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Monday, April 04, 2005

What Does GOP Stand For, Anyway?

Irwin Stelzer at The Weekly Standard has an article about free trade. I'm not sure what else to say about it, since it seems to be pointless rambling, but it does mention several pieces of common knowledge that I take issue with.

Subsidies like the EU subsidizationalization of Airbus are supposed to "hurt" America. We "need" to stop them. Let me get this straight. Airbus is able to sell us better technology at lower prices. This saves us money- and the money we save is actually being paid for with the taxes of Europeans. At the same time that these taxes go almost directly into our wallets, high taxation reduces the willingness of their other industries to hire, to increase production, and to compete with American companies.

Europeans paying us to buy from them. Sounds good to me.

The trade deficit with China is bad. We need to stop it. Hmm. The trade deficit consists of the Chinese sending us cheap consumer goods, while we send them worthless pieces of paper that have declined 20% in four years.

Also, China spends 200,000,000,000$US per year keeping its currency low. The trade deficit is 162,000,000,000$US. It seems to me that we're making money off of this, too.

Foreigners are buying up our bonds! Oh no! This allows us to spend all we want and to borrow at low rates of interest! Whatever shall we do? As long as the spending has a rate of return higher than the interest, this is yet more profit for us. Too bad most spending is wasted. I include long term scientific research and education as spending that has a return, but... cubist art? Why would we want to give grants to the cubists? That would be like selling airplanes to the EU at below cost. Idiocy.

If we could count on another few trillion in low-interest bond issues, that would be an excellent argument for SS phase-out. I mean reform. *cough* It's always a good idea to borrow money and play the stock market... as long as you win.

On the other hand, someone is bound to buy a controlling interest in America eventually.

Oh, wait. They're called the GOP. HAHAHA. In your faces! 4 more years!

Anyway, all free trade is a marginal gain, including free trade that is answered by predatory trade. Governments who try to meddle in the markets end up losing money to those who don't. The only excuse for interfering with the market is to prevent the statistical deviations in the marginal rates from hitting zero and starving someone to death.

I suppose I should explain that, although it seems self-evident once it is grasped. The market always seeks the "best" solution. However, the market's idea of a good solution may be the starvation of 12 million telemarketers. While helping the telemarketers may reduce the overall growth of the economy, it also reduces the number of annoyingly peppy corpses. The same is true with welfare programs. The choice is between safety and profit; it is possible to trade economic growth for a social safety net, but neither one can be had for free. Those who promise both are bad promisers. Er, charlatans. "Mis-leaders."


Blogger James said...

Thanks for pointing out the logical fallacies of those bits of "common knowledge". I never could put my finger on quite why they needed debunking, but they never quite felt right when I heard them uttered...

BTW, cool blog.


8:19 AM  

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