GLOBALIZATION & FREE TRADE & COMPARATIVE ADVANTAGE MISUSE

[unlawflcombatnt]

FREE TRADE, GLOBALIZATION, & COMPARATIVE ADVANTAGE

It appears many economists have used the "comparative advantage" doctrine to justify free trade. Many simplified economic texts give a very simple explanation of the theory. Unfortunately, they omit one of the essential requirements -- that capital and resources can NOT be internationally mobile. I will delve into this in more detail below.

Free trade advocates are like a religious cult. Their advocacy is based on pre-conceived theory with little regard for actual reality. They just keep chanting "free trade is good. Free trade is good. Free trade is good." Some economic theories are based on a carefully selected set of facts and concepts, while completely ignoring others. In addition, the application of some of these theories does not work in reality. This also seems to be ignored. The benefits of unrestricted free trade, along with unrestricted free flow of capital, is one such phantom belief.

The argument frequently used is that of "comparative advantage." Modern economists often ignore one important aspect of this theory. It requires that CAPITAL AND LABOR CANNOT BE INTERNATIONALLY MOBILE.

Let me repeat this. In order for the "Comparative Advantage" theory to work, CAPITAL AND LABOR CANNOT BE INTERNATIONALLY MOBILE.

Here is the quote from Paul Craig Roberts article regarding David Ricardo's original Comparative Advantage theory:

"For comparative advantage to reign, two conditions are necessary:..."

"The other necessary condition is that capital and labor (factors of production) cannot be internationally mobile..."

The following is the link to the article:
http://www.mises.org/fullstory.aspx?control=1420&id=64

(note: I am NOT an advocate of the "mises" site. I disagree with much, if not most of what they say. I simply found this article by Paul Craig Roberts at the site. But I AM an advocate of Paul Craig Roberts, however.)

It truly is amazing that economists constantly regurgitate the free trade mantra, and attempt to support it by misapplying the "comparative advantage" theory.

A big problem with some economists is that they "miss the forest for the trees." They often develop complicated mathematical equations to explain theories that don't make any sense. It's almost as if they try to prove mathematically that the sky is red, instead of blue. Then they ignore the fact that most non-economists agree that the sky is actually blue.

I'm going to take a stab at disproving the benefits of unrestricted "free" trade, using a simple equation -- the GDP equation. I think economists will agree that it goes as folloows:
GDP=Consumption+Invstmt+GovSpending+TradeBalance

If applied globally, "trade balance" should be zero (unless Martians are buying some of our goods.) Therefore, this should be the "global" GDP equation:

GlobalGDP=GlobalConsumption.+GlobaInvestmnt+GlobalGovtSpending

Economists state that consumer spending, or consumption, is 2/3 of all economic activity. Thus, global consumption is 2/3 of all global economic activity. It's the generally accepted consensus that consumer income is the biggest determinant of consumer spending. Logically, it is essentially the only long-term determinant of consumption. (Consumption financed by borrowing cannot last indefinitely) Thus, global income is the biggest determinant of global GDP. If the aggregate loss of American wages is not compensated for by aggregate foreign wage increase, global income goes down. So does global GDP.

How does global income decrease affect the remaining factors? Let's start with global investment. Global investment will not make any real contribution to GDP if global consumer spending declines. Increased investment is supposed to increase production. If global income falls, so does global demand for production. If global demand falls, there is NO benefit to increased investment. There is no need to build more production facilities or provide more services, if there is no demand for them. Excess "investment" would simply go into corporate coffers, in the form of CEO salaries, stock holder dividends, "cash-on-hand" and bank accounts. In actual reality, as opposed to economists' "pseudo-reality," this investment would add absolutely 0 to global GDP in the long-term. (It's mis-allocated money that would have contributed to global GDP, if it had it gone toward global consumer spending.)

How about government spending? Government spending is financed exclusively from taxes. Taxes subtract directly from private wealth. Thus, government spending reduces private wealth, dollar-per-dollar. However, the "marginal propensity to consume" concept needs to be considered here. ( Which basically states that the more affluent devote a smaller percentage of their wealth towards consumption. The more affluent they are, the smaller the percentage.) Taxes on lower income individuals reduce consumption more than those on higher income individuals. Taxes directed mainly at consumers, such as sales tax, reduce consumption spending dollar-for-dollar. In contrast, taxes on corporations primarily reduce investment spending. Thus, the type of taxation affects how much it subtracts from consumer spending. But it is clear that government spending subtracts significantly from consumer spending. In addition, reduced consumer income reduces the money availabe for taxation. Government spending cannot make up for consumer spending reduction. Not only does it depend on consumer income, it subtracts from consumer spending.

In summary, the global GDP equation is almost overwhelmingly dependent on global consumer income. Labor cost reductions reduce global income, and global GDP. When $90/day workers are replaced with $2/day workers, global consumer income drops. Global consumer spending then drops as well, further reducing global demand for goods and services. The increased profits made from the labor cost reduction do NOT help the world economy. The increased investment capital that results has NO benefit when global consumption drops. It merely provides a short-term gain in profits, at the expense of a long-term loss in global GDP. Unfortunately, many economists DO have a blindspot to this simple mathematical reality.

unlawflcombatnt

EconomicPopulistCommentary

http://www.unlawflcombatnt.blogspot.com/

[goodhue]

1. great post

I agree wholeheartedly with your critique and analysis.

[unlawflcombatnt]

2. Free Trade

Thanks for your comments. I hope you get a chance to read the link by Paul Craig Roberts. It is simply amazing that we never here this caveat about Ricardo's "comparative advantage" doctrine. Also, if you oppose free trade, you'll love the writings of Paul Craig Roberts. He posts extensively at "EconomyInCrisis" at http://www.economyincrisis.com/


unlawflcombatnt

[goodhue]

3. Thanks for the recommendation.

I've heard of Roberts but guess I thought he was a right-winger. Wasn't he a big fan of Reagan?

One economist who has made a big impression on me and my thinking is Herman Daly, particularly his discussion of steady-state economics. See, e.g., http://dieoff.org/page88.htm

He is also well known for his speech upon departing the World Bank.
http://www.whirledbank.org/ourwords/daly.html

[unlawflcombatnt]

23. Paul Craig Roberts

You're right about Roberts. He was a Reagan appointee, and a supply-side advocate. However, he has become one of the most outspoken opponents of free trade. He is definitely not a Bush fan. In fact, everything I've read from him I agreed with. I think he is a definite ally, in spite of his previous association with Reagan. He has definitely become a champion of the American worker. He's definitely an Economic Patriot
:patriot:

[PsycheCC]

4. Comparative Advantage

This isn't something I understand well, but I believe you make a good case for why Comparative Advantage doesn't apply to current free trade policy. Is there any way to simplify your explanation a little for the laypeople in the crowd?

Very interesting reading!

[idlisambar]

5. on Comparative advantage

Here is a good introduction to the concept...

http://internationalecon.com/v1.0/ch40/40c000.html

unlawflcombatnt has pointed out one argument challenging the relevence of the comparative advantage model of trade, he may want to elaborate, but there are many other problems in the model:

One, the model assumes that that labor and capital can be instantly and costlessly transferred from one industry to another, if this is not the case then the usual conclusion of the model (free trade is good) do not necessarily follow...

http://www.debunking-economics.com/Talks/free_trade.PPT

Second, there is the argument with respect to time preference of consumption....

http://www.economyincrisis.com/modules/news/article.php?storyid=51

Generalizing from the argument above, the comparative advantage model does not accomodate monopoly seeking behaviour on the part of nations or a nation's corporations. This is a critical oversight as it is so common. A monopoly once gained, depending on the industry, may not easily be dislodged. So for example if a product is dumped in order to put the other guy out of business, the dumping country loses in the short run because it is selling the product at a loss, but if the opponent loses market share and is severely weakened or put out of business, whatever short run losses the dumping country accumulates can be made up by the dumping country in the long run when it uses its now dominant market position to markup the price.

Finally, there is the historical record to round out the picure (this is a must read)...

http://www.fpif.org/papers/03trade/index.html

[unlawflcombatnt]

6. Comparative Advantage

Thanks for that addition. I think there are a lot of reasons why "Comparative Advantage" does not apply to current trade policies. At one point, I had made a list of reasons it didn't apply. However, I had not been previously aware that Ricardo's original doctrine required INTERNATIONAL IMMOBILITY OF PRODUCTION FACTORS in order to be valid. It is worth noting how much Ricardo stressed this point. Even though such mobility was not possible in his day, he had the forsight to realize it would invalidate the theory if put into practice.

unlawflcombatnt

[PsycheCC]

7. Comparative Advantage

Thanks very much for this further information. I appreciate the links and will read through them.

[sweetheart]

21. monopoly seeking

That fits the behaviour of the indian software labour dumping effort
in the US. As this weakens US markets, the prices go up as the monopoly
position is strengthened.... insightful.

[PsycheCC]

24. Which is EXACTLY why we Need to PROTECT Ourselves!

What's wrong with protecting ourselves from lower quality goods and services? You can't find a computer not made in China, and you can't get computer tech support unless you speak a foreign language.

So...our ECONOMY, WORKERS, and CONSUMERS all suffer because protectionism seems to equal discrimination in the minds of many. Yet "free trade" helps foreign workers VERY little if at all and greatly hurts American income and, by extension, global income. In the long run, even the corporations who are pitting workers against each other will lose the market for their goods. Why? Because they were so busy racking-up profits to pump up their stock prices that they didn't pay labor enough to buy anything!

How can the Bush Admin. and Congress care so little for their own people? I know it all comes down to money and power, but I've NEVER felt so systematically deceived by my own government as I do now. When it doesn't make me mad, it makes me so sad.

[sweetheart]

26. Bush's government is only for corporations

There is no deception really. The government is for profits above ALL
things.. period. It is the religion of america today.

[PsycheCC]

27. Tell Poor Southerners There's No Deception

Sweetheart is right, of course. Anyone looking can see that profit is "the religion of America today."

Yet, poor, religious Southerners voted overwhelmingly republican in the last election (IF you believe the voting machine tallies, which is a VERY BIG IF). Clearly, these Southern voters believe the lie that Republicans care about their religious views and want to protect them from "immorality." They ARE DECEIVED into voting against their own interests, into voting for politicians in bed with big business who could not care less about their economic plight OR their religious views. These Southerners don't know PROFIT, NOT CHRISTIANITY is today's dominant religion.

[sweetheart]

28. its not really the south

Its california and so many "blue" states are huge swathes of red-voters
that the country is purple, and the red/blue thing a convenient myth.
Rather the theocracy of profit has been sold beyond red and blue that
the popular consensus is profit rules over democracy.

It really is right that business should make a profit in the end, but
as there is no insulation from the business cycle, there is a tendency
to maximize profits at the cost of all else. As well, there is a
tendency towards maximizing profits over the better good of the
society at large by pushing undesirable effects external to the
model. In this way, an industrial factory can pollute a river and
not pay for the damage.... and nuclear power can be proposed without
consideration for 1000 generations of managing the waste and the
real cost of all that.... and so many what amounts to ponzi schemes
where the real costs are passed out to the public in subtle ways
that are hidden by corporate media complicit in the while charade.

It increasingly appears that "the enemy" is the free-trade capitalists
who have no ethical basis besides that profit, no borders are allegiance
except a profit... and these poisonous mushrooms are growing in the
dark closet of ignorance the planet over.

[PsycheCC]

32. Agreed Sweetheart

You said,
"It increasingly appears that 'the enemy' is the free-trade capitalists who have no ethical basis besides that profit, no borders are allegiance except a profit... and these poisonous mushrooms are growing in the dark closet of ignorance the planet over."

Of course you are right, and I love your metaphor. My point is just that the South is a good example of the deception of voters. Of course, we are a "purple" nation, but in the South people voted in large blocks AGAINST THEIR OWN INTERESTS because their politicians have convinced them that the issues are abortion and gay rights, NOT profit.

Certainly, people have every right to vote as they please, based on the issues that matter to them. The problem in the Republican party right now is that the party is, as you said, making profit the "religion of America" while at the same time deceiving their voters into believing they care about their problems. In fact they are just using them for their own ends. Bill Frist, the good Christian Senator from Tennessee, comes to mind. Do you think the constituents who voted for him have any idea how much he has increased corporate wealth and decreased middle class income through his position of leadership? What appeals to many of them is his push to pack the courts with conservatives, etc. In my opinion, they are deceived.

[unlawflcombatnt]

30. Free Trade References

Idlisambar,

Thanks again for the references you provided. The last one was particularly interesting. Part of the message was that even though many countries, such as the US, are espousing the unrestricted free trade dogma, they have used PROTECTIONIST policies with great success in the past. The author clearly lays out that the alleged benefits of free trade policies are in conflict with the data.

I would add that many of the advocates of free trade have published papers and books using conditions that do NOT apply today. For example, in Paul Krugman's "Peddling Prosperity," written in 1994, he makes the statement that "workers in the 'typical' U.S. trading partner are paid almost 90% of the U.S. wage rate." This is simply NOT the case today. But statements like this still cloud current economic thinking. Foreign workers are no longer paid anywhere near 90% of American wages.

As I stated earlier, many are paid as little as 2% of today's U.S. wages. And this kind of change makes all the difference in the world. It makes it impossible for American workers to compete in terms of labor cost (wages) per dollar of production. There are no convoluted trade theories that can circumvent this problem. American wages will be driven downward until they can no longer purchase American goods. This isn't high-echelon trade theory. It's just common sense.

unlawflcombatnt

______________________
Capitalism cannot function without consumer income. The benefits of capital investment are limited by consumers' ability to buy the products of capital investment. There must be balance between the "means of consumption" and the "means of production."

[idlisambar]

34. Thanks

I know you from http://www.economyincrisis.com. Good of you to come provide your arguments over here. More conversation on trade and economic issues is always welcome and much needed. :)

[newyawker99]

11. Hi PsycheCC!!

Welcome to DU!! :toast:

[PsycheCC]

14. Welcome to DU!! :toast

Thanks for the warm welcome Newyawker99!:hi:

[libodem]

8. They don't seem to care as long as there is a little growth

they don't care that the growth comes from corporations who are looting the globe. They don't care that the middle class is stagnated. No raise in the minimum wage, for how long, jobs that are going over seas, lots of lay offs and plant closings. Those people have no money to spend and no taxes to pay. And the jobs that are going over seas are going to emerging nations even more primitive than the 3rd world countries...so that some fat cat can use slave labor. It's the buying and selling of humanity on one end and the obscene profit gouging on the corporate end. They've just found a way to exploit a cheap labor market...and make so much money that it pumps the whole 3% growth rate in the economy up enough that it doesn't appear that the middle class is floundering. And look and the dollar dropping. end of rant.....

[unlawflcombatnt]

12. Welcome

Psychecc,

Welcome to Democratic Underground. We all hope you'll like the site. Thank you for responding to my post.

unlawflcombatnt

[PsycheCC]

15. "Welcome"

Thanks for the welcome Unlawflcombatnt. I appreciate the insight I'm getting from you and others here.

PsycheCC

[Kmarx]

9. The idea of free trade is a cover.

What economists and corporate Capitalists call free trade is nothing more than a feeding frenzy on cheap foreign labor. Many academicians support the idea of free trade because they teach at universities which are heavily endowed by alumni who are now captains of industries. These same alumni would consider it 'unfortunate' if their former alma maters (who need endowments) were unfriendly toward this latest stage of Capitalism decadence which makes a few people far richer at the expense of multitudes both here and on the global scale.

Do not be swayed by the term 'free trade'. It's like the term 'free enterprise' which is anything but a 'free' system and I don't mean because of government interference. No economic system is 'free' when corporations spend millions every year to lobby (buy) the crooks in Washington in exchange for the passage of laws which help ensure that they, the corporations, stifle any and all competition here and are allowed to do what they want when they want not only on a national scale but on a global scale as well. The bells and whistles of theories, equations and so called studies can never change that fact.

[unlawflcombatnt]

10. Free Trade

Kmarx,

You're absolutely right. If this trend continues, capitalism WILL destroy itself. If capitalism is to continue, its excesses need to be curtailed. And soon.

unlawflcombatnt
EconomicPopulistCommentary
http://www.unlawflcombatnt.blogspot.com/
________________________________
Investment does NOT create jobs. It only "allows" for their creation. Only DEMAND for goods creates jobs, because it requires workers to produce goods. Investment may "permit" job growth, but only DEMAND necessitates it.

[bvar22]

13. Good Post.

CAFTA is now out of committee. I am working on an essay which I will be posting in GDPolitics this week:

NAFTA, CAFTA, and the DLC

I agree with you that "FREE TRADE" has become a mantra, and many use it to END any discussion. I believe that this is a cleverly crafted "meme" that has been successfully marketed by the Corporatists using our CorpoMedia propaganda network. Even John Kerry used it to end a discussion in the Primary Debates when asked about outsourcing.

Many proponents argue that FREE TRADE is INEVITABLE. Globalization and the InterNet cannot be stopped!
This is completely BOGUS. Globalization is NOT some NEW THING that is a product of the InterNet. Globalization started when the first primitive man/woman gathered up the stone tools he/she had crafted, journeyed to the next cave, and traded them for some food. Globalization has been happening for thousands of Years and has NOTHING to do with the InterNet. The InterNet makes it possible to access information; it does NOT make it any easier or inevitable to trade goods and services. It does not even make it easier to transfer capital. Wire Transfers have been around for longer than 1/2 century.


The stated GOAL of the FREE TRADERS is to "Remove the Barriers to Trade!" What they fail to mention is that those "Barriers to Trade" were in EVERY case put there for a reason, and that reason is ALWAYS to protect something worthwhile. What the FREE TRADERS really want to do is remove ANY obstacle limiting the ability of their Corporation to increase PROFITS for the owners by any means possible.

The FREE TRADERS are always quick to brand someone a "PROTECTIONIST" if they dare to question the sacred IDOL of Free Trade. Some things are WORTH protecting. PROTECTIONISM is NOT necessarily a bad thing especially when protecting one's family, protecting the ability to earn a decent living for LARGE segments of a nations Workers, protecting the Environment, protecting the cultural assets of a civilization, or protecting a nations natural resources from predatory Corporations!!!

In those respects, I AM A PROUD PROTECTIONIST, and it is time to debunk the myths, broken promises, and outright LIES being marketed by the "FREE TRADE for EVERYONE" salesmen!

[unlawflcombatnt]

16. PROTECTIONIST = ECONOMIC PATRIOT

I agree with you completely. I am happy to be called a "protectionist." The purpose of the American government is to "protect" us. It's not just to protect the interests of Corporate America. It's to protect ALL Americans. If we didn't need "protection" we wouldn't need a government. The government's sworn duty is to protect Americans, be it from military threats, domestic threats, or economic threats. Protecting American workers from competition with foreign slave labor IS one of those protective roles. It's amazing how Corporate America espouses patriotism, unitl it works against their bottom lines. Then they suddently become "concerned" about the poor in other countries, and by sending American jobs overseas, they are "helping those less fortunate." That's not what they're doing. They're adding American workers to the rolls of "those less fortunate." Meanwhile Corporate America rakes in record profits by helping "those less fortunate." In reality, the foreign slave laborers continue to be "those less fortunate." But corporate America becomes "more fortunate."

I think we need to develop a new brand of patriotism. We need to become "Economic Patriots." To me, the word "protectionist" means "economic patriot."

Protectionist = Economic Patriot :patriot:

[hansberrym]

17. These days Protectionist = Patriot. There is no need for qualification.

While America celebrates our independence two weeks from now, there will be a few who work to steal away that very independence in the form of "trade agreements". The Fourth is an excellent occasion for informing everyone one meets on the street about the plans the globalists have for integrating the US with Mexico and Canada.

If the corporate power gets its way, the Declaration will be replaced with "integration" -which is just another word for a complete corporate takeover of our free country.

"Protectionist" is likely the nicest label that one who oppose CAFTA will be subjected to. The corporate power does not play nice, and the opposition is being labeled as "racist" or "xenophobic" simply because they do not favor the dissolution of our Constitution and the protections it affords the citizens of the US.

[bvar22]

18. Absolutely!

And a kick for the late nighters.

This IS the MOST IMPORTANT issue of our times.
This ONE issue will determine the quality of life for 98% of working Americans for the next 50 years!

[sadiesworld]

19. .

:kick:

[sadiesworld]

20. I hope people are reading your excellent posts.

C'mon folks, this stuff is far more important than the latest "Will (insert name here) be the dem nominee in 2008?".

Even if you don't have a substantive comment you can always give it a big :kick:

[unlawflcombatnt]

22. Thanks for the support

I agree completely. The economic message the Democratic Party embraces seems far more important than who our candidate will be 4 years from now. In addition, the economic message may well determine who the best candidate is. We certainly don't want an unmitigated "free-trader." We want to start sending the message to the party leadership that we don't want all of our jobs outsourced, and we don't want American workers to be forced to compete with $2/day foreign slave labor.

Since the elections ARE quite aways off, we need to frame the issues and craft our message. We need policies that clearly favor the working man, vs. the multinational corporations. Now is the time to focus on that message.

Regarding "free trade", we need to expose it for what it is--an attempt by Corporate America to substitute foreign slave-labor for American labor. It's really that simple. We need to become Economic Patriots.:patriot:

unlawflcombatnt

EconomicPopulistCommentary
http://www.unlawflcombatnt.blogspot.com/
_________________________
As Corporate America reduces labor costs, it reduces America's ability to purchase its own production.

[unlawflcombatnt]

25. Economy in Crisis

I just wanted to encourage everyone to check out the site "Economy In Crisis." The address is http://www.economyincrisis.com/
The site has some excellent articles about why free trade is bad, and they give a lot of statistics. It's a little tricky to navigate, but well worth the trouble.

unlawflcombatnt

[PsycheCC]

36. Thanks for the Tip!

I did a little browsing. Looks like a lot of good info. Well-written articles!

[unlawflcombatnt]

37. EconomyInCrisis

I hope everyone will take a look at the site. It can be somewhat difficult to navigate, especially if you are trying to post. But it is the best site to read if you want to understand why our "free" trade policies are hurting us.

unlawflcombatnt

[Elwood P Dowd]

29. Kick

I don't understand why important threads like this one receive so few responses. It appears that many Dems are just as ignorant about the subject as the working class voters who helped put Bushit in office. Trillions of dollars are being transferred from the middle class and working poor to those at the top. A few more years of this, and you won't have to worry about what some repuke called Hillary. You will drag home from your 12-hour-a-day minimum wage job and worry about paying the heating bill.

[FogerRox]

31. GLobalism was tried by the Dutch in the 1500s

NYC waas a Dutch colony--
BAck then it was called trans national economic alliances.
THe Dutch had a strong middle class
they outsourced jobs and the Dutch empire fell

The SPanish tried it
THen the Portugese
ANd the French
ANd the Brits
And now the ole USA

400+ years and it hasnt worked yet.

[unlawflcombatnt]

40. Excellent Points

Those are great historical points. Again, David Ricardo's "comparative advantage" doctrine was invalidated by international mobility of production factors. It seems like it would have been more difficult then. With the ease with which that can be done today, it makes comparative advantage even more invalid today. Ricardo's doctrine never included international translocation of production facilities to countries with cheaper labor. This was clearly excluded.

unlawflcombatnt

EconomicPopulistCommentary

http://www.unlawflcombatnt.blogspot.com/

______________________
Capitalism cannot function without consumer income. The benefits of capital investment are limited by consumers' ability to buy the products of capital investment.

There must be balance between the "means of consumption" and the "means of production."

[unlawflcombatnt]

33. Thanks again

Elwood,

Thanks again for the kick. We're just going to have to keep bringing this subject to the forefront. People need to realize that Corporate America is very well represented in Congress, while the working man is poorly represented. It's no longer one-person, one-vote. It's one-dollar, one-vote. We have the best government money can buy.

[PsycheCC]

35. Right on Mr. Dowd!

It DOES seem tough to get people interested in economic issues. Obviously they know they're affected by the economy, but they just don't want to "wade through" the details. Those details, however, WILL eventually leave them, just as you say, having to "drag home from their 12-hour-a-day minimum wage jobs and worry about paying the heating bill."

I think Unlawfl's posts are really accessible to those of us without an economics background. That's why I look for his threads. I like what he said in this thread about things coming down to "one dollar-one vote," not "one person-one vote."

Until average Americans take an interest in the economy to the point of VOTING on it and contacting Congress on it (as I do), the rich will buy legislation that hurts the rest of us.

[PsycheCC]

38. On a Related Note, Greenspan, Snow, Baucus, and China...

The Senate Finance Committee had a hearing this week on trade with China. Alan Greenspan and Secretary Snow testified about the importance of government funding of "retraining" for workers "displaced" (nice word for axed) or "on the wrong side of the adjustment" (vague words from Grenspan for axed) by "free trade."

Senator Baucus from Montana, spoke at the hearing and again Friday on the Senate floor about the importance of changing education to create more globally competitive workers. While I generally like Baucus' views and agree (as a former high school English teacher) that education could use some major reform, I don't see how "retraining" and changes in education will help us compete against slave labor.

Unlawful talks about the importance of maintaining consumer spending in order to drive economic growth. That means maintaining consumer income, which means staunching the flow of outsourcing to places like China. So finally, my point is this: How can education (or re-education) possibly do enough to make an American worker who makes about $90/day, competitive with a worker elsewhere who makes about $2/day? Will there ever be enough cutting edge, high-tech, science, and engineering jobs to replace the income from all the other jobs going overseas in our "free trade" deals?

So...as always, I keep coming back to the same view. While "free-trade" sounds nice and fair, it really ends up hurting EVERYONE except the big corporations (and even them in the long run if I understand Unlawful correctly).

I just don't see how some changes in education can fix all the problems created by "free trade," especially when practiced with countries like China who don't play fair. YET, I don't hear ANY other solutions coming from "experts" like Greenspan and Snow. So, I guess I'm going to have to admit to myself that I'm a PROTECTIONIST! There, I've said it. That wasn't so bad... :patriot:

[unlawflcombatnt]

39. Protectionist = Economic Patriot

PsyceCC,

Welcome to the "Protectionist" club. We also call ourselves ECONOMIC PATRIOTS.
":patriot:

Thanks for you input about the limited effect of increased education on outsourcing. What good is it going to do to have a B.S, or a Ph.D., if your rival foreign worker will work for $5,000/year. How is increased training going to help us compete with that? Should we be training our work force to live off the land, so they can survive on $5,000/year? Maybe we should be "re-training" our workers to survive by living in tents and eating nuts & berries. These are the REAL skills our workers lack. And they'll become essential when American wages have dropped to the level of those in China and Central America. Once again, our educators have failed to each us the necessary skills.:sarcasm:

unlawflcombatnt

EconomicPopulistCommentary

http://www.unlawflcombatnt.blogspot.com/

______________________
Capitalism cannot function without consumer income. The benefits of capital investment are limited by consumers' ability to buy the products of capital investment.

There must be balance between the "means of consumption" and the "means of production."

[cloudythescribbler]

41. THIS IS REALLY AN EXCELLENT POST -- I've been forwarding it

[unlawflcombatnt]

42. Thanks

Thanks for the support. I greatly appreciate you sharing what I have posted here. :) The more people that understand how bad our current "free" trade policies are, the better.


I'm going to eventually post again on this subject. More specifically, I'm going to explain why outsourcing is simply a way to transfer wealth from American labor to Corporate America. Corporate America is simply eliminating American labor costs, and increasing their share of the profits as a result.

unlawflcombatnt

EconomicPopulistCommentary

http://www.unlawflcombatnt.blogspot.com/

______________________
Capitalism cannot function without consumer income. The benefits of capital investment are limited by consumers' ability to buy the products of capital investment.

There must be balance between the "means of consumption" and the "means of production.":)