For some time I've been struggling with my alignment with strong free market economists of the 50s-90s like Milton Friedman or Thomas Sowell and the obvious downsides of "deindustrialization." I don't want to nail Friedman on a single talk , but his statement that "you don't want to be sending out more than you take in" seems completely at odds with being economically productive. That's the basis of economic productivity: a farmer sends out far more than he gets in return, but he lives off a margin of what he creates.
But starting in the 80s we started exporting industries themselves. Friedman would argue that exporting our textile industry merely freed up our country to produce more valuable products, so it was a win. Then went our heavy industries and from almost the beginning we paid to create our semiconductor ICs and related things in SE Asia (ultimately China). Ok that's fine? We're being freed up for more valuable industries, right? Except that's not the case; we're now a "services economy."
As far as I can tell a "services economy" produces nothing but add generation platforms. Every fucking "tech" idea for the past 15 years is about extracting value from the shrinking bits of the productive economy (with much funny money to keep things going)?
So I have two opposing questions for the economics nerds. 1) Are guys like Friedman and Sowell right about global trade, ie bring me back to the team Milton Friedman. 2) If I wanted to start a communist revolution and seize the means of production, is there anything left to seize?
If you assume all cows are spherical and don't weigh anything and don't interact when they collide.
Where it butts up against the real world is where you lose the ability to produce everything at home in case of war or hostile foreign actors. But that one is obvious. That flaw is well explored.
Another place it fails is when you fail to consider conglomerates or nations acting 1 industry at a time to advantage themselves. The Chinese for example will happily subsidise orange farming, block your oranges from sale in their country, take advantage of what is basically slave labour to create a huge surplus of their oranges and then dump their oranges on your shores, killing your local farms. Good for consumers that year right? Well now your local orange farmers are bankrupt, and maybe china even bought that land up. Either way, now china controls the market. It might remain somewhat cheaper because they still have that low wage back on the mainland and a lot of investment in mass orange harvesting, or they might be able to ramp up the prices to higher than they were. Either way, China is winning. If prices remain lower, your local farmers continue to be unable to compete and you lose that local knowledge. But even if china gets greedier and ramps the price right up locals can't easily just start up another farm to compete and take advantage of the now higher prices because of a high barrier to entry and lack of knowledge AND the best spots are all already taken and china can always just do it again for one year and kill the new farms. And then you move to the next food product, then the next.
You cannot have free trade with china. But what I just talked about doesn't apply just to china or other nations with that co-ordination. Bigger companies will do it too. Supermarkets will loss-lead, selling bread and milk on the cheap to get you in the door and putting bread at the front to have the smell draw you in. But this is a manipulation, an advertisement campaign that kills your local baker who cannot do the same with his prices because the bread is all he sells and knows. Letting foreign companies who do not have any loyalty to their local area is the issue. Free trade inevitably means making your locals compete against foreigners with shit wages AND who don't care about your local long-term situation AND who are happy to co-ordinate in ways that destroys your local industries in an 'unfair' way, one that isn't simply about providing a better product at a lower price. Them being able to leverage their profits from one arm to run another arm at a loss for a short while for various reasons, to kill competition so they can later have a monopoly or as an advertisement is a fundamental flaw with free trade. Whichever the reason, you're now down a local family business for no good reason.
A third reason against 'free trade' meaning no tariffs is that tariffs are the least bad option in terms of taxation. What are your other choices, given even a minarchy's need to tax at least a little bit? Taxing productive work with an income tax? Taxing the successful and productive by taxing profits? The theft that is inheritance and wealth taxes*? Sin taxes? land taxes?Resource taxes? Well, ideally resource taxes actually, if you're in a situation like Norway (or like Australia SHOULD be) is in, you'd be able to not tax anybody doing anything productive, but effectively just 'sell' the resources under the ground. But the next best option after that and some sin taxes which won't cover your needs, is tariffs. It protects local industries, as compared to a local sales tax it in effect only hits the goods from foreigners, and is easier to collect at the gates coming in rather than burdening each and every business with taxes to track at each little transaction and gumming up all trade between people.
To go even further it can be said that any ideology, practice or belief that fails to guard against bad faith is unviable.
This includes "free trade", "democracy", "conservatism", "libertarianism", "equality", and a host of other foolish Boomer era beliefs.
This is the best description of the unease I feel about guys like Friedman I've ever seen.
There’s plenty to seize with a communist revolution because those guys want to grab power and kill Christians and anyone else against them.
Sure, sure. An important part of any Bolshevik movement, but after that, does the US really have any "means of production" to nationalize? No shipbuilding, not much steel, and no silicon production at all. I'm actually completely serious. What the heck is a workers movement supposed to seize at this point? The UberEats office? Do they think China will partner with the Socialist States of America? Ask the Soviets how that partnership worked out.
Commies don't believe in anything, they just want power.
This post is evergreen. https://pbs.twimg.com/media/Gj2Msh8XgAA9G1C?format=jpg
They’ll just force everyone out of the city to the factories and farms.
Milton Freidman was pro free trade, despite the mounting evidence that the Ricardian theory of comparative advantage is impossible to materialize in an era where both labor and capital are mobile.
US industry exported all their manufacturing because Asia was willing to build it for pennies on the dollar. China outright purchased President Bill Clinton in the 1990s, which is why China was granted Most Favored Nation trading status.
Tariffs is how you stabilize and protect your domestic industries, but so far, until Trump, no President has wanted to do that, due to how deep in the "free trade" paradigm most mainstream politicians are.
Thanks to Freidman.
Have you read any Rothbard? Someone who is around now that you might find interesting is Bob Murphy.
As far as your question goes, the problem is that we don't have a free market. The government has a ton of red tape making it unprofitable for many companies to operate in the US. This causes companies to set up shop overseas for good reason. Because of this we have become a service economy, not the other way around. It isn't the free market that is hurting our country, it is our lack of a free market that is preventing us from competing with the rest of the world.
Ok, reading up on Rothbard and Murphy will take some time, but
I don't buy it yet. Every important industry in the states went tits up over the past 40 years, and American investors made bank on it (see also: boomer psychology); is this an American regulation a ploy? On whose behalf? Either the free market libertarians are wrong, or there's a national conspiracy that would make most alienated thinkers blush.
As the government got more and more involved. I'm not saying pure libertarianism is necessarily the answer, but it's very, very true we don't currently have an actually free market. Everything the government touches turns to shit, and the government touches the economy and private business repeatedly and without consent.
We don't have a free market. Look up Marx's ten pillars of communism...we actually meet most of the criteria of a communist system. Specifically the heavy centralization; credit via central bank, communication and transport, and, most importantly, education. Also, phony fiat currency.
No one but the most retarded neocon would argue for capitalism and hold up our current system as a positive example. Our whole system is fake, and built on oppression and lies. Not concepts of free exchange.
We have fake money controlled by the Fed. Every transaction is taxed at least four different ways on all ends. Government loans and grants are in nearly every sector, and massive regulatory bloat controls what everyone can do. This is not a free market.
There is not and will never be a truly free international market. Free trade works well within the confines of the nation, but purist libertarianism without discernment is as flawed as anything else.
As vicious-snek pointed out, there are nations that use economics as a form of warfare. And for the general benefit of the country we have some standard labor laws, while shitholes use slave labor. There will always be downsides to protectionism as well, but economics should be considered as part of national security, and national industry thus protected to a degree.
We can have free trade with things like entertainment, but our farms and local manufacturing capacity need to be supported. None of our military hardware should be made in China, for example. Taking protectionism too far is also a problem, but we need a certain level of it to preserve the capacity for local industry, and the ability to expand that capacity rapidly.
For another example, oil. Should we not buy oil from the middle east? It's a limited resource, if we can exploit them we should, because it preserves our own stores - but we should produce enough that our own local industry is functional and capable of expanding to meet our needs wholly if necessary.
We will never be able to compete on cost because we have free workers with rights and we try to keep workplaces safe and our environment clean. Libertarianism has no answer for the fact that 3rd world slave labor risking their lives on every shift and throwing their trash directly on the ground will always produce for significantly cheaper. Sure, the quality is worse, but the people making decisions on where to have factories clearly don't care about that as much as keeping production costs low.
Counterpoint: Japan went all in on creating things, since the second world war. Then the banking people came in and had to mess with the money so hard to undermine it all.
So if we're weighing that against seizing the means of production, it doesn't really matter if you make things in the long run. If you're prosperous, someone's gonna resent it and move to fuck it all up.
The Japanese messed themselves up with market speculation. Eventually it became less about the products made and more about what stock trades you could make with the profits. Inevitably this leads to disaster. So the MBAs and C-suite share heavily in the blame with the bankers.
Financial instruments are the curse of every prosperous nation with usury.
There are some factors to consider in global trade: (1) Other countries like China have been accused of heavily subsidizing certain industries. This is ostensibly why current administration like to promote tariffs as solutions to everything. (2) Freedom of labor movement is more limited than goods. Open border advocates of all sides ostensibly believe we need to have completely open borders to stop countries with poor labor conditions to exploit their cheap labors.
Makes me think that most UBI proponents don't get the economic case surrounding UBI. The case being small wealth redistribution for power balancing across socioeconomic segments, with bleeding heart assessments of basic needs being irrelevant to calculations. If they had a hard macro socioeconomic interest, they'd apply the same logic to reactive tariffs against dysfunctional countries. But UBI devotees are leftists, and leftists cozied up with the neoliberal tribe. It's all social signalling via copying acceptable opinions.
This is a great post - I'll add this. Friedman's assumption that "all cows are spherical and don't weigh anything" that Vicious_snek6 wrote about is wholly inadequate to address the implications of population IQ distribution. Even if you take off the infamous minority paperweights on American IQ, you still need to be above 1 standard deviation from the mean to work in the tech industry or most prosperous service industries. That excludes 80-90% of the country. You cannot retrain a warehouse worker or a random middle manager to code software or diagnose neurology or whatever.
One might argue that this would create eugenic selection pressures, but that's ludicrously opposite reality for reasons that most people know here. In the end you're left with a drug-addicted underclass, a deteriorating middle class, and an elite that smugly reinforces its own self-aggrandizing mythology while extracting wealth from both of them.
They are right, but don't realize that governments can follow the same logic to take power.
Regarding "means of production": the dirty lie is that, at the most atomic level, the means of production is the individual. Specifically, one's time and skills, and, by extension, their assets. If they really meant it, they would abolish all forms of income tax, sales tax, and property tax, and cut the red tape.
What the communists are selling is more akin to theft; take the assets of individual owners (including corporate ownership), through tax, force, or oversight, and put it under government control. The second dirty lie is that the government is an altruistic public institution. It should be painfully obvious, by now, that that is rarely the case.