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Comment by endorphone | Hacker News Reader

Comments such as yours -- parroting Donald Trump like talking points -- are remarkable when you consider that the US has the second highest purchase power in the world.

The US really has no incentive to allow this to happen

Except that it has opened trade for US companies, and the reported numbers are often laughably misleading. Apple, for instance, nets almost all of the profits from an iPhone, yet in the trade balance an iPhone magically counts as a $1000 deficit with China. Further, it yields cheaper goods for Americans, and more efficiency.

The US was literally built on free trade, and sits right near the top because of it, so to read these nonsensical "but what if" arguments borders on parody. It is just a profound ignorance of history and even the most rudimentary of economics. It is one of those amazing things where people really, really don't understand what they have until they lose it.

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> Apple, for instance, nets almost all of the profits from an iPhone, yet in the trade balance an iPhone magically counts as a $1000 deficit with China.

What good does Apple's record profits do for the US? Apple is owned by shareholders across the world, and Americans benefit only insofar as they actually own Apple stock.

Normally those profits would be taxed in the US...

The profits made by Apple Germany are taxed in Germany. Profits made by Apple US are taxed in the US. In theory... In practice very little of what they make is taxed.

America, and the market as a whole benefits because something new is created. Even if you didn't own any Apple stock, you can still buy something that didn't exist until Apple made it. iPhones are an option for consumers to choose when making a purchase that otherwise wouldn't have existed. You can buy something that previously didn't exist.

A smaller scale example is restaurants open late. If you wanted a meal at 4am, a 24-hour restaurant is providing you value because otherwise you would have gone hungry. The value to you is fulfillment, even if you don't own any of the restaurant, or even if the restaurant didn't pay any taxes.

There is real value in companies moving the world as a whole forward. You don't have to own part of them to get the benefits.

The US was built on free trade. This is untrue. Look at US history as it was becoming a superpower before WW2.

From 1871 to 1913, “the average U.S. tariff on dutiable imports never fell below 38 percent [and] gross national product (GNP) grew 4.3 percent annually, twice the pace in free trade Britain and well above the U.S. average in the 20th century,” notes Alfred Eckes Jr., chairman of the U.S. International Trade Commission under President Reagan.

> Except that it has opened trade for US companies,

US trade balance: https://tradingeconomics.com/united-states/balance-of-trade

How to read that graph: if the line is above zero, it's a net benefit to the US to allow free trade, if it is below, it's a net cost. In the last 50 years, not once has it been positive, and it's systematically gotten worse.

TLDR: free trade is a massive cost to the US economy. It is in fact clearly at a level where if it wasn't for the dollar's status as global reserve currency, it would be completely intolerable.

In the last 50 years, not once has it been positive, and it's systematically gotten worse.

The US must be a 3rd world country then, right? 50 years being apparently looted like that. Oh wait, it is actually right at the pinnacle of strongest economies in the world.

How can that be?

Because maybe, just maybe, it isn't zero sum. As I mentioned the trade balance is largely a myth (Apple brings hundreds of billions home, while China nets tens of dollars per iPhone, yet the whole gets attributed to China. This goes across every major US manufacturer), and the US has been an enormous beneficiary of it, not only in economic power but in quality of life.

Good for apple, good for the Chinese people working those jobs, bad for American citizens who would have been working those jobs.

What is so wrong about using our leverage as the world's largest economy to protect the interests of our citizen's, just like China does?

What is so wrong with California using its leverage as America's largest state economy to protect the interests of its residents, just like China does?

It's just a thought experiment. I understand the US constitution vests the power to regulate interstate commerce with the Federal government.

Let me put it another way. If it would be advantageous for the US to erect trade barriers against Chinese exports, why would it not be advantageous for California to erect trade barriers against Mississippi, where average wages are dramatically lower, there are far fewer environmental regulations, etc.

> If it would be advantageous for the US to erect trade barriers against Chinese exports, why would it not be advantageous for California to erect trade barriers against Mississippi, where average wages are dramatically lower, there are far fewer environmental regulations, etc.

It would totally benefit California because they could do whatever they wanted and companies couldn't just up and move to Mississippi if things got too bad.

California (and all other states) consumers, on the other hand, would not benefit as prices would rise as a result of this protectionism.

Not really sure what the point of this red herring is but the theory of protectionism applies equally well at all levels from the mom and pop grocery store opposed to a new Walmart to continent sized economic blocks.

> Not really sure what the point of this red herring is but the theory of protectionism applies equally well at all levels from the mom and pop grocery store opposed to a new Walmart to continent sized economic blocks.

I agree that the effects would be largely the same. The point of the thought experiment is that protectionists never clamor for interstate trade barriers.

Almost universally, protectionists accept and even marvel at the US single market and interstate free trade, but they somehow lose sight of the benefits when trade becomes international.

> Almost universally, protectionists accept and even marvel at the US single market and interstate free trade, but they somehow lose sight of the benefits when trade becomes international.

I would say it's because the states have a generally level playing field due to federal laws/regulations while foreign countries can do whatever they want to reduce prices. It's not like Ohio can make child labor legal or something like that.

Though I will admit most protectionists aren't really known for their ability to construct a rational economic argument to support their position.

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