The Economist: Trading Places

FORGET left and right. These days, it is often said, the real dividing line in politics is between open-door liberals and pull-up-the-drawbridge nationalists. Like most grand claims, this one can be overdone. But the pummelling that international trade is taking on both sides of the Atlantic suggests there is something to it.

Why has trade become the piñata of politics? Partly because it fits the anti-elite mood. Trade deals are cooked up behind closed doors by obscure bureaucrats. Negotiating positions are hidden from voters. The economic changes wrought by technology and competition should perhaps shoulder more of the blame for job insecurity. But it is easier to rail against the hand of a politician who signs a trade deal than the invisible hand of globalisation.

So far, so transatlantic. But there are telling differences between Europe and America. In the EU, opposition to TTIP is at its sharpest in Germany and Austria, two export powerhouses with low unemployment. The thousands of protesters who rallied in Hanover last weekend, as Barack Obama rolled into town to instil energy into the flagging talks, or the Dutch campaigners gathering signatures to put TTIP to a referendum, fulminate not against lost jobs but greedy multinationals and the lower food and environmental standards they believe the deal will bring.

But in America the anti-trade message resonates most in post-industrial regions that lost out from NAFTA, a trade deal struck in the 1990s with Canada and Mexico, as well as the accession of China to the World Trade Organisation in 2001. This led to huge job losses as American firms struggled to compete with cheap imports. In his Hanover speech Mr Obama acknowledged that governments must do more for globalisation’s losers.

Why the difference? Pascal Lamy, who served as the EU’s trade commissioner before running the WTO from 2005 to 2013, distinguishes between the “old” and “new” worlds of trade deals. The old world, dominated by national producers, was about opening markets and cutting tariffs. The new one aims to reduce differences between sets of national or regional rules that hinder trade in a world of transnational production and long supply chains. In the old world, trade negotiators battled producers who sought protection from international competition. In the new, officials must contend with consumers who fear that the domestic standards they cherish will be watered down.

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Tim the plumber said:

The ecconomists will always see free trade as a good thing. It makes the GDP numbers go up. Good right?

There is, however, the view from the bottom that when Polish workers come to the UK to work in a factory making vinal flooring or Mexican workers work in a US factory making wash hand basins that it is bad for the countries recieving them as the social problems are not wanted and the jobs should go to locals and they are definately driving down wages but also that it is bad for the nations which are losing their best workers to lands already developed.

Today workers have to chase the capital. How about making the capital chase the workers by having such factories move to the locations where they are now?

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joG said:

I guess, we could try command economy for a change. Why we should want to prove, what the Soviet and other socialist countries did in the 20 Century competition of the systems, is more than I know. But, if we want to be losers? Power to the people, I guess.

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Lafayette said:

What the aversion to global trade says about Europe and America



TPIP (TransPacific Partnership Agreement) is having some difficulties, which is a Great Shame. If it will work in the Far East, where China will sign the agreement, it will help diminish the flood of Chinese cheap knock-offs. The Chinese were not asked to participate in the formation of the TPIP, but have indicated that they will sign it. Why?

Because China has discovered the virtues of International Patents protecting Chinese hi-tech products. (Wow! Now that they've virtually stolen a good number of them for their own production of knock-offs sold to the world!) China has become a very-large depositor of international patents.

Unfortunately the polemic (yes, that's what it has become) reminds one of the 1920s when governments tried to protect their balance of payments by refusing imports. Which helped precipitate the Great Depression.

And in Europe, they see TTIP (the Atlantic version of TPIP) as a subterfuge for getting "American chlorine-tainted poultry" into European supermarkets.

So, the real-story (underlying the perhaps exaggerated headlines) is a bit confused/confusing (meaning intended). But, why should chicken-meat be the Whipping Boy ... ?
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Tim the plumber said:

I am not suggesting such a drastic move at all.

I am suggesting that whilst in the US Detroit losing more than half of it's population since the 1960's is OK because you are all of one society and culture (ish), here in Europe the idea od half of Portugal moving to Germany or most of Spain's youth moving to Demark is not good and the existing problem of loads of eastern Europeans being forced to live in the vastly overcrowded London is trouble waiting to happen.

Total command ecconomy is bad.

Total free ecconomy is.....

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joG said:

It isn't the first time chickens have separated the US and Europeans Chicken War 1963 | Great Chicken War may sound funny, but such trade disputes can be deadly - tribunedigital-baltimoresun

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Tim the plumber said:

There is, however, the view from the bottom that when Polish workers come to the UK to work in a factory making vinal flooring or Mexican workers work in a US factory making wash hand basins that it is bad for the countries recieving them as the social problems are not wanted and the jobs should go to locals and they are definately driving down wages but also that it is bad for the nations which are losing their best workers to lands already developed.

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Lafayette said:

The precedence was set in those times we now call "the ole days", when foreign labor was badly needed to augment already full or near full local employment. Now, after a major recession, we don't "need them anymore". Except of course in Britain where the hospitals cannot find enough nurses, so (regardless of their Polish accent in English) the "foreigners" are welcome?

Or, in France, with high unemployment rates but no French engineers to fill them. Then, lo-and-behold, the Czech and Slovak computer engineers are avidly being recruited.

Is that your view of the world?

Look, for the most part, the migrant Syrians and Africans that flooded into Europe are not going to find jobs that will go first to long-lines of unemployed local individuals. The Syrians are now safe from a sudden death, but that's about it.

Workers are not "chasing capital", except for the many wild-eyed super-duper programmers who move to Silicon Valley seeking financing for the "next-greatest-Internet-thingy" are doing so. These migrants are ravenous for ... uh, "food".

They are just looking for a job - our world having been overrun by a lingering serious recession in the West and rabid Muslim assassins in the East - in developed countries desperately searching the exit to higher employment levels.

So, rather than anxiety, we should have pity ...

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Tim the plumber said:

Again you miss my point. The point I am making is that Polish plumbers do drive down the wages of British plumbers and reduce the incentive to train locals.

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Lafayette said:

And you miss mine.

Foreign labor is what built America. We all know that, especially me, since my parents came from Europe.

Neither of them "bid down" the value of American labor because there was a dire need for a foreign "complement to" and not "replacement of" American laborers.

Of course, come the first recession, and national labor goes into serious unemployment, then foreign-nationals are indeed employed to replace nationals. Typically without work-permits. Btw, this is illegal in any country, the US or in the EU.

If America is not prosecuting those who hire illegal labor, it will obviously continue. In France, if you do it once, you get away with a warning. If you do it twice the fine is enormous.

If the US has not been able to get a handle on Mexican labor illegally crossing the border, that is the fault of who? If the Dept. of Labor cannot send its agents into a factory to seek those who have American work-permit, that is the fault of who?

If the Dept. of Labor cannot send agents into vegetable fields in California to seek the illegal workers, that is the fault of who? And so what? Your cucumbers are going to cost 10 cents more a pound.

When I came to work in France, I had a work-permit awaiting me obtained by the company employing me; which is standard procedure around the world. Anyone wanting work in the EU from another European country can easily get a work-permit by simply showing an EU-passport. It's a simple process.

However, anybody who does not observe the rules by obtaining a legal permit to enter the country to work with a work-permit awaiting them, should be asked/forced to leave. The rules should be clear: If you want permission to enter a country, said permission should have requested by an American company (following clearly defined procedures) that will result in permission to enter the United States where a work-permit is awaiting them.

Those employers in the US should have shown to have exhausted all means to employ a local and, if having failed, they can then turn to a transnational solution. The burden-of-proof is clearly upon the employers.

How is that process unfair or arbitrary? Entering a country without prior permission is an illegal act.

Period ...
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Tim the plumber said:

I would like to see some restrictions on the movement of labour as I see the social costs of the present very free situation between places of very different wealth levels and different cultures being too high to be justified by the slightly higher GDP levels.

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Lafayette said:

What the aversion to global trade says about Europe and America

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Lafayette said:

Yes, and so?

We disagree on Import Certificates, because you cannot accept their usage as defined by the WTO.

End of story.

M... r... a...

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Lafayette said:

Yes, and so?

We disagree on Import Certificates, because you cannot accept their usage as defined by the WTO.

End of story.

M... r... a...
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I'm Supposn said:

Trading places | The Economist

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Poverty affects individual access to quality education. The U.S. education system is funded by local communities; therefore the quality of materials and teachers reflects the affluence of community. Low income communities are not able to afford the quality education that high income communities do. Another important aspect of education in low income communities is the apathy of both students and teachers. To some, the children of the poor or ignorant are mere copies of their parents fated to live at the same level of income and education as their parents. The effect of such a perception can manifest itself in teachers who will not put forth the effort to teach and students who are opposed to learning; in both cases poor students are thought to be incapable. Females in poverty are also likely to become pregnant at a young age, and with fewer resources to care for a child, young women often drop out of school. Due to these and other reasons the quality of education between the classes is not equal.

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According to Moss, socioeconomic factors that affect impoverished populations such as education, income inequality, and occupation, represent the strongest and most consistent predictors of health and mortality.

The inequalities in the apparent circumstances of individual's lives, like access to health care, schools, their conditions of work and leisure, households, communities, towns, or cities, affect people's ability to lead a flourishing life and maintain health, according to the WHO. The inequitable distribution of health-harmful living conditions, experiences, and structures, is not by any means natural, "but is the result of a toxic combination of poor social policies and programmes, unfair economic arrangements, and bad politics." Therefore, the conditions of an individual's daily life are responsible for the social determinants of health and a major part of health inequities between and within countries.

Along with these social conditions, "Gender, education, occupation, income, ethnicity, and place of residence are all closely linked to people's access to, experiences of, and benefits from health care." Social determinants of disease can be attributed to broad social forces such as racism, gender inequality, poverty, violence, and war.

This is important because health quality, health distribution, and social protection of health in a population affect the development status of a nation. Since health has been considered a fundamental human right, one author suggests the social determinants of health determine the distribution of human dignity.

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Lafayette said:

We are coming out of a Great Recession, and since we (think we) don't know how it happened, we look for "guilty parties". Preferably those abroad. Like pointing the finger at Global Trade. ...

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Lafayette said:

... I'd venture, nowadays but not in 2012, for the most part the poor are also people with the lowest level of education. Ipso facto, which leads me to this article from WikiP: Poverty and education. Excerpt:

Further more: Social determinants of health in poverty. Excerpt:

I find it unconscionable that, when local taxation is insufficient to support even schooling, it's the kids that suffer most. It is at such a moment that recourse to Federal funding should be available (perhaps via state educational agencies).

All of our children deserve a chance, otherwise we incarcerate them under the Poverty Threshold in which they live daily with no obvious exit - except perhaps crime ...

What's to pull them out if not Federal assistance ... ?

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I'm Supposn said:

There are many problems that for various reasons cannot be exclusively dealt with by our state and local governments, there are many problems that should not be directly dealt with by governments, and there are some problems that can only be dealt with on a federal level.

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I'm Supposn said:

I don't recall reading or hearing of any creditable commentator contending a great USA economic calamity being almost entirely due to our global trade practices but our chronic annual trade deficits of goods certainly drag upon our production of goods and consequentially upon our numbers of jobs and our median wage.

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In 2015, the United States had trade deficits with 101 countries – a multilateral trade deficit in the jargon of economics. But this cannot be pinned on one or two “bad actors,” as politicians invariably put it. Yes, China – everyone’s favorite scapegoat – accounts for the biggest portion of this imbalance. But the combined deficits of the other 100 countries are even larger.

What the candidates won’t tell the American people is that the trade deficit and the pressures it places on hard-pressed middle-class workers stem from problems made at home. In fact, the real reason the US has such a massive multilateral trade deficit is that Americans don’t save.

Total US saving – the sum total of the saving of families, businesses, and the government sector – amounted to just 2.6% of national income in the fourth quarter of 2015. That is a 0.6-percentage-point drop from a year earlier and less than half the 6.3% average that prevailed during the final three decades of the twentieth century.

Any basic economics course stresses the ironclad accounting identity that saving must equal investment at each and every point in time. Without saving, investing in the future is all but impossible.

So why is this relevant for the trade debate? In order to keep growing, the US must import surplus saving from abroad. As the world’s greatest economic power and issuer of what is essentially the global reserve currency, America has had no trouble – at least not yet – attracting the foreign capital it needs to compensate for a shortfall of domestic saving.

But there is a critical twist: To import foreign saving, the US must run a massive international balance-of-payments deficit. The mirror image of America’s saving shortfall is its current-account deficit, which has averaged 2.6% of GDP since 1980.

It is this chronic current-account gap that drives the multilateral trade deficit with 101 countries. To borrow from abroad, America must give its trading partners something in return for their capital: US demand for products made overseas.

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Lafayette said:

Perhaps, but healthcare is not one of them.

And the EU, which has National HealthCare Systems catering to more than 500 million people is a case in point. Moreover, studies corroborate the fact the EU healthcare systems are amongst the best going ...

To wit:
*World Health Organization Ranking of Health-Care Systems
*Commonwealth Fund’s Study Results of HealthCare Performance
*Health Care Systems: Three International Comparisons

I already live in France, which has one of the best HC-systems noted. And I would not care in the least to return stateside, where the costs of such insurance is prohibitive, even if of excellent quality. Why is it so much less expensive in Europe? Because all acts and medications are priced by the state, which negotiates bulk their cost-prices. (So, yes, this is the principal reason why healthcare "services" are so much less expensive here.)

Comparative cost structure (see "Ambulatory", meaning staff costs), US and EU:
View attachment 67202035

HeathCare is not something a nation wants to get wrong. Because when that happens, a great many people must suffer ...
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James972 said:

American health care is a huge spaghetti mess of govt programs and regulations. If we switched to capitalism prices would be reduced to 20% of what they are now and 10-20 years would be added to our life spans

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Tim the plumber said:

Perhaps we are saying the same thing.

I would like to see some restrictions on the movement of labour as I see the social costs of the present very free situation between places of very different wealth levels and different cultures being too high to be justified by the slightly higher GDP levels.

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