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Jeff
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Re: The Misunderstandings of 'Free Trade'
Reply #30 - Mar 12th, 2018 at 5:02pm
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Snarky Sack wrote on Mar 9th, 2018 at 3:45pm:
Well, sure.  Once the government mandated that people poor corn into their vehicle gas tanks, the price of corn went up so people switched to corn production causing the prices of other agricultural commodities to go up also.
Pouring huge amounts of liquidity into the financial system helped drive up the prices of lots of commodities.

Corn prices spiked for a while when the ethanol mandate became law, but markets handled it. Farmers grew more corn and the price went down again.

Inflation drives up the price of everything and has driven up the price of everything pretty much right along with corn.
  
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Jeff
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Re: The Misunderstandings of 'Free Trade'
Reply #31 - Mar 12th, 2018 at 5:10pm
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England was about free trade no more than the US is about free trade now.
In world wide economic systems, trade that is more free and that is engaged in in a system of political economy that largely respects and protects property rights (mostly) equally under a rule of law, is a superior system to most.
The prosperity of a nation will be better served by markets that are more free.

England met the criteria better than most others, which is what created the prosperity that allowed England to create and support its empire.

Creating empires is not a good goal for the wealth that free markets create, and creating empires seems to lead to crony capitalism and protectionism and restrictions on free markets, which slow wealth production and make empires too costly to sustain without massive debt.
  
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Jeff
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Re: The Misunderstandings of 'Free Trade'
Reply #32 - Mar 13th, 2018 at 9:30am
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BobK71
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Re: The Misunderstandings of 'Free Trade'
Reply #33 - Mar 13th, 2018 at 9:56am
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The Opposition wrote on Mar 9th, 2018 at 3:32pm:
I'm not sure why the yuan would increase and the dollar would drop due to more stuff coming out of China (the trade surplus you mentioned).

If there is no govt. interference, since American consumers only have dollars, and Chinese companies and workers only get paid in yuans, in the forex markets there would have to be more selling dollars to buy yuans than the reverse, *as long as the trade imbalance lasts.*  This would cause the price of yuan in dollars (the exchange rate) to go up, and notice it would continue to go up until such an exchange rate where trade is balanced.  There's no way around it.  (At this moment things are different as Chinese are happy to hold dollars as assets, but this wasn't the case throughout most of the last 2-3 decades.)

This was why it was necessary for China to keep buying dollars and become the single largest holder of Treasuries over the last decades, in order for it to enjoy a persistent trade surplus throughout the period.

I noticed that this simple but undeniably dangerous dynamic was rarely explained to the public.  You don't see the New York Times running a half-page schematic with diagrams on the topic of the last quarter-century.  To me this is a good sign that elites on both sides of the Pacific really wanted to keep it going, despite occasional lip service in protest.  As always, the instability was left for the future to deal with.

The upshot is: Trump was partly right! Smiley

The Opposition wrote on Mar 9th, 2018 at 3:32pm:
Many sellers of goods find it profitable to raise prices rather than lower them in this kind of a market. American labour drops in price... and the cost of food goes even higher. The price of food is outpacing inflation, and has been even during and after the 2008 crash.

If a bunch of people suddenly get poor, it might be a better investment to stop trying to sell to them, quintuple your prices, and cut your losses by selling one tomato for $5 rather than trying to make ends meet by selling 5 tomatoes for $1. A couple businesses who refuse to do this can ruin it for the others, but it's weird that everything from Ramen noodles to fancy stuff has gone up by about the same.

This is why I think it's the fate of the American labourer to starve if we ever get capitalism.


There can be all kinds of forces working in the food markets.  One might be that high quality food is made in the soil and there's no way to cut costs on those.

Something similarly strange is happening in the housing market.  Since middle to lower class renters can't possibly pay higher rent, all the new condo/apartment development is in the luxury segment.  So supply is growing only in the low-demand sector.

The Opposition wrote on Mar 9th, 2018 at 3:32pm:
It would have been immensely easy to do something similar to what China does and limit welfare babies to one per female. This would have prevented wages from being driven down due to excess labourer population in comparison to the population of people who owned the means of production.

I still don't believe it would be possible in the West to tell people not to have babies.
The Opposition wrote on Mar 9th, 2018 at 3:32pm:
In the 50's, you could feed a family of four on a plumber's salary and no one thought he was being overpaid. Now, if he holds down a second job and has one kid, and the wife works too, the family is likely to be struggling and everyone (including me) understands that he doesn't even deserve what he gets, because minimum wage is holding his wages artificially high and if all the immigrants who wanted in got in, he wouldn't be able to remotely compete with them.


It may be addictions, etc. have made some people economically obsolete in one way or another, but in theory, and probably if the problem had been spotted earlier, all of this would have changed if the dollar had been allowed to find its natural, free-market level.  (Though I'm not so naive as to think such a thing would ever be possible, in the 1950s or the 1920s, in the current world system.)
  
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Jeff
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Re: The Misunderstandings of 'Free Trade'
Reply #34 - Mar 13th, 2018 at 10:07am
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BobK71 wrote on Mar 13th, 2018 at 9:56am:
If there is no govt. interference...
But there is, in every aspect of finance and trade and control of the supply of money and interest rates and regulation of virtually everything that is done.

Nevertheless, eliminating tariffs helps.

Anything (such as tariffs) done to help some favored business or industry is cronyism and the help they receive comes at the expense of others.

Free markets are not a zero sum game, but government controlled markets are.
  
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Jeff
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Re: The Misunderstandings of 'Free Trade'
Reply #35 - Mar 13th, 2018 at 10:11am
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BobK71 wrote on Mar 13th, 2018 at 9:56am:
There can be all kinds of forces working in the food markets.
There are. Better means of producing more and better food have been constantly created by profit seeking businesses, to the point where nations that used to suffer periodic famines now export food.

Advances in food production are opposed by government regulations and "activists".
  
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Jeff
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Re: The Misunderstandings of 'Free Trade'
Reply #36 - Mar 13th, 2018 at 10:13am
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BobK71 wrote on Mar 13th, 2018 at 9:56am:
It may be addictions, etc. have made some people economically obsolete in one way or another, but in theory, and probably if the problem had been spotted earlier, all of this would have changed if the dollar had been allowed to find its natural, free-market level.  (Though I'm not so naive as to think such a thing would ever be possible, in the 1950s or the 1920s, in the current world system.)
The gold backed Dollar, like the silver backed Pound Sterling did have a natural market level. Fiat money never will.
  
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Re: The Misunderstandings of 'Free Trade'
Reply #37 - Mar 13th, 2018 at 1:02pm
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Jeff wrote on Mar 13th, 2018 at 10:11am:
There are. Better means of producing more and better food have been constantly created by profit seeking businesses, to the point where nations that used to suffer periodic famines now export food.

Advances in food production are opposed by government regulations and "activists".


This is a good example of the problems you moan and groan over being problems related to 'your' country Mr. Sickler. Do you mind if I call you mr. Sickler?

Cubs serves as an opposite example of that which you complain about. it's no coincidence that it's a communist country.
  
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Jeff
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Re: The Misunderstandings of 'Free Trade'
Reply #38 - Mar 13th, 2018 at 4:35pm
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This is a good example of the problems you moan and groan over being problems related to 'your' country Mr. Sickler. Do you mind if I call you mr. Sickler?

Cubs serves as an opposite example of that which you complain about. it's no coincidence that it's a communist country.
You are wildly off topic and seem to be raving irrationally about something...

So irrational that you think Cuba is a good example of government created prosperous equality.

Be smart, pick somewhere better than Cuba...

But wait, you can't think of anything better than Cuba can you?
  
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BobK71
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Re: The Misunderstandings of 'Free Trade'
Reply #39 - Mar 21st, 2018 at 9:59am
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Jeff wrote on Mar 13th, 2018 at 10:07am:
But there is, in every aspect of finance and trade and control of the supply of money and interest rates and regulation of virtually everything that is done.

Nevertheless, eliminating tariffs helps.

Anything (such as tariffs) done to help some favored business or industry is cronyism and the help they receive comes at the expense of others.

Free markets are not a zero sum game, but government controlled markets are.


The core nature of the world system is that the alliance of top politicians and bankers use state power to prop up the values of money, debt, and other financial assets, to benefit themselves who issue a lot of these assets.  Since these assets are over-valued, and deception is part of the toolkit, and especially because of the incentives for members of the elites to destabilize their own system, the assets eventually crash.  When that happens, people lose jobs, business, savings, etc. especially because economic demand has been distorted and artificially expanded during the financial inflation period.

Oh I forgot, the official version is that central banks control money for the good of us all.

Stopping cronyism is of course a good thing, but it really doesn't make sense to speak of cleaning up a system, inside the larger context of a world system that is based on theft and deception.  Protectionism can also be a coping mechanism in the face of this world system.

Protectionism was practiced by the US during the 19th century (and by China until Britain forced it open with the Opium Wars.)  One way or another, these countries must have understood, at some level, the predatory nature of 'free trade' when the top country of the system controls money.  Immanuel Wallerstein pioneered a whole field of study called 'world system analysis' that pinpoints the flow of capital and goods across borders as the major tool of exploitation of poor countries by rich ones.  It comes from a left-wing point of view, but that shouldn't diminish its validity when it comes to diagnosing the false free market nature of our world.
  
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