In Which I Take On a Protectionist.

This video is an excellent starting point for the topic today. I wouldn’t ordinarily use South Park as a basis for a post, but I think this is fitting.:

You see, whenever I hear people complaining about outsourced jobs, this is all I can think about because it’s usually the only argument the protectionist can come up with. In my experience, I find the most adamant protectionists amongst union members and conservatives whose area of interest is primarily in social conservatism. After my long neglect of twitter, I started logging on and found one user in particular who seemed to fall into that latter category. Naturally, I couldn’t help myself and responded to one of her tweets touting protectionism. After a few rather content-less tweets, she finally produced this:

@alyxwi If you read my profile, it says I am anti-freetrade AGREEMENTS. I am not and never have been against free trade. But the ability to trade freely with anyone in the world and freetrade AGREEMENTS where neither side pays tariffs is not fair and the reason is because the only way it could be is if our economy was equal to the other country’s. We’ve been singing this song for decades. America invents a new technology and decides because of a freetrade agreement to have it manufactured in China. However, China copies the technology in short order and starts selling the product for half the price the inventor does. Of course, they can, because they have no R&D costs to recoup and their manufacturing costs are much lower because they are not paying their workers even half of what American workers make. So time goes on and the original company is driven out of business because of lagging sales…afterall, the same product can be bought for half the price of their model. Their employees all lose their jobs. Once that company goes out of business, the copying company raises its price based on other competitors’ prices.
Just look at the negative trade balances we have with China, Japan, Mexico and Canada. Compare them with the figures even 20 yrs ago. In fact, before NAFTA, we actually had a positive trade balance with Mexico…now the figures are a float in red ink. And to make it worse, the government wants to sign more free trade agreements with South America. We just built a plant in Brazil for GM with stimulus money they were given. We have to realize that the politicians on either side will not stop. They are being paid too well to go along with these programs. The only way we can stop the decline of jobs in this country is to Buy American and be stubborn about it. I’ll guarantee there will be plenty of items you will still need to buy from other countries because there are entire product lines that aren’t even made here anymore!
If you look at the history of America, you will find that its strength & prosperity came after WWII with the industrialization during and following the war.
Economic experts will tell you something different and that’s part of the problem. America was alot better off before experts. I view experts like I do educators…Those who can, do and those who can’t teach (or claim to be experts).

to which I responded with (approximately*) this:

@ConservativeGal Pseudoeconomics can be so alluring, can’t it? Your remarks betray you as a protectionist making a poor attempt at masking herself as a patriot (though coming off more as a nationalist than anything else). One cannot be pro-free trade sometimes, or pro-free trade only when it benefits one’s city/state/country. It is simply inconsistent and does not serve the country well as the basis for fiscal or monetary policy.

Protectionism is what the Fed is (only somewhat inadvertently) doing right now by devaluing the dollar and by extension attempting to boost exports in a way that only a weak dollar can. Too bad that’s going to manifest as skyrocketing inflation in a year or so when the credit markets loosen up. Inflation will kill as many, if not more, jobs as this recession has. And it’ll hit everyone and spur more government spending. That sure doesn’t sound like it’s a good thing.

Protectionism is not realizing that a growing global economy is the result of the growth of emerging market countries and that it helps Americans too. When the Chinese are making our cars more cheaply than American laborers ever could (as a result of the inefficiency of minimum wage laws and union monopolies on blue collar labor) it allows the American car companies to grow their domestic businesses too. It can expand into new markets, it can create new domestic, higher-paying jobs and invest in new capital, thereby creating profits and jobs in other markets and companies.

In addition, we can get cheaper goods and after the initial wave of frictional unemployment, the laid-off workers will acquire other skills and find new jobs, likely doing something taking more skill. See, when we don’t have to waste time and capital on easily produced goods, we can spend our time creating higher-value or higher-quality goods which can be sold at a higher profit margin than the lower-quality goods the foreigners are now producing. And those foreign workers are getting paid much more than they ever have been in their lives before now, so their buying power is much increased, growing their economy and the global economy on the whole. This emerging market provides investment opportunities for American venture capitalists and investment firms, which provides more profit opportunities for Americans.

The alternative is Americans making the same goods they’ve always made. The alternative is more expensive goods everywhere. The alternative is economic stagnation and chilled international commerce. The alternative is weaker international relations, achieved through the absence of international trade. That’s what protectionism, your brand of “free trade”, has to offer. That sure doesn’t sound like it’s a good thing.

You don’t like experts? I’m no expert. I’m a college sophomore. But the principles of economics I’ve put forth here are so noncontroversial, so absolutely basic that they are taught in every macroeconomics class and required for any Liberal Arts student at my school. But aside from that, your absolute rejection of knowledge offered by these thoroughly abhorrent and evil (your idea, not mine) experts casts a veil of ignorance over your argument from the start. Paul Krugman may be a moron in the “intellectual” tradition of Keynes, but Friedman, Hayek, Mises and their intellectual heirs are correct about economics and many of them have doctorates. They’re all well-educated and regarded as experts. Before condemning them all on some hatred for the abstract idea of expertise, think about it. Your doctor is an expert in the human body. Do you wish he were less of an expert? How about the professors at your child’s college, whom you pay to thoroughly and correctly educate him? How about the engineer designing the bridge over which you have to drive every day, or the architect who drew up the plans for the house in which you to live every day? Want them to be less expert?

*I was typing this on my phone around 1 a.m. which resulted in a few incorrectly autocorrected words that I did not see last night. That’s all I changed.

If you disagree with me about anything, I’d love for you to contribute to the discussion.

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2 Responses to “In Which I Take On a Protectionist.”

  1. Jack Says:

    Correct me if I’m mistaken.
    Has our economy not grown in the past five quarters? (Although it was marginal.) I would say we are no longer in a recession; however I would say the economy could be far healthier than it is.

    Only mistake, I found. Otherwise, I agree with you in virtually everything.

    Oh, and ConservativeGal sounds like a tea party follower. I don’t really like the movement that much myself and I apologize if you do and I insulted you.

    • alyxwi Says:

      The economy has grown. Barely, as you said. We’re technically recession free and have been since mid-2009. But this is not due to any government help, rather in spite of it. When we eventually truly recover, it will not be ecause of the loose monetary policy of the Fed, though they will undoubtedly claim the success of the country as their own. The Fed (and the Feds) have a nasty habit of confusing correlation and causation.

      I used to like the tea party. I loathe what it has become.

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