Ha-Joon Chang is an award-winning Cambridge economist whose new book, Bad Samaritans, explodes what its subtitle calls “the myth of free trade.” At a time when Democrats are bashing NAFTA and Republicans are championing a NAFTA-style free trade deal with Colombia, Chang shows how the entire debate over trade has divorced itself from history and economic reality. Phrases like “free… return to article
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Reader Comments (4)Page 1 of 1 pagesThe free trade debates, like a lot of disagreements, rely on certain assumptions and definitions. The problems are often due to the contestants working off differing perceptions of the key factors involved.
In my lifetime I believe the only truly free trade has been that in the black market. My son was in the Soviet Union with his high school class in 1980. In this most governmentally structured economy the currency was ignored by Rusian teens wanting Levis, news magazines and Elvis recordings. An illegal black market economy set the prices along with supply and demand.
It’s a lot like saying the death penalty doesn’t work. If someone holds a gun to your head and says, “ If you do that I’ll kill you.” The effect of imminent death is likely to be quite a lot more effective than if you assume you’ll spend decades on death row — IF you are caught.
I totally agree with Ha-Joon Chang and have written for nearly twenty years about this — to business pubs, congress, unions, CEOs — nobody cares. Too many are making $millions with the charade they are playing.
Posted by whattheheck on Jul 4, 2008 at 1:45 PM This book looks awesome - I like that it has a conversational tone and is really written for anyone to be able to read and understand the message. There’s a film coming out in September about free trade called, “Battle in Seattle” - it’s about the 1999 World Trade Organization protests in Seattle. The movement for the whole thing is really cool - too, and reading this article reminded me of it. There are all kinds of videos and news stories and information on the effects of free trade at www.starbuckers.org and www.whocontrolstheworld.com. This is great stuff!
Posted by internCyndi on Jul 7, 2008 at 1:49 PM This is an explanation of Warren Buffett’s proposal to significantly decrease USA’s trade deficit.. His article, “Squanderville” was published in October, 2003 by Fortune magazine.
If exporters of goods from the USA choose to pay a fee to defray the USA government’s expenses, their goods will be assessed and transferable IMPORT Certificates, (ICs) equal to the assessed value of their goods will be issued to them. If an exporter should decline to pay the fee, their goods leave the USA unassessed and no ICs are issued. The exporter’s motivation is to profit from the sale, trade or use of the certificates.
Importers would be required to surrender ICs for the assessed value of their goods entering the USA. Surrendered cetificates are cancelled.
Unlike a tax or tariff, the fees will not be a net source of government revenue. Their only purpose is to completely fund all the expenses of this proposal. The market driven proposal grants government no discretion of policy; (Assessment of goods is a technical rather than a policy determination). The proposal will increase the aggregate sum of USA’s imports plus exports. Decreasing USA’s trade deficit in this manner will increase both our GDP and median wage in “real” dollar amounts (fully reflecting the U.S. dollar’s purchasing power).Buffett’s proposal is a restriction upon “pure” free trade but the market rather than government driven proposal’s pure free enterprise.
USA would still enjoy cheap, (but not the absolute cheapest) imported goods, increasing real GDP and real wages. I’m aware of no other existing or proposed trade policy that could be superior to what Buffett proposed.
For further information refer to www.USA-Imports.Blogspot.com
Respectfully, Supposn
Posted by supposn on Jul 28, 2008 at 4:24 PM A trade deficit is detrimental to a nation’s economy.
Participating nations benefit from global trade but a trade deficit’s detrimental to their economy. Due to “production leverage” the detrimental amount is greater than that of the deficit.
A nation’s annual trade deficit indicates some foreign production was substituted for potential domestic production. Their gross domestic production; (their GDP) was less than otherwise. The trade deficit’s detriment to the GDP exceeds the amount of the deficit itself and is also detrimental to the median wage.
Producers of any goods or service products generally require the support of other producers; (i.e; designers, pens and pencils, materials, components, the purchase and maintenance of production tools and machinery, trucking to bring these products to the final product’s assembly plant).
Many products benefit from increasing production’s decreased cost per unit, (economy of scale). Mass production often induces increased sales, uses and thus additionally increased production volume.
We often observe “production leverage”; (i.e; Modification of production inducing or compelling resonating changes by other producers which in turn induce additional change of the community’s gross production).
The initial catalytic modification affects both related and almost completely unrelated producers. (e.g; a local factory’s increased production may increase local beauty parlors’ revenue or a decrease can cause reduced street cleaning or public library hours). Modification of the community’s gross production of course also affects local jobs and wage rates.
This same phenomenon occurs when the initial catalytic producers are small but acting in concert. On a national scale it all is greatly dispersed and thus less obvious but no less real.
For over a half century the USA’s continuously increasing annual trade deficit has been such a significant catalyst. Our annual GDPs and median wages have been less than otherwise due to our pursuit of pure unrestricted free trade among nations unable or unwilling to better compensate their labor. Trade deficit’s net economic detriment is greatly under-estimated by those influential within and outside of our government; (because its affect upon the median wage is proportionately more burdensome to lower income families)?Warren Buffett wrote a proposal to significantly decrease USA’s trade deficit.
Refer to www.USA-Imports.Blogspot.com
Respectfully, Supposn
Posted by supposn on Jul 28, 2008 at 4:35 PM Page 1 of 1 pages -
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