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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Wednesday, August 22, 2007

Modern Leftist Economics...

Protectionism from the likes of IQ challenged Democratic Senator Chuck Schumer and a coterie of other Democrats supported by self interested unions and others completely miss the point of global trade and particularly trade with China.

First, is a person more wealthy with money in pocket or more wealthy if one has used that money to purchase a good or service? For example is a person more wealthy with having $30,000 vs. spending it on lets say a heart operation that would save ones life. The answer is very clear in that example, that the person is probably better off by consuming the heart operation if it is needed. The same could be said with food or other necessities. And the marginal utility of a purchase may fall across all goods and services purchased by a consumer.

So, thinking about the above, one cannot say that an economy is better or worse off by spending its wealth on goods or services particularly if they are needed or wanted. Its just a transfer of value from that money in your pocket into the things that you want or need. Lets say for example that a person offers to give you his car in exchange for a piece of paper that says that you intend on paying him some fixed amount of money at a later date. If it is acceptable to the seller that he receives this promise from you and you are pleased to gain ownership and use of this good, then has one person gained or lost? I say that the only way that this transaction would have been completed is if BOTH sides are satisfied with the terms of the deal. If one side is not satisfied then the transaction would not happen, right?

So, assuming that the US is pleased with receiving goods from China and China is pleased to sell it to the US in exchange for money, then has one or the other party gotten the worse part of the deal? I argue that both sides are satisfied or other-wise, the trade would not happen.

So, clowns like Chuck Schumer argue that China is trading unfairly and are subsidizing the export of Chinese goods to Americans. So, lets go back to the previous example: say the person selling you the car decides to charge you less for the car than you theoretically assume is the right price. Would you argue that the seller is charging you an unfair LOW PRICE? How stupid would that be? How stupid would it be for the seller to voluntarily sell you a product below the price that you would be willing to pay for it. But that is the exact argument that is being made by such intellectual giants like Chuck Schumer.

He is saying that it is unfair that China is charging us so little for the things that we want to buy and is saying that China should charge us more for these things. Huh? It just doesn't make sense to me. We are asking to pay more for these things?

Imagine that some other country develops a new technology, say Kazakhstan, so that they can produce a good much cheaper than before and they pass some of those saving onto the consumer. IS this unfair? I argue that this is exactly what has been going since the beginning of mankind and is what SHOULD be done in the natural course of human endeavours.

So, is China unfairly subsidizing producers? Or are they more efficient at making these things? Is it unfair that technology improvements lead to lower prices and more competitive markets? The answer to this is clearly no. Is it unfair that as Schumer and company argue that China unfairly subsidizes prices that Americans pay for goods from China? I think that Americans should love the largess of the Chinese to subsidize our consumption. So we in the transaction are getting the better part of the deal. Is this unfair? Maybe yes, but it is unfair to the Chinese and their citizens that are subsidizing rich Americans not the other way around.


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