Redstate

>>Don't get me wrong I am a BIG free trader, I just believe that unilateral trade disarmament makes about as much sense as unilateral nuclear disarmament.

That is because you continue to see trade as conflict, when it is actually a system of co-operation that benefits both parties. Once you see that it is the _opposite_ of warfare, and not another type of warfare, the analogy with disarmament plainly falls down.

What is it that you think other countries are getting for the goods their citizens send to America? They are just pieces of paper. Money only has a value if you spend it. And dollars, while used as a means of exchange all over the world, can only be redeemed in the US. So every dollar that goes abroad is a future American export. Except, of course, for those that are stored in mattresses as a protection against devaluation of foreign currencies. Those dollars provide you with goods for nothing.

Quentin Langley
Editor of http://www.quentinlangley.net

No, you are the one with blinders on. Ideally trade is only cooperation but if you don't think it can also be aggressive perhaps you need to learn a little about history.

Perhaps the opium wars, Radical reconstruction, and the period between the world wars would be places to start.

I would also like to know if you view one of our largest trade partners China as a friend? Maybe they have only our best interests at heart no?

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

It seems that a little knowledge of history can be a dangerous thing.

Trade didn't cause the opium wars, governments did. Voluntary trade is an exercise in co-operation.

Whether the Chinese government has the interests of the United States at heart is irrelevant. Both China and the United States benefit from mutual trade. Both would be foolish to distupt it.

That's the thing about trade. The guy selling you double glazing doesn't have your interests at heart either, but that doesn't mean it is a bad idea to buy from him.

You are still imagining conflict where there is no need for one.

Quentin Langley
Editor of http://www.quentinlangley.net

First of all, there have been a few compelling arguments as to why its actually smart for small countries to have barriers to trade early in their development. In fact, the US had many barriers for the first 150 years of our history or so. Its not a universally good thing for everyone all the time, but overall most of the time, yes it is a good thing.

Two quick examples (both involving US-Canada lumber relations). Early in the 20th century, Canada had a comparative advantage making paper with respect to the US, but the US had barriers in place on Canadian paper, but the US paper industry bought much of their pulp from Canada, so the Canadians put barriers up on their exports of pulp. Paper thus got really expensive, and eventually the newspaper industry forced the US government to take down their barriers, and now Canada is the largest producer of paper in the world, so sometimes adding more barriers can eventually lead to the removal of others. Trade can indeed be an ugly thing.

Similar story with soft lumber. Canada can sell it cheaper than the US can, so we put barriers up to protect our lumber industry. Sure, if we removed them, we could get lumber cheaper which would reduce costs for industries that use it, such as the construction industry. Overall, it is in the best interest of the US to do this, but it will drastically hurt our lumber industry, so to say that everyone wins is not quite true. On an aggregate level, the US would be better off, but certain industries would definitely be worse off. The "official" economist position is that all those people who lost their jobs in the lumber industry would just move to another sector, but tell that to someone whose entire career has only been within that industry. The "rust belt" and places like Detroit, Flint, etc. have shown that the transition to new sectors is hardly as painless as most economists paint it. For the record, I think we should drop the barriers on soft lumber, but this administration has shown no interest in that.

I also have one question about a comment above concerning when dollars are used to hold foreign reserves:

"Except, of course, for those that are stored in mattresses as a protection against devaluation of foreign currencies. Those dollars provide you with goods for nothing."

are you saying that since they don't buy things with the US dollar, we get nothing in return? or that it cost us nothing because all they got was a piece of paper in a vault whereas we got a real good? If its the latter, remember, that dollar had to be earned through work, so it indeed did cost you something. You got a good in exchange for the labor you did for someone else. As you said, a dollar is only worth what people think its worth, and someone exchanged a lot of their time and energy to get it.

Also, remember, instead of buying a US good with the dollar, they could just exchange it. Arguably, whoever they exchange it with will then just buy something from the US so it doesn't matter, but then again, maybe there are more people are out there selling dollars than buying them, in which case, the dollar will go down in value, causing those foreign goods we buy to be more expensive (and also our goods to be cheaper).

Also, all those countries that hold on to the US dollar for foreign reserve purposes are none to happy with the fact that its declined in value so much over the last few years and every couple weeks you read about another country announcing that its converting some of those dollars to some other currency (like the Euro). The more people do this, the more the dollar could decline, and the more it declines, the more countries that will follow suit. Do you know how many billions various countries lose a year just by holding on to their dollars these days? Everyone wants to dump them, but they know if they do, then it'll start a panic sell off, and the last one getting stuck with the bag of dollars is screwed, so, at least for now, everyone is just playing it cool.

It should be noted that one of the main things we sell is debt. We sell bonds for dollars.

So while the rest of the world is selling us cars and TV's, we're mainly selling them big ol' fat, IOU's.

Right now, China has a truckload of those IOU's.

Of course, if you're a country making billions and billions from selling oil. Who the heck cares about the advantages of trade? And also remember, the US makes up something like 50% of the demand for oil, so we can only blame ourselves for the high prices. Sure, India and China made things worse, but without our love of oil, the price would plummet.

And for that Iran and Venezuela thank us all.

We buy more oil than anyone (aka we're the largest factor in the demand function), and that makes oil expensive and that floods the coffers of oil exporters like Iran, and that allows them to buy all the missles they want for Hezbollah.

And don't tell me that OPEC is controlling supply. That might've been true a couple decades ago, but these days I think they have those oil wells running at max.

>>are you saying that since they don't buy things with the US dollar, we get nothing in return? or that it cost us nothing because all they got was a piece of paper in a vault whereas we got a real good? If its the latter, remember, that dollar had to be earned through work, so it indeed did cost you something. You got a good in exchange for the labor you did for someone else. As you said, a dollar is only worth what people think its worth, and someone exchanged a lot of their time and energy to get it.

I fully realise that someone exchanged their time and skill for a dollar. If they spent the dollar they got something in return for it. The only person who gets nothing for it is the person who gets the dollar and doesn't spend it. So, yes, if it is simply stored and not spent, you have indeed got something for nothing. (Specifically the Federal Reserve has).

Quentin Langley
Editor of http://www.quentinlangley.net

Oh yeah, because the last thing the American people need are goods at low prices...

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If you're seeing shades of gray, it's because you're not looking close enough to see the black and white dots.