Submitted by Edward Harrison of Credit Writedowns
I have to admit to hyping the debate now swirling about protectionism. I believe that tariffs are not a very good solution to a trade problem as they are likely to result in retaliation and/or escalation. Moreover, they end up protecting small groups at the expense of higher prices for everyone else. That is why I wrote the provocatively-titled “Murder-Suicide in Chimerica.”
But taking a step back from the rhetoric for a second, I want to highlight two recent articles and make a few comments.
Is the protectionist bogeyman really coming?
First, while a protectionist backlash is a distinct possibility which I see as the main threat to sustained recovery, I recognize that countries like China and the United States are co-dependent and loath to permanently altering the status quo unilaterally. So while I condemn the recent tariffs imposed on Chinese tires, I recognize that the tariffs were imposed in the calculus that this issue would not or could not escalate.
This is what James fallows argues in a post yesterday:
I keep putting this off, so before it finally disappears into the mists of time, here is a bullet-point summary of what I would have said at greater length when the Chinese tire tariff first arose.
1) There is not now, and there never was, a serious possibility that this would escalate into some sweeping, self-intensifying, global-recovery-threatening “trade war.” The many publications and commentators who raised their hands in “Oh no! It’s Smoot Hawley again!” horror need to calm down — and to have their tendency toward over-reaction noted for the record. Yes, I’m talking about you, Economist magazine cover-designers (last week’s cover image, below), but you had tons of company.
There is too much going on, on too many other fronts, involving affairs of incomparably greater consequence between China and America, for this to have been more than a contained, specific dispute — contained in both duration and sweep. This was clear at the time and should have buffered the shock-horror tone of the stories. Why this matters: because of the boy-who-cried-wolf principle. There are issues between China and the outside world in which a small disagreement could spiral into a very dangerous confrontation. Many of these involve Taiwan, for reasons to be spelled out another time. But tire tariffs, agree with them or not, were never going to set off a global economic confrontation.
In effect, Fallows is saying that it undermines ones argument to scream, “Smoot-Hawley, Smoot-Hawley” every time there is some issue that deviates from the idealized world of free trade. Eventually people will block this out, especially in an environment like this, in which populist sentiment is running high. Fair enough.
Protectionism is more than just tariffs
So with those thoughts in mind, I read Edmund Conway’s article “We are entering a new age of protectionism” in the Telegraph. Conway says:
Some are “traditional” measures, familiar from the Depression and elsewhere – subsidies for domestic producers or tariffs on imports, President Obama’s move to slap a 35 per cent charge on Chinese tyres being a prime example. Such measures are provoking fury, and with good reason: the protectionist spiral into which the world plunged in the 1930s almost certainly contributed to the war at the end of the decade.
However, such visible signs of protectionism tell a fraction of the story. For the shocking truth is this: over the past year, the costs and obstacles faced by exporters have, according to a study by economists David Jacks, Christopher Meissner and Dennis Novy, increased by almost the same scale as in the early 1930s when the US and others were imposing a range of protectionist laws, including the infamous Smoot-Hawley Act.
Partly this is one of the perverse consequences of the financial crisis, which crippled the system of trade credit that underpinned the international flow of goods, making it impossible for some companies to ship products from one part of the world to another. But, far more worryingly, it is also a product of explicitly protectionist measures imposed by countries such as the UK in an effort to save their domestic banking systems from collapse. Most egregiously, these included so-called financial mercantilism, whereby governments, having rescued a bank, insisted that it had to lend far more to domestic customers than business or individuals overseas businesses.
This new protectionism is a different beast from that of the early 20th century, but the result is the same. According to the Bank for International Settlements, the amount of money flowing across national borders has collapsed in a way never before witnessed. Put simply, financial globalisation, which helped power economic growth in recent years, has gone into reverse over the past year. All the more worrying is that it has done so without people noticing.
If I read Conway correctly, he is rightly pointing out that all the bailouts and subsidies we have seen – especially in the financial sector – are the economic equivalent of tariffs. Protectionism is not just about tariffs. We are moving to a world in which domestic jobs are ‘protected’ via non-tariff remedies.
Extending Conway’s argument to the auto industry, it should be patently clear that this is what is happening. Here are a few posts I wrote on the issue. The titles should give you the gist.
- Volkswagen: if the American carmakers can get bailout funds, so can we – Dec 208
- Sweden: competitive auto bailouts begin with Saab and Volvo – Dec 2008
- Germans reject Chinese offer for Opel – Jul 2009
- Cash for Clunkers will put GDP over the top in Q3 – Aug 2009
Every car company has its hands out for a subsidy or bail out and most of them are receiving it. Certainly, the U.S. has led the way, but the Germans have been as bad as anyone here. The deal that the German government struck to save Opel with Magna, a Canadian-Austrian auto parts manufacturer, is widely perceived as having been slanted in favor of German jobs over Spanish, Belgian or British. All of these countries are complaining bitterly to the EU that the deal represents a subsidy and is anti-competitive.
This is why you see the Germans talking up regulatory reform in finance and the Americans and the British are talking up re-balancing: The U.S. and the U.K. have strong financial services industries and Germany has a strong export sector. Of course the Americans are opposed to financial reform. Of course the Germans don’t want global rebalancing.
Politics is domestic
In a prior life I was a foreign policy guy. In my time living and breathing foreign policy it became evident to me that politics is always domestic first. If you want to know why a foreign leader is acting a certain way or taking a specific position, take a look at the domestic political environment.
Do you think the Chinese cared what Americans think, when they threatened to retaliate to the tire tariffs? Do you think Angela Merkel cares what happens to workers at Vauxhall plants in the U.K. when she arranged the Magna deal? Do you think the Americans care about what happens to Frankfurt as a financial center when they bailed out BofA and Citgroup? Of course not.
What matters is placating domestic concerns and consolidating power domestically. So while I talk about the “cozy” relationship between China and the U.S. as a marriage, I am under no illusion that this is anything more than a business relationship. When push comes to shove domestic concerns will win out. And if that means placating rioting workers in fear of losing jobs, so be it.
Expect more, not less protectionism
So I am not optimistic this protectionist wave is going to go away. My baseline sees more not less protectionism. What would be wonderful is if the recovery taking hold were robust enough so that nations came together and worked out a workable forward-looking global solution to some of the more intractable macro problems. However, for the time being most people are retreating to their corners, making protectionism a continued threat.
36 comments
Comments are closed.
Here is an interesting view on why we might expect more trade tension – not necessarily protectionism per se, but due to financial imbalance driven by savings rate staying positive in China and now a rising US savings rate:
See post – The Coming clash in savings
http://mpettis.com/
Yeah I was going to link to Michael Pettis too. He’s also pointed out that the Chinese situation is highly unique, and their policies have led to a collapse in exports in the other heavily Asian exporting countries…and fully expects open trade war over that. His point is that even if there isn’t protectionism by the industrial powers per se, their financial systems are still extremely vulnerable to a developing world conflict.
When push comes to shove domestic concerns will win out. And if that means placating rioting workers in fear of losing jobs, so be it.
Yeah, those stupid childish workers, actually wanting jobs, and actually thinking the point of having a country and government in the first place is to establish a system which creates such jobs.
The nerve of some people.
The fact is, the financial crisis and Peak Oil portend the end of globalization, which was a wicked, lying system to begin with, which never had any intention but to hollow out and colonize all countries, from the lowliest in the “3rd world” to America itself.
The facts since the 70s prove this. The cosmopolitan elites never sought “comparative advantage” but only absolute advantage, everywhere, while America’s only (fictional) comparative advantage was in printing the reserve currency and thereby running up debt to temporarily prop up a fictitious potemkin “middle class” who could be temporarily deluded into believing they were prosperous even as their wages and social safety net were ground into the dust.
The fact is that globalists were never citizens of any country, but only a cosmopolitan cabal presiding over the treason of multinationals and corrupt governments.
How foolish of mere slaves, er, “workers”, to have a problem with that. And of course, as our globalist betters lecture us, governments are supposed to be loyal to multinationals, not to petty little domestic whiners.
Nothing’s ever going to be fixed until we wipe away such captured criminal governments and restore actual domestic governments who understand what their moral imperatives are.
Who act for the people and against the enemy, rather than the other way around.
attempter,
Did you catch the coverage of anti-globilization protests and the police reaction at the NY Times?
Here are some links:
http://www.nytimes.com/2009/09/25/us/25pittsburgh.html?hp
http://www.nytimes.com/slideshow/2009/09/24/world/0925PROTEST_index.html
http://thecaucus.blogs.nytimes.com/2009/09/24/getting-out-the-anti-globalization-message/?ref=us
Whatever one’s ideas about globilization might be, one certainly can’t help but notice the difference in the way these demonstators are being treated as opposed to the way the tea party and health care town hall meeting demonstrators were treated. What do you rekon would happen to one of these demonstators if they showed up sporting an M-16 rifle or a pistol like some of the right-wing demonstrators did?
When the state must deploy this sort of violence in order to silence its own citizens, I’d say there’s trouble in paradise.
As some one that facilitated the training of State and Federal law enforcement in military tactics at its antitheses. I feel a malaise over come me every time I view photos like your NYT link.
Skippy…could say so much more, but for once lack the will due to past deeds burden. How I used to revel in my instructors/masters praise and the moniker they gave me *The Baby Face Killer*, man they had big plans for me back then.
attempter:
Very well said. It has bothered me for quite some time now, while perusing the many economic blogs, I have noticed a complete lack of focus on just this issue. While we do hear from time to time a comment on the fact that US industry has been shipped wholesale to the far and middle east, no-one has put as precisely as you as to the true “man behind the curtain”.
Well done.
I think it’s worth pointing out that Europe is really in transition from one form of protectionism to another. Up to the financial crisis, the EU was a protectionist bloc, trading freely among its members – except for occasional outbursts of “informal” protectionism, for example when France would flout EU rules to protect its inefficient farmers – but levying tariffs and erecting barriers against imports from outside the EU.
The financial crisis and subsequent recession has increased the risk of inter-EU protectionism, whereby EU members discriminate against one another. It makes perfect sense that this would happen in a crisis, because since EU members are still states, their politicians pay more attention to their own voters than to the EU in general. You don’t get re-elected on a platform that says “I sacrificed your jobs for the good of Europe in general”.
I don’t so much have an opinion about this being “right” or “wrong”; rather I think that for this trend to emerge tells us something about the persistence of reality. In a sense, EU members have been kidding themselves that they had abolished economic nationalism, but they could only continue in this delusion as long as they were free-loading on a US/China led global expansion. Growth due to globalism could be presented as a benefit of the EU. Now that free ride is over, Europe is re-discovering all the problems of economic nationalism that they imagined the EU had cured, but which it has not.
Europe now has to face problems it thought it left behind in 1970. It thought it could abolish those problems with voluntary compliance, but in a real crisis voluntarism does not work. So it has a choice. It can go back to multi-lateralism, which ironically would mean the EU not enforcing free trade, or it can take the final step towards federalism that would allow the EU – and that really means Germany – to enforce a regulated social market and a neutralist foreign policy throughout Europe even over the protests of EU members – and their allies outside Europe.
This should not be too strange to Americans; you had a little bit of bother over whether States or the Federal Government was really in charge a bit over a century and a half ago.
So what’s the problem with protectionism? What’s wrong with having iPods and iPhones made in this country, so the people who are expected to somehow come up with lots and lots of money to buy them, can have a job, for a change? Is that such a complex concept for the average ow-IQ MBA moron to comprehend?
Not only that, but people like Steve Jobs wouldn’t have to embarrass himself by apologizing on every piece of equipment he sells with “Designed in California, assembled in China”? Just show some dignity and write “Made in China” for crying out loud.
Vinny G.
You know as I recall we were quite the prosperous nation before we granted China Most Favored Nation trading status.
China needs the USA. The USA does not need China.
@ jon livese:
You make a lot of good points about the EU. If you are European, I have to say that it is refreshing to see a European whose thinking is not clouded by long-faded delusions of Napoleonic grandeur. :)
Personally, as an observer who spends time on both continents (American and European), I tend to think that moving toward federalism is inevitable, if Europe is to remain First World. Right now, with its declining population, disdain for immigration, addiction to entitlements, and toxic levels of nationalism-socialism (or, okay, maybe just “nationalism” :), Europe is in a bind, and growth is simply not possible. Decline would be unavoidable under such circumstances. However, I think the positive in all this is that the nation that matters the most in the EU (Germany) seems to also be the one that actually thinks most rationally and logically, and is willing to change, as it already has, to a large extent. It is likely that once Germany sets the tone, the parasitical Western EU members (primarily Spain, France, Italy, and the UK) will follow suit. It is also positive that Eastern Europe has a much more progressive way of looking at the available options, and also has a much less nationalist/socialist and far more humble way of looking at themselves in the world context. Let’s face it, despite the overly inflated French or British egos, those nations are now irrelevant on the world scene. Additionally, Eastern Europeans, just like the Germans, are not yet allergic to work (even non-government bureaucratic work), as is the case with the French, British, and the Spaniards… not to mention the Italians…LOL
Vinny G.
http://www.forbes.com/2005/03/22/cx_da_0322topnews_print.html
Still, French workers remain among the most productive in the world, ahead of Britain, Germany, the United States and Japan, according to the European statistics agency Eurostat, the AP reports
Allergic to work my @$$.
Yves:
So this was all about cheap tires and not about Chinese manufactured tires separating because they forgot the “gum” need to bind the treads together? What happened to that issue or was it buried in the oppla about tariffs???
For a vigorous defense of free trade see: http://cafehayek.com/ by Prof’s. Don Bordreaux and Russ Roberts. I like their site and agree quite often with both of them. But even as “RedSt8r” I am questioning the premise of so called, “free trade” and whether protectionism may have merit in some cases.
It seems to me that trade with China involves US workers competing not against different technologies or better efficiencies or improved designs but simply against “lowest cost in the world” Chinese peasants. I ask if it can truly be “free trade” if the only comparative advantage is cheap labor. Can “lowest cost in the world” workers be the sole comparative advantage. I asked if this is so then isn’t our participation simply trading diminished living standards of US workers for increased living standards of Chinese peasants? With the Chinese government skimming off a cool trillion in the process?
I believe in trade. I believe in markets. I am a capitalist. I am RedSt8r. I am pained to find myself considering the propriety of some version of protectionism against the “lowest cost in the world” workers.
What if instead of a tariff by industry there was a generalized tariff based on wage differentials? The benefits of the tariff could be used to pay down debt (omg! ah ha ha ha, sorry, forgot myself; pay down debt, that’s a laugh).
What would be the outcome of a generalized tariff to compensate for non-economic currency differentials (assumes such can be quantified of course). For example, the value of the Yuan being held down “artificially”.
What would be the outcome?
It’s not just that the US workers are competing with peasants, but they are competing with non-existent environmental standards, non-existent safety standards, etc. They are competing with contaminated milk, that would never pass the strict USDA inspections here, with lead-poisoned toys, etc.
Regulated capitalism is always more costly than unregulated one, but it comes with the benefits of cleaner environment, healthier people, and some basic standards for us all.
Here’s a couple of good “then” and “now” links.
First, one from 1999, from the U.S. Bureau of Export Administration about implications of U.S. companies being required to transfer technology over to China as a condition of doing business.
http://www.fas.org/nuke/guide/china/doctrine/dmrr_chinatech.htm
And here’s a 2008 study from the Economic Policy Institute showing how the U.S. is “prospering” from these technology offsets.
http://www.sharedprosperity.org/bp201.html
Bloomberg’s Tom Keene had a chat with Philip Verleger the other day. Verleger is known as an energy expert, but Keene asked him first about a letter the NYT published, which Verleger wrote in response to Krugman’s salt v fresh piece. It’s short so I’ll quote the whole thing.
=== begin quote NYT Letter Sept 16 2009 ===
Paul Krugman’s essay is excellent, as far as it goes. However, it ends at the edge of the salt water. Krugman does not raise the subject of international trade. Yet for years salt-water and fresh-water economists have all written and preached of the benefits of free trade. Larry Summers, for example, has endorsed the view that trillions of dollars of benefits would accrue by opening international markets. I was part of the chorus for more than 10 years as a fellow at the Peterson Institute for International Economics.
Here, too, I believe economists got it wrong. The United States’ economic situation has been harmed, not helped, by the push for free trade. America’s skilled workers and middle class are undoubtedly much worse off thanks to the market-opening measures negotiated over the past three decades at the encouragement of almost all economists. The losses have occurred because the theoretical benefits projected by economists are blocked again and again by our trade partners.
Unfortunately, few economists are willing to offer the same detailed criticism of trade policies that Krugman has offered of macroeconomics.
PHILIP K. VERLEGER JR.
David Mitchel/EnCana Professor Haskayne School of Business
University of Calgary
Calgary, Alberta
=== end quote ===
My view is that Japan got a free ride thanks to being an “unsinkable aircraft carrier” during the Cold War, and China has gotten a free ride thanks to the bonuses generated on Wall Street due to intermediating flows arising from the currency peg. Of course it’s much more complicated, but that’s my bumper sticker so far.
I’m two chapters into Martin Wolf’s “Fixing Global Finance” and very curious about how he tackles the global savings glut meme, which apparently has become toxic due to its association with the self-serving worm Greenspan.
So, cheers Ed for posting on this issue and let’s see some more questioning of how free-trade orthodoxy functions when the rubber meets the road, so to speak.
Vinny G. I am as susceptible to flattery as the next guy, but if you are going to talk nonsense, could you do it as a “me-too” response to someone else?
Pretty please. Thanks.
The tire tariffs were a geo political shot-across-the-bow to China , in regards to the situation with Iran. It had little to do with unions.
The US can legally institute a whole array of tariff hikes on China if it so chooses. This would make Mexico and the ASEAN countries very happy, as well.
Remember that China supplies Iran with gasoline.
Well, I’ll be the only free trade defender. One benefit is to the poor people of China who have jobs (yes, I know that they are not unionized, don’t get coffee breaks, health care, and live in pollution – but when the alternative is starvation, you settle for what you can get). The Chinese make cheap, cheap stuff that we buy with dollars that we can also discount at will. Maybe the Chinese will come to figure out the down side of Merchantillism (to paraphrase Patton, your duty isn’t to earn dollars, but to spend dollars).
Very interesting post, this one. I tend to favor ‘free trade’ except that it’s never really free. As it isn’t, a lot of people get in a howl and off we go down the wrong fork in the road.
I reflect on the jobs that have been sent overseas, largely labor intensive ones and then on the shift in our employment and production structure. I recall that post WWII, we were the last manufacturing base standing. We enjoyed that position for about twenty years. In the late 60s we began to see an acceleration in the rate of decline in manufacturing employment. As I recall, the late 70s brought us the transplanted automakers. The catalyst of the labor/manufacturing turmoil that began in the 60s and continues today was/is the wage rate differrential.
I see the exudus of labor intensive production operations to lower labor cost locales as part of a global equilibration process. Our middle class is incuring a declining standard of living while our trading partners are seeing the development of a middle class. What is very difficult for us is the fact that that portion of our middle class that is most severelly affected is that cohort that is in its late 50s to early 60s, the leading edge of our baby boomer generation. How do you re-train that cohort and for what?
And if we are to continue to expand as a service economy, what service can we provide to our trading partners so as to balance our trade accounts?
As to the tires thing, somehow, I am unconvinced that it is about tires.
Krugman’s position is clear – goods that are made in violation of certain standards that we hold dear, must be subject to tariffs to make the producer pay the costs of these violations.
Chinese tires that are made in violation of all known environmental standards, must be subject to tariffs equal to the amount the domestic manufacturers pay to comply with such standards.
Aren’t Chinese surplusses finally being recognized as one of the causes of this crisis? Sounds like another form of greed to me.
Re. The above defense of French productivity, you must be thinking of the Polish workers who kept France going lately. Sorry, but in my 2 years of residence in Paris, I failed to notice the highest productivity in the world you describe. That would be something, to have a Latin country like France win the world’s productivity contest. Boy, we’d be in rough shape then…
Vinny G.
When there has been a great imbalance in the trade between two countries for a long period, you have to become suspicious. Market forces should not have allowed that to happen. It should have been corrected through a combination of devaluation of the currency of the country (and/or deflation) with a deficit, appreciation of the currency of the country with the surplus (and/or inflation), etc. Market forces should soon make the citizens of the country with a deficit feel poorer and the citizens of the country with a surplus feel richer.
So, have market laws been suspended? I think you know the answer … but I will spell it out anyway. Governments manipulate currencies and prices so the imbalance is not fixed. Imagine that, for example, Alabama had its own currency that were controlled by their government who also kept prices in Alabama extremely low (through government controls). What would that do to the economy of the neighboring states?
Let me give you a specific example. Turkey is keeping their cost of doing business low through regular currency devaluations and through a government policy on prices and wages. The result is that industry from neighboring countries has relocated to Turkey.
Here is another example: Germany, though land controls and government policy on housing, has discourage speculation on land and excessive investment in housing and real estate — what a contrast with the USA! The results are obvious in the balance of payments of the two countries.
@ Tortoise:
good points, albeit a bit idealistic. As a shrink, I am never surprized by human stupidity and irrationality anymore. Those Germans who could not speculate in real estate in their own country did so in Spain. They also bought a lot of property in Florida. One of them bought my condo in Boca Raton in 2006… Let’s just say I got a great price for it… just in the nick of time…
Ok, let’s assume the worst case scenario… a global protectionist tariff spiral with tariffs and countertariffs. Why is that bad (from societal welfare and distribution perspective) for some european countries and the US?
“The above defense of French productivity, you must be thinking of the Polish workers who kept France going lately. Sorry, but in my 2 years of residence in Paris, I failed to notice the highest productivity in the world you describe. That would be something, to have a Latin country like France win the world’s productivity contest. Boy, we’d be in rough shape then…”
Well, the French have higher productivity per capita PER HOUR WORKED as opposed to the measure of per capital per year. I suppose one way to increase marginal productivity of labor is to reduce the labor supply. The French do this by restricting work hours, and putting people in early retirement.
BTW, I remember the Left Behind books, and they did not do a good job of describing a big event such as the rapture in detail. It was almost like those books did a brief job mentioning the consequences of that event so it go back to preaching with paper thin characters. Does anyone want to describe the consequences of protectionism in detail (especially its consequences on welfare, inflation, and wealth distribution) within the US without becoming an apologist for free trade/ protectionism?
@ Aki_Izayoi:
You make an interesting point about the per hour worked. Indeed, the French only work, what, 3 or 4 hours a week, and have 8 month-long vacations? :) Talk about institutionalized lazyness. Lucky for them there are still enough suckers out there willing to fork over lots and lots of money to see that rusted old clump of iron, the Eiffel tower… :)
Personally, I completely fail to see the benefits of free trade. Like I said before in this forum, I’m tired of morons like Steve Jobs writing on their iPhones “Designed in California, assembled in China” and that in microscopic type. What a sorry of an apology, huh?
Vinny G.
I know I’ve been harping on the Steve Jobs/Apple iPhone/iPod/MacBook “Designed in California, assembled in China” BS for a while, but I have one more thing to say about that:
“Made in ZZZZZZZ” clearly states where something was manufactured.
“Designed in XXXXXX, Assembled in YYYYYYY” does not say where something was manufactured. It only says where it was designed and assembled. How about the manufactured part, Steve? Where did that happen?
Isn’t this type of product labeling illegal? Isn’t Stevie here breaking the law of the land.
I propose we all forward a complaint about this to the FTC, Justice Department, and other corrupt branches of government. Or, perhaps we file a class action suit and demand we get a refund for all the Apple products we ever bought, because we obviously we deceived into thinking California was a country…LOL
Anybody here interested in kicking some greedy capitalist butt?
Vinny G.
PS — I know the guy is very sick, so as a doctor I recomend we move quickly, to get our refunds before he kicks the buckett…LOL
Vinny,
Your Jungian psychology is showing again, in its awkward stage.
Skippy…Dr. J. Marshall Jung and Dr. Frank Kellogg would like to have a word with you other wise they will send Glen Beck around.
Protectionism has been around for a long time. If you want to see the effects of protectionism just look at what DARPA has provided us: the internet, satellite communication and imagery, drone aircraft, speech recognition, advances in robotics, etc. All these advances come from our federal government spending US taxpayer dollars. I could list even more things such as stealth technology, but I think my list gets my point across, GOVT spending does not necessarily equal waste. And all those defense jobs are American NOFORN or higher classified jobs. It’s damned hard to get a job in the defense industry if you are not an American citizen.
Granted, there is allot of waste in government spending especially in the defense sector (the f22 and JSF programs are a waste in my opinion, future air combat will be with drones and not manned airframes), mostly fueled by poisonous lobbying, but all government spending is not evil.
Another thing to think about. If suddenly Atlantis was to rise from the sea and we were to discover 1 billion more Atlantians would it be worthwhile pursuing free trade with Atlantis?
Depends, are they comparatively rich or comparatively poor to Americans?
If rich, then hell yes trade with them, if poor I think trading with them would be a mistake.
That is our relationship with China.
Hi Skippy:
Lately I’ve embraced Adlerian psychotherapy, because it allows me to largely blame the problem on the patient himself/herself. Kind of like, “Hey dude, you’re depressed because along the way somewhere you made the decision to be this way, and it’s probably convenient for you to be this way.” You know, Freudians and those who followed him (Klein, Winnicott, Anna Freud, etc) blamed everything on one’s parents (the mother in particular). Adler put the responsibility on the patient. It’s a jaw-dropper everytime I explain it to them :)
@ Trainwreck:
If Atlantic were to rise form the ocean, I’d think they’re a lot more advanced than we are, else how would have they managed to live under the ocean this long. As such, the question is, would we have anything to offer them? Better yet, perhaps we can be “their China”, namely a cheap source of labor… that assuming the Atlantians are also a consumer economy, with ATM-style home ownership, high credit card debt, corrupt healthcare, etc. :)
Vinny G.
Look at the results of the last 15 years of free trade.The USA has received lower prices on a broad array of manufactured goods.In exchange we have lost millions of jobs
ran huge trade deficits which in itself has indirectly caused our financial meltdown and have run huge budget deficits.To the free traders i ask “was this worth it”