From: reed@rd08.wg2.waii.com (Michael Reed)
Newsgroups: tx.politics
Subject: Re: Protectionism and Japan
Date: 18 Dec 92 15:08:20 GMT
Reply-To: reed@rd08.wg2.waii.com
Distribution: usa,tx
Organization: Western Geophysical Research & Development

In article <BzBwEJ.nr@NeoSoft.com>, hari@NeoSoft.com (Doug Andersen) writes:
|> In article <1992Dec14.151917.14345@mksol.dseg.ti.com>, mccall@mksol.dseg.ti.com (fred j mccall 575-3539) writes:
|> > As a general principle, certainly.  But the assumption there is that
|> > EVERYONE is doing it.
|>  
|> No Fred, I'm saying that the vast majority of economists support free
|> trade in the world we live in right now.  The imperfect world with other
|> countries that don't believe in free trade.
|>  
|> > You need to look at the overall effects on the economy, which simply
|> > isn't quite simple enough to say, "Uhg!  Must pay more for steel!  Bad
|> > Wampum!"  What happens once domestic steel production goes under?
|> > What impacts does that have?  Why isn't the biggest steel user in the
|> > country out there against this if they're damaged so badly by it?
|>  
|> First of all, there is no evidence that every steel maker would go out of
|> business in the US.  You would see a rapid re-organization in the market. 
|> Weaker companies would fold or consolidate.  Companies would have to get
|> better terms for their unions.  But smart innovative companies like Nucor
|> will continue to flourish.
|>  
|> Some workers would lose their jobs, but calculations a few years ago show
|> that the US could give $100K/year to each steel worker and still benefit
|> from free trade in that market.  Which means that even if 50% went on
|> welfare the US would have a net gain.  
|>  
|> I'm amazed by your constant reliance on this strange logic which says that
|> if people aren't taking to the streets it must mean that protect doesn't
|> really hurt people.  The commerce dept, which support some protect,
|> calculates itself that protection has added hundreds of dollars to the
|> price of the average american car (and thousands to the average truck). 
|> Why don't Americans care?  Maybe they don't know, maybe they think it's
|> worth it to bash Japan, who the hell knows.  But it doesn't invalidate the
|> data.
|>  
|> Finally, it's simply a fantasy to believe that one country is going to 
|> take over a market like steel and once they've driven everyone out, raise
|> prices through the roof.  It just isn't going to happen Fred and to keep
|> claiming that as a claim against free trade just makes your argument look
|> like it doesn't have a leg to stand on.
|>  
|> I'm still waiting for you to introduce some facts Fred.  ANY facts.

Fred is incapable of presenting facts, but I will help him out in this
case.  

The recent tariffs on steel introduced by the US were set to compensate
for any government subsidies the steelmakers in the country of origin
received.  Consequently,  German steel only had a small (10%) tariff,
while heavily subsidized Mexican steel had a very large (300%) tariff.

If other governments are subsidizing their steel production, while
we are not, our steel manufacturers will go out of business in the
long term, that's just simple micro-economics.  Consequently, we
imposed subsidies of our own in the form of tariffs.  If we did not
impose tariffs, only those countries which got a price advantage through
government subsidies would retain steel industries.  

Doug and Curt, you seem to argue that the barriers American companies
encounter in exporting products are solely due to poor quality and
marketing.  Can you sell rice to Japan?  Wood baseball bats?  Real
trade barriers do exist.  We can ignore them to our nation's detriment,
or we can try to force their removal by playing some hardball with
our trading partners.  If rice is a "sacred" product in Japan, why 
can't flat computer screens be a "sacred" product here?  If we hit
them where it hurts, they will open their markets.  Unilateral
free trade on our part hurts only ourselves.

-- 
The above are my own opinions and mine alone.

*****************************************************************************
Dr. Michael Reed,
Western Geophysical, Research and Development Group
reed@rd08.wg2.waii.com
(713) 964-6322                     FAX: (713) 964-6372
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