Free Trade with South Korea

[dre]

Who decides what the bottom is ? At some level, people have to make trade-offs between social, environmental and economic choices whether you are North Korea or Sweden.

In theory the consumers could. For example, if your iphone came with a pamplet that explained that the workers make only a few pennies per day, are forced to work 60-70 hour weeks, were not allowed to talk to each during shifts, and routinely committed suicide by jumping off the roofs of the factories they work on, then less people would buy them.

Then the standard of life of their workers would become an essential part of marketing products.

Of course this wont happen because the real driving forces behind so called "free trade" (corporate and political class) could care less about this, and free trade religionists like most of the people in this thread dont even understand whats really going on.

Edited March 17, 2014 by dre

[Michael Hardner]

In theory the consumers could. For example, if your iphone came with a pamplet that explained that the workers make only a few pennies per day, are forced to work 60-70 hour weeks, were not allowed to talk to each during shifts, and routinely committed suicide by jumping off the roofs of the factories they work on, then less people would buy them.

I don't think that would work.

Of course this wont happen because the real driving forces behind so called "free trade" (corporate and political class) could care less about this, and free trade religionists like most of the people in this thread dont even understand whats really going on.

Free trade makes sense economically, that can't be denied. Also trade appears to be a better social program than international handouts.

Better information is always a good idea, though. Bangladesh will see improvements because of non-profits spreading the news of which multinationals support reforms. Can you name which ones do and don't ?

[dre]

I don't think that would work.

Why not?

Free trade makes sense economically, that can't be denied.

Thats a religious belief.... a feel good slogan that you couldnt even begin to back up. Whether its true or not is a judgement that would have to be made on a regional basis, and a national basis, and free-tradists dont even understand which factors need to be weighed.

Its no more true or meaningful than a protectionis saying "free trade is bad".

Like I said before... for countries running large trade deficits as a result of these trade agreements the simple result is skyrocketing debt, both public and private, and youre seeing massive inflation in domestic services as a result as well. Eventually it will lead to austerity, cuts to important services etc. Youre also not taking into account the effect of all this on the environment.

[Michael Hardner]

Why not?

People don't concern themselves so much with the problems of others, I think.

Thats a religious belief.... a feel good slogan that you couldnt even begin to back up. Whether its true or not is a judgement that would have to be made on a regional basis, and a national basis, and free-tradists dont even understand which factors need to be weighed.

Every country has some competitive advantage over another. The idea is that two countries can be aligned so that the areas in which they have an advantage are 'given' to that country. That way, there is more trade, more consumption, more production.

[dre]

People don't concern themselves so much with the problems of others, I think.

Then why did apple work so hard on rebuilding its image after all the FoxConn stories last year? You are dead wrong on this... For a company the way consumers see its brand is everything. They spend huge ammounts of money making people see them a certain way. If the treatment of workers and the environment was directly attached to their brand in a way consumers could easily see, then would have to take that into account and they would. PR is huge in the business world.

Every country has some competitive advantage over another. The idea is that two countries can be aligned so that the areas in which they have an advantage are 'given' to that country. That way, there is more trade, more consumption, more production.

This is just more sloganeering. You didnt touch on a single point I made.

[Michael Hardner]

Then why did apple work so hard on rebuilding its image after all the FoxConn stories last year? You are dead wrong on this...

Well, at a certain point of course it does matter. But the idea of putting a sticker on a product saying that somebody killed themselves at this company or whatever... it's not well thought out.

Neither was my idea of an elected board of trade representatives by the way, but I did give it a perfunctory amount of consideration, and stated a caveat too.

This is just more sloganeering. You didn't touch on a single point I made.

I'm not qualified to talk about the debt question, and furthermore I don't think it's necessary to talk about it at the basic level. You want to bring debt, currency and banking into all of these discussions but it effectively ends the discussion because I don't feel qualified enough to discuss wide economic topics at depth, even as suspicious as I am about the points you make and the evidence you bring to it.

[dre]

Well, at a certain point of course it does matter. But the idea of putting a sticker on a product saying that somebody killed themselves at this company or whatever... it's not well thought out.

Neither was my idea of an elected board of trade representatives by the way, but I did give it a perfunctory amount of consideration, and stated a caveat too.

I'm not qualified to talk about the debt question, and furthermore I don't think it's necessary to talk about it at the basic level. You want to bring debt, currency and banking into all of these discussions but it effectively ends the discussion because I don't feel qualified enough to discuss wide economic topics at depth, even as suspicious as I am about the points you make and the evidence you bring to it.

The problem is you cant evaulate these trade agreements without looking at those things. Im not trying to argue from authority either, and Im also not qualified. But I understand that these factors exist, and that you cant claim the success or failure of these policies without evaluating all the options, unless you do a bunch of regional cherry picking.

Edited March 17, 2014 by dre

[hitops]

You don't understand anything. If you give up all your capacity to produce to others, where is your wealth going to come from in order buy these cheap goods? I suggest you look up the defintion of the word TRADE.

Ha... no no. You're still not getting it. I completely understand what trade is, what a balance means, and all the rest. I understand what you're saying, and it's wrong. You are factoring in only the perceived benefits, and not the costs. When you factor in the costs, it's a net negative, at the expense of everyone.

It's not real productivity if every taxpayer in Canada has to subsidize auto for it to survive (which btw, is the current situation). It's only real if the industry stands on it's own feet. Subsidize means either direct subsidy, or subsidy through tariffs (reduce competition).

2 examples:

1) Subsidies. In this example, you and I are separate markets/nations. You want to trade pinneaples to me. In order to do that, you go and grow pineapples, but they kind of suck because this is Canada. They cost you $10 to grow. You offer them to me for $15, and I say no those pineapples are shabby, I will pay $10. Now you don't want to shut down your operation, so you force your other family members to each give you $1, and now you offer them to me for $10. I take the deal, you get $10 from me, and $1 x 4 from each family member, for a total of $14. Hurray a profit! Quickly write down your great trade balance in your notebook! See the problem?

2) Tariffs. IN this example, your family is your domestic market. You again want to sell pineapples, that kinda suck. You family wants to buy $8 good ones from the guy next block over. But you, as the head of the house, say no they can only buy them from you at $12. So they do, but now they have worse pinneaples, and $4 less each than they would have had. Because they have less money, they need more from you in other ways. But you don't worry about recording the costs that your family incurred by being forced to spend more, you just write down $12 on the trade balance and declare it a positive balance. See the problem?

This is what you aren't seeing. Just shifting the numbers as costs onto your population so your trade balance looks better, is not actually real prosperity.

Edited March 17, 2014 by hitops

[Wilber]

I'm not arguing in favour of tariffs or subsidies, just that they can't be one sided. BTW, you have no idea what advantages and incentives the Korean government gives its industry.

I also don't buy your assertion that everything Canadian sucks.

[Michael Hardner]

The problem is you cant evaulate these trade agreements without looking at those things.

Why not ? What's wrong with my basic example ?

[Wilber]

Also, if you tried growing pineapples in Canada, they would suck.

[dre]

Why not ? What's wrong with my basic example ?

Like I said... youre trying evaluate trade policy in a vacuum. Youve come to a bold and sure conclusion without considering a whole host of the most important considerations, including the macro-economic consequences of being on the wrong end of a trade imbalance.

For most of the west what "free trade" has really meant, is the huge flow of goods going in one direction and most just IOU's (bills, bonds, notes) etc going in the other.

Try running your household this way and see what happens! It should be easy enough to understand.

[Michael Hardner]

Like I said... youre trying evaluate trade policy in a vacuum. Youve come to a bold and sure conclusion without considering a whole host of the most important considerations, including the macro-economic consequences of being on the wrong end of a trade imbalance.

It's a model, so of course it's simplified. It doesn't inform anyone about specific examples but explains why trade agreements should theoretically be win-win.

Try running your household this way and see what happens! It should be easy enough to understand.

That's a different question.

[Bonam]

It's a model, so of course it's simplified. It doesn't inform anyone about specific examples but explains why trade agreements should theoretically be win-win.

What evidence supports the model?

I suspect that free trade is just like anything else... beneficial in the right amount, but incurring unwanted side effects if applied excessively. Most any kind of societal change is best done gradually, so as not to shock existing social and economic structures.

It seems clear that globalization has led to wage stagnation among lower and middle income earners in developed nations, while rapidly producing wealth in developing nations (as well as among owners of international enterprises). Whether this is beneficial or not, therefore, depends on one's perspective. Globalization also has other downsides, including the environmental impact of shipping goods across the globe, and the greater reliance on goods from around the world making people's comfort or even survival dependent on an ever larger and more complex network of international infrastructure, which can easily be disrupted by natural disasters or conflict.

All that aside, South Korea is a fully developed nation, like Japan, and is in fact ahead of Western nations in some aspects of technological use/deployment. Free trade deals between nations of comparable advancement, in my opinion, are less prone to causing serious negative side effects, compared to trade between developed and developing nations. Therefore, free trade with SK is likely a good thing.

[dre]

What evidence supports the model?

I suspect that free trade is just like anything else... beneficial in the right amount, but incurring unwanted side effects if applied excessively. Most any kind of societal change is best done gradually, so as not to shock existing social and economic structures.

It seems clear that globalization has led to wage stagnation among lower and middle income earners in developed nations, while rapidly producing wealth in developing nations (as well as among owners of international enterprises). Whether this is beneficial or not, therefore, depends on one's perspective. Globalization also has other downsides, including the environmental impact of shipping goods across the globe, and the greater reliance on goods from around the world making people's comfort or even survival dependent on an ever larger and more complex network of international infrastructure, which can easily be disrupted by natural disasters or conflict.

All that aside, South Korea is a fully developed nation, like Japan, and is in fact ahead of Western nations in some aspects of technological use/deployment. Free trade deals between nations of comparable advancement, in my opinion, are less prone to causing serious negative side effects, compared to trade between developed and developing nations. Therefore, free trade with SK is likely a good thing.

Thats a good post, and just to be clear I wasnt saying this trade deal was bad. I entered this thread when I saw someone post that even if trade is lopsided, and one side keeps tarrifs in place, its still a benefit because we get cheap stuff. My point there was the real cost isnt on the price tag. And then Mike made a boolean boiler plate statement and I picked that apart.

[Michael Hardner]

What evidence supports the model?

Are you asking if *any* free trade agreements have worked ?

beneficial in the right amount, but incurring unwanted side effects if applied excessively.

That's incorrect. There are always unwanted side effects, or - more accurately - adjustments, job losses and so on.

Whether this is beneficial or not, therefore, depends on one's perspective.

The overall economic benefit is there, though. Wage stagnation is a general effect that has been happening since the 1970s.

Globalization also has other downsides, including the environmental impact of shipping goods across the globe, and the greater reliance on goods from around the world making people's comfort or even survival dependent on an ever larger and more complex network of international infrastructure, which can easily be disrupted by natural disasters or conflict.

As long as you add in the fact that interdependence between nations will mitigate the risk of conflict, as it stands to reason.

[PIK]

Read my post again and August's comment again. August isn't talking about free anything. He doesn't see anything wrong with them keeping tariffs on our goods as long as we drop ours so he can buy their products for less, even though our products are being priced out of their markets because of their tariffs.

By insisting that they drop their tariffs if we are going to drop ours, that isn't protecting our domestic automakers, it is giving them a level playing field on which to compete. Do you guys hate the auto workers so much that you can't understand something so basic?

Screw the auto workers , they should have thought of that yrs back when they were screaming forevery little thing they could get there hands on and that is what aloty of people think. I live no where near the auto workers but surrounded by farmers and logger and other rural workers that have been breaking there back for yrs ,while listening to auto workers and posties constantly cry. So why do you hate the rural folk????

[Michael Hardner]

Screw the auto workers , they should have thought of that yrs back when they were screaming forevery little thing they could get there hands on and that is what aloty of people think. I live no where near the auto workers but surrounded by farmers and logger and other rural workers that have been breaking there back for yrs ,while listening to auto workers and posties constantly cry. So why do you hate the rural folk????

Seems to me that you're putting way too much emotion into a discussion around facts and numbers. You should know that trade pacts can also have a huge negative impact on farmers too.

These things aren't set up to reward hard workers and punish lazy people.

[eyeball]

In my region globalized trade has resulted in the ownership of natural resource quotas in foreign hands, lower wages and higher prices. An old fish plant reopened under new American management where I live. The starting wage is less than the starting wage that was offered 35 years ago.

So what's the price of fish got to do with anything? They're the highest they've ever been in history for starters.

These things aren't set up to reward hard workers and punish lazy people.

They're set up to do one thing, concentrate wealth, into as few hands as possible.

[Michael Hardner]

In my region globalized trade has resulted in the ownership of natural resource quotas in foreign hands, lower wages and higher prices. An old fish plant reopened under new American management where I live. The starting wage is less than the starting wage that was offered 35 years ago.

So what's the price of fish got to do with anything? They're the highest they've ever been in history for starters.

They're set up to do one thing, concentrate wealth, into as few hands as possible.

The whole economy does this. Resisting that natural flow of concentration without hurting the economy overall takes good thinking and good politics.

[eyeball]

Good luck with those.

[Michael Hardner]

Good luck with those.

Do you want some examples of how it happened in the past ?

[Michael Hardner]

Do you want some examples of how it happened in the past ?

Think about it - manual labourers being able to afford a house did happen, at some point. Otherwise, we wouldn't be bemoaning the decline in their income.

[eyeball]

Do you want some examples of how it happened in the past ?

I can hardly wait.

[guyser]

Screw the auto workers , they should have thought of that yrs back when they were screaming forevery little thing they could get there hands on and that is what aloty of people think. I live no where near the auto workers but surrounded by farmers and logger and other rural workers that have been breaking there back for yrs ,while listening to auto workers and posties constantly cry. So why do you hate the rural folk????

I guess we could say screw the farmers and loggers since farmers have always had subsidies (meaning we pay for them to farm) and the softwood lumber scrap is due to subsidies.

And rural folk have always been subsidized by the big city and cottagers (if you live in any cottage country type spot)