A very interesting read given all the recent angst and arguments over NAFTA.
So standing up to China seems like a logical way to help ordinary Americans do better. But there’s a problem with this approach: the very people who suffer most from free trade are often, paradoxically, among its biggest beneficiaries.The reason for this is simple: free trade with poorer countries has a huge positive impact on the buying power of middle- and lower-income consumers—a much bigger impact than it does on the buying power of wealthier consumers. The less you make, the bigger the percentage of your spending that goes to manufactured goods—clothes, shoes, and the like—whose prices are often directly affected by free trade. The wealthier you are, the more you tend to spend on services—education, leisure, and so on—that are less subject to competition from abroad. In a recent paper on the effect of trade with China, the University of Chicago economists Christian Broda and John Romalis estimate that poor Americans devote around forty per cent more of their spending to “non-durable goods” than rich Americans do. That means that lower-income Americans get a much bigger benefit from the lower prices that trade with China has brought.
trinkets
they get our jobs and we get their lead paint trinkets…. sounds to me like its time to shut down the taxbreaks for companies that outsource and look the other way while theres sweatshop labor.
Re: The Paradox of Free Trade
Dear Phillydem,
Your lame argument in support of free trade with China is the most asinine, irrational and block-headed rhubarb one should be forced to suffer.
In line with your percieved “benefits” by way of so-called free trade you state that the less one makes, “the bigger the percentage of your spending that goes to manufactured (imported) goods.”
Have you ever once considered that hundreds of thousands of our own workers who indeed “make less” are but hapless victims of the very same free trade with China which has destroyed thousands of decent-paying manufacturing jobs in each of our 67 counties, including your own county (city) of Philadelphia.
I do not wish to be too hard here since it is a fair guess that anyone who embraces such insensitive opinions has never had the opportunity to soil his own hands or sweated his own brow as a skilled laborer and therefore, he should have every right to be forgiven for being both uninformed and totally ignorant of the issue at hand.
Matt Thomas
Former Union Steel Worker, USWA
Married to former Garment worker, UNITE
and coalminer’s (UMWA) daughter.
Just a different perspective
Dear Matt,
First, this is not my argument, but it’s a different perspective on trade. Let’s face it, how many people do you know who bypass a local small business to go to Wal-Mart or one of the other big box stores because their prices are cheaper? More than you’d care to admit, I’d bet.
FTR, I’m also a union member (AFGE) and both my parents are as well (PSEA and BRAC). My great uncle founded the first potter’s union in town as well. So don’t throw this anti-union allegation at me.
pd
Just a different perspective
Pd,
Never suggested that you were anti-union…merely that you are insensitive (or perhaps simply oblivious) to the harm inflicted on Pennsylvania working families by the immense U.S. trade deficit via China.
You are correct in saying that many people shop Walmart and purchase Chinese-made products…unfortunately, even some union members do. However, this does not alter the fact that many thousands of working families have seen their condition of life severely diminished by way of U.S. trade with China.
These problems are not limited to this human issue. Last year, China’s annual GNP surpassed 10 percent while our own growth cannot reach 3 percent. At the same time, our own military now admits they are deeply concerned with the tremendous expansion of the Chinese arsenal of weapons, including ICBMS.
The unbridled greed of U.S. corporations is indirectly financing a monsterous military machine that will, in a few short years, seriously challenge U.S. interests around the world.
One is reminded of remarks by the Soviet Union’s own Lenin who had little fear of western economic sanctions following the Russian Revolution:
The greedy capitalist will sell us the rope we need to hang him.”
Matt Thomas
This a complicated issue
Matt, the reason I posted this was to point out how complex the trade issue is.
It’s not just a simple matter of slapping on tariffs or some of the other solutions that have been suggested. Today, the loss of low cost items would seriously hurt many Americans, including union members, who are barely able to make ends meet as is.
Personally, I would love to see one of Obama’s first initiatives be to work with a Democratic congress to completely gut and rewrite our labor laws. They are written so that if there are 52 cards in the deck, management/employers hold 51 of them. Get a living wage, remove the “right to work” laws, enact national (not private and not insurance-based) health care and most of the issues surrounding free trade would disappear, IMHO.
pd
Paradox indeed! So many
Paradox indeed! So many American workers have slipped from middle-class Americans to low-income Americans due to the simple fact that they have lost the jobs they based their entire lives on. Losing fair hourly wages, health benefits, pensions and most importantly self-esteem as breadwinners is hardly appeased by the cost of Chinese goods. One must note that the article addresses only “non-durable goods.” The damage of losing lifelong income is especially evident when one must purchase their own health care, food, gas and fuel oil, a car or truck, a house payment, college tuition, etc etc etc.
JP
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