Saturday, July 2, 2016

Trump quotes Left-Wing Economic Policy Institute on Free Trade

As explained by Dean Baker here.
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15 comments:

  1. Tiberius GracchusJuly 2, 2016 at 2:54 PM

    Dean Baker is one of my favorite economists and his Beat the Press blog is good for his biting critiques of mainstream economics reporting.

    Trump needs to bang on the trade issue because he likely has to win Rust Belt states such as Ohio and Pennsylvania if he is to win the presidency. These states have been devastated by free trade agreements and outsourcing and the working people there are desperate for a champion. He needs a strong turnout among working-class people (especially white workers) if he wants to win.

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    Replies
    1. AnonymousJuly 3, 2016 at 6:21 AM

      What do you think about Trump's "ideas" on income taxes?

      Delete
    2. Tiberius GracchusJuly 3, 2016 at 8:37 AM

      I am not in favor of Trump's tax cut plans but saying we need to increase taxes in the US is politically difficult especially if you are trying to run as a Republican.

      Delete
    3. Lord KeynesJuly 4, 2016 at 2:01 AM

      Trump's tax cuts are shamelessly skewed in favour of the rich, but from what I have read I think there is at least something for the middle class and poor people too.

      At any rate, if he were to cut taxes, run huge deficits and greatly increase spending on infrastructure that would stimulate the US economy.

      Delete
  2. Lord KeynesJuly 4, 2016 at 1:58 AM

    The libertarian and neoclassical arguments that total unrestricted free trade is only ever a good thing are utter B.S., yes:

    http://socialdemocracy21stcentury.blogspot.com/2011/01/mises-on-ricardian-law-of-association.html

    http://socialdemocracy21stcentury.blogspot.com/2014/06/protectionism-and-us-economic-history.html

    If you want to ensure trade is mutually advantageous, trade needs to be managed.

    At the moment the West needs managed trade and industrial policy, big time.

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  3. Ken BJuly 4, 2016 at 6:05 AM

    All the free traders have on their side is mathematics, logic, and history. You have Bill Mitchell.

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  4. Lord KeynesJuly 4, 2016 at 6:27 AM

    Snide remarks are all very well, Ken B.

    But if you actually have any counterarguments that respond to my
    critique here, then do so.

    Ricardo’s principle of comparative advantage requires two fundamental conditions to work properly:

    (1) Domestic capital or factors of production like capital goods and skilled labour are not internationally mobile, and instead will be re-employed in the sector/sectors in which the country’s comparative advantage lies;

    (2) Workers are fungible, and will be re-trained easily and moved to the new sectors where comparative advantage lies.
    ---------------
    Assumption (1) doesn't hold today and what happens in our world is a race to bottom via absolute advantage. (2) is of course highly questionable.

    Furthermore, there are additional hidden assumptions in the argument for free trade by comparative advantage as follows:

    (1) it does not matter what you produce (e.g., you could produce pottery), as long as you do it in a way that gives you comparative advantage;

    (2) technology is essentially unchanging and uniform; and

    (3) there are no returns to scale.
    ------
    These are all ridiculous assumptions, leaving the argument almost wholly intellectually bankrupt if it is supposed to be describing the world in which we live.

    Have a look at Detroit. That is what free trade leads to. Pretty disgusting I'd say.

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  5. disequilibriumJuly 4, 2016 at 6:31 AM

    history is against them ken b

    you are welcome to check the history of the U.S the history of Germany specially in the 19 centuary the history of taiwan japan south korea even of interventionist singapore the history of china as well as the history of chile as well (from 1982 after the failure of the neoliberal policies).

    so ken which history are you talking about?

    can you give me examples of countries who were really able to prosper under the so called free trade policies without being small countries with big financial sector (hong kong) or countries with huge amount of natural resources?


    and its only the historical side of the equation

    about the logical and mathematical one
    you are welcome to read this interesting articles

    https://en.wikipedia.org/wiki/Thirlwall%27s_Law

    post keynesian explanation why managed trade is required (or clearing monetary union with strict capital controls)

    https://en.wikipedia.org/wiki/Leontief_paradox

    (undermines hecksher-ohlin model which is the neoclassical explanation of why free trade is benefitical).


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  6. KevinJuly 4, 2016 at 2:13 PM

    Found Dean Baker's current blog:

    http://cepr.net/blogs/beat-the-press/nyt-is-badly-confused-president-obama-is-pushing-protectionism-not-selling-globalization-2

    What do you think of what he says about TTIP? I've never heard this take on it before, that it's protectionist!

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    Replies
    1. Lord KeynesJuly 5, 2016 at 2:04 AM

      It's no great mystery, Kevin.

      It's well known that these trade agreements like TTIP are a complex mix of liberalised trade and heavy crony capitalist protectionist measures.

      Yes, sometimes protectionist measures can be bad; sometimes they might be good.

      Sometimes increased trade can be good; sometimes increased liberalised trade can be very bad.

      People like Ken B are like theologians peddling a morality tales:

      free trade = always good
      protectionism = always 100% evil
      -----------
      The real world is much more complicated than this.

      Delete
    2. KevinJuly 5, 2016 at 2:06 AM

      heavy crony capitalist protectionist measures

      Kinda what I thought he meant. Guess my hunch was right. Thanks for clearing that up.

      Delete
  7. KevinJuly 4, 2016 at 5:57 PM

    the free traders have on their side is mathematics, logic, and history

    Well then, I guess they're happy that NAFTA is allowing TransCanada to sue the US Government for not letting them have their pipeline?

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  8. Ken BJuly 4, 2016 at 7:19 PM

    Daniel, I challenge you to defend that comment at Landsburg's blog, thebigquestions.com. He has a recent series on free trade and a sharp bunch of commenters.

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    Replies
    1. KevinJuly 5, 2016 at 1:51 AM

      https://www.amazon.com/Armchair-Economist-Economics-Everyday-Life/product-reviews/1451651732/ref=cm_cr_dp_qt_hist_one?ie=UTF8&filterByStar=one_star&showViewpoints=0

      Delete
    2. Lord KeynesJuly 5, 2016 at 2:10 AM

      Why should he have to defend it there? He asked *you* a question. You appear not to be able to answer.

      If Landsburg's commenters want to answer, let them come here if they want to argue.

      To return to the question: Can you give examples of countries that prospered under unrestricted free trade policies, without being unusual, very small countries with lucrative service sectors (e.g., maybe Hong Kong), or (2) countries with some huge gift of high-value natural resources like energy, e.g., Saudi Arabia?

      Delete

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