I think the idea of a global free market is a wonderful idea, and free trade is essential to achieving such a goal. However, one problem lies in the way: most countries do not have free markets themselves.
Let’s assume the United States had a free market economy right now. If global free trade was set up tomorrow, consider the following: the governments of socialist/communist countries such as China or Russia would continue to subsidize their businesses, which would allow those businesses to “flood” our markets with products FAR below prices naturally determined by supply and demand.
Eliminating tariffs would seem to cause more harm than good when it comes to free markets.
If global free trade was set up tomorrow, consider the following: the governments of socialist/communist countries such as China or Russia would continue to subsidize their businesses, which would allow those businesses to “flood” our markets with products FAR below prices naturally determined by supply and demand.
And what would be so bad about that? It would be a shame for the citizens of China and Russia that have to pay the taxes that pay for the subsidies so that we can get stuff for cheap, but from our point of view it would be a great thing. Take it to the logical conclusion and we’d actually be getting stuff for free.
That would not matter at all! if that happens, it’s not only the “subsidize” is going to benefit us, It also would create opportunities, etc. That situation will be also untenable for those countries, because their goverment would receive less money and would spend more subsidizing, so, do not worry about it, If it happens it would just benefit us and for a very very short time. If you are thinking that those countries would create unemployment in our country or something like that, It would not happen, you are not seeing the whole thing, Less trade taxes and still subsidizing mean More Corporation and income taxes, then this mean less motivation to produce, Instead of attracting inverstor, it would put them off. Then, Why capital is going to China and those countries? For other reasons, like cheap wages, high productivity of capital etc.
" If global free trade was set up tomorrow, consider the following: the governments of socialist/communist countries such as China or Russia would continue to subsidize their businesses, which would allow those businesses to “flood” our markets with products FAR below prices naturally determined by supply and demand. "
And you are complaining!!?? We get stuff for ridiculously cheap, and we didn’t have to work for it, and, wait, what’s the problem again?
Imagine if there are robots in a different country that could do all of our work for free. Would we want to use them? YES! But we may lose our jobs… but guess what, we don’t need jobs per se, we need the productivity that is typically associated with jobs. But if we can get that same productivity without working, why work?
Suppose that Robert Samuelson is correct that the Chinese renminbi is undervalued by 40 percent (“A new economic world order?” May 3). His conclusion that the resulting low prices of Chinese exports pose a threat to America’s economy doesn’t follow.
To see why, ask what would happen if the prices of Chinese exports fell by 40 percent as a result, not of currency manipulation, but of a discovery by Chinese shippers of a proprietary new source of fuel for their warehouses and cargo ships – a highly efficient fuel that cuts energy costs so much that the prices of Chinese exports fall by 40 percent.
Would Mr. Samuelson complain? No less (and no more) than the allegedly undervalued renminbi, this technological advance would increase American imports and intensify competitive pressures on many American exporters. But unless Mr. Samuelson has become a naïve protectionist (which is unlikely), he wouldn’t worry about the effects of this technological advance on America’s economy. So why does he worry about the nearly identical effects of an undervalued renminbi?
Couldn’t foreign companies then charge low prices just long enough to put everyone else in the industry out of business before raising prices to exorbitant levels?
I’m still not convinced 100% free trade is the best thing.
The governments of socialist/communist countries such as China or Russia would continue to subsidize their businesses, which would allow those businesses to “flood” our markets with products FAR below prices naturally determined by supply and demand.
Wow. So Americans would get more goods at a cheaper price? oh no. Please stop that. Why would we want to be rich?
I don’t mean to be rude, but how do you come to such opinions?
Couldn’t foreign companies then charge low prices just long enough to put everyone else in the industry out of business before raising prices to exorbitant levels?
So they can restart the business after. What’s the big deal. Factories don’t disappear when a company goes bankrupt.