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by ConfuciusSay 3787 days ago
This paper shows how there's negative affects from free trade with China, and your conclusion is "oh it was negative with China, but all those other free trade deals were positive"? Sorry, but NAFTA was a massive job killer. Just ask anyone in Detroit.

Also, the idea that China has no regulation on business is ridiculous. Obviously you've never worked there!

1 comments

but all those other free trade deals were positive

In economics, "free trade creates additional wealth for all involved" is closer to consensus among economists than is "the Earth is warming" is among climatologists. The paper [1] that the OP references does itself say that their conclusion is peculiar to the circumstances of China:

"While these results do not at all suggest that international trade is in the aggregate harmful to nations--indeed, China's unprecedented rise from widespread poverty bears testimony to trade's transformative economic power--it makes clear that trade not only has benefits but also significant costs."

but NAFTA was a massive job killer

As it happens, Don Boudreaux [2] just published something relating directly to this:

"since NAFTA took effect Mexicans have invested more – 59 percent more, to be precise – in manufacturing activities in the U.S. than Americans have invested in manufacturing activities in Mexico."

Quoting Confucius again:

Obviously you've never worked there!

No, I haven't. But I've been there many times, and know many people who do work there. What I've observed myself is that for the average person on the street in Shanghai - say, someone making and selling pork buns, or a farmer bringing in a cart of vegetables from the country - there seems to be a significant laissez-faire attitude. At a larger scale - what we're talking about for international trade - my perception is that while China may have many barriers, knowing the right people and being able to "grease the wheels", makes things proceed relatively easily. In America our regulations are taken much more seriously - we don't have anything like their degree of corruption, but we also don't have that as a means to get around onerous rules.

[1] http://www.ddorn.net/papers/Autor-Dorn-Hanson-ChinaShock.pdf

[2] http://cafehayek.com/2016/01/which-way-flow-the-equity-inves...

EDIT: formatting

In economics, "free trade creates additional wealth for all involved" is closer to consensus among economists than is "the Earth is warming" is among climatologists.

Except for, you know, the economists who penned the study that is the topic of this thread, along with plenty of others. On top of which, whenever someone spouts this falsehood, invariably it's economists who are looking at very narrow definitions of free trade, or very narrow definitions of "creating additional wealth". Is free trade good if the only gains in wealth go to a few people while most workers lose their jobs? Maybe the GDP increased, but for your average person it wasn't good.

The study does not say that the conclusion is peculiar to China, just that not all trade agreements are in aggregate harmful. Yes, China benefitted, but if it takes a population to be at starving level poverty to benefit from free trade, then I think your average American would say "no thanks".

Investment is not the same thing as employment. Mexicans may invest in American based companies, but those companies can outsource every last one of their employees if they so desire. Not to mention he says himself I realize that 5 of 21 years is too small a portion of time from which to draw any conclusions. Conservative estimates of job losses from NAFTA are in the realm of at least 700,000. It's pretty obvious that job losses are part of the deal when the government created the NAFTA-Transitional Adjustment Assistance Program to help people deal with losing their jobs as result of NAFTA!

There are many regulations in China. Sure there's more corruption there than here, but you seem to be advocating for America to become a more corrupt environment to improve America's "ability to pivot". Do you really think the brown paper bag economy is the way to go?