Was free trade worth it?

Nov 2014
287
ph
#1
Was free trade and the lost jobs and social problems like due to China's entry to the WTO and NAFTA, worth it in terms of getting cheaper consumer goods? It seems that for the US working class with all those manufacturing jobs, they would rather take a well paying union job, more expensive goods due to tariff barriers, and an "uncompetitive" economy, and even slightly worse quality of manufactured goods, over no jobs or a life time of dead end jobs, cheaper electronics from China, and a welfare check? In the same vein, are make work jobs, like work fare, a better solution than a monthly welfare check, when it comes to jobs displacement due to technology unemployment?
 
Aug 2014
4,042
Australia
#2
Free trade treaties don't exist. If they did then we wouldn't need to spend years negotiating all the exemptions and special cases where free trade doesn't apply. I think the term you are after is "globalised economy". I think it was worth it for developing countries - it has helped to lift millions out of poverty. In many developed countries it has destroyed the middle class and increased wealth inequality.
 
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Dec 2011
2,080
#3
Dan (even though your posts seem always to be intelligent) I must take you to task when you use a phrase like "destroyed the middle class". I must say I don't agree with this idea of "class" (though I would accept a distinction of 2 classes; A. those who own sufficient capital to live of the interest/rent, B. those who do not have such capital), but I ask you to show that what you mean by the middle class being destroyed (ie suggesting the the middle class do not exist any more).
 
Sep 2013
819
Chattanooga, TN
#6
Free trade treaties don't exist. If they did then we wouldn't need to spend years negotiating all the exemptions and special cases where free trade doesn't apply. I think the term you are after is "globalised economy". I think it was worth it for developing countries - it has helped to lift millions out of poverty. In many developed countries it has destroyed the middle class and increased wealth inequality.
So free trade has increased wealth inequality within developed countries while decreasing wealth inequality internationally?
 
Sep 2013
819
Chattanooga, TN
#7
Was free trade and the lost jobs and social problems like due to China's entry to the WTO and NAFTA, worth it in terms of getting cheaper consumer goods? It seems that for the US working class with all those manufacturing jobs, they would rather take a well paying union job, more expensive goods due to tariff barriers, and an "uncompetitive" economy, and even slightly worse quality of manufactured goods, over no jobs or a life time of dead end jobs, cheaper electronics from China, and a welfare check? In the same vein, are make work jobs, like work fare, a better solution than a monthly welfare check, when it comes to jobs displacement due to technology unemployment?
What is the difference between free trade and unfree trade? How is there free trade in the USA now but there was not free trade in the past? I speculate that you are saying that there are less tariffs in the USA now than there was in the past? If so, when did the USA reduce tariffs? How much were tariffs reduced?

AFAIK, only parents with prepubescent children dependents and disabled people get monthly welfare checks. Able-bodied, single grown men without dependents are not able to receive welfare checks.
 

Naomasa298

Forum Staff
Apr 2010
32,079
T'Republic of Yorkshire
#8
What is the difference between free trade and unfree trade? How is there free trade in the USA now but there was not free trade in the past? I speculate that you are saying that there are less tariffs in the USA now than there was in the past? If so, when did the USA reduce tariffs? How much were tariffs reduced?
Well, back in the 90s, the US used to provide certain countries with a "most favoured nation" status, lowering tariffs for them. Under WTI rules, that's not allowed, unless there is some kind of bilateral trade agreement between the two countries.

Also, free trade doesn't just imply no, or low tariffs - there are also non-tariff barriers to consider.
 
Apr 2018
726
Upland, Sweden
#9
Well, back in the 90s, the US used to provide certain countries with a "most favoured nation" status, lowering tariffs for them. Under WTI rules, that's not allowed, unless there is some kind of bilateral trade agreement between the two countries.

Also, free trade doesn't just imply no, or low tariffs - there are also non-tariff barriers to consider.
Exactly. These non-tariff barriers is the crucial issue, and they are often very difficult to cover by free trade agreements. How could they be covered, when they more often than not take the form of domestic policy decisions? A foolproof free-trade agreement would in practice have to circumscribe a country's sovereignty so much that no one would sign them.

A good example of this is how many countries subsidize various high tech or capital intensive industries, either directly (tax exemptions, transfers) or indirectly (national R&D spending, special grants). This kind of special treatment can also take regulatory form, for example in Sweden our rules when it comes to preference listed shares in publicly trades companies are a lot more liberal than in many other European countries. This has the interesting effect of leading to many "Swedish" companies (ABB, Ericsson and a few others come to mind) having Swedish shareholders who control a majority or plurality of the votes, while not controlling as sizeable shares of the capital owned. We recently had an incident shedding light on this with Volvo trucks, when Geely (who own Volco cars) became the plurality shareholder according to market value. The Wallenberg family was not happy, but they still control the highest amount of votes through their private-equity firms...

There is also the fact that creating "free trade" in services is much more difficult than in goods.


To answer the question though: No, I don't think economic globalization has been very good for the developed part of the world. It has given us cheap products we don't need, in exchange for incrementally disemboweling our economic infrastructure and hurting the working as well as the lower middle class. It has also "financialized" the economy, creating a wealth inequality that is not reflective of hard work or added meaningful productivity and innovation to the economy. There is a point for a country having the production, R&D as well as corporate governance of its companies all remain nationally: it gives you economic depth, as well as creates economies of scale. This has to be counteres to the "inefficiency" created by lack of specialization in the short run of course, but in the long run it might well pay off, especially as it makes you less vulnerable to economic changes and shifts. Everyone becomes naturally protectionist in a crisis, and the countries that are the most internationalized also have the most to loose in such a situation. Anyway, what has now happened is that there are whole kinds of "know how" that have simpy dissappeared, because they were tied into the parts of the supply chains that have relocalized overseas. In the long run this is also a national security problem, especially for the United States.
 
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Likes: Edratman
Sep 2013
819
Chattanooga, TN
#10
Well, back in the 90s, the US used to provide certain countries with a "most favoured nation" status, lowering tariffs for them. Under WTI rules, that's not allowed, unless there is some kind of bilateral trade agreement between the two countries.
What is the WTI?

Also, free trade doesn't just imply no, or low tariffs - there are also non-tariff barriers to consider.
What non-tariff barriers are there to consider?