From: whynot@leland.Stanford.EDU (William Shepherd)
Subject: Re:  Free Trade
Keywords: free trade
Organization: DSG, Stanford University, CA 94305, USA
Distribution: usa
Date: Fri, 10 Apr 92 00:30:11 GMT

In article <1992Apr9.090256.12363@midway.uchicago.edu> mss2@midway.uchicago.edu writes:
>In article <1992Apr9.074307.3313@leland.Stanford.EDU> whynot@leland.Stanford.EDU (William Shepherd) writes:
>>In article <1992Apr8.130655.28253@chinet.chi.il.us> pat@chinet.chi.il.us (Patrick Louis Sugent) writes:
>
>>>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.
>
>Japan is also not noted for its high standard of living.  Japan is an
>example of a government-industrial policy which contributes to the
>strength of the corporations which produce industrial products at the
>expense of virtually everyone else in the country.  Add to that the
>gerrymandering which gives Japanese farmers disproportionate power,
>which keeps high trade barriers against food importation alive,
>and thus makes it impossible for the Japanese to buy cheap American
>food instead of expensive Japanese food.

Go to the library.  Find _any_ book on the post-war Japanese economy.
Compare the _relative_ difference between our economy and theirs
over the last 4 decades.  Yes, we're still ahead.  But not for
long.  Also, who do you think owns the corporations?  (Note that the
average Japanese citizen is a far larger shareholder than the average 
American citizen.)  Of course I'm not going to defend the foolish
policies that give the Japanese farmers disproportionate strength, I was
just noting the fact that a lack of free trade is not equivalent to
poor economic performance.

>The fact is that the Japanese spend too much for basic necessities and
>are forced by high land prices to live in spaces which Americans
>wouldn't use as closets, while the government spends the tax money of
>Japanese citizens to ensure the position of Japanese corporations.

This is mostly a function of lack of space in the country.  Admittedly,
the fact that their farmers are defended from competition is a contributing
factor, though.  And contemplating my move to NY next year, I'll probably be
lucky to have a closet at $1000/mo.

>Hardly a model to use in defending an industrial policy or
>protectionism, as it puts the cart before the horse.  Americans favor
>such policies only insofar as they believe that they would benefit the
>citizenry, and in Japan that simply is not a major consideration or
>they wouldn't _have_ the policies they do.

Circular reasoning.

>In terms of purchasing
>power, the US still has the world's highest standard of living, in
>large part as a result of having low trade barriers.

But it's falling relative to many other industrialized countries.  You
just shot your own argument in the foot.

>And we've tried the experiment with extremely high barriers: it was
>called the Hawley-Smoot Tariff, and was the major factor in
>precipitating the Great Depression.  The idea that we should protect
>our citizens from paying lower prices and protect our industries from
>the evolutionary pressure of competition is an invitation to high
>prices and self-satisfied, stagnant corporations (which pretty well
>describes the American auto industry prior to the Japanese onslaught--
>of course, thanks to "voluntary" restraint agreements, not much was
>done about the high prices, but at least the quality of the domestic
>product has improved significantly).

Whoa!  Who said I was in favor of high tariffs?  I'm just suggesting that
we move slowly, carefully, and deliberately in freeing new markets overseas
and at home.  Over time, I'd like us to move toward freer trade - I just
think it should be done cautiously.  Also, never forget that there are
some cases where we might want to consider temporary tariffs.  Take
Harley Davidson.  Back a few years ago, they were getting crushed by
Yamaha, Honda, and other Japanese companies.  They went to Congress and
asked for protection.  Several years later, re-armed with new plants and
products, _Harley Davidson_ went back to Congress and asked that the
tariffs be lifted.  This kind of _temporary_ tariff for "infant industries"
or "rebuilding" companies should be allowed - although it is rare that
a company will come along with the guts that HD had and ask for a lifting
of tariffs.

-Bill Shepherd