Send a Tweet
Most Popular Choices
Share on Facebook Share on Twitter Share on LinkedIn Share on Reddit Tell A Friend Printer Friendly Page Save As Favorite View Favorites
OpEdNews Op Eds

When Trade Theories Confront The Real World, The Real World Wins

By   Follow Me on Twitter     Message Dave Johnson       (Page 1 of 3 pages)     Permalink    (# of views)   2 comments

Related Topic(s): ; ; , Add Tags
Add to My Group(s)

Must Read 1   Well Said 1   Valuable 1  
View Ratings | Rate It

opednews.com Headlined to H2 8/5/15

Author 4387
Become a Fan
  (12 fans)
- Advertisement -

Reprinted from Campaign For America's Future

From twitter.com/350nz/status/628687307806253056/photo/1: Trans-Pacific Partnership
Trans-Pacific Partnership
(Image by Twitter User ExplorerTweets)
  Permission   Details   DMCA

I had a conversation over the weekend about the Trans-Pacific Partnership (TPP). She's for it, because "more trade is always good."

- Advertisement -

TPP covers a whole lot more than what we would think of as "trade." Regardless, let's look here at the idea that expanding trade is always good.

Trade Is Good

Trade is good. We all at the very least trade our time for our pay. We might make or grow or draw or write something that we sell (trade) for money. Trade is basic.

- Advertisement -

But how we trade always makes a difference. If we trade our time and get paid too little, is that a good thing because it was a "trade"? Obviously the way trade gets done -- the rules/policies that are in place -- makes all the difference. So the question to consider is whether our current international trade policies as applied under our current economic order a good thing or a bad thing for We the People of the United States.

Cross-Border Trade

"Increasing cross-border trade" sounds like a worthy goal. But if you close a factory in the U.S., move the machines and jobs to a low-wage country, then bring the goods back here to sell in the same stores, you have just "increased cross-border trade." How should we look at this?

The people now making the goods are paid much less, the investors who own the factory are pocketing much more. Sounds bad, unless you're one of those owners.

Economists will tell you this is good because fewer of the resources of your economy are being expended to obtain whatever that factory was producing. Those resources can now be applied elsewhere by the investors, toward more productive investment. Sounds good.

Theoretically those American workers will now be freed up to do more productive work, potentially at a better pay rate. Sounds good.

- Advertisement -

But the way our current economic order works, those resources (the difference between what the American workers were paid and the lower costs of making the stuff somewhere else) are more often applied to the offshore tax-haven accounts of the elite investors than toward "more productive" investments. Sounds bad.

And the way our current system is working, without this new investment those workers remain unemployed, competing with the rest of the people in the workforce, which drives down everyone's wages except for a few at the top. The reality is that if people laid off due to trade find new jobs, it is at a lower rate of pay. Sounds bad.

Economic theory confronts the reality of America's current economic order and falls short. The elites use rigged "trade" deals to knock down labor costs. Instead of applying the gains toward investment in our economic future and higher wages for America's workforce, they apply it to their bank accounts.

Comparative Advantage

The idea of comparative advantage says that countries (regions, etc.) should do what they are good at and trade with others for the things the others do better. Some countries are good at growing bananas and they can trade them for things they can't grow or make.

Next Page  1  |  2  |  3

 

- Advertisement -

Must Read 1   Well Said 1   Valuable 1  
View Ratings | Rate It

opednews.com

Dave has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational (more...)
 

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon Share Author on Social Media   Go To Commenting

The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Follow Me on Twitter

Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Three Charts To Email To Your Right-Wing Brother-In-Law

Upcoming Trans-Pacific Partnership Looks Like Corporate Takeover

Actually, "the Rich" Don't "Create Jobs," We Do

Now We Know Why Huge TPP Trade Deal Is Kept Secret From The Public

Does Clinton Really Oppose TPP? There Is A Test For That

Will TPP Kill The Post Office?