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August 23, 2003

End of the "Free Trade" era?

Robert Samuelson is pretty gloomy about the world's reliance on American imports (and the concurrent trade deficit) to drive growth-the dollar is weaker and we are starting to export a bit more again (and can only take up a finite amount of debt). I'm not an economist, but I'm seeing a critical mass of stories about the trade deficit and the problems that accrue from over-reliance on the American market. Samuelson seems to be complaining that individual governments are following policies that don't favor the continuance of healthy trade, well, big surprise....

Posted by razib at 12:40 PM




Any comments Godless?

Posted by: Peter Phillips at August 23, 2003 01:24 PM


"I guess I will have to post that debunkment of the Pat Buchanan piece. Ok...it feels like work, though, because Buchanan gets *so many* things wrong."

Youd also have to "debunk" almost all American Presidents up to FDR. Quite a task.

Posted by: Peter Phillips at August 23, 2003 01:49 PM


well-i think free trade works well if transnational orgs like the WTO have teeth to enforce good practices, and right now, we are pretty stable, the world is getting prosperous, etc. but if things get more difficult and we go through a world-wide recession, i doubt WTO will have as much sway, and you'll get a lot of cheating going on as some countries "horde," just like kind of what happened in the depression on the individual level....

Posted by: razib at August 23, 2003 02:55 PM


"They believed in God too :)"

Therefore?

Posted by: Peter Phillips at August 23, 2003 03:06 PM


"Socialism, autarky, and tariff barriers sound much more appealing...except that they don't promote prosperity."

The worst socialists have been from the middle classes (in most nations) and today the worst left-wing nuts come from the upper classes (and occupy important positions in Ivy League schools). Theyre hardly the "average Joe".

Posted by: Peter Phillips at August 23, 2003 03:18 PM


"They believed in God too :)"

Therefore?
Therefore maybe they thought the tooth fairy had an opinion on trade. If you believe in one stupid thing, you might believe lots of stupid things.

About individual counties having policies that don't promote free trade: In addition to concentrated benefits and difuse costs of protectionism, could free trade be a tragedy of the commons, where having tarrifs but being able to sell to tarrif-free markets is in the interest of a player? I'm too dumb and lazy to work it out.

Posted by: rob at August 23, 2003 04:15 PM


"Therefore maybe they thought the tooth fairy had an opinion on trade. If you believe in one stupid thing, you might believe lots of stupid things."

Like the Constitution and Rule of Law for instance.

Posted by: Peter Phillips at August 24, 2003 03:17 AM


"could free trade be a tragedy of the commons" ?

Only if the world economy is a zero-sum game.

As long as most folks play by the rules, everyone's slice of the pie keeps getting bigger and bigger.

Posted by: jim at August 24, 2003 08:17 AM


I'm in favor of free trade but I am a bit concerned about structural imbalances. By that I mean the way labor is less mobile than capital and the fact that moving to new, higher employment sectors of the economy takes time and places burdens on labor that are difficult to carry on top of taxation. Also, cost structures in the US need to adjust downward and I'm not sure businesses want that.
In the long run I'm convinced FT is the way to go but in the short run it could cause a lot of dislocation and resentment.

Of course some would argue we still have managed trade rather than real free trade.

Yet another factor is that the current mania for outsourcing may not prove to be as profitable and easily managed as it's thought to be and these jobs may come back to the US after a few years.

Posted by: John Purdy at August 24, 2003 09:06 AM