Mark Pettitt commented on Tariffs Are Working, to the Consternation of the Economics Profession 2020-01-09 17:47:29 -0500Discussions about whether a particular trade policy “works” are very often confused by the lack of agreement on the GOAL. What does more production get you if the production per person declines? Answer: poverty. In a democratic republic, what does greater production per person get you if the median income remains flat? Answer: socialism. While Mr. Boros is more driven by economics than politics, he correctly observes that one can never be independent of the other in the real world. The driving political challenge of our time is how Americans will deal with the pressures of the world’s poor billions on the great American middle class.
Jeff, your facts and rational arguments are a breath of fresh air. Of course, the import lobby still denies that a large and persistent trade deficit is harmful for America.
Persistent trade deficits yield:
• Ownership of American assets to foreigners and hence political influence to foreigners. Foreigners own 30 million acres of farm land, 35% of the S&P500, 37% of corporate debt, 41% of Federal public debt. Debt is a claim on future production.
• Reduced rate of US productivity increase due to use of cheap foreign labor rather than investment in domestic machines for American workers to use.
• Reduced rate of US labor wage increases due to competition with cheap foreign labor. This causes US workers to lose faith in free enterprise and turn to socialism.
• Reduced rate of per-capita GDP growth and hence reduced rate of increase in Federal, State, and local tax receipts.
Mark Pettitt commented on CPA Briefing Paper: Why Economic Forecasts of the Effects of Trade Action Are Consistently Wrong 2019-06-06 12:44:50 -0400President Obama celebrated “jobs saved” by his policies. Pseudo data for propaganda. I appreciate CPA’s efforts to highlight the weaknesses of past economic modeling. I agree with Dr. Ferry, actual forecasts that are proven correct are the only way to build model credibility sufficient to influence opinions of the open minded. Of course, nothing will sway the thinking of those seeking global minimum labor costs.
“Free and fair” are vague concepts that cannot be used to shape policy for trade between nations. Political and economic conditions are too different for such value laden terms to drive policy. Let’s demand “reciprocal”, not in the sense of some economic conditions, but results. Unilaterally adjust US dollar exchange rates until we are trading goods for goods. All else will fall into place as the world realizes America is not for sale.
Give a man a hoe and he may scrape out a subsistence living, but give him a harvester and he can create enough to live in comfort. The world is tool poor and flush with labor. Multitudes still harvest wheat with a knife for lack of better tools. It is beyond naïve to believe that America, with almost 20% of the world GDP, can prosper as a whole by exporting to the poor world. The world needs and will demand their own machines. Rather, American workers will get richer over time by creating more per hour worked in an environment where businesses must compete for their labor. Free enterprise works best when there is a persistent labor shortage where wages increase along with productivity in the competition for workers. Rising labor costs naturally drive increased investments in automation making us all richer over the long run. The excessive use of cheaper foreign labor short circuits this process of industrialization which created the greatest middle class in on earth.
Mark Pettitt donated 2018-12-04 16:11:33 -0500
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Mark Pettitt commented on Free-Trade Economists Begin To See the Light on Trade and Globalization 2018-05-10 10:43:10 -0400Respectfully, notice how the previous commenter felt obliged to embrace the term “free trade”. This is testament to the success of the import lobby in shaping thought. Others try to “justify” protection of American productive capacity by using the term “fair trade”. The import lobby happily uses “fair trade” mantra then engages in endless litigation with little change. CPA has started using the term STRATEGIC TRADE. This term abandons the implied unobtainable, undefinable goal of fair and equitable global economic homogenization—-which in fact would harm most Americans. This rebranding is, I think, important in helping turn the tide against the import lobby who brandish the “products will cost more” club to good effect with short-sighted interests. It helps refocus public attention on our primary obligation to promote the general welfare of Americans.