The US really has no incentive to allow this to happen
Except that it has opened trade for US companies, and the reported numbers are often laughably misleading. Apple, for instance, nets almost all of the profits from an iPhone, yet in the trade balance an iPhone magically counts as a $1000 deficit with China. Further, it yields cheaper goods for Americans, and more efficiency.
The US was literally built on free trade, and sits right near the top because of it, so to read these nonsensical "but what if" arguments borders on parody. It is just a profound ignorance of history and even the most rudimentary of economics. It is one of those amazing things where people really, really don't understand what they have until they lose it.
What good does Apple's record profits do for the US? Apple is owned by shareholders across the world, and Americans benefit only insofar as they actually own Apple stock.
A smaller scale example is restaurants open late. If you wanted a meal at 4am, a 24-hour restaurant is providing you value because otherwise you would have gone hungry. The value to you is fulfillment, even if you don't own any of the restaurant, or even if the restaurant didn't pay any taxes.
There is real value in companies moving the world as a whole forward. You don't have to own part of them to get the benefits.
From 1871 to 1913, “the average U.S. tariff on dutiable imports never fell below 38 percent [and] gross national product (GNP) grew 4.3 percent annually, twice the pace in free trade Britain and well above the U.S. average in the 20th century,” notes Alfred Eckes Jr., chairman of the U.S. International Trade Commission under President Reagan.
US trade balance: https://tradingeconomics.com/united-states/balance-of-trade
How to read that graph: if the line is above zero, it's a net benefit to the US to allow free trade, if it is below, it's a net cost. In the last 50 years, not once has it been positive, and it's systematically gotten worse.
TLDR: free trade is a massive cost to the US economy. It is in fact clearly at a level where if it wasn't for the dollar's status as global reserve currency, it would be completely intolerable.
The US must be a 3rd world country then, right? 50 years being apparently looted like that. Oh wait, it is actually right at the pinnacle of strongest economies in the world.
How can that be?
Because maybe, just maybe, it isn't zero sum. As I mentioned the trade balance is largely a myth (Apple brings hundreds of billions home, while China nets tens of dollars per iPhone, yet the whole gets attributed to China. This goes across every major US manufacturer), and the US has been an enormous beneficiary of it, not only in economic power but in quality of life.
What is so wrong about using our leverage as the world's largest economy to protect the interests of our citizen's, just like China does?
It's just a thought experiment. I understand the US constitution vests the power to regulate interstate commerce with the Federal government.
Let me put it another way. If it would be advantageous for the US to erect trade barriers against Chinese exports, why would it not be advantageous for California to erect trade barriers against Mississippi, where average wages are dramatically lower, there are far fewer environmental regulations, etc.
It would totally benefit California because they could do whatever they wanted and companies couldn't just up and move to Mississippi if things got too bad.
California (and all other states) consumers, on the other hand, would not benefit as prices would rise as a result of this protectionism.
Not really sure what the point of this red herring is but the theory of protectionism applies equally well at all levels from the mom and pop grocery store opposed to a new Walmart to continent sized economic blocks.
I agree that the effects would be largely the same. The point of the thought experiment is that protectionists never clamor for interstate trade barriers.
Almost universally, protectionists accept and even marvel at the US single market and interstate free trade, but they somehow lose sight of the benefits when trade becomes international.
I would say it's because the states have a generally level playing field due to federal laws/regulations while foreign countries can do whatever they want to reduce prices. It's not like Ohio can make child labor legal or something like that.
Though I will admit most protectionists aren't really known for their ability to construct a rational economic argument to support their position.
Isolationism, and the concept of 'us vs. them' at a global level needs to die. Humans are a global species, and the longer it takes us to realize that the worse off we will be at trying to solve global problems, like economics.
Also, if that happens, you have the worst of all possible worlds : the situation gets worse (more resources are more inequal), AND the party that tried to get it fixed is the one that loses the most resources. This, of course, will make any future attempt to fix inequality that much harder.
It's just not that simple.
For example, I recently heard from a friend with family in China that Americans who go to China can make $50 an hour private English tutoring rich Chinese kids. How can wages be rising so much in China and they are still wildly undercutting us?
The other weird thing is Americans who move to low cost south east Asia locations and run dropship ecommerce stores that make $2000 a month and live like they were making 10 times that in the bay area.
The friend of mine who makes his living expenses for two years in Argentina in two months doing webdev.
The bottom line is someting is wrong with prices for things in America. Prices for education, price for health care, prices for rent. Everything is so expensive that people can't live on low wages and be content. When they just change their location all the prices wildly change relative to each other and it all makes sense.
I don't have an easy answer, but some unusual economic phenomenon is going on that transcends national politics and it is important for a individual who can operate internationally to take note. of it.
I live on low wages and am content.
I work a hundred-something days a year at a job any idiot can perform and manage to keep a roof over my head in a pretty decent neighborhood and food in my belly. If I really want something all I have to do is work a few extra days or weeks until I earn enough to buy it then go back to my regular slacker schedule.
The quality of life is equalizing across the world and this is how. Those who were higher have to go down, those who were lower will go up.
China is a country of HUGE income inequalities. You have a few people that make millions and you have few hundred million people make $500/year. The middle class for them makes only $800/month. Money all flows to the top to the government/state firms, and much eventually flows out to Canada/Australia/US.
> The other weird thing is Americans who move to low cost south east Asia locations and run dropship ecommerce stores that make $2000 a month and live like they were making 10 times that in the bay area.
Living abroad is good for young singles, bad for anyone else. There's bad weather, dirty food, dirty water, food poisoning, no access to good healthcare, lots of noise and pollution. Not to mention if you're an entrepreneur, you are not putting down a root, not making network connections you need for sales, not going to meetup events and learning new technologies, etc.
What an incredible nonsense. America has been pushing free trade all over the globe to be able to sell American products into other markets. They're not 'allowing' free trade, they have been pushing it for all it's worth and then some.
Exhibit A: copyright law. Exhibit B: patent law. Exhibit C: privacy/data protection law.
Anywhere they have an edge, the US aggressively arm-wrestles third parties into submitting themselves to trade deals that makes them keep subservient to whatever, and present their accomplishments to voters as "free trade" deals. It's not.
It's a bit like "peace process". It's code word for whatever American interests align to. Try to find any reference of the US being against a peace process. You won't.
Free trade is based on merit (quality) and production capability, America has made some costly mistakes with both.
Sanctions will hit the American consumer harder than the exporters.
Rossignol is a French company by the way.
But I don't see anything exceptional there, it is similar to the nonsense America engages in vv Canada when it comes to dairy, beef and lumber.
Why are trade deficits necessarily bad? The trade deficit represents the spread between savings and investment. If net foreign investment in America is very high, then there will be a trade deficit. This is an accounting identity.
Household debt as a percentage of GDP has been declining in the US for the past decade. This leads one to believe that the trade deficit currently represents high foreign investment in the US.
For years we've been exporting our inflation to other countries for actual physical goods and they keep buying it under the auspices of "reserve currency".
How many trillions of dollars of US debt does China own these days which they happily exchanged to fuel our consumerism?
This is fundamental economics, and why tariffs exist.
I think you're mincing words and avoiding the main argument. Wether or not the US government is "pushing" or "allowing" doesn't alter the affect on the US manufacturing sector and jobs overall. I suspect from a corporations' point of view, they are "pushing" it, from labor's point of view, they are "allowing" it. Both political parties embrace it and as it is today, it benefits corporations immensely at the expense of the US manufacturing sector.
This resulted in lower prices but was a net negative for the American job market.
America was totally free to engage in free trade by exporting their local products abroad, and by accepting foreign products to be sold in their own market without gutting their production capacity.
Settings aside the fact that the US currently enjoys very low unemployment, with a steady rate of job creation that is now the longest jobs expansion in recorded US history, why do you believe other countries are willing to manufacture things and give them away to Americans for free?
Dollars are only valuable as a medium of exchange for American goods and services. Chinese companies will export goods and services to America because there is a demand for US dollars to purchase American goods and services, which are generated by labor and sold for a profit.
The idea that wealth and jobs could flow out of the country as a result of trade - whether free trade, or otherwise - is literally impossible.
The promise that outsourcing didn't matter because goods would be cheaper was a lie, Corporations are instead enjoying record profits on the difference in labor costs.
You can keep spouting the same talking points that economists and politicians have for years but there's a reason people like Trump and Bernie Sanders were able to have so much success, people are hurting. The phrase "Don't piss on my shoe and tell me it's raining" comes to mind.
The only reason people would vote for anti-establishment politicians is because the current establishment isn't doing it's job. If things were great someone like Trump would have never stood a chance.
Those disproportionately benefiting, are those invested in the stock market, and work as top tier management of those companies. As defacto owners and operators, their company gets cheaper labor without honoring the labor rights of the home country, and have become wealthier because of this. Ironically, perhaps, the home country benefits from this as well via tax collection.
The idea that that reverting to prior trade paradigms will be more fair is just stupid. Regression will be worse because it will deprive so many more people of what wealth they do have. It would destabilizing economically, and politically. Bilateral trade is as dead long term as petroleum. A silly president, who transparently favors bilateral trade either because he lacks the mental acuity to understand multilateral trade, or he's malevolent and wants to take advantage of others without being held accountable (his long standing business m.o. is split between the two), should have no say. And in practice the senate, American business, foreign leaders and businesses, nod and smile just so he doesn't poop his diaper again. Not because bilateral trade has a realistic chance.
Instead of taking an unserious person's advice, we need to double down on mutilateral trade combined with strong competition, anti-fraud, and ethics. And a lot of rational constructive arguing. The more who benefit, the wealthier and safer we all are. I win you lose is Trump's idea of winning strategy, and everyone knows it. His followers love the bully mentality, they think it works, and his detractors see it for what it is: shitty behavior you expect from shitty people best avoided as much as possible.
[1] A Crime So Monstrous: Face-to-Face with Modern-Day Slavery Ben Skinner
https://www.politico.com/agenda/story/2017/05/26/trump-right...
Oh, bs. There's plenty plenty access to cheap labor (intra EU migration, external immigration, asylees with work permits). The minimum wage is low enough to not matter much in most cases.
As long as america continue to allow free trade our wealth and jobs will flow out of the country as countries seek cheaper labor and sell it right back to America with no restrictions. The standard of living is raising in other countries while lowering in the US. Labor is already getting too expensive in China for cheap goods so companies are beginning to look at other countries for cheap labor, or bring manufacturing back to the US and us automation to make up the difference.
The US really has no incentive to allow this to happen. We have the largest market in the world and could very easily do what China does if other countries want access to it. The US allows anybody into our markets while China bends them over the bargaining table requiring them to give up IP and form joint ventures with Chinese companies. What incentive does the US have to do "fair" trade? We have all the leverage in any negotiation but for years haven't used that leverage. At some point we're going to have to or the citizens are going to either rebel or accept lower standard of living, lower income, and lower life expectancy.
I'm starting to believe that the reason Washington DC does nothing about the opioid crisis is because it benefits them. If thousands of unemployed, heavily armed rust belt men were not strung out and dying from addiction they probably would have organized and marched on DC a long time ago and got payback on the politicians who have sold them out for personal gain.