More on free trade:
I tend to agree with Z in the abstract, but several things aren't clear: why, for instance, would we "have likely permanently lost the production" if the goods are no longer "bargains"? Why wouldn't factories spring up in this country, if it becomes economically feasible? Also, how would tariffs be structured to produce a "rate which brings trade into balance"? What tariffs would do that, what goods would be subject to it? Would TVs? Clothes? Appliances? Hard drives (had to get that one in)? How many of those things are produced here now? Would consumers just get hurt by paying higher prices?
However, the danger of perpetuating endlessly the one way "trade" (our money for their goods) is that our own market gets eroded, then destroyed as we beggar ourselves. If other markets aren't being built up through higher wages for workers moving into middle class status, then the one way trade will end as the goose with the golden egg dies. What will be left? A few extremely wealthy people, a mass of poorer people, a small middle class that manages to service the rich. That at least is the fear (my fear, anyway), which I don't see how Krugman addressed. On the other hand, imposing tariffs in this country won't really address that problem, the governments of the manufacturing countries have to address it. But the fact that they don't appear to address this issue is what leads to the fear that the middle class of this country is in danger, and leads to calls for tariffs. And which is, to my mind at least, the real reason why many of us resist the idea of free trade. |
