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Thread: Negative Balance of Trade? So What?

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    Negative Balance of Trade? So What?

    Same argument: Just not right to suppress the freedom to choose of those who trade.

    Negative Balance of Trade? So What?

    ...balance-of-trade data in particular can scarcely help but serve as a rationale for pernicious policies, such as export subsidies and tariffs, quotas, and other official restrictions on imports. In short, the data help the government establish and maintain policies that enrich the privileged few at the expense of the unconnected many, including consumers in general and producers who rely on imported raw materials and components, as many do these days.

    Although the topic may appear daunting, the essence of the matter is utterly simple. As a fair approximation, each international transaction, whether it be buying, selling, borrowing, or lending across a national border involves a willing party on each side—importers want to purchase goods from sellers abroad, lenders want to lend to borrowers abroad, and so forth. Each party to the transactions expects to benefit by entering into it. In a sane and just world, that would be the end of the matter. People would simply be left alone to make the transactions they wish to make in anticipation of benefiting thereby. If each transactor benefits, how can the nation as a whole suffer?

    Of course, one might claim that because, for example, consumers wish to purchase imported products, the sellers of competing, domestically produced products suffer, but such parties have no defensible right to suppress consumers’ freedom of choice simply because the consumers have chosen to patronize alternative suppliers. After all, such losses of sales by domestic producers might have arisen just as easily from changes in consumers’ purchases that had nothing to do with imports (e.g., changes in tastes or the appearance of new, better, competing domestic products).

    The whole nasty business of international-balance-of-payments politics exists entirely because rent-seekers exploit the public’s ignorance of economics to prop up their activities with a superficially appealing but completely baseless rationale. They then reward politicians who play along with this shameful hoax. After centuries of mercantilist nonsense, it is well past time that people demanded that the international balance of payments be consigned to the dust bin of history along with the predatory politics of subsidies, tariffs, and other trade barriers that such data chronically serve to support. A government that confines itself to enforcing the people’s just rights to life, liberty, and property has no need of international-balance-of-payments data. The whole complex apparatus can be trashed and replaced by a simple rule: laissez faire, laissez passer.

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    The balance of payments thing only made sense when we were on the Gold/silver standard, which we are not anymore!
    "When fascism comes to America, it will come wrapped in the flag, and waving a cross"

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    Quote Originally Posted by Dr. Strangelove View Post
    The balance of payments thing only made sense when we were on the Gold/silver standard, which we are not anymore!
    Mercantilism^^

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    Quote Originally Posted by Dr. Strangelove View Post
    The balance of payments thing only made sense when we were on the Gold/silver standard, which we are not anymore!
    Even then it didn't matter.

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    Quote Originally Posted by Chris View Post
    Same argument: Just not right to suppress the freedom to choose of those who trade.

    Negative Balance of Trade? So What?
    Ultimately the only way there can be a trade imbalance is if people want to do things with dollars other than buy US goods and servicrs which is absolutely fine. To the extent it is a function of protectionist actions of foreign governments, of course that is wrong, then that government is stopping voluntary and many actually are worse off for that.

    At the end of the day the trade figures are really just an after the fact accounting for what alreadt happened.

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    Quote Originally Posted by Newpublius View Post
    Ultimately the only way there can be a trade imbalance is if people want to do things with dollars other than buy US goods and servicrs which is absolutely fine. To the extent it is a function of protectionist actions of foreign governments, of course that is wrong, then that government is stopping voluntary and many actually are worse off for that.

    At the end of the day the trade figures are really just an after the fact accounting for what alreadt happened.
    The problem then becomes retaliating against other countries's protectionism, harming their people, by engaging in protectionism, harming us.

    And it doesn't matter the goods and services purchased with US dollars are US or foreign, US dollars spend on foreign goods and services can onlt be used to purchase US goods and services in return.

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    Quote Originally Posted by Chris View Post
    The problem then becomes retaliating against other countries's protectionism, harming their people, by engaging in protectionism, harming us.

    And it doesn't matter the goods and services purchased with US dollars are US or foreign, US dollars spend on foreign goods and services can onlt be used to purchase US goods and services in return.
    Look at Bastiat's negative railroad. The case for protectionism is local/parochial and the case for free trade is unassailable. Given a choice between the fruits from free trade and placating a localized interest, free trade should prevail.

    There is simply no other enforcement mechanism and its no different from the domestic enforcement of law. If somebody robs you, that, in a very broad sense, infringes on your free trade rights, and they force me to pay taxes to enforce that and to protect your rights.

    Its just another form of a civil right and crossing the political boundary doesn't really matter once the common market is formed.

    You wouldn't tolerate cronyism domestically, but once we cross the political boundary, you would? Why? Isn't the acknowledgement of free trade's superiority premised on the political boundary being irrelevant?

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    Quote Originally Posted by Newpublius View Post
    Look at Bastiat's negative railroad. The case for protectionism is local/parochial and the case for free trade is unassailable. Given a choice between the fruits from free trade and placating a localized interest, free trade should prevail.

    There is simply no other enforcement mechanism and its no different from the domestic enforcement of law. If somebody robs you, that, in a very broad sense, infringes on your free trade rights, and they force me to pay taxes to enforce that and to protect your rights.

    Its just another form of a civil right and crossing the political boundary doesn't really matter once the common market is formed.

    You wouldn't tolerate cronyism domestically, but once we cross the political boundary, you would? Why? Isn't the acknowledgement of free trade's superiority premised on the political boundary being irrelevant?
    No, cronyism is cronyism. But foreign countries engage in it to the loss of their people and the gain of ours. Why would we want to return the favor?



    A Negative Railroad, by Frédéric Bastiat:

    In this short excerpt from Economic Sophisms, Bastiat demonstrates the absurdity of supposed economic benefits from inefficiency.

    I have said that as long as one has regard, as unfortunately happens, only to the interest of the producer, it is impossible to avoid running counter to the general interest, since the producer, as such, demands nothing but the multiplication of obstacles, wants, and efforts.

    I find a remarkable illustration of this in a Bordeaux newspaper.

    M. Simiot raises the following question:

    Should there be a break in the tracks at Bordeaux on the railroad from Paris to Spain?

    He answers the question in the affirmative and offers a number of reasons, of which I propose to examine only this:

    There should be a break in the railroad from Paris to Bayonne at Bordeaux; for, if goods and passengers are forced to stop at that city, this will be profitable for boatmen, porters, owners of hotels, etc.

    Here again we see clearly how the interests of those who perform services are given priority over the interests of the consumers.

    But if Bordeaux has a right to profit from a break in the tracks, and if this profit is consistent with the public interest, then Angoulême, Poitiers, Tours, Orléans, and, in fact, all the intermediate points, including Ruffec, Châtellerault, etc., etc., ought also to demand breaks in the tracks, on the ground of the general interest—in the interest, that is, of domestic industry—for the more there are of these breaks in the line, the greater will be the amount paid for storage, porters, and cartage at every point along the way. By this means, we shall end by having a railroad composed of a whole series of breaks in the tracks, i.e., a negative railroad.

    Whatever the protectionists may say, it is no less certain that the basic principle of restriction is the same as the basic principle of breaks in the tracks: the sacrifice of the consumer to the producer, of the end to the means.
    Protectionism is an absurd idea to Bastiat.

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    Quote Originally Posted by Chris View Post
    No, cronyism is cronyism. But foreign countries engage in it to the loss of their people and the gain of ours. Why would we want to return the favor?



    A Negative Railroad, by Frédéric Bastiat:



    Protectionism is an absurd idea to Bastiat.
    Their export subsidies hurt their taxpayers, help the localized interest, benefit consumers here but do hurt producers here. Basically what you're telling me is that you're ok with cronyism in the common market as long as it benefits you. Export subsidies have far ranging negative incidental consequences on you which far exceed any benefits of the subsidy you receive. The subsidy received is 'that which is seen', the nehative incidental consequences is 'that which is unseen' -- but it'd be obvious any rational person with any business acumen whatsoever would have to take possible foreign government cronyism into account.

    Ok, if that's the principle, do unto others as you would have them do unto you.

    Let's remember from my point of view taxes, all of them, are just my tariff with everybody.

    And trust me, Trump's proposed tariff, the tax plan, where pass thrus pay only 15%. Yeah, that? That's a godsend for me, if it means less free trade for you, well, you know 'f--- y--' right?

    But even aside from that the cronyism takes the form of directly blocking shipments, other non-tariff barriers complete with blocking websites.

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    Quote Originally Posted by Newpublius View Post
    Their export subsidies hurt their taxpayers, help the localized interest, benefit consumers here but do hurt producers here. Basically what you're telling me is that you're ok with cronyism in the common market as long as it benefits you. Export subsidies have far ranging negative incidental consequences on you which far exceed any benefits of the subsidy you receive. The subsidy received is 'that which is seen', the nehative incidental consequences is 'that which is unseen' -- but it'd be obvious any rational person with any business acumen whatsoever would have to take possible foreign government cronyism into account.

    Ok, if that's the principle, do unto others as you would have them do unto you.

    Let's remember from my point of view taxes, all of them, are just my tariff with everybody.

    And trust me, Trump's proposed tariff, the tax plan, where pass thrus pay only 15%. Yeah, that? That's a godsend for me, if it means less free trade for you, well, you know 'f--- y--' right?

    But even aside from that the cronyism takes the form of directly blocking shipments, other non-tariff barriers complete with blocking websites.

    From the OP: "Of course, one might claim that because, for example, consumers wish to purchase imported products, the sellers of competing, domestically produced products suffer, but such parties have no defensible right to suppress consumers’ freedom of choice simply because the consumers have chosen to patronize alternative suppliers. "

    So no one is arguing it, which may or not represent cronyism, isn't unfair. It is, to a few select businesses, who then lobby the government for political favors, cronyism, that harms us.

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