Tuesday, May 8, 2012
Adam Smith on Free-Trade Versus Protectionism
"It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost more to make than to buy. What is prudence in the conduct of every private family, can scarce be folly in a great kingdom."........................................................................................So, in essence, what we have here is Adam Smith, David Hume, John Stuart Mill, David Ricardo, Frederic Bastiat, John A. Garraty, and Milton Friedman versus wd, Thom Hartmann, and three modern-day economists whose names are utterly unrecognizable. Gee, I wonder who in the hell that I'm going to listen to here, NOT!........................................................................................Look, I think that I have been very intellectually honest on this topic. I have consistently stated that there are pros and cons to BOTH free trade AND protectionism. I just happen to agree with highly respected and bipartisan Council on Foreign Relations that free trade is ultimately preferable. Read it and weep, me-buckos.
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10 comments:
What if other countries are putting tariffs on our products?
You're misinterpreting Adam Smith.
Noam Chomsky explains...
Adam Smith is very rarely read. He's worshiped, but not read. For example, everyone's heard the phrase "invisible hand", but almost no one knows how he used it. The term "invisible hand" actually does appear in his classic, "Wealth of Nations" -- once. It appears in an argument in an argument against what is now called neoliberalism... what's now called neoclassical economics, which we're supposed to worship. So we're supposed to worship Adam Smith and neoclassic economics -- but they radically differ on the notion "invisible hand".
Adam Smith was concerned, as later David Ricardo was, that if there was free movement of capital, and free import of goods... he was concerned about England, he said "England will suffer". Because British capitalists will invest abroad, and they'll import from abroad, and that will harm the English economy. Ricardo had similar concerns.
Then Adam Smith gave an argument... it wasn't a very good argument, but his argument was that English investors would prefer to invest in England, because of what some called a "home bias"... they'll have a preference for investing close by. And therefore, as if by an "invisible hand" England will be saved by the menance of free capital movement and free import... that's "invisible hand". [That has nothing to do with] the modern enthusiam for free capital flow.
Having US corporations invest in China so they can send stuff back here to sell cheap, exploiting Chinese workers, that's not Adam Smith. [end Chomsky quote]
Adam Smith advocated in favor of "free trade", but what's taking place today isn't the "trade" Adam Smith was talking about. American corporations offshoring labor isn't trade, it's the free movement of capital that Adam Smith opposed.
Jerry asked: "What if other countries are putting tariffs on our products?"
Just because other countries do a stupid thing and clobber their citizens with such taxation doesn't mean our government has to turn around and do it to us.
Jerry, just because one country punishes its citizenry with stifling taxation doesn't mean that we should replicate it. Wait a minute, that just what dmarks wrote.
wd, I'll let Mr. Chomsky speculate what Adam Smith would have said if he were alive today. I will focus on what he actually said when he was alive.......And the Chinese workers aren't being exploited if they're working for what the market of China today will pay. If you're argument for tariffs against China switched from protecting your overpaid and undereducated union buddies to one of punishing China for its human rights violations, MAYBE I'd consider it.
You're misinterpreting what Adam Smith actually said when he was alive.
I quoted him directly.
You're hopeless.
Adam Smith was an advocate of free trade. Maybe he had some pause and concerns (as opposed to you who has ZERO open mindedness on literally everything) but that doesn't change the fact, true believer/rigid ideologue.
Free trade, yes. Free markets, no. Most "free trade" today isn't trade... it's labor offshoring. Adam Smith was not in favor of it.
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