More on the Economic Irrelevance of Political Borders

by Don Boudreaux on June 9, 2011

in Seen and Unseen, Subsidies, Trade

Writing about the economically unjustified Trade Adjustment Assistance (TAA) program in today’s Washington Post, George Will gets it exactly right about the nature of that lamentable program.  Here’s the heart of the column:

A government borrowing $58,000 a second cannot afford Obama’s policy of Stimulus Forever, and there is this problem with TAA at any level: It is unjust to treat some workers as more entitled than others to protection from the vicissitudes of economic dynamism.

Consider a hypothetical Ralph, who operated Ralph’s Diner until Applebee’s and Olive Garden opened competitors in the neighborhood. With economies of scale and national advertising budgets, those two franchises could offer more choices at better prices, so Ralph’s Diner went out of business. Should he and his employees be entitled to extra taxpayer subventions because they are casualties of competition?

Why should someone be entitled to such welfare just because he or she is affected negatively by competition that comes from abroad rather than down the street? Because national trade policy permits foreign competition? But national economic policy permits — indeed encourages, even enforces — domestic competition.

In 2001, when approximately 80,000 people worked in 7,500 music stores, the iPod was invented. Largely because of that and other technological changes, today only about 20,000 people work in 2,500 music stores. Should those 60,000 people be entitled to extra welfare because they are “victims” of technology? Does it matter if the 60,000 have found work in new jobs — perhaps making or selling electronic devices?

In 2008, Americans bought 1.4 billion books made of paper and 200 million e-books. Soon they will buy more e-books than paper books, and half the nation’s bookstores will be gone. Should the stores’ former employees be entitled to special assistance beyond unemployment compensation?

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{ 191 comments }

rhhardin June 9, 2011 at 7:16 am

Those workers are the victims mostly of adverse US regulations and prospective regulations that favor shipping jobs overseas.

Economic aid to them spreads the pain around more.

Craig S June 9, 2011 at 9:15 am

Actually, workers are victims of adverse regulations that protect established businesses at the expense of new competitors

muirgeo June 9, 2011 at 9:26 am

Yes , we should stop requiring companies to not end their toxic effluent into local water sources.

I am just finding out that my childhood neighborhood was a site for toxic run off from near by Lambert Airport into the Coldwater Creek basin that I played in as a child with my best friend Mike … but Mike had leukemia diagnosed at age 8 and is dead now… as is Jimmy Engleman up the street who died of ALL around the same time.

Yeah those damn regulations…

Sam Grove June 9, 2011 at 9:29 am

Are you commenting on a different post?

crossofcrimson June 9, 2011 at 10:30 am

I believe he things crimes and torts don’t exist for libertarians….

Either way, it’s a bit batty.

crossofcrimson June 9, 2011 at 10:30 am

**thinks

Methinks1776 June 9, 2011 at 1:17 pm

**thinks

Is that how you would describe what he does? I think not.

John B June 9, 2011 at 1:30 pm

All arguments that even vaguely hinge on Libertarianism must involve the words “toxic waste”, “Somalia”, and “roads” regardless of the actual topic.

He’s just getting 1/3 out of the way early.

Polly June 9, 2011 at 2:00 pm

Whatever, it does make me wonder how HE survived all that toxicity. Maybe that’s what makes him so cranky, “survivor’s guilt.”

WhiskeyJim June 9, 2011 at 2:23 pm

@Sam

Actually muirgo, perhaps unintentionally, illustrates Progressive thinking on trade in his post.

We want domestic jobs, but only the cleanest union jobs. The other stuff we will import with high tariffs, especially if those goods come from countries where people have yellow skin. Dark skinned countries deserve our never-ending compassionate hand-outs, unless they show a proclivity for generating soulful, rhythmic music.

And there are some industries we don’t want either; 99% of energy for instance. We can import that stuff also, but it should be heavily taxed.

Then, we’ll be really rich. And we will all be employed, like Keynesian manna from heaven.

So no, Will is wrong. Obama did not just use the stimulus to kick back trillions to his supporters. He supported the good and moral jobs that all compassionate people should aspire to. The rest of us are working for Satan’s spawn until unions or the government take them over.

Ryan Vann June 9, 2011 at 1:11 pm

I concur with you muir. Water table management has become abysmal in this country.

Dan June 9, 2011 at 4:33 pm

Those damn airline corps! Shut down the airport! Where is the EPA? Shut down the airlines with their filthy fossil fuels and open them back up once hang-gliders are used as replacement .

muirgeo June 9, 2011 at 5:18 pm

No I’m just saying we should make sure their effluent only ends up in libertarian soil, food and water since they are OK with that.

Me … I miss my childhood friend.

vikingvista June 10, 2011 at 2:29 am

And just so you know, it is pronounced “corpse”.

W.E. Heasley June 9, 2011 at 7:20 am

The plan needs to be fully retroactive! That’s the ticket! Going all the way back to the period covering yesterday to and including pre-agricultural revolution! It would only be “fair”!

Steam engine mechanics, wagon wheel repair shops, wooden hull boat manufacturers, cassette tape and eight track tape producers/assemblers, push lawn mower assemblers, tin cup workers, paddle wheel river tug assemblers/producers, trans-Atlantic telephone cable layers, windows 98 makers/assemblers, horse Calvary amour assemblers……

Maybe we need the (PTAA)! Politico Twit Adjustment Assistance.

Nemoknada June 9, 2011 at 7:59 am

I’m not clear what the theoretical objection to TAA is. It’s not protectionist; it’s redistributionist, and what it redistributes is not the money made by American businesses who outsource but the manna sent from abroad.

What, exactly, did the average Wal Mart shopper do to deserve the gift implicit in cheap foreign goods? Even if we accept as free traders that it would be idiotic to reject the gift by imposing tariffs, what is wrong with sharing the gift of lower prices with those who are displaced by it? Even assuming that the spending is inflationary, the inflation takes a sliver of purchasing power from people who are gaining it from lower prices and allocates it to those who are not, at the same time helping them to learn to do what America’s gorwth industries need people who know how to do.

It seems to me that the opposition to the TAA is personal and relfexive. Personal in the sense that unions support it, and we hate unions, so we oppose what they want, and reflexive in that we don’t think anything government does is good, so this must be bad, too. But, the facts remain that the evils actually opposed do not protect failing industries and do benefit entrepreneurs who would start modern American competitors. So, I ask again, what’s not to like?

Gordon Richens June 9, 2011 at 8:35 am

“It seems to me that the opposition to the TAA is personal and relfexive. Personal in the sense that unions support it, and we hate unions, so we oppose what they want, and reflexive in that we don’t think anything government does is good, so this must be bad, too.”

Gee, project much?

Nemoknada June 9, 2011 at 8:45 am

“Gee, project much?”

Is that a disagreement with the observation? A defense of the objections to TAA?

Or is it proof of my point, like the two, reflexive, irrelevant anti-protectionist comments by Vance Armor and John Sullivan?

Methinks1776 June 9, 2011 at 9:20 am

To anyone but a fool that is sarcasm.

There is nothing more irrelevant or reflexive and nothing that so heartily misses the point than your original comment. The only person who takes your straw man seriously is you.

WhiskeyJim June 9, 2011 at 3:21 pm

Nemoknada clearly believes that the results of enterprise are free gifts or manna, and further, that Government is God in those situations, free to give or take away the manna at their discretion.

It is his analogy, not mine.

Gordon Richens June 9, 2011 at 9:51 am

Read what I quoted.

No matter. Go ahead and turn your economy into a museum for all I care. It just opens the door for other nations to outbid you for scarce resources.

John Dewey June 9, 2011 at 9:01 am

“What, exactly, did the average Wal Mart shopper do to deserve the gift implicit in cheap foreign goods?”

Are you for real? Did you really mean to write this?

What did anyone on the planet do to “deserve” the Salk vaccine?

What did anyone who didn’t raise their own cows do to “deserve” fresh milk?

What did anyone do to “deserve” the benefit of industrialization?

What does your argument mean? Why does it have any relevance to the question of whether a government should redistribute money from one household to another?

Nemoknada June 9, 2011 at 9:51 am

“What does your argument mean? Why does it have any relevance to the question of whether a government should redistribute money from one household to another?”

The strongest economic argument against the redistribution of wealth is that redistributing it lessens the incentive to create it. There are philosophical arguments about liberty and autonomy to be made as well, but economics has ALWAYS trumped philosophy where the two conflict. Free entrerprise persists because it is the best way to achieve prosperity; to the extent it is not, our laws restrict it.

One of the key economic arguments against redistribution is that it destroys incentives – that you can’t share what doesn’t get produced. I agree with that argument. Ceteris paribus, if you tax the creation of wealth, less wealth gets created. But that logic does not apply to what Bastiat calls the “gratuitous gift” of free trade. If we “redistribute” the lower prices realized by consumers from trade, we will not reduce the amount of trade, except as part of the general reduction in spending that accompanies any form of widely applicable tax, including inflation. I ask what the consumer has done to “earn” the benefits of free trade because, if the consumer has nothing to withhold as a consequence of his getting less of a gift, then the incentive-destruction argument against redistribution evaporates. All that remains is a finders-keepers argument, which has way less political appeal than the “If it weren’t for my efforts, it wouldn’t exist” argument.

So let’s look at your alleged analogies:

“What did anyone on the planet do to ‘deserve’ the Salk vaccine?

I didn’t suggest that we eschew the benefits of free trade; I suggested that we redistribute them because the people who are getting them did no more to earn them than those who are not. How does that relate to a vaccine available free to everyone who wants it? You are making my point exactly. No one did anything to earn the Salk Vaccine, which is why it was distributed by the political process and not auctioned to people with jobs.

“What did anyone who didn’t raise their own cows do to ‘deserve’ fresh milk?”

They did something else that entitled them to trade for it, something they might do less of if it didn’t entitle them to buy milk. People earned the right to get what Wal-Mart has to sell; they did not earn the right to China’s subsidy of it.

“What did anyone do to ‘deserve’ the benefit of industrialization?

And you don’t believe the political process has to some extent redistributed those?

I don’t really have a problem with the government “redistributing” a windfall that did not arise from my pursuing it (or my donor pursuing it) as an incentive to productive effort. There is no reason why manna should not be distributed per capita, and even be means -tested.

John Dewey June 9, 2011 at 9:56 am

My reply to you was intended to help you realize that the word “deserve” makes no sense in your argument.

Now that you have added the word “windfall” to you argument, I’m beginning to believe that you have no respect for property rights.

Slappy McFee June 9, 2011 at 10:27 am

edit — “I’m beginning to believe you have no respect”

The “for property rights” was simply extra filler for someone like Nemo.

John Dewey June 9, 2011 at 9:59 am

“There is no reason why manna should not be distributed per capita, and even be means -tested.”

People who think as you do are exactly why I keep a loaded weapon in my home.

Nemoknada June 9, 2011 at 10:41 am

“People who think as you do are exactly why I keep a loaded weapon in my home.”

Probably true. More a statement about you than about me, but probably true nonetheless.

And do you have a Bible there, too? With the part about the Manna being distributed per capita?

John Dewey June 9, 2011 at 11:12 am

With the part about the Manna being distributed per capita?

I assume you are referring to Numbers 11:9. That Manna was not redistributed from one household to another.

As a youth, I did read that Jesus taught us to be charitable to others. I was also taught that the amount of such voluntary charity was a matter for each of us to decide for himself.

Forcing others to sacrifice their property against their will was not something I learned in my religion classes as a youth. Is that something you learned from your bible?

dsylexic June 9, 2011 at 10:36 am

“what did consumers deserve a subsidy from china”
have you ever shopped for yourself anytime in life? every buyer thinks he or she should things at a cheaper price -ALWAYS. the essence of buying lies in looking for value.if people did not value their money,prices wouldnt matter OR they would be bureaucrats spending other peoples money on some other people.are you one of them?

Captain Profit June 9, 2011 at 1:43 pm

“The strongest economic argument against the redistribution of wealth is that redistributing it lessens the incentive to create it.”

No, the strongest argument is the one that goes something along the lines of, “neither shall you steal.” If that’s too “philosophical” for you, I doubt that I can be of further assistance.

Chucklehead June 9, 2011 at 5:38 pm

“What, exactly, did the average Wal Mart shopper do to deserve the gift implicit in cheap foreign goods?”
They shopped at Wal Mart. If they have to share their savings, then they may shop at some more convenient place, and Wal Mart has the less of incentive to scour the globe to find the most efficient producer. This would also remove incentives for domestic producers to become more efficient. The eventual consequence is to freeze economy in time, inhibit change and innovation This is why eastern Europe looked the same when the Berlin wall fell as it did when it was erected.

txslr June 9, 2011 at 5:59 pm

I remember visiting Berlin in the mid-1980′s, before the wall fell. In the East Berlin they hadn’t gotten around to repairing the damage…FROM THE SECOND WORLD WAR! There were bombed out buildings and bomb craters littering the place where tourists didn’t regularly go. Stunning.

Chucklehead June 9, 2011 at 6:25 pm

If you liked the fifties, go to Havana, where it is still going on.

Shidoshi June 10, 2011 at 9:49 am

Nemoknada,

Don’t the workers who are being displaced by more efficient industries and technologies get to participate in the cost savings as well? So if they are in receipt of TAA hand-outs and continue to “shop at Wal-mart” (in your analogy), they are benefiting twice.

You are attempting separate producers/consumers, as they are one in the same when they exchange their goods and services. It is up to one’s self to gain the relevant skills necessary to continue to consume. Will’s interpretation holds true, otherwise we should be supporting the makers/users of the plow, typewriter, the rowboat, etc…

Don Boudreaux June 9, 2011 at 12:27 pm

*Like*

vidyohs June 9, 2011 at 9:05 am

“Even if we accept as free traders that it would be idiotic to reject the gift by imposing tariffs, what is wrong with sharing the gift of lower prices with those who are displaced by it?”

You have the belief that those who are displaced by , say Walmart’s lower prices, are prohibited from shopping in Walmart? That is what you are saying in that quote.

Therefore as “those who are displaced” are free to shop in Walmart and already have the gift of low prices shared, why do you think “something needs” to be done?

Nemoknada June 9, 2011 at 10:12 am

“You have the belief that those who are displaced by , say Walmart’s lower prices, are prohibited from shopping in Walmart? That is what you are saying in that quote.”

Being out of work tends to reduce the benefits one gets from shopping ANYWHERE, as one has (much) less money to shop with. Many people put out of work by Wal-Mart shop AT Wal-Mart, but I’m not saying anything bad about Wal-Mart. I am merely saying that the benefits of shopping there are proportional to the money spent, and people with jobs tend to spend more than people without them, so the benefits of free trade flow disproportionately to those not displaced by it.

George Will asks the better question of why the losers to foreign competition should get things that losers to domestic competition do not get. The answer is that goes back to the fundamental argument that free enterprise persists at the sufferance of the mob because it is the best engine of prosperity every created. If it weren’t, it would be sharing space with Communism in history’s dustbin, now matter how much personal autonomy it allows.

Our political tolerance of free enterprise is largely tacit, but it has consequences. If some aspect of free enterprise – outsourcing, say – appears to be REDUCING prosperity rather than increasing it, whether or not it is increasing aggregate wealth, which is not the same thing as proseperity, the political process will try to undo the perceived harm. Outright redistribution tends not to work, as it crushes incentives, but it’s hard to make the case that retraining assistance has any such negative externality; it may even pay for itself. That may be irrelevant to those whose complaint is that Big Brother is involving himself in the process, but there is no defense for any action by government if all action by government is bad, so it hardly matters whether TAA assistance is or is not sound under any other test.

Nemoknada June 9, 2011 at 10:14 am

What are the libertarian and economic arguments for or against an “Edit” button on this site?

Slappy McFee June 9, 2011 at 10:23 am

If enough people choose not to post on cafehayek due to the lack of an edit button, cafehayek will add the edit function or go the way of the dodo bird

nailheadtom June 9, 2011 at 12:51 pm

“Our political tolerance of free enterprise is largely tacit, but it has consequences.”
————————————————————-

So our political “tolerance” of free enterprise is largely “understood but unspoken”? Wouldn’t it be more accurate to say that in an environment of freedom, of which free enterprise and a free market economy would be essential features, there would be a toleration of politics? That individuals intellectually invested in the freedom of thought and action brought about after centuries of struggle against tyranny and despotism and embracing the well-documented benefits of the free market would understand that government intervention in markets has consistently produced negative results? You neo-Hegelians are so predictable.

Nemoknada June 9, 2011 at 3:41 pm

“The economy is not a commons by any flight of reason. ”

Yes, it is. You’re just not inclined to see it.

Nemoknada June 9, 2011 at 3:55 pm

“Wouldn’t it be more accurate to say that in an environment of freedom, of which free enterprise and a free market economy would be essential features, there would be a toleration of politics? ”

No, it wouldn’t. Politics is economics continued by other means. A system allocates the available goods in a way that a free populace finds justifiable, or it doesn’t and it is overthrown.

Capitalism persists because it works, not because it lets people do whatever they want and the starving masses think that’s oh so important. Private property and freedom of enterprise are essential condtions for capitalism and, therefore, prosperity, but that’s all they are merely means to an end, not something that would be tolerated if it didn’t work so well.

“You neo-Hegelians are so predictable.”

I asked my kid how much 2+2 is, and he said “4.” The jerk has no imagination. I was SURE he would say “4,” and he DID say “4.” I told him that he was far too predictable. He asked why he would want to be anything but predictable where the answer is obvious, and I was stumped. Maybe you can help me out with that one.

nailheadtom June 10, 2011 at 12:32 pm

” Politics is economics continued by other means. ”
———————————————————
Nonsense masquerading as profundity. An economy is the sum of the individual transactions between separate actors. Politics is the effort to control those transactions and other behavior to the advantage of a portion of those actors. The idea of the economy as a commons and the importance of “aggregate demand” relate well to the instinctive behavior of hills of ants or colonies of termites but humans, differing in values, act in a more individualistic fashion.

STATISTICULOUS June 9, 2011 at 2:59 pm

How would you ever be able to tell who has lost their employment due to trade? If the owner of a business buys 3 new machines that allow him to reduce his labor costs 10 units by replacing the labor with the new capital, does that count? What if, as a result of free trade, the business owner can buy 5 machines from China for the same price as 3 produced domestically? Now maybe 15 units of labor can be done away with and replaced by capital. Do we compensate all 15? Only 5? Which 5?

I am always amazed when somebody thinks they can actually distinguish who deserves these government hand-outs. More things contribute to a single job lost than simply “trade”; we shouldn’t be foolish enough to think we can know when trade was the culprit and not innovation or ineptitude.

Nemoknada June 9, 2011 at 3:42 pm

“How would you ever be able to tell who has lost their employment due to trade?”

That might matter if you were trying to do justice. If you’re trying to get people back to work to restore aggregate demand, you don’t really care if you get it wrong.

I_am_a_lead_pencil June 9, 2011 at 9:07 am

What, exactly, did the average Wal Mart shopper do to deserve the gift implicit in cheap foreign goods?

….what is wrong with sharing the gift of lower prices with those who are displaced by it?

I could edit this as follows:

What, exactly, did the average “Toms farm stand” shopper do to deserve the gift implicit in Tom’s cheaper goods?

…..what is wrong with sharing the gift of Tom’s lower prices with Tom’s competitors who are displaced by it?

———

Most people would not argue for Tom’s competitors to get a share of the savings realized by Tom’s customers. Both are examples of voluntary commerce and competition. There is no distinct difference.

Nemoknada June 9, 2011 at 10:27 am

“Most people would not argue for Tom’s competitors to get a share of the savings realized by Tom’s customers. Both are examples of voluntary commerce and competition. There is no distinct difference.”

The distinct difference is that Tom creates jobs for Americans. Free enterprise persists because enough people perceive that it works for them in all of their roles – as consumers and as producers. Tom’s farm stand does nothing to impair that belief. Cheap foreign labor, like the hiring of illegal immigrants – outsourcing is just virtual immigration – does impair that belief.

And rightly so, because cheap labor helps us as consumers but hurts us as producers UNLESS we can find something else more lucrative to do, which there is mounting evidence is not going to happen. If we posit that American workers WILL find better work soon enough without assistance, then I would agree that their being displaced for a while is the price of poker in a free society (although I might argue for TAA as paying for itself in income taxes, if I had the numbers to back it up). But if we agree that displaced workers WILL NOT soon find work, I would not say “tough darts, it’s your own damn fault, and I’ve got a gun so go rob someone else.” And if I did, the revolution would nevertheless come, and I’d probably wish another public policy had been pursued.

crossofcrimson June 9, 2011 at 10:46 am

“But if we agree that displaced workers WILL NOT soon find work, I would not say “tough darts, it’s your own damn fault, and I’ve got a gun so go rob someone else.” And if I did, the revolution would nevertheless come, and I’d probably wish another public policy had been pursued.”

It’s fairly telling how that argument is employed in the context of human competition these days but much more rarely with non-human competition. It suggests that other motives (conscious or not) are in play. Nationalism and more broadly lesser forms of tribalism seem particularly suspect. Although I generally agree with your assessment of how people do or will act politically – even if they are incorrect.

Nemoknada June 9, 2011 at 10:55 am

“Although I generally agree with your assessment of how people do or will act politically – even if they are incorrect.”

What I find interesting is how voters are thought to be stupid, electing corrupt morons or voting to confiscate this and redistribute that, but CUSTOMERS are all-knowing and would never vote with their dollars to put their neighbors out of work and then, as a consequence of the demand they have destroyed, themselves. People are stupid sheep until they flock to Wal-Mart; then they are wise and careful and to be trusted beyond any expert. The voter is always wrong, and the customer is always right. Only in America!

lamp3 June 9, 2011 at 11:43 am

@Nemo: Voters’ choice of suboptimal outcomes is well described in Bryan Caplan’s “The Myth of the Rational Voter.”

Find policies that have clearly been disproved economically for the past centuries — protectionism, for instance — and wonder why those policies still exist. Individuals act in their rational self interest because they have a large, immediate and close incentive to get things as right as possible. The incentives facing those in government are not what the incentives facing a monolithic, single-minded “society” might have. In addition, voting does not measure the intensity or preferences of individuals, which may also lead to suboptimal outcomes.

Combine this comment with your others and you clearly do not believe in consumer sovereignty. Which I expect is a pretty big deal around these parts.

crossofcrimson June 9, 2011 at 1:30 pm

“What I find interesting is how voters are thought to be stupid, electing corrupt morons or voting to confiscate this and redistribute that, but CUSTOMERS are all-knowing and would never vote with their dollars to put their neighbors out of work and then, as a consequence of the demand they have destroyed, themselves.”

Firstly, I’d second lamp3′s suggest of reading Bryan Caplan’s “Myth of the Rational Voter” to see how clearly political and market-based functions differ fundamentally in that regard. I also enjoyed David Friedman’s “The Machinery of Freedom” in its basic explanation(s).

Secondly, buying cheaper products doesn’t destroy demand – it reallocates it marginally. We could have similarly made claims about such “stupid” Americans buying automobiles instead of horses, light-bulbs instead of candles, buying machinery to harvest crops instead of people, etc.. If you would have asked what we were going to do with all that excess labor post-transition, no one at the time (based on then-current lines of work) would have understood or predicted the many areas where labor was subsequently allocated.

People voted time and time again to “put their neighbors out of work” with their dollars, and yet, in hindsight, it was clearly the correct choice. Whenever anyone or anything displaces skilled labor, it almost always represents the prospect of loss (albeit usually temporary) for that particular individual or industry. Voluntarily helping those displaced in this way is admirable – something we should all strive for. Forcing society to collectively throw change at modern-day farriers seems more questionable.

Tangentially, while we’re on the subject of apparent paradox, what of government-controlled charity in a democracy? If you have a significant enough amount of national support to must an electoral plurality, then it seems like you’d be quite capable of forming voluntary organizations to address this problem without voting with your right hand to force your left hand to give. Unless the claim is that one side of the political fence is drastically more destitute than the other, this would prove an even more interesting paradox in my book.

Sam Grove June 9, 2011 at 1:33 pm

What I find interesting is how voters are thought to be stupid, electing corrupt morons or voting to confiscate this and redistribute that, but CUSTOMERS are all-knowing and would never vote with their dollars to put their neighbors out of work and then, as a consequence of the demand they have destroyed, themselves. People are stupid sheep until they flock to Wal-Mart; then they are wise and careful and to be trusted beyond any expert. The voter is always wrong, and the customer is always right. Only in America!

The incentives facing voters are different than those facing customers.

Voters see no immediate cost to themselves for their electoral choices.
Many voters expect others to bear the cost of their electoral choices.
Voters often see their choices not from among their most preferred options, but from their least preferred options. Voters often vote against the “other” guy.

Customers generally know what their choices will cost them and will usually pay the cost.
Customers have many options from among multiple providers and can seek out their most preferred options.
Customers are often offered money back guarantees.

It’s not so much about what people know or don’t know, but abut the incentives in the dynamics of shopping or voting.

Chucklehead June 9, 2011 at 4:59 pm

Why not just get rid of the minimum wage and have cheep domestic labour?

I_am_a_lead_pencil June 9, 2011 at 11:18 am

Whats the difference between an invention from abroad and a low price from abroad?

If someone in America invents the compact disk (and US LP sellers go out of business) it’s okay….but if the inventor were from Sweden he’d need to share the gift of his profits with US LP sellers?

lamp3 June 9, 2011 at 11:37 am

“what is wrong with sharing the gift of lower prices with those who are displaced by it?”
Those displaced get the rewards of looking to serve others in a more valuable, productive way. They also get the rewards of being in a position to better afford whatever they used to make themselves. Also, the intercession of someone unemployed who use to be the person you traded with into trade with somebody else should be left to the parties trading with each other. You essentially are pulling for charity; even if we purchase at high prices, as long as consumer surplus (a gift of trade) exists, why not forcibly redistribute that as well? It should be between the seller and buyer. If anyone wants to voluntarily give money away, let them do so voluntarily.

“I suggested that we redistribute them because the people who are getting them did no more to earn them than those who are not”
Do you also suggest we penalize the people who used to charge higher prices, who obviously were more inefficient and did even less to earn their income than overseas rivals?

It’s not that TAA opposition is reflexive. It’s an understanding that implicit in the subsidization of employee retraining, you already are creating deadweight loss and moral hazard. TAA also softens the blow for persons engaged in comparatively inefficient industry, by putting another benefit on the table in the event employees lose their jobs. TAA also puts the burden of inefficient industry on the shoulders of American taxpayers who, in addition to overpaying for goods/services, now must also foot the bill for those who were engaged in inefficient activity to begin with. Even if we use the “redistribution of low prices from abroad” that you mention later, you are still pushing the market away from where it otherwise would be. This also is deadweight loss.

“The answer is that goes back to the fundamental argument that free enterprise persists at the sufferance of the mob because it is the best engine of prosperity every created.”
Mutual and voluntary free trade persists at the enriching of the mob, because it is the best engine of prosperity ever created. Your fundamental argument is false and unsupported. The method by which you discuss this also gives me a sense you feel that workers are entitled to their jobs, which certainly is a condition that should not exist.

“People earned the right to get what Wal-Mart has to sell but not Chinese subsidies”
You are imagining contractual agreements between the body of consumers and current American businesses. This is not how reality works. People should/can approach Walmart, or any other entity (foreign and domestic, except limited by government), to seek mutually voluntary trade, but are not entitled to it.

There seems to be a make-work and antiforeign bias implicit in your message. This is used to say the current comparative inefficiencies in markets are the efficient point, and departures away from them (via foreigner’s lower prices) create inefficiencies that must be fixed by government. This sounds quite backwards. Coupled with the quotation of a few famous people that seem to support your counter-arguments, and we have a troll.

Nemoknada June 9, 2011 at 1:00 pm

“Those displaced get the rewards of looking to serve others in a more valuable, productive way. ”

How’s that working out for them so far? How come you get to say what is a reward for someone else? Sounds intrusive to me. I would think you’d accord them the liberty of deciding for themselves whether their fate is a reward. What are you, some sort of leftist, statist creep like me?

“You essentially are pulling for charity; even if we purchase at high prices, as long as consumer surplus (a gift of trade) exists, why not forcibly redistribute that as well?”

No, I am pulling for a remedy for a destruction of the commons. I am not suggesting that TAA is a matter of compassion. I am saying that it is sound public policy, It is retraining assistance to restore demand. It should pay for itself in rapid redeployment of human resources for the benefit of all. It is not charity; it is a tax for a public purpose: maintenance of a robust domestic economy and the consequent domestic tranquility, to secure the blessings of liberty for us and our prosperity.

The rest of your arguments are with straw men whose defense is not my job. As for the troll thing, it’s as important to me as your other opinions.

WhiskeyJim June 9, 2011 at 3:15 pm

Nemoknada’s argument rests on the premise that a person who works hard to provide more value or lower prices, married with the consumer who finds and transacts with them, is a free gift or manna. Therefore the consumer receives something for nothing.

Further, since it is manna, others are free to capture some of it.

Does anyone believe that? The premise circumvents all ideas of rights and freedoms, where it originates and resides, and even the idea of ‘deserve.’

Using this argument, we all subsist at the behest of some powerful entity, namely government. Happily, Nemoknada illustrates his equation of government with God when he quotes the Bible to illustrate what manna is later in the comments.

lamp3 June 9, 2011 at 4:08 pm

Nemo,
Shifts in employment are always difficult. It’s hard enough to know what the job market will look even the next year.

You are presuming much when you intercede into other’s transactions. I am only saying that the process for anyone unemployed and looking for work is the process of looking to serve others in more valuable, productive ways.

This is very different from the statist creep that you are, because I make no suggestions that others should pitch in to retrain those displaced workers.

I disagree with your point about restoring demand. If I work for Ford and Urals from Russia make me unemployed, it is not that demand has changed. Urals and Fords are substitute goods; the consumer demand for vehicles does not change.

Some days you herp, some days you derp.

lamp3 June 9, 2011 at 4:57 pm

“Tom creates jobs for Americans… …UNLESS we can find something else more lucrative to do, which there is mounting evidene is not giong to happen….”

It does not matter if the producer creates jobs for Americans or not in order for free trade to work. If China completely and totally subsidizes pears to be sold in the United States, we still benefit as a whole and pear farmers don’t keep their job. This is the optimum outcome — the pear farmers can find some other work to do that is valued by consumers. There is no way to know ahead of time what that more valuable work will be. No one should feel entitled to their job, especially if someone else can do it cheaper. Even free.

Your presumption that there are decreasing numbers of lucrative jobs seems incorrect. The day when nobody needs to do anything in order to accomplish everything will be the day lucrative jobs cease to exist. Until then, as technology opens opportunities and trade expands markets, the pool of consumers and sellers will increase globally. So long as voluntary and free trade exist, mutual gains from trade will also.

Since market transactions have been going on forever under a variety of regimes, regardless of its legal status, I do not share your pessimism of the future. The Cafe showed me Macaulay, and I share it with you — “On what principle is it that, when we see nothing but improvement behind us, we are to expect nothing but deterioration before us? ”

You mention the temporal aspects of unemployment; how does regime uncertainty factor into your discussion? Government intervention into industries and markets delay employer’s investments and hiring. I hope a revolution comes, to change the role of government.

dsylexic June 9, 2011 at 9:14 am

the trade adjustment assistance should come from a)own savings b)help from friends and family. that is what i did when i lost my job. that is what non parasites do.instead of forcing others to “share” their good fortune.

John Dewey June 9, 2011 at 9:16 am

** Like **

Richard Stands June 10, 2011 at 12:21 am

+1

Slappy McFee June 9, 2011 at 9:20 am

A Dank Omen –

Clearly since so many white workers have been displaced by minority immigrants, the US government should install a tax on all minorities and distribute it to all white people. Then, because so many white men have been displaced by women entering the workforce, a tax should be levied on all women. Because I have been displaced by all the people around me, who’s money would be mine if they didn’t work around me, they should be taxed and that should be given directly to me.

I like your way of thinking

Sam Grove June 9, 2011 at 10:55 am

For one thing, manna is, theoretically, free.

Goods from abroad are not given away suggesting, that resources are still scarce, and so, cheaper goods from abroad are not gifts.

How about a practical argument? TAA makes poor people poorer.

PrometheeFeu June 9, 2011 at 10:58 am

“What, exactly, did the average Wal Mart shopper do to deserve the gift implicit in cheap foreign goods?”

He shopped for the lowest priced good sending the signal to Wal Mart that he wanted lower prices and therefore induced Wal Mart to go figure out ways to lower said prices.

What did the TAA beneficent do to receive those benefits? Seems to me they probably were part of the protectionist crowed attempting to deny others the benefits of free trade. Should we perhaps tax them for the pain and suffering they caused through those actions?

Nemoknada June 9, 2011 at 11:21 am

“He shopped for the lowest priced good sending the signal to Wal Mart that he wanted lower prices and therefore induced Wal Mart to go figure out ways to lower said prices.”

And his incentive to do that is impaired by the TAA? Is this contribution to the economy equivalent to starting a business or building a home, you know, actually EARNING something?

You have answered my question fairly: he did something that the society does not value highly enough to reward with all of the fruits of the labor involved.

Logic is not the key to this problem. The issue is not whether something is in some way or other analogous to something else. The issue is whether the American voter can decide that, having gone to Wal-Mart to save a buck, and recognizing the system-wide externalities that arise from his doing so along with his fellow citzen-shoppers, can decide that he has not “earned” by the act of shopping, the moral right to cause those externalities, but, because it makes no sense to forego the cheap goods en masse, and even less sense to forego them as an individual while others do not, he will instead vote to cause them to be shared in the most efficient and targeted way possible, to provide re-employment assistance to those harmed by the fall-out. That’s a political decision based on what the thing IS, and not on what else it might be analogous to on paper.

Ken June 9, 2011 at 4:08 pm

Nemoknada ,

“And his incentive to do that is impaired by the TAA?”

Someone has to pay for that “assistance” and people like to make Wal-Mart pay for that “assistance”. The incentive for Wal-Mart to find lower prices is destroyed by you trying to keep prices high.

“Is this contribution to the economy equivalent to starting a business or building a home, you know, actually EARNING something? ”

What contribution? You mean the contribution Wal-Mart is making by providing the same goods as other only at lower prices? In case you didn’t know, that IS earning something.

“The issue is whether the American voter can decide that, having gone to Wal-Mart to save a buck, and recognizing the system-wide externalities that arise from his doing so”

The standard lefty response: people are too stupid, so all decisions should be made by lefties, who by defintion are smarter than anyone else. Got it.

Also, lowering prices are decidedly NOT externalities, nor are any employment changes resulting from changes in prices.

“can decide that he has not “earned” by the act of shopping”

He did earn that money he spent and can spend it anyway he wants. Wal-Mart provided the service of lowering prices on goods. Are you really saying that Wal-Mart is contributing to the economy because they’ve lowered prices? The incoherence of your comments are confusing me.

The rest of the comment after the last quote I have from you is completely incoherent. Largely due to the fact that you failed high school english and have one of the longest run on senteces on this blog. An example of the incoherence:

“he will instead vote to cause them to be shared in the most efficient and targeted way possible, to provide re-employment assistance to those harmed by the fall-out.”

What is being shared in the most efficient and targeted way possible? To what are you referring to in this Byzantinne sentence?

Take a moment, gather your thought, and write clearly. The jumbledness of your comment shows the jumbledness of your thinking on the mess. You certainly cannot write clearly on a subject when you aren’t thinking clearly about it; conversely, clear thinking leads to clear writing.

Regards,
Ken

Seth June 9, 2011 at 11:18 am

“…what is wrong with sharing the gift of lower prices with those who are displaced by it?”

What, exactly, did the average displaced worker do to deserve the gift implicit in redistribution?

Nemoknada June 9, 2011 at 11:29 am

“What, exactly, did the average displaced worker do to deserve the gift implicit in redistribution?”

Why does that matter? The point of the “earning” question is that, unlike redistributing income, redistributing a gift destroys no incentive to bring the redistributed thing into existence. It has nothing to do with justice or entitlement. It’s about economic consequences of redistribution as counterargument against redistributing a windfall.

Justin P June 9, 2011 at 1:29 pm

“redistributing a gift ”

Gift? Where does the money come from?

Captain Profit June 9, 2011 at 1:52 pm

Refer back to Russ’s post titled “my generosity”…

Seth June 9, 2011 at 1:42 pm

It matters as much as the Wal-Mart shopper who doesn’t deserve “a gift” of lower prices. It doesn’t.

It’s an attempt to use verbal gymnastics to characterize the effects of free trade vs. restricted trade as a gift, where no such gift exists.

WhiskeyJim June 9, 2011 at 3:24 pm

@Seth,

Actually, he goes further than that. By his own argument, manna is not only a gift, but government is God.

Rich Berger June 9, 2011 at 1:01 pm

“What, exactly, did the average Wal Mart shopper do to deserve the gift implicit in cheap foreign goods?”

They forked over the advertised price at checkout.

Polly June 9, 2011 at 2:06 pm

I’m not completely familiar with the TAA program. For how long are the displaced workers paid to NOT find alternative employment? Longer than Unemployment Compensation would provide? Forever?

Still, it’s certainly true that union support of any policy is a good predictor of that policy’s harmful effects. Is that too personal?

WhiskeyJim June 9, 2011 at 2:30 pm

The arguments against it are principally three:

1. Subsidizing displaced workers has terrible ROI, and like welfare, often produces the opposite of its intent. Read the research.

2. The subsidy is administered by a vast bureaucracy subject to favoritism, inefficiency, corruption, and current fads, none of which are governed by effectiveness.

3. It immoral to take others’ gains and redistribute them willy nilly.

Vance Armor June 9, 2011 at 8:17 am

Bastiat’s “Candlemaker’s Petition” is an insurmountable argument for free trade.

John Sullivan June 9, 2011 at 8:24 am

The greatest economic fallacy is to examine an issue from the perspective of producers, rather than consumers. To make that error is to establish an argument on a false premise. Thus, the premise must be attacked and exposed as fallacious.

Anyone can make an argument for someone economically injured from the injured person or groups perspective, but for it to be valid for the aggregate of individuals in a competing marketplace, global or domestic, the argument must be made from the perspective of the consumer. This is known as consumer sovereignty.

It is the consumers, and only the consumers, who direct a market economy and who ultimately determine what is made, how much is made, who makes it, and what the prices will be charged for it, and what the costs of the factors of production will be, including labor rates. This is because all levels of production and the distribution of labor is constantly adjusting itself to consumer demand.

In contradistiction to this, only a command economy by a government can, by restricting the freedom and liberty of the consumers, destroy consumer sovereignty. So, any proposed measure to protect producers from the choices made by consumers must be accomplished through potlical force.

Art June 9, 2011 at 9:11 am

Check your premise.

John Sullivan June 9, 2011 at 11:00 am

There has never been a regulation that rewarded producers, including laborers, at the expense of consumers, that resulted in a net aggregate gain of wealth. Every regulation protecting anybody results in a net loss of total wealth in the society affected by the protective legislation. Besides the regulations being premised on theft, they can’t even claim to have an overall benefit to the society at large.

Economic theory is simply mathematical logic. The fact that it runs counter to the emotional ideologies of many of the participants here does not render it false.

2 plus 2 equals 4. That is my premise. What’s yours?

Nemoknada June 9, 2011 at 1:29 pm

“There has never been a regulation that rewarded producers, including laborers, at the expense of consumers, that resulted in a net aggregate gain of wealth. ”

So your premise is that all net aggregate gains of wealth are good, no matter how distributed?

John Sullivan June 9, 2011 at 3:48 pm

Yes, under conditions of freedom, wealth is created by the division of labor and it is never, absolutely never, distributed in ways and means that contradict the desires of the free consumers. The consumers reward and enrich those who satisfy them. They penalize those who don’t through their buying choices. That is justice unless you’ve been reared in a totalitarian society, or one gripped by envy.

Consumers vote with their dollars to reward those entities and individuals who best and most efficiently satisfy their wants and desires. It is nothing other than unjust to act as an omnipotent overlord who seeks to decree any other method of the distribution of wealth. Only dictatators think they know what’s best for sociey. They seek to reward those who have failed to satsify their fellow man.

The bottom line here is that you haven’t thought it through. I suggest you read Rothbard’s “Man, Economy, and State” or Mises’ “Human Action” to fully understand the ethics that underpin the proper distribution of wealth. In a free society, wealth is never arbitrarily distributed. It is painfully distributed exactly how it should be; exactly how the consumers value what is provided to them for consumption. You make what you do for your fellow man. Do you have a problem with that?

I’m sorry if you value yourself higher, but, unfortunately, you only make what value you can provide to others based on their assessment of your worth, not your own.

A free society always has the most even distribution of wealth. Unfree societies have the most disparity between rich and poor. We have extreme wealth in our society partially due to their access to the political realm–Goldman, etc.

Read Albert Nock’s “Our Enemy, The State”. The problem is the State, not capitalism, per se.

Ken June 9, 2011 at 4:14 pm

Nemoknada,

“So your premise is that all net aggregate gains of wealth are good, no matter how distributed?”

Distribution matters very much. You seem to be assuming the distribution should be uniform or close to it, but this is false on the face of it. You have failed to ask WHY distribution is not uniform in the first place. The answer is quite simple: wealth is accumulated by those who are very productive and is not accumulated by those who are not very productive.

It really is that simple. Your plans for redistribution violate TWO, not just one as you seem to think, principle of society. The first, which you seem to recognize is that taking away from the productive and giving to the unproductive explicitly rewards the unproductive. The second, which you completely ignore, is liberty and property rights associated with that liberty. A person has the right to whatever he wants with himself or his property. Taking and giving willy-nilly for redistributive purposes necessitates the use of force, i.e. violence or the threat of violence. It undermines the dignity of a person.

Regards,
Ken

Art June 9, 2011 at 1:50 pm

My premises are:

1. You cannot consume until you produce.

2. True, regulations do have a stifling effect and create a loss to all.

3. Economic theory is NOT simply mathematical logic, it is more about choices and cause and effect (and effect, and effect,…). If it were simple mathematical logic we wouldn’t be having these discussions and our economy would be moving along nicely.

John Sullivan June 9, 2011 at 4:06 pm

Mathematical logic is ‘a priori’ reasoning, and so are the foundations of Austrian economics based on just a couple of assumptions regarding human nature. Empirical research is redundant pertaining to their economic theory. It’s like doing scientific experiments to prove the veracity of addition, subtraction, and geometry. They aren’t necessary.

The theory is based upon the category that man thinks and acts to make himself happier than before his action, based on his own values. He never acts against his will at the time of action, although he may regret his actions afterwards. There are a whole group of categoies derived from this–the disutility of labor, the law of diminishing marginal utility, the law of returns, etc., and from these rules of human nature, and entire ediface of economic theory is possible to mentally contruct from logic, with no empirical studies warranted.

You’d have to study all that in order to undertand it, but the overwhelming point is that when everyone is free to seek their own happiness, the greatest amount of human intelligence is employed in the process, and competition is the spontaneous factor that provides for the creation of wealth.

So, no matter how you guys rationalize things, the regulations you propose are tantamount to degrees and forms of slavery, or bondage. They are fundamentally anti-consumer!

If you want to contribute, why don’t you study how the markets are already rigged to favor certain special interests, and dismantle them, rather than try to use our system to simply favor other groups that you’re more emotionally attached to?

Sam Grove June 9, 2011 at 10:23 am

IOW, businesses do not own their market share, and it must follow from that, that workers/employees do not own their jobs.

John Sullivan June 9, 2011 at 12:42 pm

You’re correct.

Randy June 9, 2011 at 8:25 am

It occured to me while reading the title of this post that the study of ecomonics should explicitly recognize political behavior. That is, we have marginal propensity to save, to consume, to work, etc., so why should we not study also the marginal propensity to participate in political behavior? That is, political behavior is a subset of economic behavior…

PrometheeFeu June 9, 2011 at 10:59 am

It’s called Public Choice Theory.

Randy June 9, 2011 at 1:17 pm

True. So, how do we get it added to the basic textbooks?

Justin P June 9, 2011 at 1:30 pm

Since Public Choice is usually used as evidence against the Keynesian paradigm…the answer is never.

John Sullivan June 9, 2011 at 12:50 pm

Man acts to replace an unsatisfactory state of existence to a more satisfactory one. It is just as rational and natural to employ labor and capital to satisfy his ends as it would be to seek it through political advantage. It is up to his competitors to prevent him from using political means, or for hem to get involved poltically to prevent all groups from using politics to circumvent the economic process of mutual social cooperation through freedom of exchange. That is why I called the poltical means ‘theft’. It is legal theft.

Randy June 9, 2011 at 1:23 pm

I think there is advantage to incorporating both political behavior and theft into the concept of economic behavior. Economic behavior being methods applied to acquire resources. Sub-methods being production, theft, politics… or perhaps politics would be a sub-method under theft… organized theft and private theft…

John Sullivan June 9, 2011 at 6:14 pm

I agree. Most actions regarding property are economic in nature. The greatest economic labor saving device is theft.

I have argued on these boards that man maximizes his power in his economic relationships. If he can enslave others, he will, etc. Every person who negotiates terms of a transaction seeks to maximize his gain, monetarily or psychologically, or a combination of both. The only thing preventing him from dominating others is their relative power against his own.

Mazimum prosperity, on the other hand, occurs under conditions of maximum individual freedom with the protection of property. This happens when people evolve to hold equal power with each other. Equality under law was never intentional, but always a byproduct, or compromise between people intent on dominating each other. People eventually agree to mutually exchange with each other rather than kill and enslave each other.

A critical concept for maximum prosperity is thymology. It is a person’s specific knowledge of his environment, his surroundings, and relationships. The entrepreneur utilizes this specific knowledge to bring forth something better for his target customers. Thymological knowledge is the aggregate sum of individual knowledge put to use productively toward the creation of wealth. The centralization of power and the commonad economy that results does not employ that knowledge.

Randy June 9, 2011 at 6:25 pm

Well said.

vikingvista June 9, 2011 at 8:26 pm

People do come to discover that peaceful cooperation, even with less powerful individuals, is self serving.

Chance June 9, 2011 at 8:31 am

My father was a beneficiary of TAA when his textile job went to Mexico. He is now a Respiratory Therapist. It’s hard to go back in time and figure out how things would have played out without the extra help. I can envision a selling of the home and a general liquidation of all things unnecessary in order to afford the books, tuition. Of course, this would certainly be a stress free process and not in any way cause problems learning new material at the age of 55. I suppose he could have just moved overseas and stayed in the textile industry?

Having said that, I’m fine with not picking favorites – TAA for all or none, even if it is easier to move within the country than it is overseas to stay in a particular industry. And we just need to make sure to pound into the heads of our youth that the America that once existed is gone…what is left is a cold callous cuthroat place where you can’t depend on public policy to make your life just a little bit more bearable and that at a moments notice a capitalist will eject your job and have you figuring out where you’re gonna have to move next to stay employed.

vidyohs June 9, 2011 at 9:10 am

“And we just need to make sure to pound into the heads of our youth that the America that once existed is gone…what is left is a cold callous cuthroat place where you can’t depend on public policy to make your life just a little bit more bearable and that at a moments notice a capitalist will eject your job and have you figuring out where you’re gonna have to move next to stay employed.”

Mind boggling in its ignorance, and amazing in its total reversal of fact. In short, typical looney left regressive crap.

John Dewey June 9, 2011 at 9:15 am

Chance: ” I can envision a selling of the home and a general liquidation of all things unnecessary in order to afford the books, tuition.”

Hey, life is not easy. That’s why smart people have for many years put money into savings so that they don’t get caught. Are you saying that taxpayers should take care of your father because he wasn’t smart enough to save for the possibility of being out of a job?

Why should you father have a right to my money when he needs to be retrained?

What is so different about learning a new trade when one is 55 as opposed to learning a trade when one is 18? At 55, your father had access to same resources an 18 year old would have.

Chance: “we just need to make sure to pound into the heads of our youth that the America that once existed is gone”

The opportunities in America are far greater than what was available for me in 1971, when I was 20. This is a far wealthier nation. Education and training are much easier to access. The potential customers available for any budding entrepreneur are far easier to locate, and span the globe.

Herman June 9, 2011 at 11:33 pm

A smart man with no expectation of help may fear that his trade could be rendered obsolete without his foreknowledge. That man would save a part of his earnings as a buffer against it.

Across the economy, the effect of millions of fear-struck workers would drive the savings rate way up. This would pull money from the economy.

The US safety net allows consumers to live close to the edge, pumping money in that would otherwise be held back in reserve.

txslr June 10, 2011 at 1:19 pm

It doesn’t “pull money from the economy”. It increases savings, lowering the cost of capital investment, which makes workers more productive and improves their prospects.

Chance June 13, 2011 at 11:43 am

“That’s why smart people have for many years put money into savings so that they don’t get caught.”

Let’s not try to twist the language. For decades and decades “smart” people knew they could rely on their employer to be there. Folks his age just never had to contemplate the idea that a job wouldn’t be there so there was no concept of having to save for that scenario. That was my point that we need to drive home the idea in our youth that those days will never return and the boom and bust is here to stay. It will take my generation – 31 yrs old and have been through 9 months of unemployment after a failed multi-billion dollar multi-national corporation – telling our children what to expect before people get “smart”.

“What is so different about learning a new trade when one is 55 as opposed to learning a trade when one is 18?”

Time? At 18 I had the support of parents and no encumbrances of debt or children with which to take up time needed for learning new concepts. Not to mention he had been using a very specific set of skills for 30+ years.

“The opportunities in America are far greater than what was available for me in 1971, when I was 20. This is a far wealthier nation. Education and training are much easier to access. The potential customers available for any budding entrepreneur are far easier to locate, and span the globe.”

That would be fantastic if the competition wasn’t proportionally greater still.

dsylexic June 9, 2011 at 9:17 am

didnt you old man know to save for a rainy day? or was extending a begging bowl an automatic reflex. this is disgusting. at 55,you should be wise and able to guide(ok..generalization).in anycase,if he needed support,he could have depended on his progeny,if nothing

Methinks1776 June 9, 2011 at 9:26 am

Good point. It is disgusting. And because his old man did not help himself, he feels free to rob others. How compassionate to take from someone else struggling to make it in life to enrich a guy who does nothing to help himself. If all of us are entitled to a cushy, pain-free life at the expense of someone else, it’s a wonder any of us work at all.

brotio June 10, 2011 at 12:26 am

Sounds like Yasafi to me. Always telling us we must pay for some poor woman’s babies because he’s booked a carbon-spewing flight to Exit Glacier.

John Dewey June 9, 2011 at 11:23 am

<Chance: "at a moments notice a capitalist will eject your job"

“Your” job? Is this what you learned in school somewhere? That a worker “owns” a job, and has a right to the wages his employer was paying him?

Perhaps you would have preferred that your family had lived in the USSR, where they would not have been subject to the whims of capitlists. How’d that work out for the workers there?

WhiskeyJim June 9, 2011 at 2:41 pm

Chance’s argument:

Maybe it is ok not to subsidize workers displaced by foreign (read brown or yellow skinned) competitors.

Conclusion: Capitalism is cold and callous.

I fail to understand how the conclusion follows the premise. Your father was free to leave his job for 30 years. Would he have been cold and callous to do so?

How is the creation or destruction of a job cold and callous?

How does the reason for a job’s creation or destruction have any bearing on the inherent morality of people who offer them? Or by implying ‘capitalism’ is callous, are you saying that it is the job itself that is callous?

vikingvista June 9, 2011 at 11:48 pm

“Conclusion: Capitalism is cold and callous.”

But what apparently is not cold and callous is bullying, extortion, theft, threats, slander, kidnapping, and persecution.

Chucklehead June 10, 2011 at 4:01 am

“at a moments notice a capitalist will eject your job”
A worker does not own his job, or even the employer. Jobs are the property of the customer.

Preston Speed June 9, 2011 at 9:20 am

I think the iPod example is much better than the Ralph’s diner example.

In my opinion, the image of poor Ralph hanging an “Out of Business” sign, having been victimized by the large restaurant chains, is one that is likely to resonate with some readers. That heart-tugging image of a failed American dream might encourage sympathy to the protectionist argument.

Aside from that minor quibble, great stuff as usual.

John Dewey June 9, 2011 at 10:04 am

“the image of poor Ralph hanging an “Out of Business” sign, having been victimized by the large restaurant chains, is one that is likely to resonate with some readers.”

Ignorant readers, perhaps.

Most large restaurant chains started as a Ralph’s diner, of course. And Wal-Mart started as a true mom-and-pop variety store. Large restaurant chains and Wal-Mart only succeeded because they provided a better product than the other Ralph’s diners and the other mom-and-pop variety stores, But, of course, the Socialist bastards who teach our children never tell them that. do they?

Preston Speed June 9, 2011 at 10:10 am

Unfortunately, I doubt the average reader is as economically literate as the Cafe Hayek crowd.

Justin P June 9, 2011 at 10:44 am

Well some of the CH crowd, see the post below.

John Dewey June 9, 2011 at 10:56 am

” I doubt the average reader is as economically literate as the Cafe Hayek crowd.”

One need not be well-versed in economics to understand these simple facts:

1. businesses fail because they provide less value to their customers than do their competitors;

2. “large” and “evil:” are not synonyms.

What is unfortunate is that the socialist educators and socialist news media have trained them otherwise.

vikingvista June 10, 2011 at 2:38 am

And Walmart grew in spite of the existence of large competing national chains. How is that possible, marxiots?

John Dewey June 10, 2011 at 9:46 am

Good point. One that I forget when I’m defending Walmart from the socialists.

muirgeo June 9, 2011 at 9:22 am

My comment in Will’s column;

I like that…”appease big labor” …like that’s an awful thing to do when you could be appeasing the CEO’s of multi-national corporation who gain massive advantage by our free trade polices. Taxes are low as ever, we have more free trade than ever, unions are as weak as ever…. how’s that working Mr. Will?

It is the neoliberalism of people like Mr Will that has dominated the economic policy of this country ever since Reagan… IT has failed miserably and people like Will are calling for more of the same blind to the disaster playing out before their very eyes. They truly are sending us down the road to serfdom.

Ken June 9, 2011 at 11:11 am

muirgeo,

“Taxes are low as ever,”

A massive lie.

“we have more free trade than ever,”

Another massive lie.

“unions are as weak as ever”

Because people don’t want to be in them or do you not understand that? When there is a vote for places to unionize typically workers don’t want it. Why do you want to strengthen an institution people don’t want? I thought you were into unfettered democracy where simple majorities rule. Or are you only in favor of democracy whenever your favored policies are implemented?

The second paragraph of your comment is pure fantasy. The government has grown faster than the economy and population for the last thirty years, particularly the last ten. Since government can only grow this way by REDUCING economic freedom, you again demonstrate how little you understand about the world.

Regards,
Ken

Methinks1776 June 9, 2011 at 1:27 pm

And unions don’t seem weak enough not to be able to harness the power of government to screw bondholders.

Ken June 9, 2011 at 3:21 pm

Methinks,

You’re right. Unions are disproportionately powerful. How many billions went to the GM directly due to the UAW and their bought politicians? How many billions get directed into our failed educational system due to the greedy teacher’s union and their bought politicians?

I was thinking only of union membership, which is in decline in the US, for good reason, too. But the unions that are left are terribly powerful and predatory on taxpayers.

Regards,
Ken

muirgeo June 9, 2011 at 5:22 pm

100 Ken June 9, 2011 at 11:11 am
muirgeo,

“Taxes are low as ever,”

A massive lie.

“we have more free trade than ever,”

Another massive lie.

One of us is telling a MASSIVE LIE… you first on your sources that shows how big my lies were.

Ken June 9, 2011 at 9:23 pm

“One of us is telling a MASSIVE LIE… you first on your sources that shows how big my lies were.”

Tax rates: What were federal income tax rates before 1913? Want to compare today’s income tax rates with tax rates in 1940? As you can see your statement “Taxes are low as ever” are a complete fabrication. You knew this wasn’t the case even when you said it, which makes the statement a lie. Since today’s tax rates aren’t anywhere close to the lowest tax rates in US history makes it a massive lie.

As for trade being freer, the only two industries I can think of that have come under less control by government is the telecoms industry, which shocker of all shockers resulted in massive diversity in radio and TV and gave rise to the internet and cellular phones and air travel, which resulted in a proliferation of low cost airlines making air travel available to even the poorest in America. EVERY other industry has been under more and more control of government.

The energy, banking, and education are essentially run by government. The government has taken over large swaths of healthcare (remember how Obamacare wasn’t going to cause people to lose their employee provided health care? Oops, turns out 30% will). The government has taken more and more control over auto industries, electronics, software, imposed more and more licensing requirements on such things as hair stylist and interior decorating. Home building has become more and more onerous with more requirements to build every new house. The list of sectors into which the government intrudes goes on and on and based on the arguments in favor of health care, government advocates want even more intrusions to ALL aspects of your life.

And let’s not forget the massive intrusion into housing markets by government, causing massive distortions (i.e., reduced FREE trade) resulting in the current unpleasantness. Oh and this was caused by your favorite party: the democrats most embodied in Barney Frank, but Chris Dodd and other democrats did their part too.

With all that government intrusion bureaucrats are making more and more decisions about what can and can’t be done in the market place. This, by definition, is a reduction in free trade. It’s happened in nearly every sector of the US economy.

Thus your statement “we have more free trade than ever,” a massive lie.

Regards,
Ken

Ken June 9, 2011 at 9:28 pm

Let’s also not forget the massive increase in minimum wage, directly interfering with the liberty of contract between worker and employee for ALL US citizens. One of the clearest examples of a contraction of free trade.

Regards,
Ken

muirgeo June 10, 2011 at 12:53 am

We ARE paying LESS taxes for the relevant time frame. Stop being a petulant child.

http://www.taxfoundation.org/files/tw-2011spring.pdf

You didn’t even talk about trade but went on a rant about regulation. Tariffs are way down and imports/exports as a per cent of GDP are way up. Again for the relevant time frame.. since the 1980.

http://www.econedlink.org/lessons/images_lessons/450_figure31.gif

Minimum wages in constant dollars is way down.

http://www.infoplease.com/ipa/A0774473.html

Corporate profits just hit a record high suggesting that regulation is not the problem you claim it to be. And to say it is is just BS because corporations and their lobbyist are the ones writing legislation. Your a dumb MF’er and nothing more.

You are just an intellectually dishonest turd. That’s the ONLY way you can continue to hold your relative averse views.

So I just handed you your silly ass with data and facts. The fact is we have shifted policy in the direction you neoliberal dopes would suggest to improve the economy yet we again are in the mist of another great depression like the last time we shifted policies towards low taxes and low regulation in the 20′s. The results are clear but all you are capable of is making excuses and denying facts and being a boring stupid child screaming your silly non-sense that doesn’t fool anyone who is honest and paying attention. It must suck to have to live with blinders on denying reality to compensate for some ugly greedy apish uncivilized desire. you’re a damn fool.

Regards

Chucklehead June 9, 2011 at 4:14 pm

“appeasing the CEO’s of multi-national corporation who gain massive advantage by our free trade polices.” Is it only the CEO’s that benefit from free trade, not their stockholder and the pension funds that hold them, their workers, or consumers?

muirgeo June 9, 2011 at 5:28 pm

Well it certainly is not the millions who have lost their jobs, houses or health insurance or fallen under the poverty level…

How in Shiva’s name do you expect OUR quality of life to improve when competing agianst communist laborer’s? That make sense to you? The evidence sure as heck doesn’t support your position but apparently the real world isn’t your concern.

I’d sure be curious to know just how many of you libertarians have government jobs or jobs dependent on the government or government pensions and how many of you actually “made it” out their on your own. I’d bet it’s a pathetic few.

Chucklehead June 9, 2011 at 5:54 pm

I would suggest that most job losses have occurred trough government intervention of the money supply, regulation, and barriers to trade.
Our quality of life is improved by having to spend less resources for the things we need due to trade.
No government jobs or pensions in this family. Although I still have one in school, she is at a private university, JHU, which does get government money for research. I hope the government gets utility out of the work they do, or they should go elsewhere.

muirgeo June 10, 2011 at 12:57 am

I would suggest you will believe what you want to so as to adapt reality to your pre-concieved notions because you are not a free thinker but a prisoner in your own little mind.

NEVER worked for the government? No ties to what you do to government support? No grants or loans… no FHA approved mortgage?

Chucklehead June 10, 2011 at 4:13 am

It may come as a shock to you, but there is this thing called the private sector that exists beyond the beltway in flyover country. Out there, people practicet self reliance, not I wonder how we can take advantage of government programs.

txslr June 9, 2011 at 6:05 pm

So in your world the U.S. couldn’t compete with the Soviet Union and was “buried”? I’m afraid that in the world I inhabit competing economically with communists has been pretty easy.

As for my job, I was doing quite well in the private sector until the feds passed Obamacare and the administration came after the energy industry. That’s when I got laid off.

But thanks for caring.

muirgeo June 9, 2011 at 8:14 pm

Thank Buddha we weren’t allowed to send factories to the USSR!

Ken June 9, 2011 at 11:58 pm

muirgeo,

“Thank Buddha we weren’t allowed to send factories to the USSR!”

What do you think would have happened if trade had opened up between a first world nation like the US and a third world nation in the USSR? The workers in the USSR were so unproductive that NO ONE would have moved ANY factory there. The USSR was a money pit, consuming far more than it produced, and in after a short time imploded, as it logically had to.

Regards,
Ken

Ken June 9, 2011 at 11:55 pm

muirgeo,

“How in Shiva’s name do you expect OUR quality of life to improve when competing agianst communist laborer’s? That make sense to you?”

Yes, it makes perfect sense. The same way our lives are improved when laborers compete against robots and computers. When a way is found to do something with less labor, that labor is released to do something more productive. This is what is called increased. Increased efficiency is what is responsible for OUR quality of life.

“The evidence sure as heck doesn’t support your position but apparently the real world isn’t your concern.’

Actually, ALL the evidence supports that free trade benefits ALL who participate in it.

“I’d sure be curious to know just how many of you libertarians have government jobs or jobs dependent on the government or government pensions and how many of you actually “made it” out their on your own. I’d bet it’s a pathetic few.”

I’d take that bet. I’m willing to bet that as a group, compared to republicans and especially democrats, particularly leftists, libertarians have the smalles percentage working for the government. Did Wisoncin teach you nothing? The unions thugs were lefists. Have you been in academia lately? I have almost all leftists. In fact, the only government organization that I can think of that isn’t heavily populated with leftists is the military, and democrats still make up something like 40% of that group.

Regards,
Ken

Captain Profit June 10, 2011 at 8:23 am

muirgeo wrote:
> How in Shiva’s name do you expect OUR quality of life
> to improve when competing agianst communist laborer’s?

Pretty much the same way my quality of life has inproved while competing against low-skill/low-wage Americans, Tex.

Dan June 11, 2011 at 5:05 pm

Economic idiot. Krugman is calling, he wants his delusions back.

Dan June 12, 2011 at 3:54 am

Communist labor…. Exactly!….. UAW, SEIU, Teamsters, etc.,…. Can’t compete in union states or for govt contracts.

vidyohs June 9, 2011 at 9:25 am

Whatever you do, if you receive TAAP funds, make sure they come in the form of a gift. You would not want to risk running afoul of………The awesome DEPARTMENT OF EDUCATION!

http://www.opednews.com/articles/Feds-Send-Swat-Team-To-Bre-by-Rob-Kall-110608-10.html?show=votes

———-
“It not only CAN happen here, it IS HAPPENING here.

The US Department of Education sent a SWAT team which roughed up and arrested a man, holding him prisoner for six hours. Why? His estranged wife had defaulted on her student loans.”

Evidently there are some real violent student loan defaulters in America who need to be PUT DOWN quick and hard before they can flush the evidence down the toilet.

Coming soon to your neighborhood: The Library of Congress SWAT Team, shortly thereafter the National Zoo SWAT Team.

Ron H. June 9, 2011 at 6:10 pm

Check the update at the link you provided. It puts a slightly different light on the story, although it’s certainly not clear that this type of heavy handed treatment is justified in any case.

vidyohs June 9, 2011 at 8:57 pm

LOL, uh huh, and then the Tooth Fairy said……..?

No criminal investigation mentioned at any point until outrage over jackbooted thugs sent by Dept of Education goes viral and Dept of Education and jackbooted thugs begin to catch heat.

Reminds me of the initial and subsequent claims made by the BATF and the FBI over why they had to attack and kill the people in the Branch Davidian compound at Mt. Carmel, Texas.

Ron H. June 9, 2011 at 10:34 pm

I thought that after Mt. Carmel and Ruby Ridge, jack booted thugs fell out of favor, but their use seems to be more common than ever. Who would have ever thought the Dept. of Education would need such goons?

vidyohs June 10, 2011 at 8:59 am

And that my friend is the exact point, how the hell did anyone ever justify need for a SWAT team by the dept. of education?

Whoever did it is probably working on getting one for the Daughters of the American Revolution as well.

It is insane, and we have let it come to this.

Ron H. June 10, 2011 at 1:07 pm

Come to think of it, I’d better return that overdue library book today.

Martin Brock June 9, 2011 at 10:14 am

Should he and his employees be entitled to extra taxpayer subventions because they are casualties of competition?

Many people, possibly most, would answer “yes” to this question. Many people would answer “yes” to all of Will’s questions. The common reply might be, “Yes, the TAA beneficiaries get an unfair advantage, so everyone else should get more benefits from taxpayers.” Maybe, Will is asking the wrong questions.

Sam Grove June 9, 2011 at 10:29 am

To be fair, it should be pointed out that the cost of a large, expensive government that supports an extensive bureaucracy and a world spanning empire does keep a lot of people closer to the margin than they might be otherwise.

WhiskeyJim June 9, 2011 at 2:50 pm

Especially when they are determinedly devaluing the currency as they absorb your paycheck.

Because destroying your purchasing power is good for employment (Ignore the other hand behind the curtain).

WhiskeyJim June 9, 2011 at 3:01 pm

Consider this tortured thinking for a moment.

Since Progressive ideology can not really be believed by anyone with a modicum of awareness, here is the real, underlying thinking of modern Progressive thought:

1. We can engineer a better social animal.
2. Doing that requires social justice which is economically inviable. Therefore we must destroy the currency.
3. In return for destroying the currency, and one’s incentive to save or produce, the least we owe the masses is a retirement stipend and health care to lessen the burdens of old age.

Regardless of the original thinking, this seems to be the economic web we are now caught in.

How did I do?

Sure it is cynical. But it does explain the inanity. I do not believe for a second that Bernanke and others believe half the Progressive or Keynesian tripe.

Gil June 10, 2011 at 12:03 am

Gee, why then do Libertarians extol the virtue of immigrant labour? The only reason it’s good is because the workers are cheap thus freeing money for the employers to spend their businesses. So if inflation is “destroying real wages” then this is good too as it is increasing the employers’ real capital allowing them to spend more on their businesses.

John Dewey June 10, 2011 at 9:58 am

Gil: “Gee, why then do Libertarians extol the virtue of immigrant labour?”

I’m not really a Libertarian, so I don’t want to speak for them. But I do praise productive workers, regardless of where they are located or how they got to the workplace. Immigrant workers I’ve been around have been much more productive than have the average non-immigrant worker I’ve been around. I don’t have any statistics to support my opinion, just anecdotal evidence – LOTS of anecdotal evidence.

Dan June 11, 2011 at 5:11 pm

I would and have hired the person loitering around Home Depot before the lazier white guy sitting at home wondering if a job will knock on his door for $20 an hour. And, I pay the loiterer $10 an hour plus lunch and drink. The white gutty wanted$300 for the same three hours. Cost me $75 plus my own labor for 2 gentleman at three hours of work. White guy go home, you lazy, entitled wretch.

Nemoknada June 9, 2011 at 12:03 pm

“I assume you are referring to Numbers 11:9. ”

No, I had Exodus 16 in mind, where there was no excess to redistribute because no one took more than they needed, and anything hoarded rotted overnight:

——–
Moses said to them, “It is the bread the LORD has given you to eat. 16 This is what the LORD has commanded: ‘Everyone is to gather as much as they need. Take an omer[a] for each person you have in your tent.’”

17 The Israelites did as they were told; some gathered much, some little. 18 And when they measured it by the omer, the one who gathered much did not have too much, and the one who gathered little did not have too little. Everyone had gathered just as much as they needed.

19 Then Moses said to them, “No one is to keep any of it until morning.”

20 However, some of them paid no attention to Moses; they kept part of it until morning, but it was full of maggots and began to smell. So Moses was angry with them.

21 Each morning everyone gathered as much as they needed, and when the sun grew hot, it melted away.

But thanks for playing our game.

John Dewey June 9, 2011 at 2:48 pm

I’m hardly a bible expert, but I fail to see how this Old Testament story is relevant to the TAA redistribution of taxes from the producitve to the unemployed.

John Dewey June 9, 2011 at 2:49 pm

“But thanks for playing our game.”

I have no idea what you are meaning by this sentence.

WhiskeyJim June 9, 2011 at 3:18 pm

Thank you Nemoknada, for uncovering your argument with this post.

For clearly you equate the fruits of enterprise with manna, and most importantly, Government with God.

Nemoknada June 9, 2011 at 3:36 pm

Jim

I equate the fruits of currency manipulation and the fact of inadequate wage levels in foreign countries with manna, because no individual American has earned a higher claim to them, or will withhold effort on account of losing them, than any other. That is the point of the Bible story: you can have more of the bread baked in commerce if you put more stuff into commerce, but you have to share the bread that drops from the skies.

I distinguish the TV set from the subsidy of it by the Chinese government and the willingness of Chinese workers to work for wages that would destroy aggregate demand if prevalent here. The more money you have, the more tvs you can buy, and the more benefits of trade you can enjoy. But some part of that gain you would be wise to use to restore your economy, and you can’t do that unless everybody does, and they won’t do it unless it’s the law.

I don’t “equate” the government with God, but the Bible does. In the manna tale, God is most certainly Hobbes’s Leviathan, coordinating one of life’s plus-sum games to prevent a tragedy of the commons. I didn’t write the story.

It amazes me how little of the things I clearly do I do at all. Good lawyers all know that “clearly” ALWAYS MEANS “I wish.”

WhiskeyJim June 9, 2011 at 4:06 pm

Please reconsider your argument. Your own analogy, quoted from the Bible, makes gains from enterprise, however derived, manna, and government redistribution equal to God.

It is your analogy, not mine.

chris June 9, 2011 at 8:57 pm

“the fact of inadequate wage levels in foreign countries”

their wage level making goods we consume probably is higher than the wages they get begging in the street. Their life is better, as a result, so is mine.

Captain Profit June 10, 2011 at 8:33 am

Nemoknada wrote:
> The more money you have, the more tvs you can buy

This is true, assuming that the price of TVs remains constant relative to your wages. Your task is to explain how you propose to make that happen, Tex.

Dan June 11, 2011 at 5:13 pm

Govt will hav price controls. Set prices and wages by govt, then all will work out. The invisible hand and free market shoes no compassion. ( sarcasm)

Nemoknada June 9, 2011 at 1:46 pm

“Combine this comment with your others and you clearly do not believe in consumer sovereignty. Which I expect is a pretty big deal around these parts.”

I believe that consumers acting in their rational self-interest sometimes destroy the commons (the economy) because their rational self interest makes any other action undesirable unless everyone does it, which they won’t. I believe that the day laborers became important customers of American business, the worker and the consumer became the same person, and the idea of “consumer sovereignty” became obsolete.

I believe that competition is the heart of our economic engine, but I also believe in the tragedy of the commons. But I’ve had that “conversation” elsewhere – in the “Butt out” thread – and I don’t want to revisit it except to note that it is why I find consumer sovereignty problematic.

WhiskeyJim June 9, 2011 at 2:45 pm

The economy is not a commons by any flight of reason.

Your argument in this post is the most irrational one I have seen from you. It makes no sense.

Nemoknada June 9, 2011 at 3:47 pm

The software on this site makes keeping up impossible. The reply to this post appears somewhere else. But it’s short, so I’ll paraphrase it:

Yes, the economy is a commons. Get over it.

WhiskeyJim June 9, 2011 at 4:02 pm

The economy is not a commons, any more than the Internet.

Economies are not a zero sum game for one thing, or a limited resource that must be shared. It is something we build.

vikingvista June 10, 2011 at 1:18 am

What he is trying to tell you, is that he believes human beings are a commons.

You can take a socialist out of slavery, but you can’t take the slavery out of socialism.

txslr June 9, 2011 at 4:45 pm

A compelling argument! But a counter-argument occurs to me:

No it isn’t. Deal with it.

And if that isn’t enough to convince you, your mother swims after troop ships. Beat THAT logic!

Dan June 11, 2011 at 5:33 pm

That would make any engagement subject to govt regulating your activity. And, as since not engaging in economic activity is making an economic decision, govt can regulate your inactivity. This then means govt has absolute control over the individual. Thank you govt enablers.

John B June 9, 2011 at 1:51 pm

To Nemoknada:

If I understand your argument correctly, your arguing that (a) the TAA is a redistributionist policy, not a protectionist one and (b) that it’s justified because it doesn’t mess with incentives for Americans to produce. Let me know if this is an unfair summary.

For (A) I’d agree that that the concept of taxing consumers to pay for lost jobs caused by lower prices is a redistributionist position. You could even argue that it’s justified utility wise by certain social welfare functions. But I’d argue that the fact that we don’t have a sort of TAA for everyone is a pretty good sign that our social welfare function doesn’t cover it. The problem isn’t the concept behind the policy, it’s the hinging of said policy exclusively on jobs lost to trade as though they’re fundamentally different than jobs lost to other domestic producers.

Which leads nicely into (B)- it’s hard not to notice that your position doesn’t take foreign welfare into consideration. Taxing consumers to pay for the program amounts to decreasing their purchasing power, which should have predictable effects on their ability to purchase things. You’ve argued about this effect, but have as far as I can see left out that the loss of purchasing power effects producers as well as consumers. It’s just a standard tax: there’s still loss for the producer on this exchange, even if you can somehow target the taxes such that the lost production is exclusively born by foreign producers (and I have no idea how one would do that). The loss would just be born by a foreign producer.

Both domestic and foreign producers are owned by and employ human beings. I can’t think of any particular reason to think the effects of the lost business will be less destructive for the foreign producer. If you accept that all human beings have basically equal fundamental value (that there shouldn’t be any primacy for domestic utility), why should the TAA be a good idea for foreign trade and a bad idea for domestic trade? If the wounds inflicted on foreign producers/domestic consumers < the gains to certain jobholders, why shouldn't a similar exchange exist for domestic producers consumers vs. certain jobholders?

Nemoknada June 9, 2011 at 3:18 pm

“If I understand your argument correctly, your arguing that (a) the TAA is a redistributionist policy, not a protectionist one and (b) that it’s justified because it doesn’t mess with incentives for Americans to produce. Let me know if this is an unfair summary.”

Forgive my psychobabble, but isn’t the question whether it’s an “accurate” summary? Fairness matters if we assume that there is a fight to be won rather than a truth to be found.

But, no, I don’t think the summary is accurate. A more accurate summary would be”

1. Consumers, by their rational, self-intested action, may behave in such a way as to displace so many workers that those same consumers, in their role as workers, entrepreneurs. or capitalists, suffer a net loss of wealth.

2. Where the situation described in 1 applies, the consumers, this time as voters, should, in their rational self-interest interest as producers, act to restore the commons by assisting displaced workers to become customers again.

I believe that even with this amendment, some of your arguments would apply.

“The problem isn’t the concept behind the policy, it’s the hinging of said policy exclusively on jobs lost to trade as though they’re fundamentally different than jobs lost to other domestic producers. ”

That is a fair point, but it does not claim that TAA assistance is bad, just that there may be too little of it. What is the case against all unemployed Americans who want to train for a more modern job being assisted to do so, if that will reintegrate them into the competitive structure more rapidly? The object of the game is not to help the displaced worker; it is to restore aggregate demand and enhance the nation’s human capital in ways determined by the market for new jobs.

There is an Op-Ed in the NY Times today by two guys who style themselves as on opposite sides of the free trade argument in which they recommend precisely that TAA relief be expanded to a wider array of workers. I don’t have a dog in that fight.

“Taxing consumers to pay for the program amounts to decreasing their purchasing power, which should have predictable effects on their ability to purchase things.”

TAA money is stimulative – it gets spent with producers, some of them foreign. Aggregate demand should be unaffected in the short run, enhanced in the long run as people find work faster and resume discretionary spending. That the process reallocates some sales from one vendor to another is the way that particular cookie crumbles. If it puts an American producer out of work, there’s always the TAA.

As for the lost business of foreign producers, they, too will get the benefit of TAA spending by its recipients. If the manager at Wal-Mart or the teacher at the retraining center buys a new flatscreen, it’s all the same to the Chinese manufacturer.

Bruce June 9, 2011 at 4:02 pm

I’ve read your posts with a mixture of interest and amusement. No matter how you try to explain it, TAA is nothing more and nothing less than another example of government using its coercive powers to try and pick economic winners and losers; a feat at which governments the world over have repeatedly failed. Regardless of the noble intent, government, specifically those really, really smart guys (their opinion, not mine) in DC who comprise our legislature, is unable to accurately determine where assets are going to be allocated most productively. The money that the government taxes/borrows/prints to pay for this little endeavor could be money that would have been used to actually hire the displaced workers but for government interference in the marketplace.

Nemoknada June 9, 2011 at 4:16 pm

“No matter how you try to explain it, TAA is nothing more and nothing less than another example of government using its coercive powers to try and pick economic winners and losers;”

Well, that clears that up. No prisoners’ dilemmas allowed here at the Cafe. What a wonderful place. And the people are so nice.

Bruce June 9, 2011 at 4:40 pm

What a woefully evasive and inept response. Let’s break down the TAA into its component parts. G (G) – by means of taxation (we’ll leave borrowing and printing out of the equation for now) forcibly takes money from taxpayer (T). G then uses that money to provide a benefit, in this case retraining, to displaced worker (U) (betcha can’t guess why I used that letter). This can only happen if 1) G truly believes that the benefit provided to U is superior to anything that T might otherwise do with that money or 2) G believes that there is a political benefit to be gained by redistributing T’s money to U. Call me a skeptic, but I’m betting that category 2 is more often the impetus behind these types of programs. Prisoner’s dilemma aside, (and I really don’t even see the relevance of that comment) my original comment stands that this is simply government picking winners (U) and losers (T) regardless of G’s motivation.

Chucklehead June 9, 2011 at 4:21 pm

” the consumers, this time as voters, should, in their rational self-interest interest as producers, act to restore the commons by assisting displaced workers to become customers again.”
Why would it be in the rational self interest for the consumer to restore the commons by assisting displaced workers to become consumers again and compete for the same scarce products?

Smash Equilibrium June 9, 2011 at 1:52 pm

I had a chance to see some of these programs in action when, the factory where my father worked his whole life and where I had recently hired on, closed. A large number of people, whether because of the program or otherwise, were reemployed reasonably quickly after the closing. There were a good handful who took positive advantage of the opportunity, got an education they might have never gotten otherwise and went on to find work in better jobs. And then there were those who took extended vacations on the handout, and when the money ran out they bounced between welfare and work. But this situation wasn’t much different for them than before the factory closed. They had always been the type to take advantage of the situation.

So if I had to say whether I thought the TAA was necessary, I couldn’t. It’s too tough a call. And I’m an avid free trader. There were a handful of people who genuinely benefited from the program’s efforts to retrain and assist with re-employment. The economy gained some better trained and more productive employees, too. How could those positive outcomes be had otherwise? What would have been the outcome without the TAA assistance? I don’t know. And depending on how the program is funded, it may even be too trivial to worry about.

John Dewey June 9, 2011 at 2:42 pm

“So if I had to say whether I thought the TAA was necessary, I couldn’t.”

Necessary for what?

“The economy gained some better trained and more productive employees, too.”

How can an economy gain? Perhaps some businesses who use skilled workers gained in that the supply of skilled workers increased. But some businesses who use unskilled workers also saw the supply of unskilled workers decline.

Why was the TAA “necessary” in order for those workers to gain skills? Other workers gained such skills without the benefit of other people’s money.

” What would have been the outcome without the TAA assistance?

Well, for one thing, workers would not have learned they can rely on their government to take from their neighbors to give to them. So that workers who have enough sense to realize that all incomes are at risk would start saving.

Smash Equilibrium June 9, 2011 at 5:14 pm

Where you say necessary for what, I guess the question is whether there is a need for government intervention in those situations. On the macro level, I tend to think there isn’t.

But when you stop and actually consider the effect of several thousand people displaced from the only job they are qualified for, is it really humane to leave them hanging? The job which they lost is apparently at the bottom of our country’s technical level, so the skills those employees possess are all but useless – or quickly becoming so – in our economy. Some will be able to easily transition into something else, but not all.
Being reasonable, what are their private (non-government) options? I’d much prefer that. Would we suggest they uproot and deport themselves to a country where their skills are still useful? That’s not such a bad idea. It is a global job market. Labor has to be willing to cross borders, too. Sounds kind of heartless though.

On your second point, my statement was just pointing out that those employee’s output contributes positively to the economy. Higher skilled workers tend to contribute more.

I agree with your last point.

John Dewey June 9, 2011 at 6:36 pm

“But when you stop and actually consider the effect of several thousand people displaced from the only job they are qualified for”

How can that be? Millions of immigrant workers are performing jobs in the U.S. which require very little skill or else skills which can very quickly be learned on the job.

“is it really humane to leave them hanging?”

How am I leaving them hanging? If they were employed for any length of time, they certainly could have put aside funds to ensure they could survive without the job. If any worker is “hanging”, he is the one who let himself get into that situation.

“Would we suggest they uproot and deport themselves to a country where their skills are still useful? “

Whether they move to another locale is entirely up to them.

People have to be responsible for themselves. It is the worker’s responsibility to ensure he can survive. How does he do that?

- saving for unanticipated losses of employment;
- acquiring additional skills which will make him more employable;
- remaining able and willing to relocate to wherever neccessary to find employment or to create his own employment.

What is so hard about that?

Smash Equilibrium June 9, 2011 at 9:24 pm

I disagree that getting an education is so easy and that building a worthwhile savings is something anyone can do. But that’s not important because I would still expect a person to be personally responsible.

You’re describing a certain segment of immigrants. Consider how they live in order to accept those wages. Also consider that many of them also accept welfare, either directly or through a live-in relative. Now, I believe personal responsibility means those workers should accept their fate and take that step down the social ladder, if that’s what it takes to survive.. In most instances, I would just say, such is life. But I’m not convinced that this isn’t a unique case. Here’s why:

We advocate for free trade because the principle of comparative advantage shows that everybody gains when countries specialize in what they do best. That is, everybody gains in a general sense. There are losers and there are winners. Consumers win, for sure. It may mean that some workers lose, though. But society overall receives gains in the form of greater abundance and lower prices. This means you and I receive something we didn’t do anything to earn. And, in a sense, it is taken from the displaced workers. I don’t feel comfortable about that, but I believe in free trade and I’d rather have free trade at the expense of a few workers because, in the long run, the benefits of free trade outweigh the costs. At the same time, I kind of feel okay with giving a few dollars to those workers who took the hit for our (national) benefit. I would like to know that we’re not off-setting the gains from trade with our charity, certainly. But as long as there’s a net gain to the U.S, I’m not convinced it is a bad thing.

John Dewey June 10, 2011 at 6:13 am

“This means you and I receive something we didn’t do anything to earn.”

What on earth are you meaning? My wages are what WalMart receives for the goods I buy there. I certainly did earn those wages which I use to take advantage of WalMart’s ability to deliver the goods I wish to buy.

When a manufacturer or a retailer finds ways to lower the prices of goods they offer, everyone is entitled to benefit from those lower prices. That some other manufacturing plant or retailer has to lay off workers is irrelevant.

You and I receive the benefits of automation, which has been displacing workers for decades. Are you suggesting that we “owe” something to those displaced workers because you and I had no part in designing or implementing that automation?

Why do you believe I should be forced to give up some of my property because any worker suddenly has no job? I had no job when I was 18 and again when I was 23. I certainly do not remember any bleeding heart trying to give me other people’s property.

WhiskeyJim June 9, 2011 at 2:48 pm

Between the ones who benefit from government supplied training, and those who just take advantage of it, it turns out the total money spent is a huge waste.

Worse are the programs that pretend to know what to train for.

Smash Equilibrium June 9, 2011 at 5:18 pm

That’s kind of how I see it too.
True on the training. Although, from what I understand about it, they just make it easy for the workers to get any education they want. They don’t choose which.

John Dewey June 9, 2011 at 6:44 pm

TAA doesn’t just “make it easy” for workers to get any education they want. Education in the U.S. is very easy to acquire. Those of us who pay taxes are already funding community colleges and tech schools all over the nation.

TAA gives workers funds for living expenses – funds in addition to unemployment compensation.

Why do you believe it is my responsibility to provide living expenses for some fool who refused to take responsibility for his own well-being?

txslr June 9, 2011 at 4:41 pm

Well, the ones who received training in higher compensated fields added to the supply of labor in those markets, thereby supressing pay of the existing laborers in those areas. Shouldn’t those who were already in that market; who have had their wages supressed by the government-funded influx of new workers, be compensated for their loss? Perhaps we could take away the increased earnings of the new entrants and redistribute it to those whose prospects have been negatively impacted.

I mean, what did those people do to deserve free education? Get laid off? Puh-leeze. And I’m sure it would benefit the commons. Somehow.

Smash Equilibrium June 9, 2011 at 5:26 pm

It becomes a question of whether the newly trained employee displaces another one, or if more highly trained employees will attract and encourage an increase in investment. If the skills are in demand, the latter is possible. But see my response above to John Dewey. If those workers don’t get more useful training, we’re left with a conundrum of what to do with them. They could go on welfare, or they could be (gently?) pushed out of the country to continue pursuing the work they are qualified for. I don’t know that I’m 100% behind either option.

txslr June 9, 2011 at 5:54 pm

I don’t think it really is a question of whether a worker is displaced. An increase in the pool of trained workers puts downward pressure on compensation, which, worsens prospects for those already in the field. Sometimes that may be through layoffs and sometimes through fewer raises and sometimes it means forced early retirement and sometimes it means accepting a cut in pay.

Suppose you worked at menial jobs and scrimped and saved to put yourself through school to get a job in a hot new market. And then suddenly the government decides to give money to a bunch of laid-off buggy whip makers to learn how to do your job, putting you out of work or lowering your salary. Do you deserve government help less than the guy who was given taxpayer money to push down your compensation because the same thing happened to him?

Smash Equilibrium June 9, 2011 at 9:43 pm

Very valid point. Now, that would only be the case for a worker who chooses to retrain himself into a career field that is, or becomes saturated. Having just dealt with the problem of being pushed out of a career for having un-hirable skills, one would hope the workers would make better choices, but it is a possibility. It has already been somewhat established that those workers aren’t exactly the best at decision-making and planning for the future. But that guy who is scrimping and saving, hopefully he doesn’t fall in that category.

John Dewey June 10, 2011 at 5:55 am

“If those workers don’t get more useful training, we’re left with a conundrum of what to do with them.”

No, “we’re” not. A worker who is unwilling to do whatever it takes to get employment and take care of himslf is not my problem.

As I said earlier, there are millions of immigrants who are working and living decent lives in the U.S. right now. They do so by relocating to where the jobs are. They accept the level of pay which is justified by the skills they have to offer. They share expenses of living with others.

BonnieBlueFlag June 9, 2011 at 1:52 pm

Nemo’s a troll. Internet 101 says, “Don’t feed trolls.” Giving trolls the attention they crave only encourages them.

Slappy McFee June 9, 2011 at 5:06 pm

“yes, the economy is a commons” wins my Palinesque post of the day award.

Here is where I would usually whisper to the individual, there is no “the economy” and there is no “commons”. As you were gents (and ladies).

WhiskeyJim June 10, 2011 at 11:35 am

I’d never heard anyone suggest the economy was a Commons before.

Then a light bulb went off. If one views AG and the economy, at least in the short run, as a ‘depleted’ or ‘sub-optimal’ Commons, then Keynesian stimulus makes more sense. It is like using public funds as fertilizer so the grasslands can support more cattle again.

In fact now I wonder if the commons=economy is not a fundamental Keynesian assumption. That probably makes me dense, but there it is.

vikingvista June 11, 2011 at 2:29 am

“I’d never heard anyone suggest the economy was a Commons before.”

That’s because few people are dim enough to suggest such nonsense. If the voluntary interaction of two people is a commons, then a person no longer owns himself. Private property is extinguished.

That of course, is why a Marxist was spewing it.

River June 10, 2011 at 12:49 pm

I suggest those who believe that redistribution of some of the benefits of the “gift” of low prices from free trade read Russ Roberts book, “The Choice: A Fable of Free Trade and Protection” if they haven’t already. I am at that dangerous age, late 50′s. If I were to be disadvantaged by loss of employment due to cheaper foreign products two points come to mind: 1rst if I have not planned for that contingency by now, shame on me. Outsourcing has been occurring every year of my working life and I know it’s a possibility. It would have been much easier if governments at all levels had not confiscated half of my production from the sweat of my brow, but we do what we have to do. 2nd, my life is better than my fathers because of the increased wealth and opportunity created by free markets, free trade and individual freedom. If I selfishly consort with the mob and redistribute the benefits of this system to prop up myself, then I rob from the wealth and opportunity that would be available for my children and grandchildren. I will take care of myself so their futures will be brighter.

Finally, the idea that the economy as a whole is a “commons” assumes that everyone owns the means of producing the goods and services that make up production. By my simple reckoning, if the collective owns the production, not the producers there is a nasty name for the system.

Fake Herozg June 10, 2011 at 2:28 pm

I’m not sure if these arguments have been addressed already (I only got through about 100 comments) but I’d love for Russ or Don to attempt to argue with Vox Day:

http://voxday.blogspot.com/2011/06/george-will-fails-to-follow-logic.html

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