[Marxism] On Trade, Donald Trump Breaks With 200 Years of Economic Orthodoxy
POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. * NY Times, Mar. 11 2016 On Trade, Donald Trump Breaks With 200 Years of Economic Orthodoxy By BINYAMIN APPELBAUM WASHINGTON — Donald J. Trump’s blistering critique of American trade policy boils down to a simple equation: Foreigners are “killing us on trade” because Americans spend much more on imports than the rest of the world spends on American exports. China’s unbalanced trade with the United States, he said Tuesday night, is “the greatest theft in the history of the world.” Add a few “whereins” and “whences” and that sentiment would conform nicely to the worldview of the first Queen Elizabeth of 16th-century England, to the 17th-century court of Louis XIV, or to Prussia’s Iron Chancellor, Otto von Bismarck, in the 19th century. The great powers of bygone centuries subscribed to the economic theory of mercantilism, “Wherein we must ever observe this rule: to sell more to strangers yearly than we consume of theirs in value,” as its apostle, the East India Company director Thomas Mun, wrote in the 1600s. Now Mr. Trump is bringing mercantilism back. The New York billionaire is challenging the last 200 years of economic orthodoxy that trade among nations is good, and that more is better. He is well on his way to becoming the first Republican nominee in nearly a century who has called for higher tariffs, or import taxes, as a broad defense against low-cost imports. And there is a good chance he would face a Democratic opponent, Hillary Clinton, who has expressed fewer reservations about trade, inverting a longstanding political dynamic. Among Republican standard-bearers, “There’s nobody since Hoover who talked this way about trade,” said I. M. Destler, a public policy professor at the University of Maryland and the author of “American Trade Politics,” a history. For most of the last century, Mr. Destler said, such skepticism about trade had been relegated to the fringes of the Republican Party. Mr. Trump’s mercantilism is among his oldest and steadiest public positions. Since at least the 1980s, he has described trade as a zero-sum game in which countries lose by paying for imports. The trade deficit with China, which reached $366 billion last year, makes America the biggest loser. “Our trade deficit with China is like having a business that continues to lose money every single year,” Mr. Trump told The Daily News in August. “Who would do business like that?” During the current campaign, he has regularly advocated tariffs as the best solution. He has promised to penalize American companies that build foreign factories. For months, his favored example was Ford, which announced plans last summer to expand in Mexico. More recently, he has called out Carrier, which is shifting air-conditioner production to Mexico from India. “I will call the head of Carrier and I will say, ‘I hope you enjoy your new building,’ ” Mr. Trump said last month. “‘I hope you enjoy Mexico. Here’s the story, folks: Every single air-conditioning unit that you build and send across our border — you’re going to pay a 35 percent tax on that unit.’ ” In January, Mr. Trump proposed a 45 percent tariff on Chinese imports during a meeting with the New York Times editorial board. “I would tax China on products coming in,” he said. “I would do a tariff, yes.” Economists have long struggled against the popular view that exports are a measure of economic vitality while imports are evidence of regrettable dependence. They argue that the opposite is true. “Economists have spoken with almost one voice for some 200 years,” the economist Milton Friedman said in a 1978 speech. “The gain from foreign trade is what we import. What we export is the cost of getting those imports. And the proper objective for a nation, as Adam Smith put it, is to arrange things so we get as large a volume of imports as possible for as small a volume of exports as possible.” But critiques like Mr. Trump’s resonate in part because economists have oversold their case. Trade has a downside, and while the benefits of trade are broadly distributed, the costs are often concentrated. Everyone can buy a cheaper air-conditioner when Carrier debarks for a lower-cost country, but a few hundred people will lose their livelihoods. Pietra Rivoli, a finance professor at Georgetown University who explored the effect of increased globalization in her 2005 book, “The Travels of a T-Shirt in the Global Economy,” said Mr. Trump might be finding a receptive audience in part because the United States had provided relatively little help to workers harmed by trade. “You have much more negative sentimen
Re: [Marxism] On Trade, Donald Trump Breaks With 200 Years of Economic Orthodoxy
POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. * A quite fascinating article. There was never anything orthodox among economists that "trade is good". It is a meaningless statement unless contextualized. The fastest growth rate in US economic history (real growth, not speculative 'growth' based on money) was during the first 30 years of US history, based, entirely, on a highly regulated trade between the US and Europe (the slave trade, not withstanding, was ended as such quite early) most notably Britain. But it was based on the tariff which is what financed, entirely, the US gov't (minus a few sin taxes like the whiskey tax). The tariff ran well past Lincoln's administration (he was a big advocate of it) and of course the tariff(s) were regularly tweaked up and down depending on what party ran Congress or sat in the White House. Trump's fantasy, if it's actually true what he says (he said that previously, doesn't mean he won't change his mind, like, tomorrow) is akin to Sander's fantasy that he can get anything he is proposing against a party that is 180 degrees out from his program. What Republican is going to vote for free trade or support a tariff..something that would blow up the WTO and every trade agreement in the last 30 years? None, that's how many. Secondly, what are the consequences? When you put, say, a 35% tariff on Chinese products...you are talking about an almost instant 35% *effective* inflation rate. It's one thing if you are trying reign in cheapER goods that produced in the US, it's altogether different when there maybe no production in the US to begin with. Then you are asking for trouble. I think Trump doesn't actually understand anything about capitalism (despite protestations from Trump supporters, there is a huge difference between someone who understands business and one that understands economics) or how it works. That is the "political" part of "political-economy". He is, actually, a second rate version of the grade-B politician from 20 years ago, Ross Perot. Essentially he's a terrible sequel to a terrible movie. Direct to video but not to be taken too seriously. _ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
Re: [Marxism] On Trade, Donald Trump Breaks With 200 Years of Economic Orthodoxy
POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. * The economics profession has been largely pro-free trade ever since the days of Adam Smith, although there have been always at least a few outliers who have been willing to defend protectionism under at least certain circumstances, such as Alexander Hamilton, who in his Report on Manufactures, advanced a form of what economists call the infant industries argument. Later advocates of Hamilton's position included the Whig politician Henry Clay and the economist Henry Charles Carey (who would serve as an adviser to President Lincoln). In Germany, the economist Friedrich List, who had spent part of his youth in the United States, where he had become an admirer of Hamilton, Clay, and Carey, would write a book, Das nationale System der politischen Ökonomie, which advocated similar policies, with the end of creating an economically and politically united Germany. List died young, but by Bismarck's time, his theories influenced German economic policy. Interestingly enough, the British economist Alfred Marshall, one of the founding fathers of neoclassical economics, and himself a staunch free trader, conceded the strength of List's arguments. The following is from Marshall's Principles of Economics 8th edition, Appendix B, “The Growth of Economic Science” (see www.econlib.org/library/Marshall/marP57.html#Appendix%20B), the 39th and 40th paragraphs: “While recognizing the leadership of Adam Smith, the German economists have been irritated more than any others by what they have regarded as the insular narrowness and self-confidence of the Ricardian school. In particular they resented the way in which the English advocates of free trade tacitly assumed that a proposition [i.e. that free trade is good] which had been established with regard to a manufacturing country, such as England was, could be carried over without modification to agricultural countries. The brilliant genius and national enthusiasm of List overthrew this presumption [H]e showed that in Germany, and still more in America, many of its indirect effects were evil “American manufacturers adopted List as their advocate: and the beginning of his fame [i.e. in the Anglophone world], as well as of the systematic advocacy of protectionist doctrines in America, was in the wide circulation by them of a popular treatise which he wrote for them.' Jim Farmelant http://independent.academia.edu/JimFarmelant http://www.foxymath.com Learn or Review Basic Math -- Original Message -- From: DW via Marxism To: Jim Farmelant Subject: Re: [Marxism] On Trade, Donald Trump Breaks With 200 Years of Economic Orthodoxy Date: Fri, 11 Mar 2016 07:31:50 -0800 POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. * A quite fascinating article. There was never anything orthodox among economists that "trade is good". It is a meaningless statement unless contextualized. T Affordable Wireless Plans Set up is easy. Get online in minutes. Starting at only $9.95 per month! www.netzero.net?refcd=nzmem0216 _ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
Re: [Marxism] On Trade, Donald Trump Breaks With 200 Years of Economic Orthodoxy
POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. * On 3/11/16 11:31 PM, Jim Farmelant via Marxism wrote: The economics profession has been largely pro-free trade ever since the days of Adam Smith, although there have been always at least a few outliers who have been willing to defend protectionism under at least certain circumstances, such as Alexander Hamilton, who in his Report on Manufactures, advanced a form of what economists call the infant industries argument. Marx and Engels were definitely not outliers. https://www.marxists.org/archive/marx/works/1888/free-trade/ _ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
Re: [Marxism] On Trade, Donald Trump Breaks With 200 Years of Economic Orthodoxy
POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. * And I should point out that the young Karl Marx was rather dismissive of Friedrich List. https://marxists.anu.edu.au/archive/marx/works/1845/03/list.htm Nevertheless, List, posthumously, influenced German economic policy after that country was united under Bismarck. Marx & Engels, themselves, were generally supportive of free trade. But I think they, at least implicitly perceived some merit in the infant industries argument that people like Hamilton, Carey, and List had put forth. One of their arguments in support of Irish nationalism was that an independent Ireland would able to industrialize much more rapidly than it could if it remained under British rule, presumably because an independent Irish government would be able to impose some degree of protectionism to limit the influx of cheap British manufactures, and so allow industry to develop in Ireland. Jim Farmelant http://independent.academia.edu/JimFarmelant http://www.foxymath.com Learn or Review Basic Math -- Original Message -- From: Louis Proyect Subject: Re: [Marxism] On Trade, Donald Trump Breaks With 200 Years of Economic Orthodoxy Date: Sat, 12 Mar 2016 08:24:02 -0500 On 3/11/16 11:31 PM, Jim Farmelant via Marxism wrote: > The economics profession has been largely pro-free trade ever since > the days of Adam Smith, although there have been always at least a > few outliers who have been willing to defend protectionism under at > least certain circumstances, such as Alexander Hamilton, who in his > Report on Manufactures, advanced a form of what economists call the > infant industries argument. Marx and Engels were definitely not outliers. https://www.marxists.org/archive/marx/works/1888/free-trade/ Affordable Wireless Plans Set up is easy. Get online in minutes. Starting at only $9.95 per month! www.netzero.net?refcd=nzmem0216 _ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
Re: [Marxism] On Trade, Donald Trump Breaks With 200 Years of Economic Orthodoxy
POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. * On 3/12/16 10:01 AM, Jim Farmelant via Marxism wrote: And I should point out that the young Karl Marx was rather dismissive of Friedrich List. https://marxists.anu.edu.au/archive/marx/works/1845/03/list.htm Nevertheless, List, posthumously, influenced German economic policy after that country was united under Bismarck. Back in 2003, we had a subscriber named Julio Huato who came from Mexico to work on an economics PhD at the New School. He has since gotten his degree and teaches in Brooklyn. He raised quite a few eyebrows defending NAFTA like this: http://article.gmane.org/gmane.politics.marxism.marxmail/23891/ I think the key to understanding M&E's support for free trade is their identification with the bourgeois revolution. As the article I linked to before indicates, they were in favor of anything that developed the productive forces. In the 20th century protectionism is a deeply problematic stance to take if the nation adopting it is like Germany or the USA. Trump is much more the traditional protectionist while Sanders focuses more on how bad free trade agreements like NAFTA and TPP are. For me the real question is how the Golden Age of American capitalism can be restored. From Trump's "making America great again" to Sanders speechifying about helping the middle class, there's a great deal of denial involved. Wages have been going down because American manufacturing (except in certain sectors like aerospace and software development) is not profitable. You can't get the genie back in the bottle. The USA launched the Cold War in order to penetrate the Communist world and liberate it for private property. Now standing victorious, the ruling class has to confront the backlash from its own working class that may make the old mole resurface. _ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
Re: [Marxism] On Trade, Donald Trump Breaks With 200 Years of Economic Orthodoxy
POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. * I've read most of what (everything I could find on free trade) by M&E. I think in general it's anemic. I *wish* they had written a whole lot more. I think it lacks the needed historical study of how Britain became Britain and the role that mercantilism played along with the massive tariff system and outright banning of goods from other nations and colonies (especially the latter). Above all...a "wish" would of been for them to do a serious study of the political economy of the US. I don't think they really did. They certainly had a good understanding of the US political economy from the 1840s on, at least within the larger understanding of the US industrial development, slavery, etc. But before that? Not so much. David W. _ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
