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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: fatty who wrote (18280)3/8/2004 12:37:45 PM
From: GraceZRead Replies (1) of 306849
 
Trade tariffs, import restrictions, import/export taxes and other restrictions on the free market have a much longer history than 100 years, as old as governments themselves. Remember reading about boxes of tea floating around in your harbor? Adam Smith wrote his famous book on markets back in 1727.

Counting on catastrophes on the rest of the world to keep US being competitive is probably not a good strategy.


Endorsing free trade is not in any way related to counting on catastrophes abroad, but if you mean what I think you mean I agree, that we can't count on being competitive by assuming that others will bungle. We had an inherent advantage with our free market capitalist system for a long time because some very large countries followed ruinous economic paths like communism and socialism (as practiced in India) keeping their people extraordinarily poor and their industries uncompetitive. They learned the hard way what we still seem to want to discover on our own.

One endorses free trade because laws passed by governments in the effort to protect US workers from competition abroad is what will ultimately make them unable to compete because it effectively locks those workers into a job where they don't have enough of a productivity advantage to justify the higher wage. It is far more efficient to have them move into work that does have the productivity advantage and use that higher income to buy the output of the lower productivity foreigner.

This is nothing new. Workers and industries are always losing their productivity advantage to others who catch up either by employing new technologies or by changing conditions. What one man can do, another can do...given enough time to learn how.

BTW the Civil War was a major catastrophe fought on our soil. The number of casualties in just one battle, the battle of Gettysburg, was 80% of the number of US casualties in the entire Viet Nam War. The economic consequences of that conflict were far reaching and long lasting. One of the original conflicts, the conflict between state's rights and Federal control is still very much with us.
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