Sunday, January 13, 2002

International Economics R Us- “It’s better to free trade a year too early than a year too late” I noted while talking about Traficant yesterday that I haven’t blogged on free trade yet. This will be a hot issue for years to come. Free trade allows countries to do what they do best, with the global business flowing to the seller which can produce products at the lowest cost. It the U.S. is more efficient at making computers than making sweatshirts, import the sweatshirts and export the computers. The chorus against importing the sweatshirts will be led by U.S. textile workers, U.S. textile companies without overseas operations and people philosophically uncomfortable with globalization. For the moment, assume that widgets are low-tech products vulnerable to imports while jointroints are high tech products (just avoid sidewhomping) that the U.S. has a competitive advantage in making. Winners in free trade (1) Consumers. If we can choose to buy foreign goods, we get extra joytrons from saving money that would otherwise go to higher-priced domestics goods. (2) Domestic jointroint employees. Getting access to foreign markets means more business >more work >more money> more joytrons. (3) Corporations (<> terrorists) with a global reach. Multinational companies want to make goods where it’s the most economically efficient. Free trade allows them to do so. Note-that could easily be in the U.S. (4) American jointroint companies without foreign operations. If a company doesn’t have the size to have facilities in other countries, this takes down the trade barriers that hindered them from selling overseas. (5) Jointroint towns. Booming business at the plant means more money for the local service sector. Congressmen from jointroint districts will tend to be free traders, even if they’re Democrats. Losers in free trade (1) Widget workers. They can smell the bogons. They’re either going to have to get a new job or take a pay cut to get the paycheck/widget ratio competitive with their international brethren. The poster boy for protectionists is the 45-year-old factory-rat dad who’s too young to retire and too old to easily start over. (2) Small domestic widget makers. This move gives them bogons by the truckload. They’ll either have to play serious hardball with their workers to lower costs or write a new chapter in the company history, Chapter 11. This assumes that moving production overseas isn’t an option. (3) Unions. The jointroint industry is less unionized than the widget industry. Even if the jointroint industry pays better, it craps on their institutional turf. This might cause some friction in the future, as service, government and other workers who don’t make widgets make up a larger chunk of the AFL-CIO. It’s conceivable that a widget-workers branch might split off as free-trade becomes more acceptable to the non-widget-making rank-and-file. (4) Widget towns. Bogons R Us. When the plant closes, so does the town. Last one out, turn out the lights. Widget town congressmen make the most over-the-top protectionists. Traficant is a great example, as Youngstown is the quintessential widget town. If you have some heart left, you do feel for the shop-rats that are being let go and get a relapse of bleeding-heartitis when you see the town boarded up. (5) Localists- The people who like their small town world as is and don’t want to change, who would rather see Zenith than Mashushita on the box. This has a left-leaning folk-art gallery version and a right-leaning, lightly xenophobic, Uncle Charlie and Aunt Lorraine version. (6) Anarchosocalists- the protestors at any international gathering these days (and their supporters at home) that have a distrust of big corporations and institutions in general. To them, the current combination of free markets and modest government help for the needy isn’t working for the little guy. They aren’t at all coherent about what to replace the current mess with, but they are mad as hell and want the world to know. If you’re not in one of the six loser groups, you’re a candidate for being a free trader. Everyone is a consumer, so the default value should be to be in favor of free trade. That makes up the majority of Americans (or citizens of any country). Convincing the average voter of that is the trick, to drown out the pleas of the widget-centric labor Democrats. The problem is that all the groups in the loser class (except possibly #2) are Democratic constituents. Given that some Republicans will be from widget towns, we need to pry loose some Democratic support for free trade. Democratic Congressmen and Senators whose electorate is not widget-dominated are candidates for our votes.

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