sc94597 said:
Notice the last part of the quote, " in practice, it's a lot more difficult to distinguish one from the other. While this doesn’t necessarily mean we should disregard currency manipulation as a meaningful concept, it does highlight some of the more biased views that are only recognized when some other country is doing the manipulating" I think that describes it pretty well. Whose to say China is even consciously undervaluing its currency, while the U.S is not distorting its for other reasons (maintaining its status as the world reserve currency is beneficial to U.S's oil escapades)? Certainly it can be a side-effect of their monetary policy. And honestly, you mention it as a "beggar-thy-neighbor" policy as if the U.S has never done anything that comes close to "beggar-thy-neighbor." (see: post Great-Depression.) Although I guess it doesn't have to today, because it outright invades countries and ignites coups to enhance its interests. If every country installed tariffs because they perceived the other as playing unfairly, we'd be living in a new age of mercantilism (and consequently warfarism.) This last line is flatly incorrect, we currently have many tariffs which function in precisely this manner as do other countries. We haven't descended into a new age of mercantilism just because we are prepared to counter bad acting with protectionist policy. What we are talking about here is not a new practice, we are talking about expanding an accepted practice towards CM specifically. Also, China has not explictly stated it is engaging in deliberate CM, however western academics have plenty of reason to believe they are, not the least of which is the known popularity of literature promoting the concept of CM as necessary amongst the upper members of the CPC. As for the US engaging in unfair trade practices in the form of QE altering the exchange rate: you'd have to prove this was done deliberately for the economic benefits to our exporters. Since the objectives of the FRS are low inflation and low unemployment then this would imply they sought this policy to increase job growth, but then you'd have to contend with the fact that promoting exporters is laregly the promotion of manufacturing and the fact that US manufacturing is increasingly automated, means that as a policy tool it would be much weaker here than in a country with labor intensive manufacturing, like say China. In fact it would pretty much be useless here because all the growth in manufacturing production has occurred with almost no increase in manufacturing employment. You could make the case that such policies were sought to benefit the growth in GDP but not in jobs, and therefore, since the fed does not target GDP, it seems an unlikely case that monetary policy in the US is really currency manipulation. In terms of post-depression BtN policies I have to admit I am not sure what you are referencing, the time period is generally associated with trade liberalization such as the creation of General Agreement on Tariffs and Trade (GATT) and the Reciprocal Trade Agreement Act (RTAA)
That's because that's not a fact we can all agree on. In fact I would contend there is no comparative advantage in letting China do most of the manufacturing, there are many economists who agree with this sentiment. Furthermore, the assumption (or short-sightedness) that wages in China won't increase is false, as they already have over the last 20 years. Eventually they will stabilize with first world standards, once China can solve its urban vs. rural division, and jobs will move to the next capital deficient nation (possibly somewhere in Africa or South America.) But notice how he doesn't just want to punish China and Burma (relatively undemocratic places) but also Chile and Singapore - both liberal polities(at least today.) Overall, limiting trade through tariffs because some people are violating the rights of others, is the equivalent of placing sanctions on North Korea for the same reason. The establishment in these countries aren't harmed, but the common person is. Additionally, what is the best way of bringing democracy and liberalism to illiberal places? By trading with them. The more we interact with them the more they'll change for the better. We can already see this in China 2016 vs. China 1970. Overall it is silly to punish regular people who are just trying to survive because their governments violate their rights, and tariffs - whether intentionally or not - do just that. Not to mention the negative effects on consumer goods at home, which is something that always must be considered in the debate about economic welfare.
None of the economists who object to the trade deals as they've been written assumes wages in China won't rise, nor do the politicians who oppose them make this assumption as far as I am aware, even when that opposition is couched in opposition to China's human rights violations. In terms of Chile it should be noted it is a country which has a spurious relationship with democracy. Having been ruled by a dictator in the early 70s that gave way to a military coup and regime that lasted until 1990 and committed numerous human rights violations. The constitution was not made fully democratic until 2005, after the trade agreement went into effect. I can understand Sander's position, it was one of caution mosty likely, fearing the fact that the military still was autocratic and it's top commander outranked it's democratic politicians in terms of power (and could not be removed by one) at the time. It should be noted that Chile has been recently mired in political crisis over the exposure that politicians in both is biggest parties were engaged in a large degree corruption. It is also debatable whether Singapore can really be called a liberal democracy. Some have used the term illiberal democracy, Freedom House ranks it as undemocratic and only "partly free". In terms of press freedom Singapore has been ranked near the bottom of the list. Also in terms of North Korea, we do that. We do employ sanctions against them because of their human rights violations. This is not objectionable in and of itself and it does not lead to a deterioration of international markets. Also, I didn't say lowering trade restrictions is the only way to increase utility, but it is the fairest way. Giving special priveleges to any single group is not acceptable. Picking winners and losers in the world is not acceptable. There is a good utility argument that it creates distortions in how people interact with one another that in the long-term can affect total utility, but that is not why we should oppose protectionism. We should oppose it because it unfairly favors one special interest group over another. As for the intellectual property issue with regards to Singapore - it seems as if it is just being brought up the standards of the U.S and Europe. I personally am not a fan of the current intellectual property rules in the U.S (and Europe), but it seems like a small negative to a bill that will overall open up markets and trade. Sanders seems to apply a zero-tolerance policy to free-trade, when he doesn't do this with other things that might have negatives (such as his extravagant welfare programs.) It is a very rigid and uncompromising way to go about it. That is why he seems quite the protectionist. |
The part about picking winners and losers...well nearly all economic policy involves choosing winners and losers. It's just the truth about economic decisions, especially trade, you have to make hard choices sometimes. The architects of NAFTA originally panned it as a way to increase job growth in the US. When it caused hundreds of thousands of job losses they pointed to the wage growth associated with the policy instead. Arguing that the growth in wages for the highest income earners offset the wages lost from lost jobs. This was solely the result of lowering trade barriers (though selectively, keeping certain ones in place). There are winners and losers here and they were chosen by policy, but it was a free-trade policy. The reality is you have to make decisions about who wins and who loses with all of these policies, you're only deluding yourself if you think you can figure out a way to make everyone better off everytime (sometimes you can, when things line up correctly, but thats rare). The idea that we should be against any protections because they favor one group over another is not really defensible and also i,t funnily enough, puts you on Sander's side in terms of his vote history. If you really believe in that line and held to it rigidly then you'd have to oppose every trade deal he did, because they explictly made decisions about winners and losers, favoring some groups over others.
Trade with illiberal regime may indeed be the best way to spread capitalism and it most definitely has benefited many peoples lives. However I would stop short of saying that any trade agreement with a illiberal regime is beneficial towards the promotion of democratic market society. It is easy to conceive how a struggling regime may actually use certain trade agreements to prolong their power. Not to mention that trade directly empowers these regimes by handing them much more money in taxes through their economies. In terms of China I think the jury is still out, and to be clear I'm an optimist and hope that our trade with them really has deteriorated the CPCs power. But if we take an analysis of where China is today and in 1970 almost all the progress is economic, not political. They are still ruled by an autocratic one party communist regime, they still forcibly abort children, they still spy on their citizens to a degree which would make the NSA blush, they still censor all their media heavily, hell they've scrubbed Tiananmen square from the national consciousness, many experts at this point view the Chinese democracy movement to have been in decline for several decades now (peaking in the 90s). There are other examples which can be used to support the idea though and it may be that trade even with illiberal regimes is a good thing sometimes, but I think there is a good case to be made that certain trade deals would be much better if crafted slightly differently. Sanders is admittedly a bit more rigid, finding that all of the proposed deals negatives outweigh the positives, however I firmly believe he and I are in the same essential camp. That trade can be good and it can be bad, we've done it badly for decades and we can do much better in the future. That doesn't mean closing our doors to everyone though.
