My Position on Trade

I rarely agree totally with Greg Mankiw, as he is slightly too rigidly Conservative for me, but not so with this Post. I expect, though, that We reached the same conclusions from different directions; he being very much a Free Trader, while I am very much the Protectionist. Greg believes the Worker who loses his Job from Globalization should have no more protection than they who lose their Jobs from other considerations. Of course, I don’t think these Workers should lose their Jobs in the first place, whether it is due to Globalization or not.

The real dissident element for me in Globalization lay in the deliberate export of American Capital and Expertise, solely for establishment of foreign production to substitute for American labor; simply because foreign labor can be attained at cheaper Price. It becomes even more of a derogatory regime when comparison of the levels of Losses against the realizable Gains in Profitability of foreign production over American production. I believe We lose about $7 bn of American economic performance for every $1 bn of Profitable Gain in using foreign labor. The root of this distortion resides in the absence of an intelligent American Tariff structure. I can truly advise that it is time for a change in Trade policy.

Popular sentiment may recognize the Problem, but as usual, the Popular reaction operates in the wrong manner; calling for higher Corporate and Business taxes, and Caps on Executive salaries. I believe People have a natural aversion to Economic models, and so persist in misinterpretation of them. Tariffs are not an enemy to Households: I estimate that a intelligent Tariff system would increase Household Expenditures an average 6%, but increase Household Income about 17%; this effect gained with a reduction in Oil prices, and removal of about 75% of the Inflationary pressure in the Economy if the Government can reach a balanced Budget. An intelligent Tariff system would quadruple the likelihood of balancing the Budget, through increased Employment Income, higher domestic Capital Profits, and switch to Materials importation. lgl