Skip to main content

View Diary: The Great Exodus to China and Abroad (69 comments)

Comment Preferences

  •  I think I must be a protectionist. (1+ / 0-)
    Recommended by:
    idbecrazyif

    The benefits of Free Trade accrue to the corporations and not so much to the ordinary people in the countries involved.  

    Every free trade advocate will freely admit that liberalization of trade imposes costs on individuals and industries, but that the overall benefits outweigh the losses.  
    The key question is the benefits for whom? In the short term, the more affluent nation gets the benefit of cheap goods, so that appears to be a plus, but in the long term, it's at the cost of jobs and buying power. It's an unsustainable benefit.  Look what has happened here in the States.

    In the developing country, (like El Salvador or Mexico), the capital accrued by the cheaper labor is concentrated to the investing corporation, benefiting that company and removing the capital out of the developing country.  It would benefit El Salvadoreans more to have the profits from making cheap socks remain and circulate in their internal economy rather than be removed from their country to an American company off-shored to the Cayman Islands, where the profits remain in the hands of the 1%.  

    I suppose if your goal is to maximize profit for stockholders and CEOs it makes sense to reduce tariffs, but if your goall is to improve the standard of living for the people in a nation, you need to protect the removal of profit (in the form of capital generated by labor and raw materials) from leaving your borders.

    •  Nice story (0+ / 0-)

      But it doesn't reflect reality.

      The countries with the lowest trade barriers tend to be those with the highest incomes.  No coincidence.

      Developing countries don't benefit from international trade and foreign investment?  I'd recommend a long trip through Asia where you can see the fastest growing economies in the world and the fastest growing incomes.  Go ask them if they'd be better off if we cut off our markets to their exports and pulled out our investment.  And why do you assume all trade is with American-owned companies?  Most apparel makers contract out to local suppliers.  You think an American owns that sock factory?

      •  Top 20 companies in China are American. (0+ / 0-)

        Are the countries with lowest trade barriers the oil producers like Kuwait and the UAE that don't have manufacturing to speak of (thus nothing to protect)?

        Developing countries do benefit from foreign investment, but I think it's a relatively short term gain that has huge externalized cost for their societies in terms of pollution, sweat shops, and disruption of internal markets.  

        For example, the lack of environmental controls in Mexico causes a lot of children to be born with birth defects due to mercury poisoning, something we don't see in this country. Same with Nigerian children where the water is polluted by oil dispersants spread by foreign oil investors to disperse the oil spills.

        Asian countries would be better off keeping more of Nikes profits via export tariffs as those goods leave the country and investing that in schools for Nike child labor and their own infrastructure.   Have you seen the power lines in Bangkok? Scary.  

        An example of internal disruption is the production of indigo in India. Monsanto exchanged the growers' indigo seeds at a great deal to one where they can't ever own them, and then raised the price of the seeds.  (This is easier to do where there is a lack of education, btw.)  Now the farmers can no make enough money to get ahead of their debt and they no longer own their own seeds to start over.  Monsanto now gets all the profit that used to be distributed among the farmers and they take the money out of India.  You could look at the production of rice in Mexico too, where a big Ag company producing rice in Asia can out-compete local farmers until they are out of business and then raise the price of rice.

        As for exports, if Asian labor was paid decently, they could buy their own socks. Seriously, exploited workers with no disposable income can't afford the stuff they make, and unless we start making stuff, soon we won't be able to either.

        The problem with foreign investment is that in can leave instead of making things right; they don't have a stake in a nation or it's people other than the extraction of wealth.  I think overall the people in developing countries are better off with investors with more of a stake in the nation.

        As for the apparel industry, if an American company doesn't own the factory, then they lent the money to a local outfit contracted to fill an American order.  BTW, eliminating the tariffs to the US killed sock manufacturing in the US, So yes, I do think that most of the ownership is to outside foreign investors. El Salvador is still  banana republic and socks are a different banana.

        As for "American" companies, these days they are "International conglomerates" with no national allegiances. I don't think they have our American national interests in mind.  That's why it was such a big deal when the Stanley tool company decided not to incorporate in Bermuda like all the other tax dodgers.  I buy Stanley tools even when they cost me more.

        IMHO, Free Trade just concentrates wealth into the pockets of very few people who don't give a rat's ass about the rest of the world.

        •  American? (0+ / 0-)

          I'd love to see where you got that stat on the top 20 companies in china.  I'm fairly certain there are chinese companies that are substantially larger.

          And no, it's not oil rich countries with the lowest tariffs, it's western countries with some other high income countries like singapore and hong kong, australia, new zealand, etc.  look it up.

          Well, feel free to try to convince developing countries to forgo foreign investment.  They all seem to disagree with you on the benefits.  I'd be interested to hear if you know of any developing countries that are developing well without trade and investment as part of their development strategy.

          •  Uh ... I'd love to see it too. (0+ / 0-)

            I pulled that stat out of the news about four years ago but I can't find the source now, so I retract and apologize for stating it as fact.  The biggest and most profitable Chinese companies now appear to be mostly oil, power, and finance, and all are government-owned.

            I was also able to look up high-income countries, and you are right that they are mostly Western, with the USA near or at the top of the list (although the lists don't reference income disparity), but I could not readily find a list of countries with low tariffs in order to make the comparison. Can you provide a source? I would be happy to take a look.

            •  WTO Website has two tools (0+ / 0-)

              A complicated one and simpler one located here

              You have to register to use it however, keep that in mind.

              --Enlighten the people, generally, and tyranny and oppressions of body and mind will vanish like spirits at the dawn of day. - Thomas Jefferson--

              by idbecrazyif on Thu Apr 12, 2012 at 09:36:03 AM PDT

              [ Parent ]

            •  Tariffs (1+ / 0-)
              Recommended by:
              bluedust

              Thanks to idbecrazyif for the WTO link.  That may be the best location, and this document looked to have all the information, if not in a nice ranking to compare countries against each other.

              I was going to point you to the Heritage Foundation’s Index of Economic Freedom, which has a Trade Freedom component.  Not the best source for analysis, but they do have some good data.  They report tariff rates differently (trade-weighted vs simple average) and add in other trade barriers to their ranking.  I’m not sure how they weight those other components so I can’t really vouch for the rankings, but it does give a good idea which countries have the highest and lowest trade barriers.

              I’ll take some time to wade through the WTO data, but I think you’ll find the more well-off countries tend to have the lowest rates (most of Europe is under the common European Union rate) and the poorest countries have the highest rates, particularly for non-ag products.

              Trade can’t get all the credit, countries with modern trade policies tend to do other things well, too.  However, it’s clear that these wealthy countries have decided that low trade barriers are in their best interest while the most dysfunctional countries for some reason don’t agree.  The results there are obvious.

              •  Thanks for the links. (0+ / 0-)

                When you say obvious I take it you are implying causality. I will have to investigate.  (Because I hate being wrong!)

                On a slightly different tack, The Chinese government owns a lot of big companies. I would consider that ownership to be a form of protectionism and a way to keep, say oil profits, in China for the benefit of the Chinese. So China is controlling a lot of the capital in their own country.  Who owns the companies that make things for Walmart?  Who controls the prices?  Are those companies owned by China? Doesn't China have nominally low trade barriers?  It seems to me China is manipulating the markets and the cost of goods coming in and going out of their country and I don't think they practice Free Trade at all.  I think they've figured out the work-arounds to Free Trade to protect Chinese national interests.  Why wouldn't they?  Yes?

                If this were the case then tariffs are not the only way to protect and incubate manufacturing economies within national borders.

                I would love to understand this better and I would appreciate a couple of reading recommendations if that's possible.  

                •  China (0+ / 0-)

                  I’m no China expert by any means, but I’m sure someone could write a book (and may have already) on all the trade problems with China.  I’m not saying all is well in Trade Land and we’re in some kind of free trade sweet spot.  The question is do we work within a multilateral system to agree on common trade rules and keep countries in compliance, or do we lash out unilaterally, punishing all those who transgress against our view of how the world should work?  Needless to say I’m for the former.  The latter is much easier, but in the long run is unlikely to work and will just end up alienating the rest of the world.

                  As for state-owned enterprises, now known colloquially as state capitalism, it’s a known issue.  The Economist had a recent special report (link at the end of the first article linked to here) on state capitalism which I haven’t read yet.  It doesn’t look like it focuses on trade specifically, but should be interesting.

                  •  I love your points... (0+ / 0-)

                    Would love to work on maybe a series with you to highlight perhaps where areas of change are needed.

                    --Enlighten the people, generally, and tyranny and oppressions of body and mind will vanish like spirits at the dawn of day. - Thomas Jefferson--

                    by idbecrazyif on Thu Apr 12, 2012 at 09:44:03 PM PDT

                    [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site