It is disappointing to me that 10 years after the Great Recession began in 2008, there is still no general recognition that Global Free Trade has damaged the US domestic economy. Disappointing but predictable as the powers-that-be loved their theories on free trade.
Economists predicted that some grand outcome would result from free trade. (That rising tide!) But 25 years into this experiment, we can say that free trade has not lived up to their predictions.
The circular flows within our domestic economy were depressed as a direct result of free trade. American workers/consumers were harmed first and then as total household debt peaked, the US domestic economy was depressed. And that brought on the Great Recession. The dismal recovery from that Recession has caused the Federal Reserve to keep interest rates too low for too long.
In the fourth paragraph I wrote: “The United States is THE net importer. We interrupt our own circular flows by bringing manufactured goods into the country instead of producing them here. In the process we leave American workers unemployed or underemployed. This is the cause of our secular stagnation. We can move closer to solving our problems by forcing renegotiations of our trade treaties to get much much narrower trade imbalances. Given that we are THE net importer, the benefits of such a move would accrue directly to us.“
In the last paragraph I wrote “These staggering trade imbalances will be dealt with by the Democrats or the Republicans or there will be a third political party to force the issue.” We did not get a third party President in 2016 but we did get a President that both major political parties hated.
Global Free Trade and Communism both have the same problem, they depend on human beings and their organizations to act against their own short term best interests.
It took 70 years for communism in the Soviet Union to run its course. I don’t believe the American workers/voters will put up with Global Free Trade for another 60 years!
On the school shooting issue I noticed by looking at Stoneman Douglas high school on google earth, that there are lots of entrances and exists from building that lead from the parking lot. of course this makes security a nightmare. It is interesting that large buildings and employeers have tightened security at office buildings. What if high school students were issued gate key cards, and a fence was placed around the complex, and the entrances were set up on person at a time. There would be only one visitor entrance where metal detectors etc could be placed. This would also provide early introduction to what the work experience is like in large companies today with entrance gates. You could set up the school bus entrance/exit with security such that no one could walk from the outside to this area. Such solutions already exist but are expensive. Or you could move the fence line such that student/faculty parking is inside it and a visitor parking area is set up next to the entrance facility. A vistor would be issued a time limited badge after registering and clearing the metal detector. It would work in High School, but not sure about younger children keeping track of ID badges.
Semi autos have been around for many years. What’s different now?
One of the things that is different is the prevalence of psychotropic drugs. You know the ones that list side effects like “increased thoughts of suicide.”
While mass killers generally have guns in their hands, another commonality is that they often have psychiatric drugs in their blood. Adding these drugs to adolescent male brains already bursting with testosterone, anxiety, and lacking perspective. “One study shows a quarter of all children on drugs such as Paxil and Zoloft become dangerously violent and/or suicidal.”
From Prozac to Parkland: Are Psychiatric Drugs Causing Mass Shootings?
“….bringing manufactured goods into the country instead of producing them here?”
Is it because capital flows to the greatest roi which is mostly to nations that have low cost labor, therefore lower costs of production, perhaps, and that our corporate tax policies don’t tax those larger profits at standard rates until they’re brought back, and when do bring them back congress gives them a pass and allows them to do so at cut rate taxes?
What I think you’re missing is that the U.S. is competing with other nations. If we put up tariffs on imports we stop competing and fall behind other nations productivities, which then means we have to put up even higher tariffs, etc. ad-infinitum. This just leads to higher and higher prices in the US for consumers relative to what other nations will enjoy and thus our standard of living declines or stagnates, while others advance and improve.
Is there some reason you believe the US is entitled or deserving of increasing our standard of living without competing with other nations?
This may help explain why this occurs: Heckscher–Ohlin theorem “A capital-abundant country will export the capital-intensive good, while the labor-abundant country will export the labor-intensive good.” A capital intensive country will produce Capital intensive good cheaper than a Labor intensive country and vice versa.
“What I think you’re missing is that the U.S. is competing with other nations. If we put up tariffs on imports we stop competing and fall behind other nations productivities, which then means we have to put up even higher tariffs, etc. ad-infinitum. This just leads to higher and higher prices in the US for consumers relative to what other nations will enjoy and thus our standard of living declines or stagnates, while others advance and improve.”
Your paragraph is one non sequitur after another.
Toyota did not spend a fortune to increase their productivity in Japan. They moved some of their production to the US. Other foreign automakers followed Toyota’s example.
US automakers did not fall behind other nations productivities because they were forced to compete with Toyota.
What I think that you are missing is that tariffs have been used in the US since 1789 to raise the cost of cheap imported goods. The US economy flourished with them in place!
“Is there some reason you believe the US is entitled or deserving of increasing our standard of living without competing with other nations?”
The US government’s paramount responsibility is for the welfare of its citizens. I am shocked that you do not understand that.
Every other year there is an election in the US. Neither of the two major political parties can indefinitely escape from this issue.
It is disappointing to me that 10 years after the Great Recession began in 2008, there is still no general recognition that Global Free Trade has damaged the US domestic economy. Disappointing but predictable as the powers-that-be loved their theories on free trade.
Economists predicted that some grand outcome would result from free trade. (That rising tide!) But 25 years into this experiment, we can say that free trade has not lived up to their predictions.
The circular flows within our domestic economy were depressed as a direct result of free trade. American workers/consumers were harmed first and then as total household debt peaked, the US domestic economy was depressed. And that brought on the Great Recession. The dismal recovery from that Recession has caused the Federal Reserve to keep interest rates too low for too long.
Here is a link to a comment which I left on angrybearblog on 10 April 2014 at 12:00am.
See: http://angrybearblog.com/2014/04/key-variable-in-model-for-secular-stagnation-is-labor-share.html
In the fourth paragraph I wrote: “The United States is THE net importer. We interrupt our own circular flows by bringing manufactured goods into the country instead of producing them here. In the process we leave American workers unemployed or underemployed. This is the cause of our secular stagnation. We can move closer to solving our problems by forcing renegotiations of our trade treaties to get much much narrower trade imbalances. Given that we are THE net importer, the benefits of such a move would accrue directly to us.“
In the last paragraph I wrote “These staggering trade imbalances will be dealt with by the Democrats or the Republicans or there will be a third political party to force the issue.” We did not get a third party President in 2016 but we did get a President that both major political parties hated.
Global Free Trade and Communism both have the same problem, they depend on human beings and their organizations to act against their own short term best interests.
It took 70 years for communism in the Soviet Union to run its course. I don’t believe the American workers/voters will put up with Global Free Trade for another 60 years!
On the school shooting issue I noticed by looking at Stoneman Douglas high school on google earth, that there are lots of entrances and exists from building that lead from the parking lot. of course this makes security a nightmare. It is interesting that large buildings and employeers have tightened security at office buildings. What if high school students were issued gate key cards, and a fence was placed around the complex, and the entrances were set up on person at a time. There would be only one visitor entrance where metal detectors etc could be placed. This would also provide early introduction to what the work experience is like in large companies today with entrance gates. You could set up the school bus entrance/exit with security such that no one could walk from the outside to this area. Such solutions already exist but are expensive. Or you could move the fence line such that student/faculty parking is inside it and a visitor parking area is set up next to the entrance facility. A vistor would be issued a time limited badge after registering and clearing the metal detector. It would work in High School, but not sure about younger children keeping track of ID badges.
Semi autos have been around for many years. What’s different now?
One of the things that is different is the prevalence of psychotropic drugs. You know the ones that list side effects like “increased thoughts of suicide.”
While mass killers generally have guns in their hands, another commonality is that they often have psychiatric drugs in their blood. Adding these drugs to adolescent male brains already bursting with testosterone, anxiety, and lacking perspective. “One study shows a quarter of all children on drugs such as Paxil and Zoloft become dangerously violent and/or suicidal.”
From Prozac to Parkland: Are Psychiatric Drugs Causing Mass Shootings?
https://www.thenewamerican.com/usnews/crime/item/28307-from-prozac-to-parkland-are-psychiatric-drugs-causing-mass-shootings
JimH,
And why do you think we:
“….bringing manufactured goods into the country instead of producing them here?”
Is it because capital flows to the greatest roi which is mostly to nations that have low cost labor, therefore lower costs of production, perhaps, and that our corporate tax policies don’t tax those larger profits at standard rates until they’re brought back, and when do bring them back congress gives them a pass and allows them to do so at cut rate taxes?
What I think you’re missing is that the U.S. is competing with other nations. If we put up tariffs on imports we stop competing and fall behind other nations productivities, which then means we have to put up even higher tariffs, etc. ad-infinitum. This just leads to higher and higher prices in the US for consumers relative to what other nations will enjoy and thus our standard of living declines or stagnates, while others advance and improve.
Is there some reason you believe the US is entitled or deserving of increasing our standard of living without competing with other nations?
No man’s an island or do you thing they can be?
LT:
This may help explain why this occurs: Heckscher–Ohlin theorem “A capital-abundant country will export the capital-intensive good, while the labor-abundant country will export the labor-intensive good.” A capital intensive country will produce Capital intensive good cheaper than a Labor intensive country and vice versa.
Longtooth,
“What I think you’re missing is that the U.S. is competing with other nations. If we put up tariffs on imports we stop competing and fall behind other nations productivities, which then means we have to put up even higher tariffs, etc. ad-infinitum. This just leads to higher and higher prices in the US for consumers relative to what other nations will enjoy and thus our standard of living declines or stagnates, while others advance and improve.”
Your paragraph is one non sequitur after another.
Toyota did not spend a fortune to increase their productivity in Japan. They moved some of their production to the US. Other foreign automakers followed Toyota’s example.
US automakers did not fall behind other nations productivities because they were forced to compete with Toyota.
What I think that you are missing is that tariffs have been used in the US since 1789 to raise the cost of cheap imported goods. The US economy flourished with them in place!
“Is there some reason you believe the US is entitled or deserving of increasing our standard of living without competing with other nations?”
The US government’s paramount responsibility is for the welfare of its citizens. I am shocked that you do not understand that.
Every other year there is an election in the US. Neither of the two major political parties can indefinitely escape from this issue.
Democracy at work.