Wednesday, April 19, 2006

Free Trade

What are your opinions on free trade? Everyone else seems to have an opinion and ‘credible’ supporting data. It can be misleading and all these ‘stats’ should be taken with a grain of salt, and unfortunately they rarely are.

Free trade is great, it leads to lower prices and ‘allows’ more efficient production which ‘puts’ more money in consumers’ pockets and they have all these stats about how the ‘net social gain’ is positive…increases in GDP, blah blah blah.

The words in quotes are deceiving. ‘Allow’, allow? Does it mean jobs are eliminated and those out of work have the privilege to be more efficient? That’s nonsense.
Lower prices means more money for consumers…this is a tricky sentence, lower prices ultimately are a result of lower, if not eliminated, wages…not lower profits, no body cuts profit to lower prices.
Net social gain…basically means those made better off will benefit by an amount more than those made worse off…it doesn’t consider WHO is made better off and the utility (the usefulness) of one more or fewer dollar.

The US has a $220 billion dollar trade defecit. Why is that bad? Think about it this way, if it takes 10 jobs to produce 100 tvs for export, that’s an extra 10 jobs, and conversely if 100 tvs are imported, that’s 10 jobs lost.

For economic wealth, for there to be winners there has to be losers.

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