Free Trade with South Korea

[hitops]

You obviously have no clue what tariffs are intended to do.

Both of us know full well what they are intended to do. Only one of us knows that they don't actually do that. I think you're smart enough to get it, you just refuse to, perhaps due to ideology.

Tariffs are nothing more than ways to pick winners and losers in your economy. You can indeed create winners (the industry with the tariffs), but you also get losers in your economy. Yes we can improve the trade balance number with Korea by shifting money from Canadians to the auto sector. No, that shift in money doesn't magically go away. It is a real loss in wealth for Canadian, which balances out the benefit to auto.

You seem to believe that if you favor manufacturing, this is a magical panacea for your economy. China is the perfect example of why this is not true. The most successful manufacturer in the world, yet a very poor average standard of living for the citizens. They have done exactly what you want - imposed strict tariffs on imports, and had relative freedom on exports. The results are amazing trade numbers, and enormous costs to the population. If you can understand the costs to the Chinese people, you can understand the same theory applied here.

[Wilber]

So if China produced nothing, it would be better off. Gotcha.

[hitops]

So if China produced nothing, it would be better off. Gotcha.

You're not even trying to get picture are you?

China holds it's currency down in order to boost it's manufacturing. The consequences is that the wages earned by Chinese are worth less, leading to a lower standard of living. This is the cost the citizens of China pay for policies favoring their manufacturing. Life is hard for the average Chinese person, which I guess you think is fine since the 'trade deficit' looks great. There are always costs, and I guess you will always just ignore them.

Edited March 26, 2014 by hitops

[Wilber]

So you think the Chinese people would be better off if they produced nothing or returned to the agrarian society they were before China opened up to the rest of the world. Got it.

[August1991]

So you think the Chinese people would be better off if they produced nothing or returned to the agrarian society they were before China opened up to the rest of the world. Got it.

If people in China returned to an agrarian society, they would be working far more than now - and yet they would produce less, and have less. As a result, Canadians would also have less.

Life is not a zero-sum game.

----

Wilber, is it "fun" to work/produce stuff? Have you ever washed bedsheets by hand - and then discovered the miracle of a washing machine?

Let me go PC. Wilber, I suspect that you're a man, and you live in a rich country. IOW, in world terms, and given your posts here, you're clueless.

Edited March 28, 2014 by August1991

[Michael Hardner]

Let me go PC. Wilber, I suspect that you're a man, and you live in a rich country. IOW, in world terms, and given your posts here, you're clueless.

I think you misread W's post - he seems to be pro-trade as you are.

[GostHacked]

But Bonam, as Asimov and Philip K. Dick both addressed, the notion of robots "programmed to serve and obey humans" is complicated by the fact that humans are in constant conflict with one another.

A robot cannot "obey and serve humans"....only some humans, and at the expense of other humans.

That is something I never really considered before. Good point.

[Wilber]

I think you misread W's post - he seems to be pro-trade as you are.

Even more so. August thinks its OK if free trade is completely one sided as long as it gets him cheap stuff. Talk about clueless.

[Wilber]

If people in China returned to an agrarian society, they would be working far more than now - and yet they would produce less, and have less. As a result, Canadians would also have less.Life is not a zero-sum game.----Wilber, is it "fun" to work/produce stuff? Have you ever washed bedsheets by hand - and then discovered the miracle of a washing machine?Let me go PC. Wilber, I suspect that you're a man, and you live in a rich country. IOW, in world terms, and given your posts here, you're clueless.

I don't know August, hitops seems to think manufacturing has made the Chinese worse off. Perhaps your comments should be directed toward him.

[hitops]

Even more so. August thinks its OK if free trade is completely one sided as long as it gets him cheap stuff. Talk about clueless.

If it gets you a lot of cheap stuff, it is not one-sided, by definition.

You don't recognize it's not zero-sum. Cheap stuff is why modern societies have a high standard or living.

Are you thinking of all the supplies and services we can obtain cheaply for public services? Are you thinking of the increased costs to hospitals, public works, food banks and social organizations and governments everywhere when the price of goods rises due to imposition of 'balanced' tariffs that you want? No, of course you aren't.

Exporting things doesn't make your citizens have good lives. Chins exports everything, and the lives of most Chinese suck. Purchasing power and access to goods is what improves things for the citizens. The average Chinese would be far better off if the Chinese government dropped the very same tariffs you would have us impose.

When you impose tariffs, you impose them on your own citizens, not other countries.

Edited March 29, 2014 by hitops

[hitops]

I think you misread W's post - he seems to be pro-trade as you are.

No he wants tit-for-tat tariffs. That is anti-trade. He dresses it in language of 'fairness' without understanding it doesn't balance anything, it just reduces prosperity on both sides.

The idea is that if you allow Korea to sell cars cheaper, but they do not do the same to us, we lose. This idea is false, by getting cheaper Korean cars, we save more money. This remains true whether or not Korea allows the same access to our cars. That money can then be used more efficiently. Before now, that money was inefficiently used to pay the extra cost of tariffs on Korean vehicles, or in paying similar amounts for an inferior NA vehicle. Now it can be used more efficiently.

Wilbur's strategy to impose tariffs in retribution, is one he believe is like responding to a punch in the face with a counter-punch. In reality it's like responding to a punch in the face by throwing your face forward in the hopes of hurting his fist.

If Korea gets more access, and we don't, Korea actually suffers the most. Not only do they still have to pay tariffs on NA vehicles, the new overseas demand for Korea vehicle raises the price for Koreans as well. The world is not a monolithic panel with one dial that says 'more good' and 'more bad' at each end. It's an impossibly complex global economy and the interactions require a far broader understanding than 'oh no, we make less stuff!'

Edited March 29, 2014 by hitops

[Wilber]

No he wants tit-for-tat tariffs. That is anti-trade. He dresses it in language of 'fairness' without understanding it doesn't balance anything, it just reduces prosperity on both sides.

The idea is that if you allow Korea to sell cars cheaper, but they do not do the same to us, we lose. This idea is false, by getting cheaper Korean cars, we save more money. This remains true whether or not Korea allows the same access to our cars. That money can then be used more efficiently. Before now, that money was inefficiently used to pay the extra cost of tariffs on Korean vehicles, or in paying similar amounts for an inferior NA vehicle. Now it can be used more efficiently.

Wilbur's strategy to impose tariffs in retribution, is one he believe is like responding to a punch in the face with a counter-punch. In reality it's like responding to a punch in the face by throwing your face forward in the hopes of hurting his fist.

If Korea gets more access, and we don't, Korea actually suffers the most. Not only do they still have to pay tariffs on NA vehicles, the new overseas demand for Korea vehicle raises the price for Koreans as well. The world is not a monolithic panel with one dial that says 'more good' and 'more bad' at each end. It's an impossibly complex global economy and the interactions require a far broader understanding than 'oh no, we make less stuff!'

No, for the last bloody time, I want no tariffs period on goods we both produce. I can't make it any clearer than that.

All you can think about is getting cheaper stuff, You seem to have no clue about where money comes from or what gives it value. If we can't produce and export to earn money that has value, where is it going to come from? When we sell to Korea, we get Korean money in return. Korean money has value, Why? Because they have a strong economy. Why? because they produce and sell stuff to people like us. To paraphrase August, perhaps we can build a strong economy by doing the Korean's laundry but I doubt it.

You can't really think the Korean government imposes tariffs just to get a little more revenue and make life more difficult for Koreans.

[hitops]

No, for the last bloody time, I want no tariffs period on goods we both produce. I can't make it any clearer than that.

What you've said is you favor tariffs if the other guy is doing it.

All you can think about is getting cheaper stuff, You seem to have no clue about where money comes from or what gives it value. If we can't produce and export to earn money that has value, where is it going to come from?

You're right in that this is where much wealth (but not all) comes from. You're wrong that the auto sector accomplishes this, or that matching tariffs with Korea would better enable this.

You seem to believe that exporting of any kind, magically generate wealth simply because it's exporting. Nope. The point is not exporting for the sake of exporting, the point is generating wealth. It is possible to massively increase production and export, and destroy your economy in the process. Exporting only helps if it;s profitable in the free market . If you are costing the nation or the citizens money to sustain the exporter, you're just shifting money around, not generating any wealth.

Your currency doesn't gain any value just because you increase exports. China is the proof of this right in front of your face if you so choose to look. Many things affect the value of currency.

If you can figure out why, during an era of declining export of manufactured goods, the CDN gained 30 cents vs the USD, or why the world's largest exporter's currency has barely moved over decades, you might be on your way out of the tunnel vision you find yourself in.

Edited April 1, 2014 by hitops

[Wilber]

What you've said is you favor tariffs if the other guy is doing it.

You're right in that this is where much wealth (but not all) comes from. You're wrong that the auto sector accomplishes this, or that matching tariffs with Korea would better enable this.

You seem to believe that exporting of any kind, magically generate wealth simply because it's exporting. Nope. The point is not exporting for the sake of exporting, the point is generating wealth. It is possible to massively increase production and export, and destroy your economy in the process. Exporting only helps if it;s profitable in the free market . If you are costing the nation or the citizens money to sustain the exporter, you're just shifting money around, not generating any wealth.

Your currency doesn't gain any value just because you increase exports. China is the proof of this right in front of your face if you so choose to look. Many things affect the value of currency.

If you can figure out why, during an era of declining export of manufactured goods, the CDN gained 30 cents vs the USD, or why the world's largest exporter's currency has barely moved over decades, you might be on your way out of the tunnel vision you find yourself in.

I don't know whether to chime in or just let you argue with yourself.

What in your mind constitutes a free market?

How is Canada going to export profitably if its products are kept out of markets by tariffs. Which by the way is not a free market.

It seems you have already decided the Canadian auto industry is not capable of competing in a free market so there is no point in even trying to provide one. Over 150,000 Canadians earn their living making different types of vehicles and parts. Most of the parts built in Canada are exported. You would write them all off for a cheaper Hyundai.

In a previous post you maintained that China is artificially suppressing the value of its currency in order to gain market share (true) but now you claim the value of its currency is low because of what it exports. Which is it?

Ours is largely a resources economy. When world demand for resources is weak, we have nothing to fall back on unless we have other exports.

You refer to the US dollar as if it had a fixed value. It doesn't. Instead of fixating on the value of the CAD vs the USD, you should be looking at the value of the USD vs other currencies. Our economy and dollar would have more in common with the Australian dollar. That would be a better comparison.

[hitops]

I don't know whether to chime in or just let you argue with yourself.

What in your mind constitutes a free market?

How is Canada going to export profitably if its products are kept out of markets by tariffs. Which by the way is not a free market.

It won't, but enacting our own tariffs will not fix that, it will just make it worse. The answer to a less open market is not to make your own even more closed.

It seems you have already decided the Canadian auto industry is not capable of competing in a free market so there is no point in even trying to provide one.

What I've decided is irrelevant. The facts of history are that the 'domestic' auto makers have proven this by failing multiple times and requiring many billions in bailouts. If you need bailouts, by definition you cannot compete. If this is not the clearest and firmest evidence of a non-competitive industry, nothing is.

Over 150,000 Canadians earn their living making different types of vehicles and parts. Most of the parts built in Canada are exported. You would write them all off for a cheaper Hyundai.

And many millions of Canadians subsidize those livings. It's an illusion, not real wealth generation.

In a previous post you maintained that China is artificially suppressing the value of its currency in order to gain market share (true) but now you claim the value of its currency is low because of what it exports. Which is it?

There is no claim here, it is a fact. China pegs its currency to the USD at a fixed rate, causing it to be artificially low.

I've never claimed its currency is low because of what it exports. The exports don't make the currency low, it's the other way around. The currency is forced down to make the exports go up.

Ours is largely a resources economy. When world demand for resources is weak, we have nothing to fall back on unless we have other exports.

Thank God, you've finally figured out that exports is not the biggest factor in the value of our dollar. Something has been accomplished today.

Next lesson: Exports have no impact on the dollar unless they come with a net increase in productivity. Moving money from some Canadians to others (auto workers and those supported by the auto industry) with no value in return, does not accomplish this. Handing billions in taxpayer money to the auto sector with no value in return, does not accomplish this.

You refer to the US dollar as if it had a fixed value. It doesn't. Instead of fixating on the value of the CAD vs the USD, you should be looking at the value of the USD vs other currencies.

You have to refer to something to know what our dollar is doing. As the world's reserve currency, the USD has the most consistent value (more than gold even), and therefore is the best benchmark.

The USD is also the most useful for comparison for another more important reason - we buy a huge majority of everything we use and consume from the US and China. For the value of the dollar to have meaning, you have to talk about how it affects the average person, in other words, purchasing power. Because we buy so much from the US, and because China pegs it's currency to float exactly with the USD, it is by far the most meaningful comparison for sensing change in our standard of living.

Our economy and dollar would have more in common with the Australian dollar. That would be a better comparison.

Hooo boy, this comment is truly ignorant. Comparing currencies has nothing to do with how similar your economies are. What matters is how your currency affects your life. We buy almost nothing from Australia compared to the US. Ergo, what the CDN can buy from the US matters in real-world standard of living terms, to the average guy, not what the CDN can buy from the Aussies.

We import 250x more goods from the US than from Australia. That means it is 250x more relevant to compare our currency to the US, than to Australia.

Edited April 7, 2014 by hitops

[Wilber]

It won't, but enacting our own tariffs will not fix that, it will just make it worse. The answer to a less open market is not to make your own even more closed.

Negotiating a trade agreement that allows one sided tariffs is the same as hanging a sign on your back that says "Kick Me"

What I've decided is irrelevant. The facts of history are that the 'domestic' auto makers have proven this by failing multiple times and requiring many billions in bailouts. If you need bailouts, by definition you cannot compete. If this is not the clearest and firmest evidence of a non-competitive industry, nothing is.

And many millions of Canadians subsidize those livings. It's an illusion, not real wealth generation.

The auto companies needed to restructure and they have. All are now profitable, GM stock is now paying a 3.5% dividend. Now is the time to give them a chance to compete on an even field, not negotiate a deal that will keep them out.

You also have no clue what incentives other governments may or may not give to their industry.

BTW, Magna posted a profit last year of almost 1.6 billion.

I've never claimed its currency is low because of what it exports. The exports don't make the currency low, it's the other way around. The currency is forced down to make the exports go up.

So obviously the Chinese currency is actually worth more than its pegged rate and the obvious reason for that is China's strong economy and the obvious reason for their strong economy is their trade balance. Obvious to everyone but you it seems.

Thank God, you've finally figured out that exports is not the biggest factor in the value of our dollar. Something has been accomplished today.

Next lesson: Exports have no impact on the dollar unless they come with a net increase in productivity. Moving money from some Canadians to others (auto workers and those supported by the auto industry) with no value in return, does not accomplish this. Handing billions in taxpayer money to the auto sector with no value in return, does not accomplish this.

Really? What do you think would happen to our dollar if all our energy, mineral and forest product exports came to a halt?

Hooo boy, this comment is truly ignorant. Comparing currencies has nothing to do with how similar your economies are. What matters is how your currency affects your life. We buy almost nothing from Australia compared to the US. Ergo, what the CDN can buy from the US matters in real-world standard of living terms, to the average guy, not what the CDN can buy from the Aussies.

The US dollar is not pegged, its value fluctuates against all currencies that are also not pegged to the US dollar. When I first started going to Europe, I could get more than six German Marks to the US dollar. Just before the Euro came in 1 USD wouldn't even buy two Marks.

We import 250x more goods from the US than from Australia. That means it is 250x more relevant to compare our currency to the US, than to Australia.

You think only exports to the US are of any value or have any effect on a currency's value?. And you call me ignorant.

[hitops]

Negotiating a trade agreement that allows one sided tariffs is the same as hanging a sign on your back that says "Kick Me"

No, it isn't. I've clearly explained why and provided multiple real world examples.

The auto companies needed to restructure and they have. All are now profitable, GM stock is now paying a 3.5% dividend. Now is the time to give them a chance to compete on an even field, not negotiate a deal that will keep them out.

BTW, Magna posted a profit last year of almost 1.6 billion.

So? When gov hands out billions and protects your business (or that of your clients) model by law, a group of trained monkeys could turn a profit. That profit comes only when they can reach into your and my pocket for help via gov.

You also have no clue what incentives other governments may or may not give to their industry.

Which is exactly why it's a fool's errand to believe a government mastermind can respond in a way that does anything but suck wealth out of the population.

So obviously the Chinese currency is actually worth more than its pegged rate and the obvious reason for that is China's strong economy and the obvious reason for their strong economy is their trade balance. Obvious to everyone but you it seems.

I've been explaining this to you for a good 3-4 pages. Glad you're staring to catch on.

But your'e still missing the greater point. You believe: build stuff and export = good country. China has the world's largest manufactured export economy. Yet given the choice, 9/10 people would rather live here. Why? Think about that, and you will hopefully clue in a little more.

Really? What do you think would happen to our dollar if all our energy, mineral and forest product exports came to a halt?

That depends on whether those industries are competitive without taxpayer support. If they are, such as in energy exports, shutting them down would tank the dollar. If they are not, such as in the auto sector, it would make little difference or perhaps even increase the CDN value. This is the critical difference which I believe is the aspect you are not recognizing.

The point is not to just produce things, it is to generate wealth. If you are taking wealth from the citizens via taxation or regulation, and using it to prop up a manufactured product, you are not generating as much real wealth. You are just shifting wealth around.

The US dollar is not pegged, its value fluctuates against all currencies that are also not pegged to the US dollar.

I never said the USD was pegged to anything. Please try to pay attention. I said the Renminbi is pegged to the USD, which is a plain fact not denied by anyone. Year after year, the US fights with China to un-peg their currency. They may soon succeed.

You think only exports to the US are of any value or have any effect on a currency's value?. And you call me ignorant.

Yet another strawman - I never said the US exports are the only ones of value.

What I said was the comparing our currency to the USD is 250x more relevant than comparing to the Aussie dollar. The reason is simple - if you want to know the value of your currency, what you want to know is what it can buy. We buy 250x more stuff from the US than we do from Australia.

Edited April 11, 2014 by hitops

[August1991]

All you can think about is getting cheaper stuff, You seem to have no clue about where money comes from or what gives it value....

The Sun sends us light and heat for free. Is that bad?

But Wilbur, you seem to think that if China sent us stuff for free, that would be bad.

Why is free sunlight good but cheap, tariff-free Chinese stuff bad? IMHO, there is no difference between the Sun and China: both offer us useful services/products. Low cost with high quality is good and a price of zero is the best of all.

Edited April 12, 2014 by August1991

[Wilber]

The Sun sends us light and heat for free. Is that bad?

But Wilbur, you seem to think that if China sent us stuff for free, that would be bad.

Why is free sunlight good but cheap, tariff-free Chinese stuff bad? IMHO, there is no difference between the Sun and China: both offer us useful services/products. Low cost with high quality is good and a price of zero is the best of all.

Cheap stuff from China isn't bad in itself. The idea that you and hitops would sell out your own country's industry by allowing one sided tariffs on its products just to get cheap stuff, is definately bad and incredibly short sighted.

We don't make or export sunlight.

Edited April 12, 2014 by Wilber