My Aunt: People are fretting over the Affordable Care Act. Is no one paying attention to the Trans Pacific Partnership that is being moved quietly behind our backs? Bigger than NAFTA, the TPP will do more to destroy our jobs than NAFTA ever did. Why is no one concerned about the TPP? Me: Why do you think that opening up free trade is going to take jobs away from Americans? Every major economist would disagree with your position. Why dont we just subsidize and regulate all aspects of human welfare? These ideas you present just baffle me. But thanks for helping me stay sharp. Free trade has not destroyed jobs in Hong Kong where there are no taxes on imports and no tariffs. Free trade did not destroy jobs in Europe under Laissez-Faire. My Aunt: Holy Mother of Jesus sweetie, you did not just ask me why I think opening up free trade under the TPP is going to take away jobs from Americans? With every single thing you pick up marked made-in-some-other-country went a job an American could have held. Hong Kong holds roughly the population of the state of Washington. France is roughly the population of California and Texas combined. Not an accurate comparison to the whole of America. If I am helping you to stay sharp and on your toes, then I am happy. Just please dont be the dullest sharp knife in the drawer, and you will make me proud. Me: Where I can appreciate the connection between the mother of Jesus and myself, it isnt necessary. Yes, I understand your argument. If Japan can produce steel cheaper than the American steel manufacturers, then American steel manufacturers will be out of a job. Sounds simple but it still remains only a fraction of the whole story. By purchasing cheaper steel of the same quality from Japan, steel suppliers in the states will be affected, but manufacturers of steel products will have the advantage of saving money on steel so that they can hire more workers and increase overall productivity of the economy and also add jobs. Suddenly American goods are cheaper and more desirable to the rest of the world. Let me simplify my point in order to make it understandable and relatable to you. Lets take a simple and small social economy where the economy is controlled by a central body. For this discussion, let’s call this economy Your Household and You can be the central body. Now, if the state of Your Household is anything similar to the state of My Household, then Your Household is fully capable of sustaining itself by its own means; however, as the leader of My Household, I have come to realize that My Household can benefit from the economies of Other Households by means of working in collaboration. I could produce all the food, clothing, and entertainment I need through diligent labor. I would be lacking certain spices, a TV, and perhaps some other luxuries, but I would be content. On the other hand, I can choose to specialize in a skill that maximizes my ability to trade with others and live a much more prosperous life. To me it doesn’t matter if My Household trades with Your Household, some Other Household, or even a Foreign Household. Pretend Your Household can grow enough corn to sustain itself and also enough to supply 10 of your neighbors; however, you have difficulty producing cotton for clothing and you cannot meet the demands of your clothing needs even if you only grew cotton. You would be wise to trade corn for cotton, fill your demand, and free up your land to specialize in corn so that you could afford more cotton and be able to produce corn for 15 neighbors rather than struggling with cotton. With your new surplus of corn, you can now afford to hire neighbors to help you produce your corn for cheaper prices. This same simple principal works with neighbors, states, and even countries. Your argument is that the US would be better suited to keep steel jobs in the US even if another country could do it better and cheaper. In Your Household you would take a member of your household out of the workforce, inhibiting production, and place them in charge of cotton prices. You would tax imported cotton so that you could attempt to grow more cotton on your own land which ultimately detracts from your ability to produce corn. Now you can afford to produce corn for 8 Neighbors because you added land dedicated to cotton and you can cloth only 3 of 10 members of your household. I could continue with subsidies, but I think I have given you enough to chew on for the moment. Jobs are not leaving California and the United States because Japan has cheap steel. Jobs are leaving because the cost of doing business in these economies is expensive and not favorable due to the restrictions and regulations that we have put in place. North Korea imports very few goods. Their jobs are not threatened by the outside world and yet their economy suffers. They lack prosperity because they refuse to trade. My Aunt had nothing more to say
Posted on: Mon, 28 Oct 2013 18:40:22 +0000
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