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'[OT]: Free trade (was Re: [OT] So to whom do we'
2005\10\27@040911 by Vitaliy

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> Well I live in a country (New Zealand) that screwed itself badly in the
> late 1980's with the theory that 'free trade = good'.
>
> In practice, it seems to me that a free trade agreement is often a way for
> large rich countries to take advantage of small or poorer countries, and
> our leadership still hasn't learnt that :(

Roy,

I realize that a lot of (most?) people in the world share your sentiments,
but you guys are wrong. There are plenty of good articles on the issue, see
links at the bottom of this message. Let me just make a few points.

"When you have free trade, rich countries win and poor countries lose" is a
myth. As long as we are not talking about slave labor, people in the
so-called "sweatshops" are there by their own free will. Sure, sweatshops
are bad, but the alternative is worse! Here is a excerpt from the "Hearts
and Heads":

"[...] could anything be worse than having children work in sweatshops?
Alas, yes. In 1993, child workers in Bangladesh were found to be producing
clothing for Wal-Mart, and Senator Tom Harkin proposed legislation banning
imports from countries employing underage workers. The direct result was
that Bangladeshi textile factories stopped employing children. But did the
children go back to school? Did they return to happy homes? Not according to
Oxfam, which found that the displaced child workers ended up in even worse
jobs, or on the streets - and that a significant number were forced into
prostitution."

And I would add that Wal-Mart customers did not benefit from this
legislation either - clothes became more expensive.

There are many reasons to support free trade, but I realize that one e-mail
won't make you change your mind (that's why I'm keeping it relatively
short). My only hope is that it will get you to really start thinking about
the issue, and maybe do a little research of your own.

Best regards,

Vitaliy

----------------------
Articles on the benefits of Free Trade:

The Blessings of Free Trade
www.freetrade.org/pubs/briefs/tpb-001.html
James K. Glassman

Free Trade: Why are Economists and Noneconomists So Far Apart?
William Poole
http://www.stlouisfed.org/news/speeches/2004/06_15_04.html

The Benefits of Free Trade: A Guide For Policymakers
Denise H. Froning
http://www.heritage.org/Research/TradeandForeignAid/BG1391.cfm

HEARTS AND HEADS
Paul Krugman
http://www.pkarchive.org/column/42201.html

Paying a Price for Steel Tariffs
Pete du Pont
http://www.trilla.com/washington_time_aug_15.htm

Center for Trade Policy Studies
[a plethora of good articles on the subject]
http://www.freetrade.org/

2005\10\27@052531 by Gerhard Fiedler

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Vitaliy wrote:

> There are many reasons to support free trade,

You're probably right with this, but fact is that there is no one country
that actually implements it :) -- so obviously it's difficult to find a
majority that believes the many reasons for free trade are more important
than the many reasons against it. Like someone said, a free trade agreement
with 1500 pages is /not/ about free trade.

Gerhard

2005\10\27@072257 by Ling SM

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> There are many reasons to support free trade, but I realize that one
> e-mail won't make you change your mind (that's why I'm keeping it
> relatively short). My only hope is that it will get you to really start
> thinking about the issue, and maybe do a little research of your own.
>
One of the biggest problems is cost comparison is not equal.  Not all
cost are accounted, neither are all subsidies, in additional we have the
developed countries justifyingly or unjustifyingly imposing new
standard, regulations and certifications.  Trade is more politics than
pure trade/economics as any human activities.

Trade on theory is good, but in practice it may be the less competitive
supplying to the more competitive when the true cost can never
accurately accounted.  Who is paying for the bleeding earth now?

Ling SM

2005\10\27@072704 by Vitaliy

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>> There are many reasons to support free trade,
>
> You're probably right with this, but fact is that there is no one country
> that actually implements it :) -- so obviously it's difficult to find a
> majority that believes the many reasons for free trade are more important
> than the many reasons against it. Like someone said, a free trade
> agreement
> with 1500 pages is /not/ about free trade.

Gerhard,

- It's true that no one country has a totally free economy, just as it is
true that no one country is 100% capitalist or 100% communist. However, some
countries are much closer to having a free economy than others.

- The reason that the majority of the people are against free trade is not
because there are more reasons against it. The reason is that special
interest groups are much more vocal than the general society. Let me
illustrate with an example.

If the US tariffs on steel were lifted, prices of everything made from
steel - from cars, to buildings, to household appliances would drop, which
obviously benefits the consumer. However, hundreds of thousands of
steelworkers would be laid off. Now, who is likely to be more vocal - a guy
who will pay extra $10 for a microwave oven, or extra $200 for a new car, or
a worker who's job is at stake?

The problem is, the benefits of lifting the tariffs on steel far outweigh
the losses to the steel industry. It is estimated that for every job saved
by the 30% tariff on steel (in the US), we lose 5 jobs in the automotive
industry, not to mention the higher prices that we pay for cars, appliances,
etc.  The overall economic cost of keeping a steel mill worker employed is
$400,000.

It would be better for the United States, and better for the steel workers
in the long run (because the industry has long been in decline, in spite of
the tariff protection), if we were to lift the tariffs on steel. It is much
cheaper to put a worker through college, than to keep him or her employed.

What citizens don't realize, is that tariffs are a form of subsidy -- it is
the same (actually, it is worse, but that's details) as if the government
took a portion of the tax revenue, and gave it to selected industries. I
don't think that many Americans would consider that to be fair, and yet they
seem to be OK with tariffs.

So the bottom line is, people are against free trade because of ignorance.
Once you look into the matter, the benefits are frankly quite obvious.
Unfortunately, the press doesn't help - they tell us about the losers
(workers laid off), but rarely about the winners (jobs saved or created,
cheaper products), or the net gain for the country as a whole.

Best regards,

Vitaliy

2005\10\27@073948 by Vitaliy

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> One of the biggest problems is cost comparison is not equal.  Not all cost
> are accounted, neither are all subsidies, in additional we have the
> developed countries justifyingly or unjustifyingly imposing new standard,
> regulations and certifications.  Trade is more politics than pure
> trade/economics as any human activities.
>
> Trade on theory is good, but in practice it may be the less competitive
> supplying to the more competitive when the true cost can never accurately
> accounted.  Who is paying for the bleeding earth now?
>
> Ling SM

Ling,

Standards, regulations, and subsidies are all barriers to free trade. I do
not see any contradiction with what I said previously.

Negative and positive externalities (e.g., deforestation and vaccinations)
should be accounted for, but they should be treated as a special case. I'm
talking about trade in general, where you don't have the externalities.

Best regards,

Vitaliy

2005\10\27@074124 by Russell McMahon

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       BCCs: read or bin as desired.

> There are many reasons to support free trade, but I realize that one
> e-mail won't make you change your mind (that's why I'm keeping it
> relatively short).

I realize that one e-mail won't make you change your mind (that's why
I'm keeping it relatively [for me :-)] short.

The "problem" with the Walmart / Bangladesh / children / prostitution
and worse example, and zillions of others like it, is that it offers
two poor choices instead of one or more good choices in the place of
the poor original choice.

It  is often (but not always) true enough to say that people in sweat
shops are there by their own free will. Just as it's true to say that
a person held up at gun point willingly hands over their wallet.
(Consider - if someone pointed a gun at you and asked for your wallet,
would you be willing to give it to them?) I'm not saying that there is
a tight comparison between mugging and free trade - but there are
enough similarities to be of interest - and their reaction to that
comparison may be useful for some.

The crux of the problem with 'free trade' is the operation of
Capitalism. Capital may be any mix of tangible goods (or place holders
that represent them, which we call money), production capacity,
intellectual property or ephemeral items which you value. Some (eg Mr
JG) strongly contest the latter, but if eg I value greatly looking at
beautiful sunsets, then I may well trade tangible goods etc to
increase my opportunities to view them. I may also be able to arrange
for others to view more beautiful sunsets and gain tangible assets in
exchange. If this sounds ludicrous substitute eg beautiful women (or
men) for sunsets and see if the model works better.

"Pure" capitalism works on the fundamental principle that everyone
owns their own capital and may sell it or not in the open market at a
rate that suits them. On this basis goods will find their true value
as "the invisible hand" causes supply and demand to adjust prices to
their most efficient point. Price too low and you will not be able to
sustain production. Price too high and you will be undercut by others
more 'efficient' (often enough === more desperate) than yourself. I
could almost buy this argument.

However, on a world wide scale, impure-capitalism, ie the real sort,
has many distortions which cause inequities to occur. One of the
greatest is that consumers (by their proxy the suppliers to them of
goods that they use)(eg Walmart) seek out capital in locations where a
level playing field does not exist and may well be prevented from
existing or may even be actively un-levelled. If the sweat-shop
children worked in eg Boise, even without union protection and the
like, but with the core protections afforded by US law, even if they
initially accepted sub-Walmart rates (!!!) their "capital" would be
properly valued in the US market and an equitable enough outcome may
well occur.

However, locate these children in Bangladesh (or many other places)
and many other "forces" are added to "help the invisible hand do its
job". One of the greatest market distorters in the world is what is
generically known as "corruption". Corruption is essentially organised
inequity - a form of theft where individuals, organisations and even
(or especially) governments conspire to un-level the playing fields
and make it impossible for a person who does not join the game to
compete. At some levels corruption becomes an essential way of civil
life (eg India) and is so widespread and expected that it becomes less
inequitable. eg if you know that you *MUST* bribe N people along the
way to obtain a passport, or a drivers licence, of an import clearance
etc, and nobody is immune, then it becomes part of the cost of living
or doing business and all are affected equally. What trips this up is
"boundary conditions". Boundary conditions are what lead to most
engineering problems and that applies here too. If a society is rife
with corruption, and alas most of the less developed countries are,
then it will exist not only at the day to day level but at higher
levels in society. *BUT* the people at the bottom are not en masses
eligible to play at the higher levels. There must be cannon fodder to
make the system work and the only rule is that there are no rules.

As a consequence, if we in the "West" buy goods manufactured at
bargain prices in a corrupt society (as I do as well) then we are
profiting from the corruption, aiding and abetting it and stealing the
capital of those who allow the cheapness to exist. An honest
examination of why the cheap products are cheap will allow the truth
of this claim to be plain enough for any honest person to see.
[Dishonest people need not apply :-)] SOME goods are cheap due to
economies of scale, access to sources of cheap materials etc. Some
aspects of cheapness are due to goods being produced where exchange
rates allow labour rates to be lower than elsewhere in absolute terms.

eg *if* the exchange rate in Hungary (a first world country which is a
seriously low cost place for US citizens to visit) is such that the
average wage is say $US750 per month (Statutory minimum wage = 53,000
forints/month  at about 210 forints/$US = 250/month or about $US3000 /
year).(Average monthly net wage 20034 =~ 100,000 forints = 500 Euro).
Now *if* citizens in that society can work similar hours to those in
the US, live at a somewhat similar standard of living (in terms of
satisfaction, not outright waste), have similar length holidays and
time off work, educate their children well etc, then the lower wages
may well not be inequitable. Perhaps. Hungary is perhaps an example
where the playing field, if extremely lumpy, may not be actually
discontinuous.
       http://www.dresdner-bank.com/meta/kontakt/01_economic_research/14_investitionsfuehrer/10_ldk_h_Hungary_2004.pdf

However, if you are in a country where selling your children for
whatever purpose is an appealing option for a fair percentage of the
population, having your children working well under 10 years old,
hours worked per day is a meaningless abstraction, borrowing from
money lenders to buy seed for this years crop at rates that ensure
they own you and your children forever is utterly usual, and much
more - THEN the playing field has several precipices in it and a
foreign company paying just enough more than that to ensure that they
have a continuous labour supply to feed the retail stores back home is
not and cannot be equitable. Being able to value someone else's
capital at far far far far lower rates than you can value the equal
capital of your countrymen, while those whose capital you are stealing
live in utter grinding life shortening poverty, and your countrymen
don't, is a sure sign that there are distortions and inequities
"helping" the invisible hand along.

"Free trade" actual, as opposed to free trade theoretical,  attempts
to promote the myth of equity in the face of such utter immorality.
Free trade may well be good in a genuinely free market. But as long as
"the masses" whose capital you utilise are actively prevented from
competing on genuinely equal terms then 'summat is rotten in the State
of Denmark". (Dunno what the Danes have to do with it :-).

However, you'll get yours, as they say. (And I'm part of the "you" in
this case.
We in the West are all eating and drinking damnation upon ourselves in
our blind greed and rush to swill at the swill troughs of Chinese
provenance. In my country "stuff" has never ever been so cheap. The
influx of utterly unbelievably cheap Chinese goods of reasonable (all
things being considered) quality continues to astound me. Hardly a
week passes than I marvel anew at some even cheaper item on our
shelves. I just bought (admittedly part of an end of line run) six
digital kitchen scales from our local supermarket. Each contains a
genuine single point load cell, provides 1 gram resolution over a 2000
gram range, tracks extremely well across the range (I keep a large
quantity of our now extinct 2 cent coins as they weigh 2 grams each
and are excellent for scale calibration), and maintains its accuracy
when heated and cooled across an abnormal range. These cost me about
$US7 each !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!. The electronics are
well built.

The Chinese government, while not known for their desire to treat
their countrymen well, do have an eye for getting their country ahead
in the world. They have hitched their currency to the US dollar which
is an artificially high level, with the consequence that they obtain
very good $US income. The goods would be even cheaper otherwise. Not
too long from now the great Chinese giant is going to reach the point
where it can do as it wants in the world markets. Our fools paradise
of ultra cheap goods is driving us into a service mentality - people
here, I am told, no longer want to work at making things and would
rather work in service industries. That's fine if you can do it. But
the lady from American Express I spoke to today was in Mumbai, and
they can happily do to our service industries what the Chinese are
industriously doing to our industrial capabilities. And those in the
service industries are liable to find themselves on the B-Ark [Google
knows :-)]

"Free trade" on an uneven field is helping us blind ourselves to the
fact that we are living on the backs of those with aspirations not at
all unlike our own. The inequities that we sow today will help shape
how we get on a few decades from now. Already China is becoming "too
dear" and we look further afield for new places to exploit freely. So
far the ex Russian republics and core Africa have largely proved too
challenging for the consume producers, but it will come.  That said,
the truly excellent Willy Bauer shorts that I bought in the US and
wore in 20+ countries, were made in Zimbabwe. Odds are they are not
still getting them from there now :-(. The US made sandals that I
bought disintegrated a mere 15 countries later.

A day of reckoning is coming and free trade is helping blind those who
think it is such a great idea. Fortunately for us basic necessities
should still be available when "the revolution" comes - NZ still has a
large amount of sheep :-)

> My only hope is that it will get you to really start thinking about

Indeed.




       Russell McMahon

2005\10\27@075216 by Russell McMahon

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> So the bottom line is, people are against free trade because of
> ignorance.

The people who are for "free trade" are generally against genuinely
free trade because of greed. Genuinely free trade implies equitable
exchange of capital. Where this doesn't happen it's not free trade.
Where you presently have "free trade" it largely doesn't happen.


       RM


2005\10\27@082417 by Ling SM

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> Standards, regulations, and subsidies are all barriers to free trade. I
> do not see any contradiction with what I said previously.
>
> Negative and positive externalities (e.g., deforestation and
> vaccinations) should be accounted for, but they should be treated as a
> special case. I'm talking about trade in general, where you don't have
> the externalities.

There is no contradiction, I am for free-trade in theory, just like
communism.  We are in the same camp :-) but I am not sold on the brand
"free-trade".

As it is, free-trade is a false front for so many undesirable
activities, and there are so many parties reversing prior agreements and
commitments.   And there are so many examples, they are played by
multinational companies to overcome environmental objections to relocate
to places where the cost is not accounted.

Even in US, you have a congregation of oil refineries in New Orlean, not
because it is the most competitive nor the best place to perform the
refineries work, but because no other state wanted/wants it.  If within
a developed country, accurate accountability cannot be made and
industries place at at their best location.  Then the question is if
free trade is based on competitiveness, and competitiveness is based on
accurate and total accountabilities.  And if there isn't and can never
have accurate accountabilities, the concept exists only on paper.

Ling SM

2005\10\27@083446 by Vitaliy

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Hello Russell,

> I realize that one e-mail won't make you change your mind (that's why
> I'm keeping it relatively [for me :-)] short.

I'm afraid it is a bit on the long side, by my standards. :-)

[snip..snip..snip..snip]
> "Free trade" on an uneven field is helping us blind ourselves to the
> fact that we are living on the backs of those with aspirations not at
> all unlike our own. The inequities that we sow today will help shape
> how we get on a few decades from now.

Russell, I have great respect for your opinions, especially given the fact
that most of the time they coincide with mine. ;-) But, with all due
respect, I do not see your point.

Are you saying that trade restrictions are better than free trade in
protecting the workers from corruption, inequality, and poverty?

I was once accused of exploiting Chinese workers, because our products are
built in China. But wouldn't it hurt the Chinese workers, if we moved
production back to the United States?

I agree with the author of "The Benefits of Free Trade: A Guide For
Policymakers" that free trade helps spread democracy. People in China today
enjoy freedoms unheard of only fifteen years ago. The freedom to "exchange
the fruits of one's labour" IMHO is one of the most important freedoms. So
again, people are better off because of free trade.

Two questions for you:

- What solution do you propose to the problems that you have described?

- Let's forget about developing countries for a second. Do you think that
unrestricted trade between two industrialized nations (say, US and NZ) is
also detrimental?

Best regards,

Vitaliy

2005\10\27@085057 by Vitaliy

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>> Standards, regulations, and subsidies are all barriers to free trade. I
>> do not see any contradiction with what I said previously.
>>
>> Negative and positive externalities (e.g., deforestation and
>> vaccinations) should be accounted for, but they should be treated as a
>> special case. I'm talking about trade in general, where you don't have
>> the externalities.
>
> There is no contradiction, I am for free-trade in theory, just like
> communism.  We are in the same camp :-) but I am not sold on the brand
> "free-trade".

I am against communism, even in theory. :-) The same thing that makes trade
possible (self-interest), makes communism impossible. It might work for
non-human entities, though - or thoroughly homogenous societies.

> As it is, free-trade is a false front for so many undesirable activities,
> and there are so many parties reversing prior agreements and commitments.
> And there are so many examples, they are played by multinational companies
> to overcome environmental objections to relocate to places where the cost
> is not accounted.

Yes, that's true, but that doesn't change the fact that free trade in
general is a bad thing (as most people portray it). Like I said, negative
externalities are a special case, and should be dealt with accordingly.

> Even in US, you have a congregation of oil refineries in New Orlean, not
> because it is the most competitive nor the best place to perform the
> refineries work, but because no other state wanted/wants it.

Well, some states can't have the oil refineries even if they wanted them. :)
There are not that many coastal states.

And again, free trade could help here - if the government sold pollution
permits (vouchers), instead of imposing regulations.

> If within a developed country, accurate accountability cannot be made and
> industries place at at their best location.  Then the question is if free
> trade is based on competitiveness, and competitiveness is based on
> accurate and total accountabilities.  And if there isn't and can never
> have accurate accountabilities, the concept exists only on paper.

Again, the vast majority of transactions DO NOT involve negative
externalities. And certain forms of free trade do exist (for example,
certain types of goods under NAFTA), and produce tangible benefits (I'm
speaking from experience - we buy steel enclosures for our devices in
Canada, duty-free). It is a great pity that otherwise brilliant people do
not see these benefits.

Best regards,

Vitaliy

2005\10\27@102351 by Wouter van Ooijen

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> I am against communism, even in theory. :-) The same thing
> that makes trade
> possible (self-interest), makes communism impossible.

Hmmm. I would say that the same thing that made communism (as far as
what was done in the former east block was realy communism as it was
meant it to be) fail (that is: human greed) is the thing that works
against real free trade. There is just too much to be gained by
cheating, so those who can get waway with it will. IMHO the 'west'
(Europe, USA, Japan/Korea/Taiwan, etc) are the big cheaters. Check for
instance the EC (to which I belong) agricultural policy.

Wouter van Ooijen

-- -------------------------------------------
Van Ooijen Technische Informatica: http://www.voti.nl
consultancy, development, PICmicro products
docent Hogeschool van Utrecht: http://www.voti.nl/hvu


2005\10\27@102351 by Wouter van Ooijen

face picon face
> Two questions for you:

can I jump in?

> - What solution do you propose to the problems that you have
> described?

Observe the real situation and think very hard. there is no universal
solution, and there might not be a clear preferred solution in each and
every case.

Some time ago there was a discussion on the radio between two
development workers about child labour in some poor country (I think
Thailand). One (IIRC a labour union guy) argued that buying from a
factory that employs childeren gives a very bad example and encourages
child exploitation. He is of course right. His opponent (IIRC someone
who worked in some hospital there) argued that what little money the
children got at least kept them and their families from ouright
starvation. She is of course right too.

> - Let's forget about developing countries for a second. Do
> you think that
> unrestricted trade between two industrialized nations (say,
> US and NZ) is also detrimental?

I think Russel would applaude unrestricted trade. The 'only' problem is
that I can't imagine any place on earth where trade is realy realy
unrestricted.

Wouter van Ooijen

-- -------------------------------------------
Van Ooijen Technische Informatica: http://www.voti.nl
consultancy, development, PICmicro products
docent Hogeschool van Utrecht: http://www.voti.nl/hvu



2005\10\27@152953 by Vitaliy

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Hello Wouter,

> Hmmm. I would say that the same thing that made communism (as far as
> what was done in the former east block was realy communism as it was
> meant it to be) fail (that is: human greed) is the thing that works
> against real free trade. There is just too much to be gained by
> cheating, so those who can get waway with it will. IMHO the 'west'
> (Europe, USA, Japan/Korea/Taiwan, etc) are the big cheaters. Check for
> instance the EC (to which I belong) agricultural policy.

Well, first of all, when I say "communism" I mean "real communism", and when
I say "free trade" I mean "trade without restrictions." :-)

There are some instances when communism worked, but to my knowledge that
only happened in small homogenous religious communities (monks).When you
have property rights and any sort of inequality, that is by definition not
communism.

Note that whenever people list the disadvantages of free trade (including
yourself and other posters before you), they point to trade restrictions. So
let me make this clear: I don't consider trade restrictions to be synonymous
with the concept of free trade. :-)))

Best regards,

Vitaliy

2005\10\27@163729 by Wouter van Ooijen

face picon face
> Note that whenever people list the disadvantages of free
> trade (including
> yourself and other posters before you), they point to trade
> restrictions. So
> let me make this clear: I don't consider trade restrictions
> to be synonymous
> with the concept of free trade. :-)))

In that case we can agree that free trade is a good thing. But IMHO a
lot of treaties etc. that use the prase 'free trade' are a bad thing.

Wouter van Ooijen

-- -------------------------------------------
Van Ooijen Technische Informatica: http://www.voti.nl
consultancy, development, PICmicro products
docent Hogeschool van Utrecht: http://www.voti.nl/hvu


2005\10\27@210423 by Roy Ward

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[Checking around first to see that this thread hasn't been hammered by
James yet]

Vitaliy wrote:

> Standards, regulations, and subsidies are all barriers to free trade.
> I do not see any contradiction with what I said previously.
>
> Negative and positive externalities (e.g., deforestation and
> vaccinations) should be accounted for, but they should be treated as a
> special case. I'm talking about trade in general, where you don't have
> the externalities.

That is our fundamental point of disagreement - I think there are nearly
always externalities, whether it be environmental degradation (such as
the cheap beef from Brazil being produced as a result of them clearing
their rainforest, or New Zealand not wanting to import fruit that might
introduce pests we don't have, or a country that introduces a carbon tax
to try and do something about global warming being unable to compete
with a country that doesn't), labour standards (ending up with us
supporting some appalling behaviour such as sweatshops and not having
the political will to do anything about it because we get so much cheap
stuff) or other standards (such as a significant part of a population
really wanting to have a choice about whether it eats genetically
engineered food).

I used to like the idea of free trade as a concept, and would have
supported it if the externalities could be somehow accounted for, but
there is an even more fundamental flaw that was pointed out by John
Ralston Saul in 'A Doubter's Companion". I'm paraphrasing here because I
don't have the book handy, but he points out that yes, some places do
things more efficiently than other places, so place A might mine coal
cheaper than anywhere else, and another place B might be cheapest at
manufacturing clothes for instance. The problem is that if you follow
free trade to its conclusion, you end up with a situation where it is
not economically viable to be anything except a coal miner at A, because
whatever else you want to do can be done cheaper somewhere else. This
might sound wonderful to the free trade advocates if you just want to
look at people as production units, but what you have lost is the idea
of heterogeneous society and replaced it with something that is going to
be culturally much poorer.

In another post, you gave as an example the idea of a free trade
agreement between New Zealand and the USA. Would I oppose this? The
answer is a most definite yes, for two reasons. The first is that it
would not be a real free trade agreement, as the US would put in lots of
terms that maded it favorable to them, such as there would be something
in there to protect US sheep farmers (we should technically be trying to
do the same sort of thing, but the free-trade idealogues in this country
have historically been been poor at doing this, which is how we got
screwed in the late 1980s). Secondly, even if their was a genuine
lowering of all restrictions, it would be a disaster for New Zealand. We
might get some stuff cheaper, and be able to sell our sheep, but our
economy would become so completely at the mercy of the US one (OK,
there's some arguement that it is already) that in some ways we might as
well become a 51st state. We'd be seeing whole sectors of New Zealand
industry wiped out, we would see 'dumping' (where something is sold
below cost for a while in order to destroy competitors) - a side note is
that dumping is illegal within the USA, but it is not illegal for USA
companies to dump elsewhere, and New Zealand laws on such things are
weak. We would see that taxes in New Zealand would have to fall to USA
levels for people to compete - goodbye public health system and a decent
social welfare safety net, all in the name of being able to sell some
sheep and buy a few things cheaper.

I'm not against all trade - just it should be the icing on the cake, not
the whole cake.

Pure free trade is like pure communism - a myth, and the distortions it
would put on society make it about as desirable.

Cheers,
Roy Ward.

2005\10\28@064701 by Vitaliy

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Hi Roy,

> [Checking around first to see that this thread hasn't been hammered by
> James yet]

I don't think James minds, as long as we keep it civil and to the point. :-)

{Quote hidden}

Although I can substantiate it, my intuition tells me that negative
externalities are limited to a small range of products. For most goods,
externalities are either positive, or for all intents and purposes,
non-existent.

Trade restrictions won't solve the problems you've listed.

Since the whole world benefits from the rainforest, why don't we all pay
Brazil to not cut it down? How is it fair to make the Brazilians bear the
burden alone, by imposing trade restrictions?

Restrictions on fruit imports exist within a single country as well, for
example it's illegal to bring homegrown fruit to California. However, it is
not illegal to bring in oranges from Florida, or apples from Washington, as
long as they're certified. Similar laws in New Zealand are designed to
protect domestic growers from competition, not to keep the pests out (are
you saying that our apples have more worms?! :-).

Labor standards will not be improved by imposing high tariffs. Remember that
labor is a scarce resource, so when a country opens up its borders, the
standard of living actually increases. Isolationist policies is what causes
the living standard to deteriorate (cf US in the late 1800s). The only way
to improve labor standards around the world is to allow free trade (both for
imports and exports) of both goods and ideas, and to apply international
pressure on countries with non-democratic regimes.

As far as pollution goes, an international agreement is of course necessary.
However, instead of rigid regulations, which are unfair to industrialized
nations and offer zero incentive to cut down pollution by countries that are
not polluting as much as, say, the United States, we need to have in place a
system of pollution permits. Under this system, each country would get
vouchers, each allowing it to release X tons of CO2 into the atmosphere, and
would be allowed to trade them in the open market. This idea sounds
ludicrous to people because it "puts a price on the environment." But it is
the most efficient way to achieve the end result (reducing pollution).

{Quote hidden}

This argument is weak, because it can be used in favor of free trade. :-)
Say that you already have places in the world, whose main product is coal,
or steel, or textiles - and you are stripping them of the opportunity to
enjoy other things. Think of the American Northeast. The steel industry
there is dying a slow and painful death, and we are prolonging the agony
with high tariffs on steel.  What for - so that people can work in hot,
dirty steel mills? Now look at Singapore, which moved from labor-intensive
textiles, to oil refining, to computers and biotechnology. They would still
be in the clothing business if the textile industry was "protected."

Anoter argument for free trade is freedom of choice. If people want to
support their local producers - let them vote with their dollar. Let them
use persuasion ("Buy American!") if they want to keep the old ways, but
don't force the choice on those who don't want it.

{Quote hidden}

First of all, what you are talking about is not free trade per se (you're
talking about trade barriers).

Second, even when a country unilaterally decides to drop its tariffs, it
benefits from the trade - consumers can buy the same goods, only cheaper.
Which means that they get "more bang for their buck", and have money left to
spend on other things.

The fundamental mistake that people make is that they only consider the
losses, but do not consider the benefits (which are *always* much greater).
It's easy to quantify losses for a particular industry - in terms of jobs
lost, profits, tax revenue, etc. However, since the benefits are usually
spread over a multitude of products, they are not nearly as noticeable. For
example, you talk about being "screwed" by the United States, but economic
data shows that New Zealanders have more things and live better than they
did before the free trade agreement.

I think the argument for protecting young industries is valid -
industrialization is "where the money is", whenever you mechanize labor you
increase productivity and incomes. It is difficult to turn your country into
a new South Korea when you're facing such giants as GM, Ford, and Toyota.
However, why don't you subsidize your young industries, instead of using
tariffs to protect them?

Because of the "tax the foreigner" mentality (and xenofobia, take for
example your "New Zealand as the 51st state"). The fallacy lies in the fact
that when you have tariffs, you are not taxing the foreign companies. It is
the CONSUMERS who pick up the tab.

So why do we have tariffs and not subsidies? Again, because subsidies are
much easier to calculate ("we've spent *how* many billions on subsidies?!")
than the losses from tariffs (which are paid for by individual consumers in
the form of higher prices).

> I'm not against all trade - just it should be the icing on the cake, not
> the whole cake.

Doesn't make any sense to me.

> Pure free trade is like pure communism - a myth, and the distortions it
> would put on society make it about as desirable.

And yet history is on the side of free trade. There are many examples when
the quality of life of ordinary citizens impoved after a nation removed (or
laxed) its trade barriers.

On the other hand, you have nations which isolated themselves from the
world, and paid dearly for it.

And in conclusion, let me ask you three questions:

- How is trade between industrialized nations different from trade between
states or provinces within a nation?
- If it's not much different, why don't we go back a few hundred years, and
start taxing goods that cross the state, or even county lines? Think of
pre-Bismarck Germany, with its 30+ (if my memory doesn't fail me) different
tariff codes.
- Can you give me the name of one country which isolated itself
economically, and prospered because of it?

Best regards,

Vitaliy

2005\10\28@083723 by Gerhard Fiedler

picon face
Vitaliy wrote:

> I was once accused of exploiting Chinese workers, because our products
> are built in China. But wouldn't it hurt the Chinese workers, if we
> moved production back to the United States?

I don't think that this is an issue of free trade or not. It's a matter of
choice, and that's something different. Whether there is free trade or not,
you can produce (most) everywhere you want. Whether it hurts the Chinese
workers or not if you produce there (or not) is strictly a matter of
opinion (or religion :), as we never can compare the exact consequences of
either choice.


> I agree with the author of "The Benefits of Free Trade: A Guide For
> Policymakers" that free trade helps spread democracy.

Not sure about that. But trade, whether free or not, helps spread
knowledge, which is a good thing IMO. But this is also a secondary issue.
It's the amount of trade that helps spread knowledge (or, if you insist on
it, democracy), not whether or not this trade is free. This is completely
irrelevant for the spread. It might not be irrelevant for the volume of
trade, of course.


> So again, people are better off because of free trade.

I knew Brazil when it was at the end of an isolationist phase of some 20
years or so, in 1990. Electronics here was in a very poor state; with
engineers having been practically cut off of worldwide developments for a
long time you can imagine the difficulties in creating anything electronic
here. After they opened up, this became much better.


But I don't think the question is whether or not, it's -- as with all
things -- a question of degree, and the exact "how to".

I can see the logic in making things better accountable by using direct
subsidies rather than tariffs. Makes a lot of sense. I've also been a
proponent of bringing capitalist principles into the environmental
protection by using the voucher system rather than arbitrary permits (which
are /very/ open to all sorts of clientelism, aka corruption, and of course
never provide any incentive to improve beyond the required).

You say "How is trade between industrialized nations different from trade
between states or provinces within a nation? If it's not much different,
[...]"  I take this to mean that you think it is not much different. One
major difference is that people can't move between different nations, and
another difference is that many of the rules governing production and trade
are quite different in different nations. /Real/ free trade, in the pure
form you seem to advocate, IMO requires also opening the borders for
people. After all, immigration restrictions are not more than arbitrary
trade barriers. And it also requires all to adhere to some set of common
trade and production rules, with some sort of international body having the
authority to supervise this. (You seem to imply this when you suggest to
compensate Brazil for maintaining the Amazon rainforest. Once that is being
done, there is of course the need for an international institution,
determining and administering the various compensations and supervising
that the countries actually deliver what they get paid for to do.)

Gerhard

2005\10\28@113707 by Vitaliy

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>> I was once accused of exploiting Chinese workers, because our products
>> are built in China. But wouldn't it hurt the Chinese workers, if we
>> moved production back to the United States?

Gerhard wrote:
> I don't think that this is an issue of free trade or not. It's a matter of
> choice, and that's something different. Whether there is free trade or
> not,
> you can produce (most) everywhere you want. Whether it hurts the Chinese
> workers or not if you produce there (or not) is strictly a matter of
> opinion (or religion :), as we never can compare the exact consequences of
> either choice.

I don't think that's true. It's easy to see that if American companies pull
out of China, the workers there would be hurt by unemployment and low wages
(lower than they are now). And you *can't* produce just anywhere. Try
producing in North Korea. :-) Economic factors are of course what usually
determines where you can (or should) produce. It doesn't make sense to
produce textiles in Germany (the process is too labor-intensive).

[snip]
> It's the amount of trade that helps spread knowledge (or, if you insist on
> it, democracy), not whether or not this trade is free. This is completely
> irrelevant for the spread. It might not be irrelevant for the volume of
> trade, of course.

"Amount of trade" is directly proportional to its "freeness", so it is not
irrelevant. And if you have an unrestricted flow of goods and ideas, it is
difficult to maintain a police state in its traditional sense, hence
countries that are open to trade are, as a rule, more democratic than the
ones that aren't.

> But I don't think the question is whether or not, it's -- as with all
> things -- a question of degree, and the exact "how to".

Not true. Free trade - good. Trade barriers - bad. As you remove trade
barriers, you increase a country's wealth and the well-being of its
citizens. An economy which is 95% free, is worse off than an economy that is
100% free, all else being equal.

> I can see the logic in making things better accountable by using direct
> subsidies rather than tariffs. Makes a lot of sense. I've also been a
> proponent of bringing capitalist principles into the environmental
> protection by using the voucher system rather than arbitrary permits
> (which
> are /very/ open to all sorts of clientelism, aka corruption, and of course
> never provide any incentive to improve beyond the required).

I am actually against both subsidies and tariffs. :) What I said was that
when given a choice between the two, subsidies are a lesser evil.

{Quote hidden}

You have a point. :)

However, the implications of opening up borders for trade, and opening up
borders for immigration are different.

People on both sides win from an unrestricted exchange of goods - there are
no losers in this situation. But if, for example, the US was to allow
unlimited immigration, that would drastically increase the supply of labor
and decrease the wages of Americans. One can argue that in this situation
you have winners (immigrants) as well as losers (Americans).

Note that US allows unlimited immigration from countries with a similar
standard of living (for example, Great Britain). Makes sense - since you
have similar living conditions, the Brits won't emigrate in huge numbers and
drive down the wages.

Some also argue that the border with Mexico is porous on purpose, and that
economies of California, Arizona, New Mexico, and Texas would collapse if
all illegal immigrants were deported. According to the recent poll, over 60%
of people in Arizona would not support anti-immigrant legislation. I think
the reason is that most illegal immigrants are unskilled workers, who are
happy to get jobs that American's won't touch with a ten foot pole. There's
no competition for jobs, and the benefits are obvious - so why not let them
immigrate?

On the other hand, if you were to allow unlimited immigration from countries
with poor, but highly educated populations (Georgia comes to mind), people
would emigrate in droves.  You can imagine what that would do American
wages - at least in the short run.

However, if you allow free trade to work its magic for a few decades, such
problem would not exist anymore. There's an interesting phenomenon in
economics: developed nations hit a productivity ceiling at some point, and
their economies stabilize - the average annual growth rate begins to hover
around 3-5%. Economies of developing nations can grow at double-digit rates.
Thanks to the power of compounding interest, poorer nations will relatively
quickly catch up to the rich nations.

I know, in my dreams. :-)

> And it also requires all to adhere to some set of common
> trade and production rules, with some sort of international body having
> the
> authority to supervise this.

Not when we're talking about free trade.

> (You seem to imply this when you suggest to
> compensate Brazil for maintaining the Amazon rainforest. Once that is
> being
> done, there is of course the need for an international institution,
> determining and administering the various compensations and supervising
> that the countries actually deliver what they get paid for to do.)

We are talking about two completely different things. Clearing of tropical
rainforest is a negative externality, see the definition on Wikipedia:

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

Since the implication is that the whole world wants the rainforest (oxygen,
rare species, etc), I think it's only fair that the whole world pitches in
to pay for its conservation. What some people are implying is that we should
create trade barriers for Brazilian beef, to remove the incentive to create
new pastures for the cows.

Best regards,

Vitaliy

2005\10\28@172051 by Peter

picon face

On Fri, 28 Oct 2005, Vitaliy wrote:

> irrelevant. And if you have an unrestricted flow of goods and ideas, it is
> difficult to maintain a police state in its traditional sense, hence
> countries that are open to trade are, as a rule, more democratic than the
> ones that aren't.

Or un-democratic enough to believe to be able to afford allowing
'foreigners' to do things on their territory. Preferrably in specially
delimited zones and with special derogations to local legislation
(knowing that their own nationals would be dispossesed, tried, deported
and maybe shot - not necessarily in that order - if they would do such
business themselves, as the 'foreigners' are doing in their alloted
'free trade zones').

> However, the implications of opening up borders for trade, and opening up
> borders for immigration are different.

Of course. The relevant law paragraphs are worded entirely differently
on sheets of paper with the same heading as for trade agreements, and
signed by the same people (or at least of the same rank).

> Note that US allows unlimited immigration from countries with a similar
> standard of living (for example, Great Britain). Makes sense - since you have
> similar living conditions, the Brits won't emigrate in huge numbers and drive
> down the wages.

I think that you are not familiar with the immigration laws of the USA.
I am not a US citizen but I seem to know a little more about it than you
do.

Peter

2005\10\28@180753 by Russell McMahon

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flavicon
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> Hello Russell,

>> "Free trade" on an uneven field is helping us blind ourselves to
>> the
>> fact that we are living on the backs of those with aspirations not
>> at
>> all unlike our own. The inequities that we sow today will help
>> shape
>> how we get on a few decades from now.

> Are you saying that trade restrictions are better than free trade in
> protecting the workers from corruption, inequality, and poverty?

No. But that can sometimes be the case.
But my main point was that the majority who preach "free trade" do not
do so with an eye to gaining advantage for themselves rather than
maximal advantage for all concerned. They may even believe that what
they are offering will advantage 'the other party' but what they will
seek to do is advantage themselves maximally and accept as a bonus
whatever gains the other party achieves. As both / all parties seek to
do this a compromise is reached based on the relative bargaining
strengths. THEN everyone will seek to inperpret the agreement in a
manner that best suits them and when that doesn't work the strongest
party may (as the US has been known to do) simply abrogate their
agreements. When you genuinely improve the lot of others by such
agreements you make them stronger and in time they become a force to
be reckoned with. But you teach them things about how to behave that
they will never forget and which you will wish they ha dnever learned.
You can do this with eg The Phillippines and almost get away with it
because of relative sizes. China will prove to be a different story.
As 'we in the West' revel in the cheap products of the developing
world and lose our desire and ability to produce such things
competitively we teach others how to do so and also teach them lessons
about how they should deal with weaker parties and how to use strength
to advantage. It's going to be interesting.

> Two questions for you:

> - What solution do you propose to the problems that you have
> described?

I see directions, but I don't see any realistic solution that would be
acceptable to those who matter, as we are dealing with human nature,
greed and dsire for advantage rther than equity. Solutions that are
equitable and also satisfy these agendas are hard to find :-). The
obvious solution is to say "let's try free trade" and then define the
term to mean what it says. So far this is rare. I think the Eu may be
achieving this internally although I'm not up with the play on this
and there may be barriers that aren't obvious to the casual observer.
It's interesting that the canny Swiss, who have shown themselves not
averse to seizing every financial opportunity in the last century, re
not part of the EU.

> - Let's forget about developing countries for a second. Do you think
> that unrestricted trade between two industrialized nations (say, US
> and NZ) is also detrimental?

Certainly would have its problems, but may well be OK.
But so far a genuine agreement, as opposed to paper ones which are
lies, escapes us.
It's the US government who opposes such deals - not our government.

The price of a more genuine free trade deal between NZ and the US
would be the acceptance of a nuclear ships policy which some US states
will not accept and which could destroy forever one of our key trade
advantages in the event of an accident (due to our small size and
significant dependence on agricultural exports).

Re someone's question re worms in apples. Yes, agricultural barriers
can be used as a form of unacknowledged protectionism. But for NZ
there are very real gains in keeping our products free form diseases
and pests which we do not have. Foot and moth disease, painted apple
moth, and a zillion others.




       RM

2005\10\28@201558 by Vitaliy

flavicon
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Peter,

>> irrelevant. And if you have an unrestricted flow of goods and ideas, it
>> is difficult to maintain a police state in its traditional sense, hence
>> countries that are open to trade are, as a rule, more democratic than the
>> ones that aren't.
>
> Or un-democratic enough to believe to be able to afford allowing
> 'foreigners' to do things on their territory. Preferrably in specially
> delimited zones and with special derogations to local legislation (knowing
> that their own nationals would be dispossesed, tried, deported and maybe
> shot - not necessarily in that order - if they would do such business
> themselves, as the 'foreigners' are doing in their alloted 'free trade
> zones').

Examples, please.

{Quote hidden}

Would you mind substantiating?

Best regards,

Vitaliy

2005\10\28@211255 by Gerhard Fiedler

picon face
Vitaliy wrote:

> And you *can't* produce just anywhere. Try producing in North Korea. :-)

That's why I wrote "(most) everywhere".

> Economic factors are of course what usually determines where you can (or
> should) produce.

Economic factors almost never determine where you /can/ produce, they
determine where you /want/ to produce.

> It doesn't make sense to produce textiles in Germany (the process is too
> labor-intensive).

Of course, but the fact is that you /can/. Where you produce is in almost
all cases not a question of free trade, it's a question of economics. Which
has something to do with tariffs, but much to do with a lot of other
factors.


>> It's the amount of trade that helps spread knowledge (or, if you insist
>> on it, democracy), not whether or not this trade is free. This is
>> completely irrelevant for the spread. It might not be irrelevant for
>> the volume of trade, of course.
>
> "Amount of trade" is directly proportional to its "freeness", so it is
> not irrelevant.

I doubt that. "Freeness" is just one factor. In many if not most cases, the
imposed tariffs are less of an influence on the final cost than the
differences in production cost in different countries. China probably is
not a champion in "freeness" of trade, but the /combination/ of the
relative freeness with the relative cost of production is seemingly hard to
beat.


>> But I don't think the question is whether or not, it's -- as with all
>> things -- a question of degree, and the exact "how to".
>
> Not true. Free trade - good. Trade barriers - bad.

Well, this sounds like a religion. You either believe it or not...

> An economy which is 95% free, is worse off than an economy that is
> 100% free, all else being equal.

Maybe, but who says that all else will remain equal if you go the last 5%?
There might be detrimental effects. And even if not, it again sounds a lot
like religion. Unproven, unprovable, and needs to be believed -- or not.


> However, the implications of opening up borders for trade, and opening up
> borders for immigration are different.
>
> People on both sides win from an unrestricted exchange of goods - there are
> no losers in this situation. But if, for example, the US was to allow
> unlimited immigration, that would drastically increase the supply of labor
> and decrease the wages of Americans. One can argue that in this situation
> you have winners (immigrants) as well as losers (Americans).

It's actually not much different than with goods. If labor gets cheaper,
the goods get cheaper. How is that different from importing cheaper goods?
Following your argumentation, this would benefit Americans (in that
example), just the same or more than importing cheaper goods. One could
even make the point that importing cheap labor is better than importing
cheap goods: the ownership of the production (and the profit) remains in
the country.

You seem to restrict trade to tangible goods. What about trade of services?
If you want to talk free trade, you should mean free trade. Immigration
restrictions place the same sort of limitations on trade of services as
traditional trade barriers place on trade of tangible goods. After all, in
a world of free trade, people should be able to choose whom they hire to do
their garden -- independently of citizenship. Anything else would be trade
barriers.


> On the other hand, if you were to allow unlimited immigration from countries
> with poor, but highly educated populations (Georgia comes to mind), people
> would emigrate in droves.  You can imagine what that would do American
> wages - at least in the short run.

This sounds a /lot/ like the arguments of the proponents for traditional
trade barriers :)


>> And it also requires all to adhere to some set of common trade and
>> production rules, with some sort of international body having the
>> authority to supervise this.
>
> Not when we're talking about free trade.

This is about the side effects (externalities). There are all kinds of
things involved: environmental issues (mostly from neighboring countries --
something not quite familiar to most US citizens due to a geographical
position that is somewhat privileged in this respect), social issues (once
you start taking free trade seriously and include trade of services and
free movement not only of goods but also people), and so on.


>> (You seem to imply this when you suggest to compensate Brazil for
>> maintaining the Amazon rainforest. Once that is being done, there is of
>> course the need for an international institution, determining and
>> administering the various compensations and supervising that the
>> countries actually deliver what they get paid for to do.)
>
> We are talking about two completely different things.

I don't think so.

> Clearing of tropical rainforest is a negative externality, see the
> definition on Wikipedia:

There are /many/ externalities... and whether they are negative or positive
usually depends on the angle. But yes, that is what I was talking about.

> Since the implication is that the whole world wants the rainforest (oxygen,
> rare species, etc), I think it's only fair that the whole world pitches in
> to pay for its conservation.

I understood that. What I was talking about is that if you pay for
conservation, you may need to make sure that you actually pay for
conservation.

> What some people are implying is that we should create trade barriers for
> Brazilian beef, to remove the incentive to create new pastures for the
> cows.

That would not only probably not be effective, but also is not fair. Not
all Brazilian beef grows on burnt rain forest. By the same line of thinking
the EU could create a trade barrier for American beef... ("American" means
here "from the American continent").

Gerhard

2005\10\28@214821 by Ling SM

picon face
> - How is trade between industrialized nations different from trade
> between states or provinces within a nation?
> - If it's not much different, why don't we go back a few hundred years,
> and start taxing goods that cross the state, or even county lines? Think
> of pre-Bismarck Germany, with its 30+ (if my memory doesn't fail me)
> different tariff codes.
> - Can you give me the name of one country which isolated itself
> economically, and prospered because of it?

No, I am not attempting to answer questions to the UN.  My few cents as
a citizen of a small nation without natural resources that heavily
depends on free trade of goods to survive.

Market economy !=Free Trade.  Market economy is more than that as it has
to live with many shortcomings, it has to take care of many details, and
making things happen.  And Free Trade != Trade, "free trade" does not
invent trade, trade exists long before that and before market economy.

The greatest plus about "free trade" is people are cheating on rules and
words to trade than through gun, canon, slavery and colonization.  I am
inclined to believe that "free trade" staying around the unfree area is
better, unless the world become one nation. Then this becomes a moot
point.  When the strong nations cannot take advantage of the
"free-trade" rule to gain, they will resolve to another means.  The
previous ways are definitely not better.

If "trading" is equal as in the economic theory, then we should have
seen many poor nations become rich, but after so many years the figures
show that poor nations stay poor.  The tiger economies are the
exceptions but the credits go towards more to their culture and
altitudes, and they could be a short burp on the rader screen.

Guess, the Zen inside me wants Market-economy, the NGO, etc to direct
the "freeness" of trade, and not the other way round.  "Free-trade ism"
is what I am afraid.

Cheers, Ling SM

2005\10\28@221848 by Vitaliy

flavicon
face
Hello Russell,

>> Are you saying that trade restrictions are better than free trade in
>> protecting the workers from corruption, inequality, and poverty?
>
> No. But that can sometimes be the case.

Please give me one example. And show me how it benefitted the country as a
whole, not just a special interest group.

> But my main point was that the majority who preach "free trade" do not do
> so with an eye to gaining advantage for themselves rather than maximal
> advantage for all concerned.

Yes, of course. Self-interest (some say "greed") is the force behind Adam
Smith's "invisible hand." I'm sure you've read this, but for the benefit of
those who didn't:

" ... he intends only his own gain, and he is in this, as in many other
cases, led by an invisible hand to promote an end which was no part of his
intention. Nor is it always the worse for society that it was no part of his
intention. By pursuing his own interest he frequently promotes that of the
society more effectually than when he really intends to promote it. I have
never known much good done by those who affected to trade for the public
good. "

You hear what he's saying? Trade does more good than charity!

> They may even believe that what they are offering will advantage 'the
> other party' but what they will seek to do is advantage themselves
> maximally and accept as a bonus whatever gains the other party achieves.
> As both / all parties seek to do this a compromise is reached based on the
> relative bargaining strengths.

See above. And THAT'S FINE, who cares about the motives as long as the end
result benefits everybody?

> THEN everyone will seek to inperpret the agreement in a manner that best
> suits them and when that doesn't work the strongest party may (as the US
> has been known to do) simply abrogate their agreements. When you genuinely
> improve the lot of others by such agreements you make them stronger and in
> time they become a force to be reckoned with.

Even if NZ *unilaterally* abolishes all trade barriers, it benefits. Not as
much as it would if there was truly free trade between the countries, but it
is better off nonetheless.

> But you teach them things about how to behave that they will never forget
> and which you will wish they ha dnever learned. You can do this with eg
> The Phillippines and almost get away with it because of relative sizes.

Kindly explain what you mean.

> China will prove to be a different story. As 'we in the West' revel in the
> cheap products of the developing world and lose our desire and ability to
> produce such things competitively we teach others how to do so and also
> teach them lessons about how they should deal with weaker parties and how
> to use strength to advantage. It's going to be interesting.

Weaker parties? You are still talking in terms of winners and losers. I
would NOT MIND if other countries became richer and stronger, and traded
with the United States. It is always a win-win situation.

>> - What solution do you propose to the problems that you have described?
>
> I see directions, but I don't see any realistic solution that would be
> acceptable to those who matter, as we are dealing with human nature, greed
> and dsire for advantage rther than equity.

That is exactly why trade works and charity doesn't: the latter doesn't
harness the power of human greed to do good.

> Solutions that are equitable and also satisfy these agendas are hard to
> find :-). The obvious solution is to say "let's try free trade" and then
> define the term to mean what it says. So far this is rare.

Sure, I'm all for bilateral free trade agreements. But saying "I won't
remove my trade barriers until you remove yours" is like saying "I won't
stop banging my head on the wall until you do" (metaphor from one of the
articles in my original post).

> I think the Eu may be achieving this internally although I'm not up with
> the play on this and there may be barriers that aren't obvious to the
> casual observer. It's interesting that the canny Swiss, who have shown
> themselves not averse to seizing every financial opportunity in the last
> century, re not part of the EU.

Sure, if the canny Swiss are not doing something, it *must* be bad. ;-)

>> - Let's forget about developing countries for a second. Do you think that
>> unrestricted trade between two industrialized nations (say, US and NZ) is
>> also detrimental?
>
> Certainly would have its problems, but may well be OK.
> But so far a genuine agreement, as opposed to paper ones which are lies,
> escapes us.
> It's the US government who opposes such deals - not our government.

Unfortunately, it's true that there are plenty of congressmen who oppose
free trade. However, when I was watching the hearings on the subject of free
trade with Morocco, there were more congressmen speaking in favor, rather
than against it.

> Re someone's question re worms in apples. Yes, agricultural barriers can
> be used as a form of unacknowledged protectionism. But for NZ there are
> very real gains in keeping our products free form diseases and pests which
> we do not have. Foot and moth disease, painted apple moth, and a zillion
> others.

It was I who asked the question. United States imports a wide range of
fruits and vegetables, not to mention that the same type of fruit is moved
between states that are both growing it (I know, it doesn't make sense, but
let's leave that for a different discussion). With proper certification,
that doesn't create any problems.

My point was, it seems to me that the primary purpose of such legislation is
to protect the local growers from foreign competition. Perhaps that is not
the case in New Zealand (maybe you guys are truly concerned), but it is
certainly the case in Japan.

Best regards,

Vitaliy Maksimov
ScanTool.net, LLC
Tel.: +1 (602) 923-1870
Fax: +1 (602) 532-7625
E-mail: spam_OUTvitaliyTakeThisOuTspamscantool.net

2005\10\28@225057 by Vitaliy

flavicon
face
Gerhard,

> Economic factors almost never determine where you /can/ produce, they
> determine where you /want/ to produce.

Fine, I'll let you produce in my backyard if you give me 1000% of the
profits.

> Of course, but the fact is that you /can/. Where you produce is in almost
> all cases not a question of free trade, it's a question of economics.
> Which
> has something to do with tariffs, but much to do with a lot of other
> factors.

Free trade is a part of the big field of economics. If you won't make a
profit by producing in Germany, it's not a question whether you want to
produce there.

{Quote hidden}

We were talking about trade between two countries, in which case the freer
the trade, the greater the volume of trade.

>> Not true. Free trade - good. Trade barriers - bad.
>
> Well, this sounds like a religion. You either believe it or not...

I did not ask you to believe what I say is true, I substantiated it.

>> An economy which is 95% free, is worse off than an economy that is
>> 100% free, all else being equal.
>
> Maybe, but who says that all else will remain equal if you go the last 5%?
> There might be detrimental effects. And even if not, it again sounds a lot
> like religion. Unproven, unprovable, and needs to be believed -- or not.

Gerhard, think logically. You said yourself that economically Brazil is
better off now, than it was during the period of isolation. Why would
removing the remaining 5% of the barriers have "detrimental effects"? It's
like saying, "I will leave my parking break engaged half-way -- because who
knows what will happen when I release it all the way?"

{Quote hidden}

The difference is this: the overall quality of life of people living in the
United States would decrease, which would make a lot of Americans unhappy.
The opposite happens when you have free trade - the standard of living goes
up.

> You seem to restrict trade to tangible goods. What about trade of
> services?
> If you want to talk free trade, you should mean free trade. Immigration
> restrictions place the same sort of limitations on trade of services as
> traditional trade barriers place on trade of tangible goods. After all, in
> a world of free trade, people should be able to choose whom they hire to
> do
> their garden -- independently of citizenship. Anything else would be trade
> barriers.

Again, the difference is that when you open the borders for immigration, you
will have winners as well as losers. That is not the case when you trade
tangible goods.

>> On the other hand, if you were to allow unlimited immigration from
>> countries
>> with poor, but highly educated populations (Georgia comes to mind),
>> people
>> would emigrate in droves.  You can imagine what that would do American
>> wages - at least in the short run.
>
> This sounds a /lot/ like the arguments of the proponents for traditional
> trade barriers :)

Taking my comments out of the context is dishonest. I did not say whether
that logic is good or bad, nor whether the US should or should not allow
immigration from Georgia. All I did was try to explain what would happen if
US did allow unlimited immigration from such countries, and why most
Americans won't like it.

{Quote hidden}

I thought we agreed that goods have either positive or zero externalities.
Those that do have negative effects, should be treated as a special case --  
this is one of the few instances where government intervention is necessary.

>>> (You seem to imply this when you suggest to compensate Brazil for
>>> maintaining the Amazon rainforest. Once that is being done, there is of
>>> course the need for an international institution, determining and
>>> administering the various compensations and supervising that the
>>> countries actually deliver what they get paid for to do.)
>>
>> We are talking about two completely different things.
>
> I don't think so.

I do. Free trade is not synonymous with negative externalities, and does not
require government intervention.

> There are /many/ externalities... and whether they are negative or
> positive
> usually depends on the angle. [snip]

No, it doesn't. If the third party (the one not directly involved in the
transaction) is harmed by the transaction, you have a negative externality.
For example, clearing the rainforest is definitely a negative externality.
Vaccination is a prime example of a positive externality, where your chances
of getting sick are reduced because other people got their flu shots.

>> Since the implication is that the whole world wants the rainforest
>> (oxygen,
>> rare species, etc), I think it's only fair that the whole world pitches
>> in
>> to pay for its conservation.
>
> I understood that. What I was talking about is that if you pay for
> conservation, you may need to make sure that you actually pay for
> conservation.

No disagreement here.

>> What some people are implying is that we should create trade barriers for
>> Brazilian beef, to remove the incentive to create new pastures for the
>> cows.
>
> That would not only probably not be effective, but also is not fair. Not
> all Brazilian beef grows on burnt rain forest. By the same line of
> thinking
> the EU could create a trade barrier for American beef... ("American" means
> here "from the American continent").

Sorry, I'm a typical estadounidese. :-) I just don't know what other word to
use to mean "of the United States"

Trade sanctions would actually be quite effective in preventing
deforestation (Brazilians can't eat all that meat themselves). Of course, I
agree that it would be utterly unfair.

Best regards,

Vitaliy

2005\10\28@231236 by Vitaliy

flavicon
face
> No, I am not attempting to answer questions to the UN.  My few cents as a
> citizen of a small nation without natural resources that heavily depends
> on free trade of goods to survive.
>
> Market economy !=Free Trade.  Market economy is more than that as it has
> to live with many shortcomings, it has to take care of many details, and
> making things happen.

I never said that market economy == free trade. However, the more
restrictions you have, the closer you are to a command economy.

> And Free Trade != Trade, "free trade" does not invent trade, trade exists
> long before that and before market economy.

Not true, free trade is the original kind of trade. What kind of trade
barriers existed in primitive societies?

> The greatest plus about "free trade" is people are cheating on rules and
> words to trade than through gun, canon, slavery and colonization.  I am
> inclined to believe that "free trade" staying around the unfree area is
> better, unless the world become one nation. Then this becomes a moot
> point.  When the strong nations cannot take advantage of the "free-trade"
> rule to gain, they will resolve to another means.  The previous ways are
> definitely not better.

I'm sorry, I do not understand what you mean. What is "unfree area"? I can't
tell whether you're being sarcastic or sincere.

> If "trading" is equal as in the economic theory, then we should have seen
> many poor nations become rich, but after so many years the figures show
> that poor nations stay poor.

There are plenty of examples, including your own country. Just over one
hundred years ago, Germany was not much wealthier than India or China. I can
find the relevant economic data for the 1800's if that will help change your
mind. ;-)

> The tiger economies are the exceptions but the credits go towards more to
> their culture and altitudes,

China, Japan, Taiwan, and South Korea are the "poster children" of the free
trade movement, but they are not exceptions. Just ask Gerhard. :-)

Olin cited the example of North vs South Korea. Was the culture of North
Koreans was inferior to their countrymen in the South? Why did millions of
North Koreans die (we're talking about the late 1990's), while the South
enjoyed one of the highest standards of living in the world? Maybe it has
something to do with the fact that North Korea cut itself off from the rest
of the world, while South Korea was trading freely?

> and they could be a short burp on the rader screen.

You probably meant to say "blip." ;-)

> Guess, the Zen inside me wants Market-economy, the NGO, etc to direct the
> "freeness" of trade, and not the other way round.  "Free-trade ism" is
> what I am afraid.

You cannot have truly free trade when some bureaucracy has control over it.

Best regards,

Vitaliy Maksimov
ScanTool.net, LLC
Tel.: +1 (602) 923-1870
Fax: +1 (602) 532-7625
E-mail: .....vitaliyKILLspamspam@spam@scantool.net

2005\10\29@001811 by Ling SM

picon face
Vitaliy,

>> Market economy !=Free Trade.  Market economy is more than that as it
>> has to live with many shortcomings, it has to take care of many
>> details, and making things happen.

> I never said that market economy == free trade. However, the more
> restrictions you have, the closer you are to a command economy.

May not be you, but there was some implying so.  Like contrasting N and
S Korea economy, the main difference and cause is communism and market
economy.  Not free or non-free trade.  Volume-in-trade is a side-effect,
not the main driver, is the score - the result, not the cause.

>> And Free Trade != Trade, "free trade" does not invent trade, trade
>> exists long before that and before market economy.
> Not true, free trade is the original kind of trade. What kind of trade
> barriers existed in primitive societies?

Too many: slavery, landlord exploitation, tribal restriction, tribal
bias, gate-fee, gate-control, control of transportation vehicles,
corruptions, permits (they have permits), family-biased activities, etc.
 Then again, we have to agree to the definition of "free trade".  The
default definition now definitely is a totaly mismatch to old societies,
and therefore discussion here will not have a convergent.

>> The greatest plus about "free trade" is people are cheating on rules
>> and words to trade than through gun, canon, slavery and colonization.  
>> I am inclined to believe that "free trade" staying around the unfree
>> area is better, unless the world become one nation. Then this becomes
>> a moot point.  When the strong nations cannot take advantage of the
>> "free-trade" rule to gain, they will resolve to another means.  The
>> previous ways are definitely not better.
>
> I'm sorry, I do not understand what you mean. What is "unfree area"?

The examples listed earlier, "free trade" is a false front for many
other barriers putting up to gain advantages on the other parties.  And
if you are convinced that the strong nations are willing to trade fairly
than your notion of "free trade" can exist. But I believe otherwise.

>> If "trading" is equal as in the economic theory, then we should have
>> seen many poor nations become rich, but after so many years the
>> figures show that poor nations stay poor.

> There are plenty of examples, including your own country. Just over one
> hundred years ago, Germany was not much wealthier than India or China. I
> can find the relevant economic data for the 1800's if that will help
> change your mind. ;-)

It wasn't trade, it is the political system that become stagnant.

>> The tiger economies are the exceptions but the credits go towards more
>> to their culture and altitudes,
> China, Japan, Taiwan, and South Korea are the "poster children" of the
> free trade movement, but they are not exceptions. Just ask Gerhard. :-)

The 4 tigers are: S Korea, HK, Taiwan and Singapore.  But a total of 4,
is too few to be a norm.  BUT their "riches" are still under probation.
 AND they were too small to be a threat then.

>> Guess, the Zen inside me wants Market-economy, the NGO, etc to direct
>> the "freeness" of trade, and not the other way round.  "Free-trade
>> ism" is what I am afraid.
>
> You cannot have truly free trade when some bureaucracy has control over it.

So we are in agreement that "free trade" exists on paper, I am less
afraid now :-)

Cheers, Ling SM









2005\10\29@013243 by Vitaliy

flavicon
face
>>> And Free Trade != Trade, "free trade" does not invent trade, trade
>>> exists long before that and before market economy.
>> Not true, free trade is the original kind of trade. What kind of trade
>> barriers existed in primitive societies?
>
> Too many: slavery, landlord exploitation, tribal restriction, tribal bias,
> gate-fee, gate-control, control of transportation vehicles, corruptions,
> permits (they have permits), family-biased activities, etc.

Guys, I give up.

I mean, what was I thinking? Of course cavemen *hated* trade, and they
imposed all sorts of prehistoric tariffs! The gate and transportation
vehicles were invented by rich cavemen to facilitate slavery and corruption.
It was their descendants who later also developed gun and cannon.

Free trade is a conspiracy by the United States, a big lie created with the
express purpose of exploiting poor developing countries and screwing New
Zealand. It must be true, because the majority of the people, and even the
canny Swiss (!) are against free trade.

The five (some argue four -- China doesn't count) Asian tigers are bluffing,
as are a dozen of other countries! Their strong, stable and growing
economies are a fake! Rumor has it, the US is secretly paying the tigers to
pretend that they have high living standards, so that free trade evangelists
(who have been blinded by the idea that free trade is great) can use them to
deceive unsuspecting developing nations. I mean, why else would Japanese
houses be made of paper?! They're stage props!

Sometimes a little bit of free trade is okay (sort of like icing on the
cake), but too much free trade is a BAD THING (because it is a bad thing
when you have too much free trade). I mean, it's OK to allow some free trade
because it can be good sometimes, but not too much. There might be
detrimental effects.

Free trade is definitely not the solution to world's corruption, inequality,
and poverty. I don't know what is, but free trade is *definitely* not it.
Trade restrictions are not better than free trade in this regard. But that
can sometimes be the case.

Free trade was a religion to me, unprovable and requiring no proof. But your
irrefutable logic finally convinced me of its falsehood. I see the light
now.

Repent, o ye believers in the virtues of free trade! A day of reckoning is
coming!

- Vitaliy

PS You guys have a nice weekend. :-)

2005\10\29@085402 by Gerhard Fiedler

picon face
Russell McMahon wrote:

> It's interesting that the canny Swiss, who have shown themselves not
> averse to seizing every financial opportunity in the last century, re
> not part of the EU.

I think the economics of the EU were the argument for joining it. But the
loss of sovereignty was the stronger argument against -- and this is
stronger in Switzerland than in most other places in Europe. I think they
also believe that maintaining an image of neutrality is important for their
financial industry, and that would be more difficult as part of the EU, as
foreign policy would not be anymore a national question only.

Switzerland provides actually a good example of one of the problems with
free trade. If the EU and Switzerland had free trade for a while, many
essential products and services wouldn't be produced and provided by Swiss
producers and providers anymore. After that, the EU just needs to close the
border, and the Swiss would have to render themselves -- and join the EU :)
So there is no free trade between the EU and Switzerland, and that's
perceived as a matter of national sovereignty and security by the Swiss.

Of course there are enough millions in anonymous bank accounts in
Switzerland held by decisive figures in the EU nations to make sure
something like this will never happen...

(Seriously, that's why I wrote in an earlier post that free trade -- really
free trade, not the propaganda version if it -- needs some kind of
international policing institution to make sure things are and remain
fair.)

Gerhard

2005\10\29@085646 by Gerhard Fiedler

picon face
Vitaliy wrote:

>>> Note that US allows unlimited immigration from countries with a similar
>>> standard of living (for example, Great Britain). Makes sense - since
>>> you have similar living conditions, the Brits won't emigrate in huge
>>> numbers and drive down the wages.
>>
>> I think that you are not familiar with the immigration laws of the USA.
>> I am not a US citizen but I seem to know a little more about it than
>> you do.
>
> Would you mind substantiating?

Not sure what Peter had in mind, but while there may not be a formal cap on
the yearly number of visa issued to UK citizens (if so then probably
because the number of applications is way below of what they would set as a
cap), it is /not/ easy, not even for UK citizens, to get a visa that allows
free trade of services. Actually, there are only three ways I can think of:
gambling (the green card lottery), buying (investing $1M or so in the USA),
voluntary slavery (marriage :).

Not exactly what I would call "unlimited immigration".

Gerhard

2005\10\29@090953 by Gerhard Fiedler

picon face
Vitaliy wrote:

>>> An economy which is 95% free, is worse off than an economy that is
>>> 100% free, all else being equal.
>>
>> Maybe, but who says that all else will remain equal if you go the last 5%?
>> There might be detrimental effects. And even if not, it again sounds a lot
>> like religion. Unproven, unprovable, and needs to be believed -- or not.
>
> Gerhard, think logically. You said yourself that economically Brazil is
> better off now, than it was during the period of isolation. Why would
> removing the remaining 5% of the barriers have "detrimental effects"? It's
> like saying, "I will leave my parking break engaged half-way -- because who
> knows what will happen when I release it all the way?"

Ok, so let's start tackling this with logic. An analogy is a good thing
once in a while...

We know that when switching a load, it is the more efficient the smaller
the other resistances in the current path are. Yet we often place
/deliberately/ resistances in the path: transistors (instead of relays,
which would have a lower resistance), fuses (that don't really do anything
during normal operation besides providing resistance). We often don't
remove those last percents of resistance in the load path, because they
serve purposes different from simply optimizing the free flow of current
through the load -- different, but not less important.

What you seem to do, using this analogy, is trying to optimize the
efficiency of the current flow, forgetting about the different reasons why
there are other things in the current path. Of course a simple manual
switch is one of the most (electric energy-) efficient ways to switch a
light. But most of us are here because there are lots of /other/
requirements besides the free flow of current, and they get satisfied with
means that are less efficient in terms of free current flow, but overall
considered more desirable in certain circumstances.

Brazil is not at 95% yet, it's probably at around 50% or so. Difficult to
measure trade resistance in percent... and I'm usually on the side that
promotes more free trade (of both goods /and/ services). But I also
understand that these are /my/ arguments, and that the other side has
/their/ arguments, and neither of us can be sure to be right.


> Again, the difference is that when you open the borders for immigration, you
> will have winners as well as losers. That is not the case when you trade
> tangible goods.

AHA! Here it is: you don't really want free trade (which would be "free
trade of everything"), you want free trade limited to whatever doesn't
leave losers in the USA. See, that's what everybody wants, and that's why
we have trade barriers. You think that trade barriers on services are a
good thing, steel millers in the USA think that trade barriers on steel are
a good thing, Brazilian car makers (like Ford and GM :) think that trade
barriers on cars are a good thing, and so on.

> Taking my comments out of the context is dishonest. I did not say whether
> that logic is good or bad, nor whether the US should or should not allow
> immigration from Georgia. All I did was try to explain what would happen
> if US did allow unlimited immigration from such countries, and why most
> Americans won't like it.

No, I understand that, and I don't think I took it out of context. Your
argument was exactly the same argument that people use when they defend
tariffs. It's just that you believe that free trade of goods will be good
in the end for both sides, and that you believe that free trade of services
will be bad for your side -- and use the same argument against free trade
of services that you counter when it is used against free trade of goods.
(Are you in the business of providing services? :)

> I thought we agreed that goods have either positive or zero
> externalities.

No, I never agreed to that. I think that production of goods usually has
/lots/ of externalities, trade of good has externalities, possession of
goods can have externalities, and use of goods most often has. How can you
say that goods don't have negative externalities?

> Those that do have negative effects, should be treated as a special case
> -- this is one of the few instances where government intervention is
> necessary.

Since all goods seem to have lots of externalities, that's possibly one
reason why there are so many regulations -- trade and otherwise?


> I do. Free trade is not synonymous with negative externalities, and does not
> require government intervention.

I didn't say that it is synonymous. But preventing or remedying negative
externalities does require government intervention, and that's the
reasoning behind trade barriers (like the one you are defending against
free trade of services).

>> There are /many/ externalities... and whether they are negative or
>> positive usually depends on the angle. [snip]
>
> No, it doesn't. If the third party (the one not directly involved in the
> transaction) is harmed by the transaction, you have a negative
> externality. For example, clearing the rainforest is definitely a
> negative externality. Vaccination is a prime example of a positive
> externality, where your chances of getting sick are reduced because
> other people got their flu shots.

It of course depends on the 3rd party and its perception. "Harm" is usually
not a fact, it is a perception. "Lots of trees around the house" can be
both a harm and a benefit, depending on the point of view.

Clearing the rain forest is a negative externality /for you/, because you
believe this is something negative. It might not be an externality at all
for your neighbor; he just might not care (and you can't really measure its
effect at the place where you guys live). And it might be a positive
externality for the one or other guy who lived somewhere there or who went
there, because his personal life becomes better due to the influx of money
and infrastructure and, yes, even sometimes freedom. It's not as easy as it
may seem from a distance.

Same with vaccination. It has not only positive side effects. One of the
negative side effects is that it increases the stronghold of drug companies
on medicine, which in turn decreases the overall chance of getting a
non-commercial-drug treatment. A large part of what MDs know these days is
determined by drug companies' priorities. And an overall healthy population
is /not/ one of their priorities, that's for sure -- their economic model
implies that it isn't. Another side effect may be the creation of stronger
and more resistant strains, which in turn increases the dependency on
vaccines -- of course a side effect in alignment with the vaccine-producing
companies' priorities, but not necessarily in alignment with my
preferences.

You may disagree with my angle, or with anybody else's angle, but that
doesn't mean it's not there. Whether you see something as positive or
negative is a /judgment/, not a fact, and as such individually different.
So whether an externality is positive, negative or zero (negligible) is not
a matter of measurable fact, it is a matter of (individual) judgment.


{Quote hidden}

Somebody should create something :)

But I know, that's why I specified this different meaning here. I just
don't know what other word to use to mean "of the American continent" :)

> Trade sanctions would actually be quite effective in preventing
> deforestation (Brazilians can't eat all that meat themselves). Of
> course, I agree that it would be utterly unfair.

This would require that beef export is the driving force behind the
deforestation. I don't think it is, and that's why in turn I don't think
that trade barriers would have much of an effect on it. Do you have any
numbers that indicate that beef production is instrumental in the
deforestation? Or that the major part of Brazilian beef comes from the rain
forest region? Couldn't find (quickly) any relevant numbers. (But then,
this is really not relevant for the free trade question...)

Gerhard

2005\10\29@143915 by Peter

picon face

>>> irrelevant. And if you have an unrestricted flow of goods and ideas, it is
>>> difficult to maintain a police state in its traditional sense, hence
>>> countries that are open to trade are, as a rule, more democratic than the
>>> ones that aren't.
>>
>> Or un-democratic enough to believe to be able to afford allowing
>> 'foreigners' to do things on their territory. Preferrably in specially
>> delimited zones and with special derogations to local legislation (knowing
>> that their own nationals would be dispossesed, tried, deported and maybe
>> shot - not necessarily in that order - if they would do such business
>> themselves, as the 'foreigners' are doing in their alloted 'free trade
>> zones').
>
> Examples, please.

Until a few years ago, the only places where one could open (or rather
co-own with a local state-spawned and owned economical entity) a factory
in China was in a 'special regime zone'. They had to use their own money
(different from the one on the 'outside'). Similar zones exist to this
day in various countries, usually in guise of 'free port zones' and
similar, often near borders. They have special tax regimes which make
local businesses gnash their teeth and can get away with employment
standards similar to the worst third world countries known. It's like a
fat cat county in the middle of a normal country, extempt from all laws.
Of course someone makes money from this and of course there are some
perfectly legitimate businesses operating out of them.

>>> Note that US allows unlimited immigration from countries with a similar
>>> standard of living (for example, Great Britain). Makes sense - since you
>>> have similar living conditions, the Brits won't emigrate in huge numbers
>>> and drive down the wages.
>>
>> I think that you are not familiar with the immigration laws of the USA. I
>> am not a US citizen but I seem to know a little more about it than you do.
>
> Would you mind substantiating?

To the best of my knowledge the US does not allow 'unlimited
immigration' from *any* country, not even Canada, and hasn't since the
1940's at least. See here:

http://uscis.gov/graphics/lawsregs/index.htm

If you search a little on the Internet you will find a few juicy
scandals started by the ins which deported or otherwise bothered
legitimate tourists from Europe and elsewhere.

Peter

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