From: whynot@leland.Stanford.EDU (William Shepherd)
Subject: Re: Ross Perot, Free Trade
Keywords: free trade
Organization: DSG, Stanford University, CA 94305, USA
Distribution: usa
Date: Thu, 9 Apr 92 07:43:07 GMT

In article <1992Apr8.130655.28253@chinet.chi.il.us> pat@chinet.chi.il.us (Patrick Louis Sugent) writes:
>In article <1992Apr7.192630.1261@leland.Stanford.EDU> whynot@leland.Stanford.EDU (William Shepherd) writes:

[My earlier argument making the case that free trade may not _necessarily_
be to our best interests deleted...]
>
>   While I believe you are correct in theory that the economic principle is
>that overall efficiency will be increased, I believe that you are incorrect
>to say that one of the regions will be made worse off by the agreement.
>
>  I could go on for hours for this, but instead will just make a few
>points.
>
I've since checked with some experts on the issue.  It was my understanding
that economics held a unified view on the subject (as presented in one of
my classes).  It turns out that there are currently two countervailing
views on the subject within the economics community.  In any case, I
stand by my assertion that it is not necessarily irrational to argue
against free trade.  (See soc.economics for a more learned discussion of
the same issue.)

>2)  Statistics quite easy to find reveal that countries with high trade 
>barriers have very poor economies(barriers made the economies obviously
>worse off in many of these cases that I have knowledge of.)

Sorry, but I doubt your statistics.  Japan is _not_ noted for its free trade.
Any statistics would probably be considerably biased due to the effect
of political systems as well.  (High correlation distorting results.)
If you have numbers, put them on the table.

>3)  The US and the midwest in particular is very well positioned to take
>advantage of a free trade agreement with Mexico.
>4)  The US is quite silly to worry about being taken over by Mexico due
>to a free trade agreement.  Mexico is very much worried about being taken
>over by the US (perhaps more astutely), but from everything I've read,
>both countries are very likely to be better off. (With the US much better
>off.)

Two issues here.
(1)  First are the economic issues.  I do not doubt that certain regions of
the country undoubtedly going to benefit from free trade.  What I doubt
is that the country will _automatically_ benefit from any free trade.
(2)  Political/sociological impact.  Agreed.  Mexico has much more to 
fear from us than we from them.  Wasn't what I was talking about, though.

>5)  The most common arguments I've heard against the free trade agreement
>with Mexico is that it would take $30,000 machinist jobs from the US to
>go to Mexico for $2 (or some otherwise small number.) The fact is, that
>if those jobs make the US uncompetitive in a global economy, those jobs
>are going to go somehwere else anyway and we won't even have all the 
>advantages of a free trade agreement to show for it.  With free trade, those 
>jobs would be replaced by other jobs that the U.S. is better at (an obvious 
>example is the number of jobs in distribution that would arise from free trade
>with Mexico. However, there are others to be sure)

Will they go elsewhere?  Not if we constitute a large enough portion of the
global market.  And in most products we do.  Yes, the principle of 
comparative advantage says workers switch to other areas, but this 
simple model doesn't consider a couple of things:
(1)  There are considerable costs in switching from a "machinist job" to a
"distribution job.  Economic models that I'm aware of don't make an allowance
for this.
(2)  I don't see any reason why the new job would pay as much as the old
one, on average.  Drop in incomes=drop in gnp.

>  For those of us that haven't woken up yet,

I'm quite awake, thank you.  Just trying to think on my own and
not follow the rest of the flock to the slaughterhouse.

I'm not really against free trade.  I'd just like to see a bit more 
intelligent debate on the subject.  Far too many people are under the
impression that free trade is automatically the right thing to do, and
that only narrow special interest groups are opposing it.  I'm just
trying to note the fact that there _may_ be sound economic reasons
for opposing free trade with certain countries.

-Bill Shepherd
"I want to be Robin to Bush's Batman" - Dan Quayle, our Vice-President?!