When running into a bout of cognitive dissonance, the choices seem to be: sit and think it through; or shout slogans and ignore the contradiction. I have long held opinions on trade that border on the mercantilist. While puttering about, I spotted a box of “Royal Tea” sitting atop my refrigerator. Putting a kettle on, I got together the things I’d need, and waited for the water to boil. That’s when I started thinking about the items I’d gathered.
Despite the Cyrillic letters on one side and the Imperial Russian motifs (including portraits of Nicky II and his Tsarina), the tea had probably never been to Russia. It was Ceylon tea from Sri Lanka imported by way of a company in Sacramento. The kettle had been made by robots in Japan and ordered via computer. The teacups were actually crafted by Russian hands. The spoon was one of thousands stamped out en masse in China. The gas I was burning probably came out of a fracking well in this country, but not from anywhere near as close as the honey, which was collected at a maple farm two counties over. But I didn’t go there to get it. Even that was shipped in to my local store. All while I sat on my fat ass complaining how this country doesn’t make anything anymore.
I composed a quip to share with the Glibertariat, with the ending being a play on the line “It’s good to be the King.” While I cleaned up the wording and contemplated the response I’d get from known personalities, the dissonance set in. While some people far richer than I hollered about the ‘evils’ of capitalism elsewhere, I was contemplating a cup of tea. Aside from the fact that it needed more honey, the mere fact that it was in my hands at that moment was a silent testament to the good of capitalism. More specifically, the fruits of trade. I will still argue that Ricardo was wrong regarding comparative advantage (because he was), and I still hold that it is better to be the producer and seller of goods than the buyer. But these are details of nuance, separated from the base principle that it’s good to be a capitalist.
My gut instinct is to argue against international trade. But that is a response born of emotion and not rational reflection. Too many people I know tell the same story – their job went away but their family is still here. It was my tale, too. I ended up in the Civil Service because there was nothing else around. Everything was being made overseas. Why was it cheaper to ship halfway around the globe than build locally? Many here will reflexively blame government. That, too, is an emotional response. While not completely false, it carries the same danger of becoming over-simplified dogma as blaming the corporation. The company that had sent my last job overseas had been skirting bankruptcy because it had decayed into a bloated, inefficient conglomerate with scads of redundant departments duplicating the same functions. So, they had to restructure or die. Bye upstate New York, hello Mumbai. This was not the fault of the government who had chased out the other opportunities.
Did (relatively) free trade cost me a job?
Yes.
Should I be bitter?
Not unless I forget to add enough honey to this cup of tea, I wouldn’t even have tea without the same.
Nice succinct post.
Is it possible to be opposed to our current ‘free trade’ agreements, while also supporting the general concept of free trade? Rothbard was adamantly opposed to NAFTA when it was first introduced?
https://twitter.com/EmmanuelMacron/status/860111061340610561
Off topic, but after this little stunt, Macron may just lose. Worst former president ever
I’m sorry, I don’t read frog-talk.
I believe they prefer to be referred to as ‘cheese eating surrender monkeys’, you bigot
I’ve seen their cheese – most of it isn’t even finished being made before they try to sell it.
But they can exchange that cheese for garments from the UK (hat tip, David Ricardo)
What fools the English be to buy unfinished chee
OMWC will be in here to set you straight…
Old Man With Cheese?
Or is he just an old man that smells like cheese?
I thought ‘chicken’ was the appropriate euphemism for that kinda thing?
It says something like “hope is on the move”
Being endorsed by Obama may well be the political equivalent of Al Gore speaking at an enviromental conference.
the honey, which was collected at a maple farm two counties over
Go on…
Are we talking wildflower here? Is there such a thing as maple honey? I don’t know if I can handle the existence of maple honey.
I don’t think that makes sense. Trees don’t pollinate the way flowers do.
What? Avocado honey and orange blossom honey beg to differ. Also:
So apparently it is a thing.
Huh, wouldnt have expected that.
Wasn’t familiar with avocado, but knew about orange blossom.
So you said that trees don’t pollinate the way flowers do… when you knew that orange trees do? Lol.
The tupelo is a tree, as well.
blossom = flower. Right?
The main product was maple syrup, but the farm also ran an apiary and likely brough hives ro other farms to pollinate.
Speaking of bees, they were once used as a counter-example of Coase’s Law but it turned out that even pre-Coase, beekeepers and farmers were using coasean bargaining.
I will start the pointing out where you are wrong:
Everything was being made overseas.
Even with stuff being made overseas, we have more manufacturing in the US now then [pick comparison time]. The difference is, we have less manufacturing jobs. So it isn’t moving jobs overseas that have taken away US manufacturing jobs as much as robotics has.
In certain fields the robots can’t do them, and those are being done in China and wherever. But its not like US manufacturing doesn’t exist.
Aside from that “everything” not being an absolute there are two factors to consiter:
A: the factories most certainly cleared out from the area I was living in, along with most other businesses.
B: I am hard pressed to find anything I own or routinely buy that is, in fact, made in this country.
Other than honey, you mean.
The largest manufacturing industries in the United States by revenue include petroleum, steel, automobiles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, and mining. — from wikipedia
I use a lot of those, directly or indirectly.
And?
Yes there are vague generalizations on your side too.
It has only been in recent years that I’ve been able to afford products made in this country. And I was annoyed to find that it came from Detroit instead of a city that hasn’t gone stupid.
They cleared out because New York. I would never, ever set up a factory there. Ours is in Kansas.
That’s kind of what I was thinking. Beretta left Maryland not to go overseas but to go to a state with friendlier gun laws and lower taxes.
If your area is anything like my area, that is 100% the product of one level of government or another.
When 80% of your purchases come from a UK-based IP conglomerate/plastic molder…
this.
by most measures we’re the #2 in the world in export/manufacturing in $ and volume. our share has declined, but that’s simply because China has added so much capacity.
Also because American manufacturing had such an enormous share in the 50s, 60s and 70s when most of the rest of the industrialized world was recovering from having their manufacturing capacity mostly destroyed by WWII.
So, what you’re sying is, we need to bomb their factories again?
Broken windows FTW!
Paul Krugman gives this idea two thumbs way up!
I still hold that it is better to be the producer and seller of goods than the buyer
Pretty much by definition they both benefit from the trade. Which benefits more? That is hard to say.
Considering the entrepreneurial paradox, I would say that buyers, on the whole, benefit more.
I can only look at a statement like that and come to the conclusion that the speaker is a terrible decision maker when it comes to consuming.
Personally, I only buy shit that I like and which brings me value.
I have concluded that it does not exist. I can never make a purchase without ending up feeling ripped off – either by being overcharged or by getting shorted on quality. It does help me avoid spending because I know what’s coming – a lot of effort to minimize the extent to which I am scammed ending up dissatisfied in the end. If I didn’t need certain things to continue to exist, I would dramatically curtail the amount I spend from where I am now.
Damn you, food.
I stand by my original conclusion.
Either that, or you have completely unreasonable expectations of quality and value. In which case, you will always be disappointed.
Nobody will ever sell anything for less than it is worth, and will always attempt to sell for more than it is worth. The only recourse is to refuse to buy.
I think you overestimate the marginal utility you derive from what you purchase.
Shorter UCS–
Get the fuck off my lawn.
No.
The cup is neither half empty nor half full, it has almost twice as much volume as required for the task.
Jebus, man, go spend some quality time with Don Boudreaux. He’ll quickly disabuse you of these silly ideas.
Have you never heard of the “loss leader”? People will absolutely sell an individual good for “less than it is worth” if they believe that the net effect on aggregate consumption is positive. Come for the discounted cola, stay for the marked up chips and salsa.
If you can buy just the loss leader, kudos.
But in making your technical victory, you turned around and said “but they use it as bait to gouge you”.
Last time I checked, retail stores have no way to force you to buy anything.
A savvy consumer can pick up a product being sold at a loss (although usually in limited quantity) and not any of the marked-up items that the retailer intends to profit from that would offset the loss.
You may as well say that you are gouging the seller by intentionally purchasing the loss leader and nothing else.
BTW, value is completely subjective.
If I pay 50 cents for a pair of socks and they last me for 6 months before giving out, I consider that getting my money’s worth. If I pay $6 for a pair and only get 1 year out of them, notsomuch.
If value is subjective, you have undermined your own point. It is entirely possible to fail to get the purchase price’s worth of value from every transaction.
Not only is the purchased item’s value subjective, the value of that dollar bill in your pocket is too.
If your supply of dollar bills is sufficiently great, your perception of whether $6 per pair for socks is acceptable will likewise change.
My measure of the value of those dollars is how much time and effort it took me to attain them. While the effort was low, the time was high, and I place high value on my time.
Indeed, if value were not subjective, we really wouldn’t need more than one type of any consumable item, purchasing would be a very straightforward Pareto optimization based on a few easily quantified criteria, and this clearly isn’t the case,
We’d quickly reach parity and stop trading.
And all die.
Perfect order.
Why trading is a chaotic system.
Value of x = what someone will voluntarily pay you for x.
Is that subjective?
Do you classify “Bregrudgingly” under “Voluntarily”?
Fucking patriarchy.
The value of a thing is what that thing will bring.
That makes it sound like final consumers are crazy, because after they’ve bought it, the item becomes valueless by being removed from the market. I think it’s an attempt to oversimplify the question.
UCS, by that measure, food can never have value. Even the finest 3 star meal is used up and converted to shit.
If value is subjective, you have undermined your own point.
Um, wut?
Seriously, I don’t even know where to go with that. Your purchases for your needs have the exact same objective value to everyone, everywhere and vice versa? The fuck? Is this the Labor Theory of Value you’re working with?
No one determines value of a purchase, except for the buyer. Sometimes you guess right, sometimes you don’t. This is why I largely stay loyal to brands and products that have a proven track record with me. If a product or service stops providing me value, either because the quality has changed or my needs, I stop using it.
My dry cleaners were fucking awesome, I watched their kids grow up, but since I stopped wearing suits to work and started buying wrinkle-resistant dress shirts, I don’t need them any longer. The textile technology takes the dry cleaner’s previous high value to me, to zero.
Somewhere, Schumpeter is shaking his head at you.
The chain of reasoning is simple, so I didn’t spell it out for you.
If value is subjective, then you can’t say I am wrong about not being able to get sufficient subjective value for my dollar
I’m glad you’re happy with your transactions.
If value is subjective, then you can’t say I am wrong about not being able to get sufficient subjective value for my dollar
You posited that value is objective, hence the buyer is always a victim of the seller.
Sounds like a buncha snowflake whining to me.
If that is how you interpreted it, I am sorry. Clarity in debate has never been my strong suit.
Saying value is “completely subjective” goes too far. Value is not immutable, inherent, or determined by central committees. In a market, a single individual, whether buyer or seller, does not have absolute latitude over the price of a good or service. The range of amounts that “the buyer is willing to pay” and “the seller is willing to accept” are influenced strongly by market conditions, which is just a fancy way of saying the actions of buyers and sellers in the past affect the prices today.
Value is not immutable, inherent, or determined by central committees.
Right. I said that.
What is of value to you and what you are willing to pay for it (in any capacity or exchange of goods or services), may or may not be of value to me and what I’m willing to exchange for the same widget or widget service.
Even then, the same widget to the same buyer can differ in value.
The value of the ex-Wife-Unit’s beejs are of zero value to me and one could argue that I grossly overpaid for such a paltry value. I wouldn’t argue. The Not-Wife’s beejes are of great value to me and I would pay quite a bit for them. I might even argue that I’m getting a fantastic deal on them.
The point I’m making is that value is too “sticky” to be called “completely subjective”. Maybe the right term is market-subjective or something like that. Whatever the case, an individual buyer and an individual seller to a particular transaction have a very high likelihood of agreeing to a price which is similar to prices other buyers and sellers of a comparable good/service have recently agreed to in the same market.
ex-Wife’s beejs should have had very high value because of supply (very limited) and demand (very high, you pig).
So how long have you been mentally ill?
But seriously, I’m frugal to a fault in the 95th+ percentile, but even I wouldn’t make the above statement. That sounds like living hell.
Buy modern guns. They last forever, work damn near every time, and are ridiculously cheap. I have purchased probably 30 guns in the last 10 years and I can count on one hand the number of times I felt screwed on a buy.
I would say for healthy trade, that on each individual transaction, the buyer is almost always the bigger winner.
The seller is dependent on volume to become just as much a winner as the buying population.
But it works out in the end.
How do you reach those conclusions?
The buyer is in charge of the transaction. He can choose to buy or not buy. The seller has sunk effort and cost into the transaction before seeing any return. The seller is usually also working in the margins, because of competition.
Totally off-topic. Just found these guys. Its great
https://www.youtube.com/watch?v=jQqz8obYT88
Looked like there was a comment on there from one “DanO”.
I will still argue that Ricardo was wrong regarding comparative advantage
Would you like to defend this position?
You have Galbraith on your side, so you are starting with a penalty.
Here’s Ricardo’s problem – he’s describing the Economic equivalent of the Spherical Cow. That is, he over-simplified the factors and removed important elements from his analysis. We have a few hundred years of practical obervation that show a net tendency for open trade to cause unemployment to agregate at the location with higher costs of labor. (see interstate trade within the US for one example). And his archetypical example of Portugal and England ended up with Portugal suffering an inability to industrialize due to not building expertise in automation in exchange for a stangnant export market in wine.
unemployment to agregate at the location with higher costs of labor
Yes, and the store that sells their goods at the higher prices tend to have lower turnover rates too. In both cases, the solution is obvious. The question is, why do locations have higher costs of labor? In most cases, it is government.
And, really, is that true? Unemployment is bad in Eastern Kentucky and it isn’t a high labor cost area. Ditto West Virginia and Mississippi.
–“We have a few hundred years of practical obervation that show a net tendency for open trade to cause unemployment to agregate at the location with higher costs of labor”–
The correct way to say this is
We have a few hundred years of practical obervation that show a net tendency for open trade to cause employment costs between the 2 locations to converge
That second claim has not yet been suported by the evidence. An argument could be made that it was prevented from doing so by market distortions caused by attempts to fix the problem.
Damn. The dreaded Galbraith epithet. The equivalent of being called a ‘pedophile’.
I don’t recognize the name.
John Kenneth Galbraith wrote the ‘Affluent Society’, the worst pseudo-economic book ever. Complete waste of time. I read it and was angry that I had wasted precious hours of my life. He is well liked by the Left
I was actually referencing his son, James K, but I actually confused the too with my original insult.
I never read his son’s work, but if the apple doesn’t fall far from the tree, it is still a nasty insult.
He also is one of the Apostles of Top Manism
I cringed when I read in ‘Affluent Society’ how he bemoaned the fact that consumers waste money on TVs and therefore our industries focused all of its energies on improving TVs, rather than something more ‘noble’ (in Galbraith’s estimation of what is ‘noble’, of course). There is a straight line in elite perverse thought from the ‘Affluent Society’ to ‘Nudge’ (another book that I had the unfortunate displeasure of reading).
It’s all just watered down socialism, in my opinion
I don’t know if there’s a name for it already, but there is a common fallacy among left-wing economists that any effort expended on a particular task could be substituted 1:1 for effort on another task to yield the same* results. It is as though they think innovation is fungible, that every action taken has infinite opportunity cost.
* = Equivalence here being measured in some way that pleases the economist but is otherwise pure fantasy
Full disclosure, I sympathize with your position. Particularly concerning our current ‘free trade’ agreements, which are managed trade agreements that privilege some industries at the expense of others. A free trade agreement should not be longer than a page. Our current agreements are thousand page boondoggles
*5,000 page boondoggles
WaPo’s excuse is basically, “its harder to repeal stuff, so we write trade deals around the existing mess of trade-regulations”
the idea of “just repeal the old shit” isn’t given much consideration.
What’s so hard about “All laws and regulations contrary to this framework are void and superceded”?
Run that by K street and get back to me
Are you going to take issue with the number of corpses I leave in my wake?
The argument that I always hear is: “it’s better than nothing”. But, that’s not an argument. That can be applied to anything. The Republican healthcare bill is ‘better than nothing’; state capitalism is ‘better than nothing’; New York’s ‘at will’ conceal and carry legislation is ‘better than nothing’, etc.
This is not an argument, it’s intellectual laziness
Except that when it comes to regulations, in almost all cases, nothing would be better.
This tea needs more Poppy.
My people.
I’m Poppy?
No, I’m Poppy!
Poppy tea is theft.
What about private Poppy tea?
I used to drink poppy tea until I failed a drug test and got fired
All while I sat on my fat ass complaining how this country doesn’t make anything anymore.
We make America great again.
My support for free trade (and frequent opposition to free trade agreements) is not grounded in the law of comparative advantage, it is, like almost all of my support for economic liberty, based on the notion that it is immoral to interfere with people’s liberty, but also grounded in a much more fundamental, and indisputable law, the law of unintended consequences. All attempts to regulate economic activity are roughly equivalent to a chimpanzee trying to ‘regulate’ a supercomputer by hitting it with a stick. The intent of the chimpanzee is not relevant to the results of the regulation, because:
1. the chimpanzee is incapable of understanding the supercomputer
2. the stick is too blunt an instrument to actual control the supercomputer in anything more than a random fashion
3. it’s gonna break eventually
The economy is orders of magnitude more complex and mysterious to the smartest human beings than a supercomputer is to a chimp. Laws are blunter instruments than sticks.
I can respect a philosophical position, but I do not address it because of the difficulty of implementation (true bilateral free trade being as attanable at this time as an end to tribalism).
I brought up Ricardo because the most frequent response I get is “But comparative advantage“. I don’t even take issue with people who believe in simplistic economic models. What I take issue with most often is the assertion that free trade is an untrammelled good and universal benefit, no exceptions. I haven’t heard anyone take that absolutist stance in a while, but I have run into it before. I know my counter-argument is anecdotal, but I was composing my thoughts while waiting for a kettle to boil and didn’t have the time (or money, or inclination) to do a full-scale study on the matter.
Ricardo himself pointed out the potential negative local effects, but said they didn’t matter, for mostly technical reasons that were soon overcome and are practically gone today. The main thing he was absolutely wrong about was that patriotism would stop owners from moving production to other countries.
I blame going off of the gold standard in 71. The persistent trade deficit really gets going in about 1976 five years after the fact.
https://fred.stlouisfed.org/series/BOPBGSA
I’ll add some more thoughts later when I get a chance.
Richard Nixon hardest hit
Just want to add some slightly random thoughts.
By going off of the gold standard in terms of trade imbalance took away a method of allowing national economies to readjust to changing realities in the various economies. That said, no political leader liked the readjustment period as it resulted in a recession.
Now I know the argument that it doesn’t matter what the trade imbalance is because the people who receive dollars will just send it back to the US in investment. Due to the reserve currency status of the US not all dollars come back to the US. This is especially true of physical dollars that get sent outside the US, mostly through the drug trade. I agree that it really doesn’t matter as we will just print more. The issue is that the dollars that get sent back to the US are not really being used for investment. Most of it is used to issue consumer debt. At a certain point this will end most likely in some form inflation or currency crisis. Possibly brought on by the Federal debt or some other debt crisis.