted in trade deficit going from 4% to 0.5% between 1985 and 1989).

Problems:

1. China is propping up the dollar by spending 15%/GDP buying dollars. Japan has stopped buying but they're not selling yet (and sitting on a big pile).

2. The yuan is still effectively pegged to the dollar.

Reagan, while I've plenty of criticism of him elsewhere, did eventually see the necessity. GWB by contrast hasn't even hinted that he knows there's a problem.

Posted by: alex on December 13, 2005 at 3:15 PM | PERMALINK

As for "long run," I wish I knew

tbrosz, do you ever bother checking to see if you've contradicted yourself? don't make grand pronouncements about how in the "long run" market forces will create a global middle class if "you don't know" and there is no empirical data of any such global transformation ever having taken place in the millenia upon millenia of human existence.

otherwise, I'm not questioning "market forces" in the relatively "short run" in the past few centuries.

Posted by: Jimm on December 13, 2005 at 3:19 PM | PERMALINK

tbrosz--
Yes, "people" find chaotic transitions to be a little unsettling. Unfortunately for you, the only opinions that count are those of these same "people". Life sucks that way. It would be much better if we could design some kind of "AI" that wasn't so spooked by chaos, wouldn't it? Like, did you see that cool Spielberg movie? That "AI" device would be far-sighted enough to realize how things all work out in the "long-run", too!

By the way, how do you feel about that lovely "transition" in Russia in the 1990s? You know, that one that killed off a large percentage of the population? Because, yeah, it sure seems like in the "long run" that might work out all right. Wow, Russians are already doing as well as they were under Brezhnev, and it has only been a measly 13 years!

And of course, the people running that "shock treatment" policy really had absolutely no other choice than doing it the way they did, right? Right?

Golden straightjacket!!! Does that ring a bell?

Posted by: kokblok on December 13, 2005 at 3:25 PM | PERMALINK

People find chaotic processes highly uncomfortable, which is probably why it seems to be so much easier for a nation to move into a controlled economic regime than the other way around.

This has nothing to do with me. I thrive on chaos. I work on the cutting edge of information technology and architecture, and have moved about 12 times in the past 5 years. That, along with other factors, would make on hard-pressed to argue that I am not actually conditioned to accept chaos.

Of course, that's personal and irrelevant, since it is not confirmable here. I could say anything.

So, on substance, one could just as easily say that people are uneasy about terrorist forces, and thus move into a controlled security regime. The statement doesn't really mean anything, and is just a handy generalization that masks a moralization.

I'm all for "growing" a "freer economy", as I'm all for "growing" a "freer world", in the political sense, but I am based in reality when refusing to deny that political considerations in America come before economic considerations, and that the political and economic security of Americans today comes before gambles on grand visions of a global middle class without political distinction.

Posted by: Jimm on December 13, 2005 at 3:25 PM | PERMALINK

I say that, of course, as an American. Feel free to subsitute your own citizenship as necessary.

Posted by: Jimm on December 13, 2005 at 3:27 PM | PERMALINK

...there is no empirical data of any such global transformation ever having taken place in the millenia upon millenia of human existence.

Gee, Jimm, do you think anything's different about how trade is done now from the way it was done two hundred years ago? Societies have had to deal with the economic impact of new technologies before, and it has rarely been painless.

What I see as the point of this discussion is that globalization is now possible, when before it wasn't, and that we have to deal with the situation to try and limit the impact of the "creative destruction" that is pretty much inevitable.

If the U.S. slapped huge trade barriers around ourselves, the cheap goods would just flow elsewhere, and our own exports would still have to compete with them.

The point of principles, like market principles, is that you can apply them to widely varying situations and they'll still work.

Posted by: tbrosz on December 13, 2005 at 3:30 PM | PERMALINK

You're still missing the point tbrosz, and I don't have time to spell it out for you. Globalization and free trade/comparative advantage are two entirely different concepts, if not antagonistic to each other. Your idea of a global middle class and triumph of market forces is not free trade or comparative advantage, but the creation of a global political-economic-social superstructure.

Here is your grand statement, in case you forgot:

Of course, in the long run, market forces always work, and the wages and prices will level off across the planet, and the middle class will become a worldwide thing. But that's in the long run. The short run looks pretty rough.

So you say, "of course", as if it's obvious, that market forces "always" work (I'm laughing at that notion), and that what occurred in a few countries will obviously reproduce in every country in the world, indeed across the world as a single market, and the "middle class will become a worldwide thing", albeit a rapidly shrinking minority, which is the part you leave out, and you seem to just ignore that a "rough short run" is not going to create political friction which may just derail or change the course of your economic hellbound train.

The point of principles, like market principles, is that you can apply them to widely varying situations and they'll still work.

The problem is you don't really seem to understand economics, or market forces, by participating in the sham that conflates globalization with free trade, when the latter and comparative advantage require no globalization of any kind.

Posted by: Jimm on December 13, 2005 at 3:38 PM | PERMALINK

rdw: China is more dependent on the USA than ever.

In absolute dollars/yuan, that's true, but as a percentage of their trade it's absolutely false. If you don't think percentages are what count, then explain why a $1M loss wouldn't hurt you or me more than a billionaire.

They do substantially more trade with the US than the EU

Actually it's almost even now. Gotta keep up. And you're ignoring the increasing percentage of Asian trade in the mix.

and they are also more heavily invested in our currency

Yes, we've been selling America's future earnings to them. The current euphemism for this is "treasury security purchases".

Mutual economic dependence is much safer than MAD

The idea that trade interdependence would prevent wars was promoted during the first "great age of free trade". Then along came WW1. Oops.

The MSM coverage of GWBs South American trip was abysmal. Hugo lost his cool with Mexico because GWB picked his pocket.

You did not know any of this did you?

Actually I did. I also notice that you're just going on about Chavez. Did he hire the protestors in Argentina and Brazil?

BTW, Chavez is a currently fashionable right-wing bogeyman, but no threat to the US. He's also a notoriously loud showman, although quite popular in his own country (something about improved standards of living for most people).

I also note that you made no further mention of our trade realtionship with Brazil - the 600 lb. gorilla of South America. Hmmm...

According to the BBC: He said they both agreed that eliminating US and European farm subsidies, which he said makes trade unfair, was the key to success in upcoming WTO talks. In reply, President Bush promised to work together with Brazil to do this but he said the US could only reduce subsidies to its farmers if Europe were willing to do the same.

Ok, looks like it's Chirac's move. Hey, maybe France is waiting for the US to go first.

Maybe you should talk to Chavez and Lula about China trade, as they're both making plenty of deals.

Posted by: alex on December 13, 2005 at 3:44 PM | PERMALINK

tbrosz: What I see as the point of this discussion is that globalization is now possible, when before it wasn't

Yes it was. Fiber optics are a spit in the bucket compared to the impact that steamships had on trade.

The so-called "first great age of free trade" was from the mid-19th up until WWI. By most metrics (% of GDP in trade, etc.) many countries were as globalized then as they are now (the US being an exception). "Globalization" is the result of conscious gov't policy decisions, rather than anything rendered inevitable by technology. To pretend otherwise is to duck the questions.

If the U.S. slapped huge trade barriers around ourselves, the cheap goods would just flow elsewhere, and our own exports would still have to compete with them. The point of principles, like market principles, is that you can apply them to widely varying situations and they'll still work.

So what do you say that, rather than impose tariffs, we get the Chinese and Japanese governments to stop interfering in the market for our currency?

Posted by: alex on December 13, 2005 at 4:01 PM | PERMALINK
This has to be your oddest statement yet cmdicely.

I doubt that.

Obviously a statement saying that free trade should only take place between governments that are accountable to their people already includes the notion that each of the governments is accountably to their own people.

Obvious it does. I'm not talking about the governments it is between I'm talking about a common, accountable institution. You see, I'm disagreeing with you on the prerequisites.

Now, I suppose it may be "odd" that I disagree with you, but I thought it was pretty clear that's what I was doing.

You believe that desirable free trade is viable between governments so long as each of the governments is properly accountable; I believe desirable free trade is only viable when managed by a central and democratically accountable institution responsible for setting common standards.

Otherwise, each of the regimes, individually accountable or not, will be played against each other, almost certainly for the benefit of some set of wealthy interests that transcend national boundaries.

I'm not talking about free trade inside a state, but between states, each state of which is a government by the people and accountable to them.

I know what you are talking about. I just think your belief is wrong. I'm saying that what you are talking about doesn't work unless you compromise soveriegnty to acheive directly accountable common institutions.

Posted by: cmdicely on December 13, 2005 at 5:06 PM | PERMALINK

You believe that desirable free trade is viable between governments so long as each of the governments is properly accountable; I believe desirable free trade is only viable when managed by a central and democratically accountable institution responsible for setting common standards.

Forgive me for not noticing this. Obviously, I'm not clear on how you are modeling "free trade" if there is a central and democratically accountable political institution responsible for making economic rules. That is globalization, not free trade and comparative advantage. We don't really talk about "free trade" between the states in America, but an "integrated market". This is what you are talking about cmdicely, while I was speaking about Ricardo, comparative advantage, and free trade between free and accountable political principalities.

For the record, I agree that the WTO or whatever organization responsible for setting rules for the common global economic market should be accountable, though I'm unsure how exactly this realistically could be made to be the case. But I certainly don't confuse that notion with "free trade".

Posted by: Jimm on December 13, 2005 at 5:21 PM | PERMALINK

To be honest, the largest error in reasoning when considering free trade, and confusing it with economic globalization (in the sense of the creation of a single integrated market), is that aside from many of the erroneous assumptions Ricardo began with, like the labor theory of value, the most intuitive way of gaining these advantages without undue friction is the creation of a single integrated market, since there are innumerable difficulties that arise from implementation of a free market and trade system seeking to capitalize on comparative advantage within a free political system whereby the people are accountable.

The easiest way to implement a free market and trade system would be to do so from the top down, preferably by God, but if implemented from the top down by a dictator with unquestioned power to do so, or an elite with unquestioned power to do so, one could then rightfully wonder why they would bother, since the existing system has already rewarded them with the elite position by which they can make these decisions.

The world is sloppy, and political considerations, in a free liberal society, always will lay the foundation for what is allowed to occur economically (though the will and ability to enforce these rules will always be lacking to some degree of black market activity).

Posted by: Jimm on December 13, 2005 at 5:31 PM | PERMALINK

All the above said, I should emphasize I'm dealing with arguments in theory, and in relation to the actual Wolfowitz article, and the argument that we should increase poor country access to commodity markets, and the commodity processing markets, is only fair considering we're pushing all this globalization and "free trade" to begin with, and this argument has been compelling for over 20 years now, all of which the U.S. and Europe resisted such arguments while pushing those that gave them "absolute advantage".

Posted by: Jimm on December 13, 2005 at 5:33 PM | PERMALINK
Obviously, I'm not clear on how you are modeling "free trade" if there is a central and democratically accountable political institution responsible for making economic rules.

If by "modelling" you mean "defining", I am defining it as trade among participating political units where the participating units do not exercise preferences.

That is globalization, not free trade and comparative advantage.

"Globalization" doesn't require formal institutions, though formal institutions at higher levels are a manifestation of globalization. It certainly is free trade and comparative advantage.

We don't really talk about "free trade" between the states in America, but an "integrated market".

The difference between what is often referred to as "free trade" and an "integrated market" is not the absence of common rules, but the existence of barriers that make the term "free trade" a lie which allow certain participants in the economy to game different component markets against each other; particularly, the absence of mobility of persons (either as labor or consumers) which permits market segmentation. Though this is causally interrelated with the absence of common institutions, its a different thing that distinguishes "free trade" from "integrated markets".

For the record, I agree that the WTO or whatever organization responsible for setting rules for the common global economic market should be accountable, though I'm unsure how exactly this realistically could be made to be the case.

Well, for one thing, the people that are getting screwed over by the current, unaccountable institutions that exist to serve the parochial interests of the capital class could tell their local governments they aren't going to take it any more, and demand democratically accountability in institutions that have the ability to impose sanctions on and dictate policy to their own democratic regimes.

This would be greatly assisted if the notional parties of the left would also stand up for that position.

Posted by: cmdicely on December 13, 2005 at 5:34 PM | PERMALINK

We agree on a lot of this cmdicely, and, on second thought, I realize that I misunderstood your position, as well as apparently not adequately articulating my own (especially my own distinction in terms of what is and what is not "free trade" and comparative advantage).

I'll do that, and get back to you, when I have more time. Overall, I don't see much disagreement between us, and I mentioned your initial disagreement as "odd" because I didn't pick up one the fact that you were demanding a single accountable institution that overarches all the participating political principalities.

Posted by: Jimm on December 13, 2005 at 5:41 PM | PERMALINK

Wolfowitz is always wrong and Irvine is where the hypnotized Reaganites prefer to live: thus your incongruence.

Posted by: Nope on December 13, 2005 at 5:49 PM | PERMALINK
We agree on a lot of this cmdicely, and, on second thought, I realize that I misunderstood your position, as well as apparently not adequately articulating my own (especially my own distinction in terms of what is and what is not "free trade" and comparative advantage).

Looking back, my original post probably was a lot clearer if you already knew what I was thinking before you read it.

And I think a substantial part of the remaining disagreement is probably more semantic than substantial. But I look forward to hearing more from you.

Posted by: cmdicely on December 13, 2005 at 6:05 PM | PERMALINK

Actually I did. I also notice that you're just going on about Chavez. Did he hire the protestors in Argentina and Brazil?

BTW, Chavez is a currently fashionable right-wing bogeyman, but no threat to the US. He's also a notoriously loud showman, although quite popular in his own country (something about improved standards of living for most people).

I also note that you made no further mention of our trade realtionship with Brazil - the 600 lb. gorilla of South America. Hmmm...


Regarding the protestors. In America they are considered a freak show. They are utterly useless. Clinton made a famous remark which he now regrets after the riots in Seattle. "Maybe they deserve a seat at the table". Ain't happening Bill! Those a-holes destroyed about $3M of the store fronts of hard working Americans for the sheer joy of destroying private property. That crap might work in France but it doesn't work here. They are scum.

Hugo is not a threat. Hugo is a buffoon. Do you know he and his buddy Castro like to give 6 hours speeches? What a-holes!!!

Still, the diplomatic snafu he started with Mexico is priceless. Mexico is only 4x's the size. Like Mexicans give a crap about Hugo Chavez.

I am not quite sure what I was supposed too say about Brazil. That economic powerhouse is 1/8 the size of the US and that's on a purchasing power basis. We have quite good trade relations. We absorb 20.8% of Brazil's exports versus 7.5% for Argentina and of their imports 18.9% is from the US, double Argentina (CIA Factbook).

I don't think Lula is even remotely interested is pissing off GWB. I'm certain of the opposite. It will be Lula who wil go the the EU and ask to meet our proposals.

Posted by: rdw on December 13, 2005 at 6:11 PM | PERMALINK

The idea that trade interdependence would prevent wars was promoted during the first "great age of free trade". Then along came WW1. Oops.

That anyone would compare the global economy of 2005 with 1915 is absurd. Exactly how many multi-nationals were there in 1915?

We don't have too many emperors today either.

Posted by: rdw on December 13, 2005 at 6:15 PM | PERMALINK

Jimm:

I don't think I'm properly understanding your position, and this probably requires a lot more discussion than is possible on a board like this.

I am fully aware that "free trade" is a difficult concept in a world where governments, both for good reasons and bad reasons, have a large hand in the movement of trade and control over the means of production and distribution. Additionally, when the private sector has unreasonable influence over those governments, and vice versa, you have problems. When governments have major control over economics, the ones with the gold are going to make the rules.

The word "globalization" is a loaded one, since it obviously means different things to different people. Modern technology means that you can trade across the globe almost as easily as across the state, and that is going to involve some adjustment on all sides.

An ideal free trade agreement would be about three pages long. That they aren't, is part of the problem.

What alternatives are there that aren't subject to the same problems?

Posted by: tbrosz on December 13, 2005 at 6:27 PM | PERMALINK
Additionally, when the private sector has unreasonable influence over those governments, and vice versa, you have problems.

How can "the private sector" have "unreasonable influence" over government? Isn't the "private sector" the public, and shouldn't they have total control over the government?

Now, admittedly, when certain narrow interests within the private sector have undemocratic, disproportionate power to dictate policy, that's a problem.

Posted by: cmdicely on December 13, 2005 at 6:44 PM | PERMALINK

rdw: Like Mexicans give a crap about Hugo Chavez.

I suspect they don't. Why do you?

I am not quite sure what I was supposed too say about Brazil. That economic powerhouse is 1/8 the size of the US and that's on a purchasing power basis.

You're the one who mentioned GWB's important progress in trade discussions with Brazil. Of course the Brazilian economy does dwarf the combined economies of the Central American countries. So much for the importance of CAFTA.

Come to think of it, Brazil has the largest population and the largest economy (PPP) of any country in the Americas except the US (including Mexico or Canada). I know they'd love to sell us orange juice, amongst many other things. That wouldn't be good for GWB's brother in Florida though, if we dropped our tariffs, would it?

It will be Lula who wil go the the EU and ask to meet our proposals.

So Bush will agree to drop our agricultural tariffs and subsidies if Chirac and other potentates of Old Europe do so? Interesting.

BTW, free trade is supposed to work even if not everyone joins the party. We could drop our tariffs bilaterally with Brazil and tell the Old Europeans that they'll be the protectionist losers. So why is GWB waiting for Old Europe to go first?

That anyone would compare the global economy of 2005 with 1915 is absurd. Exactly how many multi-nationals were there in 1915?

Multi-nationals aren't needed for free trade. In terms of percentage of GDP in trade, relative size of capital flows, etc. the "first great age of free trade" was as big for many countries as today's situation. Those who think that free trade and international capital flows are something new are ignoring history.

We don't have too many emperors today either.

No, instead we deal with representative democracies like China.

Posted by: alex on December 13, 2005 at 6:57 PM | PERMALINK

How can "the private sector" have "unreasonable influence" over government?

I was thinking of businesses and other economic actors, including corporate interests and unions.

Posted by: tbrosz on December 13, 2005 at 7:13 PM | PERMALINK

tbrosz,

No comment on foreign governments distorting trade by propping up the dollar? If ever there was state intervention, that's it.

Posted by: alex on December 13, 2005 at 7:18 PM | PERMALINK

alex:

No, I didn't mention that particular one, although I remember some years back when it was Japan that was going to "own" America. Somehow, it never happened.

Am I supposed to come up with a comprehensive list of how various governments interfere with economics? I'd crash Kevin's server.

Posted by: tbrosz on December 13, 2005 at 7:24 PM | PERMALINK

tbrosz: No, I didn't mention that particular one, although I remember some years back when it was Japan that was going to "own" America. Somehow, it never happened.

It didn't happen in large part because Reagan did a little hard ball negotiating with them. Convinced them to stop buying all the dollars they could and even sell some. Obviously buying dollars (dollar denominated assets) pushes the dollar up and the yen down. Stopping this lead to an 8x reduction in the US trade deficit before the Japanese stock and real estate bubbles burst.

Am I supposed to come up with a comprehensive list of how various governments interfere with economics?

No, but I'm suprised at your lack of interest in the most glaring one - China spending 15%/GDP buying up dollars. Makes any other trade distortion look like a joke.

Posted by: alex on December 13, 2005 at 7:32 PM | PERMALINK

rdw: Like Mexicans give a crap about Hugo Chavez.

I suspect they don't. Why do you?

I don't. It's just a great story. The MSM covered the South American trip as if it was a disaster for Bush and a great victory for Hugo. After all, he got all the attention. If they tired to get it exactly wrong they could not have done a better job.

Posted by: rdw on December 13, 2005 at 9:54 PM | PERMALINK

It will be Lula who will go the the EU and ask to meet our proposals.

So Bush will agree to drop our agricultural tariffs and subsidies if Chirac and other potentates of Old Europe do so? Interesting.

BTW, free trade is supposed to work even if not everyone joins the party. We could drop our tariffs bilaterally with Brazil and tell the Old Europeans that they'll be the protectionist losers. So why is GWB waiting for Old Europe to go first?

If one country with subsidies is trading with
another who does not that is by definition NOT free trade. The subsidized farmers obviously have the advantage, unsubsidized farmers the disadvantage. The more open an economy the better but immmediate change would be disruptive and painful but I would support a gradual reduction in farm subsidies even without the EU on board.

The offer to Lula is that the US will do "X" if the EU does "X". Lula obviously wants access to both markets. This would be a huge political victory for him at home and internationally. It would also obviously be much easier for GWB to sell here if the EU had to accomodate the same cuts.

The fallback plan will be regional deals outside of the EU. If I had to bet this is where I'd put my money. This time next year GWB will have proposals with Mercasur for congress to approve.

Posted by: rdw on December 13, 2005 at 10:15 PM | PERMALINK

Multi-nationals aren't needed for free trade. In terms of percentage of GDP in trade, relative size of capital flows, etc. the "first great age of free trade" was as big for many countries as today's situation. Those who think that free trade and international capital flows are something new are ignoring history.

No one said Multi-Nationals are needed. I said they change everything. And there is no comparison in the size of capital flows today versus 20 years ago let alone 90 year ago. Trade may only be about 12% of GDP and for many american companies most of their sales are not in GDP. For intel it's less than 50% of sales

As a stockhold of Intel I own plants all over the world and sell my products in vitrually every nation. Moreover I have major numbers of employees in Europe, Asia, South America and the Middle East. There are 20,000 Intels and 500M stockholders around the world. The world has never, ever been anywhere near this interconnected.

In 1952 the US was essentially at war with China in Korea. It has little impact on the Chinese economy. Today the suggestion of war with the US would cause a severe depression.

There is one other big change from 1915 that is actually more important. We have a much, much larger global middle class and it's expanding rapidly. In WWI the Generals essentially butchered their own men because they could. Those days are long gone. The middle class is interested in prosperity not conquest. This is just as true in China as anywhere. The larger their middle class becomes the more demanding they'll become of stability and representative government.

Posted by: rdw on December 13, 2005 at 10:38 PM | PERMALINK

rdw,

Come on guys--the parody can end at some point, right?

I'm not falling for it. Has someone else fallen for it--whoops. Sorry.

Posted by: Pale Rider on December 13, 2005 at 11:33 PM | PERMALINK

The more open an economy the better but immmediate change would be disruptive and painful

That hasn't done much to slow other trade agreements. Why should agriculture be any different?

but I would support a gradual reduction in farm subsidies even without the EU on board

Be sure to tell GWB and Congress what you think. While you're at it remind them that most agricultural subsidies go to red states.

It would also obviously be much easier for GWB to sell here if the EU had to accomodate the same cuts.

Why? Either way America will win! Of course you'll have to explain to American farmers that their sacrifices are for the greater good, but that's true of all free trade agreements. It didn't stop deals on services and manufactured products.

The fallback plan will be regional deals outside of the EU. If I had to bet this is where I'd put my money.

When the US gets rid of its cotton subsidies (SC, AZ), and its tariffs on orange juice (FL) and sugar (KS - ADM), it'll be a cold day in hell.

No one said Multi-Nationals are needed. I said they change everything.

How, because your ownership of a few Intel shares means that you're vested around the world? No MNC's needed - you can buy shares of foreign companies (just as people could before WW1).

Actually MNC's do change things. Up through WW2 US companies wanted tariffs to shield them from foreign competition. Now that so many are multi-national, they are the foreign competiton. It seems to have changed their perspective (about half of US imports are intra-company transfers).

By contrast farms, even corporately owned ones, are usually not multi-national. I wonder if that changes the politics?

And there is no comparison in the size of capital flows today versus 20 years ago let alone 90 year ago.

In absolute terms, of course not. However rising population and productivity aren't exactly news. What counts is %/GDP. There your statement was true 20 years ago, but not 90 (ok, 91.5 years, WWI started in mid-1914).

Trade may only be about 12% of GDP and for many american companies most of their sales are not in GDP. For intel it's less than 50% of sales

Huh?

As a stockhold of Intel I own plants all over the world and sell my products in vitrually every nation. Moreover I have major numbers of employees in Europe, Asia, South America and the Middle East.

Wow, has your new 90 nm fab opened in China yet? Can you give me a tour and introduce me to some of your employees?

There are 20,000 Intels and 500M stockholders around the world. The world has never, ever been anywhere near this interconnected.

The number of small potatoes stockholders is irrelevant, as they have little political or economic clout. Trade and capital flows as %/GDP are what matters.

In 1952 the US was essentially at war with China in Korea. It has little impact on the Chinese economy. Today the suggestion of war with the US would cause a severe depression.

Historical parallels, hmmm. Germany in 1914 was one of the world's two great industrial powers (along with the US) and exported steel, machine tools, electrical equipment, etc. I understand WW1 didn't help much, although there must have been some fleeting novelty to running around with wheelbarrows full of cash.

There is one other big change from 1915 that is actually more important. We have a much, much larger global middle class and it's expanding rapidly. In WWI the Generals essentially butchered their own men because they could.

So your theory is that middle class people object to being butchered, but the poor don't mind. BTW, Germany had a large middle class prior to WW1.

Posted by: alex on December 13, 2005 at 11:41 PM | PERMALINK

Pale Rider: Come on guys--the parody can end at some point, right?

Pale Rider, you are in serious danger of being a party pooper.

Posted by: alex on December 13, 2005 at 11:43 PM | PERMALINK

alex,

Whoops--I thought you were in on it!

My bad!

Posted by: Pale Rider on December 13, 2005 at 11:46 PM | PERMALINK

trade. On the other hand, Wolfowitz's record of being wrong about everything is almost unparalleled. So should I stick with my belief that free trade is good, or should I remember that Wolfowitz is always wrong and review my premises? - Kevin

What would your position be if Wolfowitz disageed with Cheney? After all if Wolfy is always wrong and Cheney is always wrong? When contradict...the universe is wrong.

Posted by: McA on December 14, 2005 at 4:23 AM | PERMALINK

As a stockhold of Intel I own plants all over the world and sell my products in vitrually every nation. Moreover I have major numbers of employees in Europe, Asia, South America and the Middle East.

Wow, has your new 90 nm fab opened in China yet? Can you give me a tour and introduce me to some of your employees?

There are 20,000 Intels and 500M stockholders around the world. The world has never, ever been anywhere near this interconnected.

The number of small potatoes stockholders is irrelevant, as they have little political or economic clout. Trade and capital flows as %/GDP are what matters.

The ownership society has clout. they are why GWB is running things. The health and well being of Intel matters greatly to the citizens of the USA, Ireland, Israel, India, China, Japan as a major employer. it matters to many more who might own Intel in their private accounts or more likely, in their penion plans.

In 1952 the US was essentially at war with China in Korea. It has little impact on the Chinese economy. Today the suggestion of war with the US would cause a severe depression.

Historical parallels, hmmm. Germany in 1914 was one of the world's two great industrial powers (along with the US) and exported steel, machine tools, electrical equipment, etc. I understand WW1 didn't help much, although there must have been some fleeting novelty to running around with wheelbarrows full of cash.

There is one other big change from 1915 that is actually more important. We have a much, much larger global middle class and it's expanding rapidly. In WWI the Generals essentially butchered their own men because they could.

So your theory is that middle class people object to being butchered, but the poor don't mind. BTW, Germany had a large middle class prior to WW1.

are getting too far into the weeds on this one but there is absolutely no comparision between the economic environment of 2005 and 1915, the level of cross-country ownership, and especially the depth of cross-country ownership. Very few Americans owned stock in 1915. There was a tiny middle class relative to today, little education and little wealth distribution.

The political and social diferences are even bigger. Germany did not have a history of democracy and most of Europe was part of an empire. In WWI peasant soldiers were routinely ordered to their deaths in actions with no hope of military gain. Since then they've invented fragging.

BTW: The CIA factbook seems to have a different opinion regarding Chinese trade with the US and the EU than you.

Exports - partners:
US 21.1%, Hong Kong 17%, Japan 12.4%, South Korea 4.7%, Germany 4% (2004

As I said before, were China to distupt it's relationship with the USA there would be economic hell to pay.

Here's Hong Kong
Exports - partners:
China 44%, US 17%, Japan 5.3% (2004)

here's Japan:
Exports - partners:
US 22.7%, China 13.1%, South Korea 7.8%, Taiwan 7.4%, Hong Kong 6.3%

here's South Korea
Exports - partners:
China 19.7%, US 17%, Japan 8.6%, Hong Kong 7.2% (2004)

here's India
Exports - partners:
US 17%, UAE 8.8%, China 5.5%, Hong Kong 4.7%, UK 4.5%, Singapore 4.5% (2004)


How about that? The EU doesn't exist in terms of Asian trade.

Now can you see why the Asian-Pacific Partnership will be so dominant? With the USA, India, China, Japan, Korea and Australia we have 6 of the top ten economies each of which routinely grows 2x's faster than the fastest growing economy of Old Europe.

If the USA grows 3.5% in 2006 as expected they will add $425B to the global economy. France and Germany combined won't add $60B.

Who do you want to sell to? Who do you want to partner with?

This A-S partnership is the model for the world going forward. These are the worlds most important economies. To the extent the UN is relevent the US will use the UN. In the case of Kyoto they will use the A-S partnership.

In the case of future Iraq's the USA will follow the lead of Slick Willie and GHWB with the twist added by GWB as explained by Rummy. We'll set the mission and then form the coalition. The mission will determine the coalition. The coalition will not determine the mission. The EU, the UN and Canada are now limited to observer status. None have any military power and despite their economic heft their lack of growth limits the attractiveness of their markets.

Canada will remain important to the US economically. In saving ANWR for future development we are tapping the Tar Sands for our incremental needs which can be met quite easily from these huge deposits. It's a bit of an ecological nightmare for Canadians but Americans liberals are typically ignorant of there impact of their actions.


Posted by: rdw on December 14, 2005 at 8:13 AM | PERMALINK

rdw wakes up and goes right back to spamming threads...

Posted by: Pale Rider on December 14, 2005 at 8:38 AM | PERMALINK

You should recall that Wolfowitz is speaking from his Orwellian universe. He doesn't mean "free trade." He means "trade with restrictions intended to favor large corporations in rich countries."

Posted by: JayAckroyd on December 14, 2005 at 9:08 AM | PERMALINK

pale rider,

Not sure what you mean by spamming but if it means posting articles from the media I'll have to correct you on the above. It's a tread between Alex and I. The data posted is from the CIA factbook to fully dispute Alex's claim the EU is as big and as important a trading partner to China and the rest of Asia as the USA is to China and Asia.

As you can see, that's far from accurate. As you can see China, USA, Japan, India and Korea are very closely related economically, far more to each other than anyone in the EU. Allow me to add Australia.

Exports - partners:
Japan 18.6%, China 9.2%, US 8.1%, South Korea 7.7%, New Zealand 7.4%, India 4.6%, UK 4.2% (2004)


While Australia is much smaller than France and Germany is has been growing much faster for 2 decades. Australian per capital income shot past both France and German several years ago and as of 2004 was 7% higher. With GDP growing almost 2x's as fast this 7% will soon be 20%.


This is why the move to form the Asian-Pacific partnership is so shrewd. Together we'll control 50% of the worlds GDP and 80% of the growth in GDP. If you take a step back and consider Blairs warnings to the Kyoto crowd you can see he's creating the room for the UK to join.

The UK is the next most important trading partner, has a record of superior GDP growth and open markets and has a strong military. It's also clear that even before his popularity and political power started to shrink the UK was not going to give up it's currency or approve the EU constitution. Now that there is a credible conservative opposition in the UK the debate will shift from closer relations with the EU or entry into the Asian - Pacific Partnership.

Clearly, in terms of economic, military and political power this is a no brainer.

This will become even more apparent in a few years as the economic gap between this group and Old Europe continues to widen further. My hope is Bill Clinton is able to rally more fools to the cause of Kyoto and they keep the mandatory levels. Once they set the new base period the UK will be screwed. It was easy to ratify this agreement. They are set to make money. Because the coal industry collapsed and they had to convert to natural gas the Brits didn't have to do anything to meet Kyoto requirements.

In the next few years the Brits will see they'll be getting penalized for growing. The choice between Kyoto and the EU OR the Asian - Pacific Partnership will be very clearly defined.

What do you think they'll do?

The average GDP growth of this partnership will be near 6%. The average GDP growth of France and Germanty will be 1.5%. Because American per capita GDP is already 40% higher we can expect a dramatic increase over the next decade.

It won't be long before USA per capital income is 2x's France and Germany

Posted by: rdw on December 14, 2005 at 10:14 AM | PERMALINK

jay,

Give the man some credit. You are far too simplistic. It's more than just rich countries and it's definitely not liberal rich countries.

Paul, as President of the World Bank for the next 10 years, will be able to implement GWBs foreign policy long after GWB retires to Crawford.

Allow me a prediction. In 9 years when Paul retires the rich countries of Canada, France, Germany and Belguim, at a minimum, will not be happy with Paul.

Posted by: rdw on December 14, 2005 at 10:21 AM | PERMALINK

More Fans of Paul.

* "When a beaming Mr. Wolfowitz stopped at my table to greet an admiring Republican, I wanted to snap, 'Get back to your desk, Mr. Myopia from Utopia!'" -- Maureen Dowd.

Why doesn't the New York Times have a drug-testing policy? I can't imagine what it's like to be Maureen or Paul Krugman or Frank Rich or any of the other NYTs whackjobs. Getting up each morning and knowing GWB is your commander-in-chief must be worse than a hangover.

An 8 year hangover! OUCH!!!

Think about it. Not only did Slick Willie read the paper every day but he actually took their advice. GWB won't give them the time of day and they can't do a thing about it.

Posted by: rdw on December 14, 2005 at 10:30 AM | PERMALINK

unrelated but just as cool!

* "What drives American civilians to risk death in Iraq? In this economy, it may be, for some, the only job they can find." -- Dan Rather


Can Dan find a job?

Posted by: rdw on December 14, 2005 at 10:31 AM | PERMALINK

DARN!!!!

* "Do not put the champagne on ice yet - there are, after all, five months to go before the election - but it is beginning to look as if Senator John Kerry may have the beating of President George Bush in November." -- editorial in The Guardian

Posted by: rdw on December 14, 2005 at 10:33 AM | PERMALINK

rdw: The CIA factbook seems to have a different opinion regarding Chinese trade with the US and the EU than you.
Exports - partners:
US 21.1%, Hong Kong 17%, Japan 12.4%, South Korea 4.7%, Germany 4% (2004

When did Germany become the entire EU? Besides, 2004 is so last year. y/y growth of Chinese exports to the EU was 23.6%. Anyway, I was wrong about Chinese exports to the EU being almost as big as to the US - they're now bigger, and continuing to grow faster.

http://english.sina.com/business/1/2005/1212/57662.html

To add insult to injury, the EU's trade with China is pretty well balanced. Imagine that, they not only buy more things from China, but they get to sell things to them too! Why didn't we think of that?

I may not have a high opinion of China's totalitarian gov't, but they're not dumb enough to continue to rely on a debtor, like the US, that keeps digging itself deeper.

This is why the move to form the Asian-Pacific partnership is so shrewd. Together we'll control 50% of the worlds GDP and 80% of the growth in GDP.

Who's "we"? Take for example the recent East Asia Summit. They've gotten pretty inclusive, adding India, Australia and New Zealand to a very broad definition of East Asia. Russia may be invited next year. The USA though is definitely not on the guest list.

Germany did not have a history of democracy

And China does?

Posted by: alex on December 14, 2005 at 12:57 PM | PERMALINK

I may not have a high opinion of China's totalitarian gov't, but they're not dumb enough to continue to rely on a debtor, like the US, that keeps digging itself deeper.

Yes, we continue to dig deeper yet both Franc and Germany have higher bidget deficits!

Funny how the Chinese are the largest investor in our t-bills yet they don't rely on us.

I can't get into the article you provided but that is an interesting websight. I didn't realize a 2nd round of strategic talks were ongoing but it's interesting that Zoellick, Rumsfeld and hadley are over there.

I rechecked the CIA data and your report is suspect. The USA is growing at 2x's the rate of Old europe yet their imports from China are growing faster? I don't think so.

BTW: I don't have a high opinion of China's government either. They have to convert to Democracy. They are certainly converting to Capitalism. The path of drawing them further into the global economy so their middle class expands even more quickly is smart. They are now trying to hold the outside world out and in this internet age that's not going to work. Eventually their people will demand and get democracy.

Posted by: rdw on December 14, 2005 at 2:00 PM | PERMALINK

I rechecked the CIA data and your report is suspect. The USA is growing at 2x's the rate of Old europe yet their imports from China are growing faster? I don't think so.

Yeah, just dismiss out of hand anything that punctures your view of the world, you sick parody.

I mean it, guys!!! I'm not falling for this again.

Posted by: Pale Rider on December 14, 2005 at 2:22 PM | PERMALINK

Pale Rider,

Why not just post the data? It's only a couple or few lines. I can't get to it and what she said doesn't make any sense given what's in the CIA factbook.

China's exports to the USA were more than 5x's Germany's in 2004. Germany is by far the largest economy in the EU AND has the highest percentage of exports.

Since the USA economy is expanding at a rate of almost 4% and Germany at 1% it's hard to make the point exports to Germany grew faster.

No need to argue. Just post the data!

BTW: I was actually talking about Old Europe rather than the entire EU because it's France and Germany trying to have influence well beyond their means and they are the ones with the high tax rates and most protective instincts and the two I like the least.

But we'll compare the entire EU with the US.

Posted by: rdw on December 14, 2005 at 2:39 PM | PERMALINK

rdw: They [China] do substantially more trade with the US than the EU

Is what you originally wrote. Since my map doesn't show the boundaries between Old Europe and New Europe, the EC seemed like a good choice. Later on more trade got changed to most exports, but that sloppiness may have been partly my fault.

At the end I posted the text from my link (don't know why you had trouble), but you can try the FAS too. 2004 data is a bit old, but it show's the same thing.

http://www.fas.org/sgp/crs/row/IB98014.pdf

A B C D
European Union 177.3 95.9 63.4 32.5
United States 169.7 125.0 44.7 80.3

A = Total Trade
B = Chinese Exports
C = Chinese Imports
D = Chinas Trade Balance

Of course the composition is a bit different. We import more from China than the EU, but the EU exports more to China than we do. Silly Old Europeans - they haven't caught on that you can endlessly sell debt to the Chinese instead of actually paying for things.

Speaking of agricultural protections, the FAS also mentions:

Chinas agricultural system is highly inefficient due to government policies that seek to maintain a 95% self-sufficiency rate in grains, mainly through the extensive use of subsidies and restrictive trade barrier. These policies divert resources from more productive economic sectors and keep domestic prices for many agricultural products above world prices.

Funny kind of free trade, huh? Maybe Hu and Chirac are reading the same cue cards.

BTW, did I mention that the EC is also India's largest trade partner? Funny that, even with GWB's shrewd Asia-Pacific strategy.

Funny how the Chinese are the largest investor in our t-bills yet they don't rely on us.

Great strategy! I'm going to max my credit cards so I can say that the credit card companies "rely" on me.

I don't have a high opinion of China's government either. They have to convert to Democracy. They are certainly converting to Capitalism.

Of course in Chinese Capitalism many factories are owned by the People's Liberation Army, but I guess that's a local eccentricity.

More importantly, capitalism doesn't necessarily lead to democracy. Nazi Germany, Fascist Italy, and Imperial Japan were all capitalist, just to name some of the more egregious examples.

They are now trying to hold the outside world out and in this internet age that's not going to work.

Oh? Thanks to help from folks like Cisco, the Great Chinese Firewall is doing pretty good.

See, for example, "Beijing Casts Net of Silence Over Protest", discussing the news blackout over the killing of 20 protestors.

http://www.nytimes.com/2005/12/14/international/asia/14china.html

The nice thing about the Internet is that it makes centralized monitoring and control easier than printing does.

Eventually their people will demand and get democracy.

Unless they get run over by a tank - wouldn't be the first time.

==================================================

EU still China's largest trade partner
2005-12-12 04:46:31 XinhuaEnglish

BEIJING, Dec. 12(Xinhuanet)-- The European Union continued to be China's largest trade partner in the first 11 months of this year, with the bilateral trade volume topping 196.77 billion US dollars, up 23.6 percent year on year.

Figures released by the General Administration of Chinese Customs on Monday showed that the United States and Japan were the second and third largest trade partners of China.

During the January-November period, the trade volume between China and the United States reached 191.55 billion US dollars, up 25.4 percent year on year, while that between China and Japan totaled 166.97 billion US dollars, up 10.2 percent.

Hong Kong, the Association of Southeast Asian Nations(ASEAN) and the Republic of Korea have become the Chinese mainland's fourth, fifth and sixth largest trade partners, with trade volume between them reaching 120.45, billion US dollars, 117.24 billion dollars and 101.45 billion dollars, respectively, in the first 11 months.

Guangdong and Jiangsu provinces in east China and Shanghai Municipality preceded other cities in terms of foreign trade in the first 11 months. Guangdong registered a trade volume of 381.68billion US dollars, up 19.6 percent year on year. Jiangsu and Shanghai reported foreign trade volume of 207.05 billion US dollars and 170.02 billion US dollars respectively. Enditem

Posted by: alex on December 14, 2005 at 5:21 PM | PERMALINK

alex,

We're getting in the weeds here but you are obviously correct regarding total trade and I will concede the argument to you.

My point remains valid. The interdependency on the US Market is at a critical level for China both for it's high level of exports to the US AND it's large position in US Dollars.

The key point was that as long as it is so clearly in China's best interests for the US to remain as economically healthy as possible we have a far superior deterrent to war than MAD.

I'm a little hesitant to evaluate total trade, imports / exports and the trade balance in detail because the numbers have inherent weaknesses and differences across countries. For example Intel sells over $15B in chips to China however they are not counted in US GDP data nor as an export because they are not manufactured in the US. In fact many of the PCs exported from Asia to the US contain a large portion of products made by US companies or US subsidaries.

As far as the transition of a large country from socialism to capitalism and to democracy there's no model, no book, no timetable, etc. My expectation is that it is inevitable as those societies evolve they will come to mirror the developed west with much higher levels of political freedom and economic wealth.

We can look at both Russia and China and take potshots. China apprears to have made much better economic progress while Russia is closer to a full democracy. Each has come a long ways yet neither is all that close to a western democracy.

China is not yet a capitalist state but it is clearly moving in that direction. They are not close to becoming a democracy but they eventually will.

One of the reasons why I wanted to use Old Europe versus the EU is that the EU really isn't a diplomatic or military entity yet and I'd hesitate to call it an economic entity although it's fair enough for trade purposes. The WTO meeting right now is tied up in negotiations over farm subsidies with the EU but in fact it's France within the EU the focal point. Many of the contries within the EU are at odds with each other diplomatically and have different economic systems in terms of tax rates and other factors.

In terms of diplomacy the EU simly is not an entity and probably never will be. It's effectively a prozy for the UN. The strength of the Asian-Pacific partnership is that each entity is fully formed. There is one President of each to represent the diplomatic, economic and military interests and make a decision. The EU is still a bloc. They don't have a President or the ability to make quick decisions.

The EU will not be invited into this partnership although the UK will be.


I am not even a little bit concerned about our trade balance nor our budget deficit. The strength of our dollar and low interest rates indicate not too many are worried. We have a dynamic and robust economy the envy of Old europe.

Posted by: rdw on December 14, 2005 at 10:22 PM | PERMALINK

EU Blasted for Deadlocked Trade Talks

Associated Press -- It was the European Union vs the Rest of the World as global trade talks remained deadlocked Thursday, with the EU defending itself from a barrage of criticism that its refusal to further open its farming markets threatened to torpedo the entire World Trade Organization meeting.

This is exactly as predicted. GWB has been dancing circles around Chirac for 4 years.

Posted by: rdw on December 15, 2005 at 7:07 AM | PERMALINK

Michele,

Northern lights

Our friend Ed Morrissey has managed the difficult task of making Canadian politics interesting. His latest report for the Standard covers the government's embarrasments as the election approaches: "Liberal Party meltdown."


That would be the weekly standard if you are interested.

Posted by: rdw on December 15, 2005 at 8:08 AM | PERMALINK




 

 

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