Lou Gets Bluer

Lou Dobbs continues to prove that an understanding of economics scrabbled together from op-ed pages and Newsweek columns is no obstacle to being taken seriously on the subject of those scaaaaaary trade deficits. He notes that Alan Greenspan is remarkably unconcerned about this—it doesn't occur to him that this may be for reasons other than Greenspan's failure to attend to the teachings of Lou Dobbs. Someone give this man an econ 101 textbook so he can chill out and have a sandwich.

Comments

[Kevin Carson]

Dobbs was right to put "free" trade in quotes. All those jobs going overseas aren't the result of free trade--they're the result of heavily state-subsidized exports of capital.

War is Peace
Freedom is Slavery
Free Trade is Transnationals on the Taxpayer Tit

[Jason Ligon]

Kevin,

Do you have any references about the extend of subsidy to a corporation to go transnational?

I don't mean patents, as I agree with the use of those. I mean the subsidy to the merchant marine and those sorts of things. A friend of mine indicated that there isn't much of a subsidy because most shipping isn't merchant marine anyway.

I don't know enough about it to comment.

[Jean Bart]

This fellow is insane.

By virtue of exchange, one man's prosperity is beneficial to all others. - Fr?d?ric Bastiat

To produce the wine in Portugal, might require only the labour of 80 men for one year, and to produce the cloth in the same country, might require the labour of 90 men for the same time. It would therefore be advantageous for her to export wine in exchange for cloth. This exchange might even take place, notwithstanding that the commodity imported by Portugal could be produced there with less labour than in England. Though she could make the cloth with the labour of 90 men, she would import it from a country where it required the labour of 100 men to produce it, because it would be advantageous to her rather to employ her capital in the production of wine, for which she would obtain more cloth from England, than she could produce by diverting a portion of her capital from the cultivation of vines to the manufacture of cloth. - David Ricardo

[joe]

Kevin, I actually agree with you, in general. But just as Dobbs doesn't distinguish between quasi-slave labor and genuine development, he doesn't distinguish between the job shift caused by the subsidies you decry and that caused by more legitimate economic forces. It's all about the furners taking jobs away from Americans.

[dragoon]

Arnold Kling's been writing for a while about how non-economists have trouble with the idea of comparative advantage and how trade benefits everyone involved. Here's one post with a Paul Krugman essay on the widespread failure to understand the concepts involved.

[Ellie]

Could somebody explain to me exactly why this guy is full of shit? He seems to be, but I'm not smart enough to know the reason.

(Most of my friends seem to be blogging rants in the same vein, "the dollar's tanking, the trade deficit's growing, soon we won't be able to import anything, nobody will make a domestic alternative, the middle class and poor will all starve and it's Bush's fault!")

[Jean Bart]

Ellie,

By virtue of exchange, one man's prosperity is beneficial to all others. - Fr?d?ric Bastiat

To produce the wine in Portugal, might require only the labour of 80 men for one year, and to produce the cloth in the same country, might require the labour of 90 men for the same time. It would therefore be advantageous for her to export wine in exchange for cloth. This exchange might even take place, notwithstanding that the commodity imported by Portugal could be produced there with less labour than in England. Though she could make the cloth with the labour of 90 men, she would import it from a country where it required the labour of 100 men to produce it, because it would be advantageous to her rather to employ her capital in the production of wine, for which she would obtain more cloth from England, than she could produce by diverting a portion of her capital from the cultivation of vines to the manufacture of cloth. - David Ricardo

[matt]

"Chill out and have a sandwich" is basically what Dennis Farina's character said to Phillip Baker Hall in Midnight Run. HMMMMM....?

[Bostonian]

Milton Friedman has also commented that the conventional wisdom about trade deficits and trade surpluses is all wrong.

In a trade deficit, we are buying other people's stuff cheaply--we have buying power. And that is good, not bad as is often said.

In a trade surplus, we are less able to afford buying things than our neighbors are. They're buying from us cheaply.

Buy low, sell high.

[Russ]

Best book on the subject:

"Economics for Real People: An Introduction to the Austrian School" by Gene Callahan.

[richard]

Jean Bart...in economic catholic heaven, the economic pope has just canonized you...the response you gave by David Ricardo is about two-hundred years old. It is such a shame that most Americans have never heard of Ricardo or Say. If they had, maybe Kevin Carson and Joe would not need a reeducation in basic economics and trade.

[Jean Bart]

richard,

Hmm, I am an atheist, but an economic heaven could be appealing. 🙂

I acknowledge my debt to an economics teacher I had in the lycee; I wrote an essay for him concerning the physiocrats (who deeply influenced a lot of free market economists that followed them) and that is how I became a free market, free trade person.

[tonio_k]

"that is how I became a free market, free trade person"

And still You're pro EU???

A fellow European Transplant,
Eric

[Jean Bart]

tonio k,

In the EU there are no tarriffs, etc. Its not a perfect institution, but it has dramatically privatized and de-regulated many European economies, including France's. Without France would still own, for example, France Telecom or Renault or Elf, with all the corrosiveness that has on French politics. So yes I am pro-E.U. And I am not a European transplant; I work for a French company in the U.S. sub-contracted to an American company (perfect example of the beauty of free markets I would say). I am a Frenchman and a European.

[Jean Bart]

tonio k,

Or, as my Finnish friend says of the E.U. - "I love them for lowering the taxes on my vodka." 🙂

[Ellie]

Ellie,

By virtue of exchange, one man's prosperity is beneficial to all others. - Fr?d?ric Bastiat

etc ...
----

Well, I saw that the first time. ^_^

[ed]

Russ,

Also, "Economics In One Lesson" (Hazlitt), and, for the REALLY bold, Ludwig von Mises' magnum opus, "Human Action."

[Jean Bart]

Ellie,

Read some of Bastiat's work; it is highly readable, and very satirical.

[Jason Ligon]

I've caught pieces of his Selling Off America series in which he documents the evils of exporting "American jobs" by various companies.

The whole thing is remarkably uninformed, as though companies would actually pay for the same number of workers at 10 times the wages rather than laying them off. Why is it better for the jobs to be done by nobody than by them foreigners?

When consumer goods are selling at inflated prices, it is a horrible situation that must be remedied, but somehow we are all supposed to be happy if those inflated prices are the result of inflated labor costs.

[davidf]

more on trade:

freetrade.org
mises.org/fullstory.asp?control=1378
econlib.org/library/Enc/FreeTrade.html

not on trade:

confound.com
somethingawful.com
happytreefriends.com (a favorite)
kissthisguy.com (misunderstood lyrics)
savethehumans.com

servus,
drf

[Only Ed]

Didn't Lou make sense at one time? Or did I simply become a grownup? "Boiling Frog"? He may be genuinely insane.

Trade surpluses are good, but only when they are OUR trade surpluses?

Smoot-Hawley II, anyone?

[joe]

He makes no distinction between exploitative labor practices in the developing world and ethical ones. Are those companies that are "exporting America" using Chinese prisoners, or are they creating a middle class in some obscure country?

I guess it doesn't make a difference to him. They're both giving Americans' money to furners.

[Jason Ligon]

"I guess it doesn't make a difference to him. They're both giving Americans' money to furners."

I think any time an editorial position uses the conceit of national ownership for a labor market, we are heading down the 'dirty furners' road.

What the heck makes it an American job anyway? Do Americans mingle their labor with the job and, ... wait a minute ...

[joe]

As an aside, this is why it's useless to try to define, and argue against, a cohesive "antiglobalization" philosophy. There's no such thing. Pat Buchanen, Lou Dobbs, Dick Gephardt, and the people who carry around the big puppets do not share a common philsophy, or even a common frame of reference. Do you think Lou Dobbs would ever sit in the same room as somebody with dreadlocks?

[dhex]

he would if they wanted to shoot drug users on sight. 🙂

or if he were really hungry for some tofurkey.

[Jason Ligon]

JB:

Bastiat is one of the finest products of your homeland.

And people STILL commit the broken window fallacy over and over ...

[Baylen]

Has anyone pointed out to Lou that CNN International is exporting jobs overseas? Or looked into his stock portfolio to see if he owns any shares of globalized corporations? His CNN bio says that he's a member of the Overseas Press Club -- which doesn't sound very U.S.-based! Seems like someone needs to brickbat him for being a hypocrite on top of a moron (albeit one with a Harvard Econ. degree).

[tonio_k]

JB:

Please do not misunderstand with me! I am also European. Born, bred, voting, military service, the whole thing. I did not mean to suggest anything otherwise, about you.

I happen to be right now taking a further education in the US, and I am doing this, because I feel that this country offers the best possible education.

"Transplant" was to say "European living in America". You know, as in the Sting Song. I did not mean to imply anything other than that.

I also have had troubles running into technical restrictions in my previous work - in Munich. We had problems dealing with the French and Belgians, and always around some sort of technical restrictions. Some of our German suppliers also played those games with the French vendors. The petty, tit-for-tat game playing still exists, in my experience.

One criticism I had of America was that everything was the same looking strip mall across the country: It would be basically impossible to tell if we were in which suburb, across the country. We in Europe are striving to become that, as well. The beautiful linguistic differences in the German Language Territory is breathtaking. There are attempts to water that down. Harmonisation for its sake is an unsustainable concept.

How Austria was treated in February 2000 I find reprehensible. How the French and Germans treated the Norwegians when they rejected the EU was also terrible. Remember how your Mitterrand and my Kohl bullied the "no" out of Denmark in 1992?

And Why weren't either of our populations asked about Maastricht?

I am against the concept of a bureaucratic superstate. I am against the European Nationality that sets everything up as "unlike America". We get that all the time, just in a local flavour: "This is as broad as the Champs Elysee in Paris" "This has as many mirrors as Versailles". Everything is set up as a comparison with France. In my experience, that is how Europe works.

As you probably more aware of America were, when you came over here, you probably were less surprised as I was, when I discovered that there was a great deal of protectionism here, incredible agricultural policy, powerful unions, and even the petty Nationalism I did not think existed outside of Europe.

The Anti France sentiment we see here is laughable. Most Americans I have encountered do not know Europe well enough to be able to make such a judgement. Of the Americans who do know Europe, I must say, their knowledge is beyond what my peers back home have. I have been very impressed with them.

My brother has run into bureaucratic problems galore as he tried taking a position in Metz. He even cited his European Rights, and was told that those were rights on paper. That is like our 35 hour work week. It can be much more, I assure you.

I agree with you that America ought be a bit more modest with its power, and there have been some decisions that have strained relationsships across the big pond.

Yes, I am against the EU. I do not like the need to create a social union. I do not like the protectionism wars, often started by America. I enjoy the wonderful new relations with our European Community, but it has gone too far.
Eric

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