View Full Version : American Attitudes on Trade Liberalization
03-14-2008, 02:16 PM
I just attended a lecture and discussion session by Diana Mutz, a professor of political science and communication at University of Pennsylvania. The overwhelming argument was that peoples' attitudes toward free trade are only affected significantly by gender and education. Party affiliation has little to no effect on their opinions, though outsourcing is a different story.
The four components of gender and education brought forth were competition (gender), ethnocentrism, attitude toward immigration, and isolationism (education). As many can attest, these components do not correspond with political affiliation. Also, over 50% of people in the study viewed themselves as being personally unaffected or negatively affected by free trade. Shockingly, even more people thought that the US economy as a whole was negatively affected by free trade. Self-interest had very little influence on these opinions. Also, knowledge that most economists favor trade increased positive opinions about trade.
Historically, most political elites (either party) are vastly more supportive of trade than the general population. With the exception of protection of specific industries (i.e. steel), all US presidents since WWII have been in favor of trade liberalization. What do you think has caused a seeming reversal of this trend in the latest election cycle, especially in the Democrat Party, which has tended to be less isolationist and more pro-immigration?
As many logical INTJs, how do you view this study? I was very surprised that people don't do a simple cost-benefit analysis of how free trade affects them. It would make sense to me that someone who lost their manufacturing job would be against trade liberalization, but what about people who are only affected positively, such as teachers and other non-exportable occupations?
03-15-2008, 06:32 AM
I think most of the people doesn't know about differences between exportable and non exportable goods, or the theories of mutual advantage of free trade. And most of the people lives in contact with those who get the disadvantages. Also, those problems are accountable to free trade while it's not so easy to tell wich advantages you would get anyway without free trade. If you add to this the fact that in rational chices men tend to be risk avoidant I guess you could have one possible picture.
We get cheap goods so has to be good, our companies get to export to their markets and new customers are good. Except these 2 are at odds with each other.
Cheap goods come in which seems nice, but domestic companies go under because they cant sell. The stronger ones buy up the companies in the producer countries and take thier profits. Since the consumers no longer have jobs, they consume until their savings are gone. At that point they are as poor as the producers. Then it becomes economical to produce at home once more. The result is a flattening of income between the countries. Good for a poor country, bad for a rich, such as US. The big winners are the capitalists that can move first to the poor country to produce, then buy up and begin producing once more in the formerly rich country. Its not about the people but the people with the money.
America is in just this position. It produces nothing and is borrowed to the maximum, all to purchase consumables from China. So now they will crash to similar living standards of China and production will resume once again in the US.
03-15-2008, 06:29 PM
"We get cheap goods so has to be good, our companies get to export to their markets and new customers are good. Except these 2 are at odds with each other."
If you assume that all goods are generic, and all goods are in competition with each other - or in other words - apples are oranges are cars are HIV medication. In reality, different countries produce different goods. New markets enable the US to export what it produces relatively well, while at the same time consumers can buy goods that other countries produce relatively well. A medium-skilled economy with a large low-wage labour force, like China's, is great for producing cars. A high-skilled labour force (with excessive unionization in manufacturing industries) is much better at producing IT goods, biotechnology, aircraft, and other high value-added goods.
"Cheap goods come in which seems nice, but domestic companies go under because they cant sell. The stronger ones buy up the companies in the producer countries and take thier profits."
Well some domestic companies go under - namely, those that are not efficient. Countries produce what they are comparatively best at producing, in conditions of free trade. Consider the following - should a lawyer, that makes $50/hour, hire a typist, at $10/hour to do his typing for him - even though he is a good typist? Yes, because the time he spends typing could otherwise be spent law-ing which provides a much higher payoff.
"Since the consumers no longer have jobs, they consume until their savings are gone. At that point they are as poor as the producers."
Uh, are you nuts? The US has one of the lowest rates of unemployment in the world, and essentially full employment. It may dip a bit because of the possible recession, but US consumers hardly have no jobs. Some people lost jobs because they were in industries where the US does not have a comparative advantage. Given that US unemployment low, not high (and that it ROSE after Nafta was signed), it stands to reason that unemployment is at most, a short-term consequence.
"Then it becomes economical to produce at home once more. The result is a flattening of income between the countries. Good for a poor country, bad for a rich, such as US."
Other than India and China, point to the countries that are catching up rapidly? Secondly, given that the US economy has grown every year since the early 90's (or, in other words, America is producing more stuff and people are better off), America's relative share of wealth is down, but our absolute share is up. I will grant that the rise of China has international relations implications, but China's rise is hardly dependent upon the US. They have considerable sources of domestic capital.
"The big winners are the capitalists that can move first to the poor country to produce, then buy up and begin producing once more in the formerly rich country. Its not about the people but the people with the money."
Is there any single case in history you can point out of a formerly rich country that is now poor because of open trade policies? The only rich-to-poor transition I can think of is Argentina, and its decline had more to do with the socialist policies of Juan Peron.
"America is in just this position. It produces nothing and is borrowed to the maximum, all to purchase consumables from China. So now they will crash to similar living standards of China and production will resume once again in the US."
America produces nothing? America produces high technology goods, and exports about 1.5 trillion dollars worth of goods. True, Americans also import more than that, but keep in mind that the international sector is a fairly small percentage (~20%) of US gdp. Both those in favour and those against trade liberalization tend to exaggerate its effects wildly.
Does the US import more than it exports? Yes. Why is this bad? Just as individuals may decide to spend or save more at any given time, so too do consumer preferences sometimes lean towards saving and scrimping, and other times to spending. That America import textiles and cars from other countries is testament to its wealth and technological advancement, not its weakness. The value added in cars and textiles is much smaller than that in the industries America tends to be export-competitive in (because a larger number of countries are able to produce cars and textiles, and compete down the wages of labour).
03-15-2008, 11:53 PM
I'll second eternaltriangle on a few things. Firstly, the US unemployment rate is extremely low and is mostly due to frictional unemployment (people switching jobs, not remaining jobless for long amounts of time). Also, though many countries' GDP is growing rapidly, the concurrent population increase spreads the growth more than in the US. Consequently, it will be many years before they catch up with GDP per capita.
Count me in with EternalTriangle. I hate polls because they rarely qualify informed participants and the numbers get skewed with emotional responses which then results in flawed policy.
The USA as a post industrial nation needs to outsource the old-economy and focus on the new-economy. Trade is the best way to do this, by increasing the amount of consumer goods, they become cheaper, and Americans can invest more in domestic services (which generally increase the quality of life). Union advocates will come up with a million excuses as to why this is bad. But if America had been heavily unionized in 1776 I'd imagine it would still take 9 people to feed 10 because the policy would be that 'we need to preserve the agrarian workers job'.
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