Free Trade: Fight It, or Embrace It

Should the United States fight global free trade, or embrace it?

In my opinion, fighting free trade is an exercise in futility. This is a quick and dirty run-down of my take on the issue, but take it for what it's worth.

If the workers in say Indonesia are willing to produce a widget for $1 and the workers in the U.S. are willing to produce the widget for $30, guess where the companies are going to set up their widget manufacturing facilities? If the U.S. government tries to persuade companies to manufacture the widgets in the United States through a variety of tax incentives etc., guess who is footing the bill for those tax incentives? The U.S. taxpayers, who will be subsidizing the production of goods that will be sold back to those taxpayers at less than ideal prices.

Moreover, the U.S. government can't stop foreign companies from manufacturing the widgets and exporting them to the U.S., unless they plan to erect various trade barriers. Guess who is hurt by trade barriers? The average consumer, who has to pay more for goods because there is less competition and/or there are more costs to companies exporting goods to the U.S. Trade barriers such as tariffs sound good when used against foreign companies, but they work both ways and hurt consumers by reducing product options and increasing prices to consumers.

I understand that some people have legitimate problems with U.S. companies going abroad and exploiting workers. First, however, let me say what is not "exploitation." It is not per se exploitation to employ people to engage in somewhat unsafe labor for $1 per hour. Everything, including cash money, is relative. $1 is a small coffee at McDonalds to us, but can feed a large family for a day in many places. Second, if a job doesn't pay well and is unsafe in the view of a foreign laborer, that foreign laborer can take that into account and either not take the job or quit. The fact is that jobs with U.S. companies abroad are usually highly coveted. It's easy to say "those foreign workers shouldn't take those unsafe and low paying jobs with U.S. companies" when you live in Santa Barbara and not so easy when you live in a poor, rural province in China.

Should the United States fight global free trade, or embrace it?

In my opinion, fighting free trade is an exercise in futility. This is a quick and dirty run-down of my take on the issue, but take it for what it's worth.

If the workers in say Indonesia are willing to produce a widget for $1 and the workers in the U.S. are willing to produce the widget for $30, guess where the companies are going to set up their widget manufacturing facilities? If the U.S. government tries to persuade companies to manufacture the widgets in the United States through a variety of tax incentives etc., guess who is footing the bill for those tax incentives? The U.S. taxpayers, who will be subsidizing the production of goods that will be sold back to those taxpayers at less than ideal prices.

Moreover, the U.S. government can't stop foreign companies from manufacturing the widgets and exporting them to the U.S., unless they plan to erect various trade barriers. Guess who is hurt by trade barriers? The average consumer, who has to pay more for goods because there is less competition and/or there are more costs to companies exporting goods to the U.S. Trade barriers such as tariffs sound good when used against foreign companies, but they work both ways and hurt consumers by reducing product options and increasing prices to consumers.

I understand that some people have legitimate problems with U.S. companies going abroad and exploiting workers. First, however, let me say what is not "exploitation." It is not per se exploitation to employ people to engage in somewhat unsafe labor for $1 per hour. Everything, including cash money, is relative. $1 is a small coffee at McDonalds to us, but can feed a large family for a day in many places. Second, if a job doesn't pay well and is unsafe in the view of a foreign laborer, that foreign laborer can take that into account and either not take the job or quit. The fact is that jobs with U.S. companies abroad are usually highly coveted. It's easy to say "those foreign workers shouldn't take those unsafe and low paying jobs with U.S. companies" when you live in Santa Barbara and not so easy when you live in a poor, rural province in China.These are pretty much my sentiments exactly. I don't really think it's that big of an issue when we outsource our jobs, because with the capital that is created in doing so, it always seems like a job opportunity of a different sort is going to open back home. It makes sense. Capital and wealth breed innovation from the competition, and more elaborate projects are created that require more home grown workers.

I think one of the biggest economic myths is that the outsourcing of jobs increases unemployment. It doesn't really. It creates more jobs on the global level, and here in the U.S., it's essentially running in place.

I'm a firm believer in trade but there is no such thing as free trade. That said, you can't stop trade, you can't contain it, you can merely delay the inevitability of a competitive world. The rest of the world is catching up and our manufacturing prospect doesn't look good at all. At some point all we'll be able to do is trade in intellectual property and services.

I do have a problem with free trade in the sense that corporations are taking complete advantage of cheap lobar to the extent that they are cutting corners they normally wouldn't be able to in the U.S. It's more of a moral issue for me than anything else. I have no problem with them setting up shop elsewhere if they abide by universally known labor laws. Give people breaks, let them take bio breaks without fear of losing their job. provide some semblance of health service, give them some time off, don't have child labors, don't blackmail their governments, and so on and so on.

saden, you are right on the money. these other countries have NO rules to follow as far as emissions, work safety, and child labor laws. it needs to be established by someone, to keep the playing field level. and gtripp, i respectfully disagree with your statement that outsourcing jobs creates unemployment is a myth. i have seen this first hand in Pennsylvania. Armstrong flooring was a mainstay here in my hometown. it employed over 6500 people. now, that production facility is on the verge of being torn down. fewer then 200 people work there. both of my grandfathers, my wife's grandfathers worked there for over 40 years. these guys earned good enough money to raise their families, and live part of the American dream. i work at Alcoa. when i started, 15 years ago, there were about 1300 employed. now we are under 700. they always talk about how cheap everything we do, can be done in china. Hershey foods shipped 100's of jobs to Mexico. with probably thousands more in the future. our economy isn't able to sustain this drop in employment, with new jobs behind it. the production jobs leaving are all fairly good paying jobs. the jobs replacing those jobs are all 10.00 jobs. going from 50,000.00 a year, or better, to under 40,000.00 a year, or less, is a helluva change in life style

Saden,

I don't know that there are any "universally known labor laws." If you wanted to list all universally accepted labor laws, I'm not sure that you would come up with any list whatsoever. But, I don't believe that corporations should run roughshod over laborers abroad. I just don't know where the line should be drawn.

Dmek,

I believe that outsourcing does create unemployment. However, you shouldn't make decisions solely based on the fact that there is a tragedy of sorts taking place. Decisions about free trade should be made with an eye towards the consequences of those decisions. I don't think we can fight outsourcing effectively; it's simply the result of a new world economy. It's sad, but true IMO.

I don't know that there are any "universally known labor laws." If you wanted to list all universally accepted labor laws, I'm not sure that you would come up with any list whatsoever. But, I don't believe that corporations should run roughshod over laborers abroad. I just don't know where the line should be drawn.

Universally know labor laws are what you, I and every American expect from an employer...Fairness and to be treated with dignity, the ability to take a day off if you are sick, to speak freely without fear of reprisal. I mean, why is it acceptable to have one set of standards for the western world and another for the third world? It's really not about the pay, it's about the other things. Some may say that's not a corporations job but what are corporations but a reflection of us? Of what kind of people we are?

Saden,

I don't know that there are any "universally known labor laws." If you wanted to list all universally accepted labor laws, I'm not sure that you would come up with any list whatsoever. But, I don't believe that corporations should run roughshod over laborers abroad. I just don't know where the line should be drawn.

Dmek,

I believe that outsourcing does create unemployment. However, you shouldn't make decisions solely based on the fact that there is a tragedy of sorts taking place. Decisions about free trade should be made with an eye towards the consequences of those decisions. I don't think we can fight outsourcing effectively; it's simply the result of a new world economy. It's sad, but true IMO.
i agree. but for the united states to be involved, there has to be something that they could gain from it. right now, we are gaining lower prices for just about all goods. is that worth the price of losing production jobs? that will never come back? in my eyes, the risk/ reward doesn't merit the U.S. to be part of the agreement

by the way sheriff, good thread

i agree. but for the united states to be involved, there has to be something that they could gain from it. right now, we are gaining lower prices for just about all goods. is that worth the price of losing production jobs? that will never come back? in my eyes, the risk/ reward doesn't merit the U.S. to be part of the agreement

Keeping those jobs here would result in much, much higher inflation. You'd be singing a different tune when the cost of everything goes up 8-10% every year, while your wages go up no more than 3% per year.

Fighting free trade is the easiest way to drive your economy into the ground. Those in American manufacturing jobs simply must adjust. While that field is contracting, other fields are growing very strongly (ie healthcare). It's not easy for those people to just switch careers, but it's better than driving up prices for all 300 million of us who live here.

Keeping those jobs here would result in much, much higher inflation. You'd be singing a different tune when the cost of everything goes up 8-10% every year, while your wages go up no more than 3% per year.

Fighting free trade is the easiest way to drive your economy into the ground. Those in American manufacturing jobs simply must adjust. While that field is contracting, other fields are growing very strongly (ie healthcare). It's not easy for those people to just switch careers, but it's better than driving up prices for all 300 million of us who live here.
being in production, this has started almost 5 years ago. we hourly are ask to do 2, and sometimes 3 different jobs at once. you talk about switching careers. easier said then done. how is someone my age, with limited schooling, going to accomplish this? i say lets make the playing field even. how can something that's made in china get into the American market with lead paint on it? isn't there any guidelines that must be followed? why do i need to give up my job, to satisfy the Chinese economy. we American workers have proved time and time again, that no one can match our quality. lets bring the other countries up to our standards,. or lower our standards, so that we can compete equally