Also it includes cheese, which will make westerners in Japan very happy.
Also it includes cheese, which will make westerners in Japan very happy.
http://www.customs.go.jp/english/tariff/2019_2/data/e_04.htm
https://hts.usitc.gov/?query=cheese
Similarly high tariffs across the board on most imports has been the norm in Japan for decades, with many agricultural products also having quota limits. This led to potato shortages in 2017.
Free trade is great when applied evenly. If it takes reciprocative pressure from the US to cause others think differently and change the status quo, so be it.
Free trade is great even when applied unevenly.
As Friedman used to point out, if Japan wants to subsidize its steel at the cost of their own taxpayers, just take the cheap steel and be thankful for it.
There are complex consequences, and the rebound when opportunities re-emerge isn't anywhere as rapid as the fall.
Africa is an interesting case in point - I don't know very much about the average case, but I remember Zimbabwe gutted themselves, going from the Bread Basket of Africa to famine in a very short period of time with no particular effort from outside forces. There is a strong case the Africa's economic problems are more attributable to their struggles to organise politically rather than charity and dumping from external economies (which probably hasn't helped or hindered in the big picture). Maybe we can peg the organisational issues on foreign countries; but it is going to be more complicated than that.
Take China. Their protectionist policies probably have an impact, but most of their advantage is they are organised, politically stable, willing to work more for less pay and have a culture that believes in investment and education. Without government handicaps like Maoist Communism, that is a very formidable set of attributes in a competitor.
So your price ends up at fair market price... when averaged over many decades, maybe, but likely not for long at any particular point in time. And in the meantime workers get screwed over as industries and skillsets lose economic value.
Secondly, you're only looking at the negative consequences for some workers. You're not looking at the benefit to all workers, who pay lower prices as result of cheaper labor from abroad.
Suppose workers had been guaranteed their jobs for life because of protectionist policies. This is called mercantilism. Everybody pays more for everyone else's labor and nobody can benefit from comparative advantage. As a result, everyone is poorer. This has been known for centuries and it has been accepted by economists across the political spectrum. Yet politically, protectionism never ceases to lose appeal.
You don't have shops to buy parts anymore, you don't have assembly lines anymore, you don't have people trained in this anymore.
If China decided tomorrow to increase the costs of the electronics they export, you'd have to accept that.
Apple tried their best to move even some assembly back to the US, and couldn't even get the simplest custom screws made in the amounts they need. Only a single small company still had the tech to make them, and they couldn't produce enough, fast enough.
It's not just a single monopoly, the problem is that entire industries are gone, and it'd take decades to train workers and regain the institutional knowledge.
And this is just one example.
And your argument has one more flaw: free trade reduces costs of products, and wages. But it won't affect cost of housing (except over a timespan of decades due to cheaper labor and materials, but it still won't solve cost of land). Nor will it affect cost of utilities.
In our household, we're now spending 71% of our budget on rent and utilities. Under more protectionist policies, I might pay 20% more for products, but I'd also be making 20% more wages — and as result, I'd be better off (in fact, my disposable income after rent, utilities and food would almost triple)
Of course not, U.S. labor is far too expensive to do the kind of menial work required to assemble electronics, unless maybe it's a repair shop for certain products.
> You don't have shops to buy parts anymore, you don't have assembly lines anymore, you don't have people trained in this anymore.
You don't need "local shops" to purchase parts for assembly lines. Ask Elon Musk if the biggest challenge in building an assembly line is procuring the parts, he will say: No. You have a worldwide integrated economy where you can buy basically anything. The number one challenge is labor cost.
In any event, training people for electronics assembly is trivial. If you can take apart an iPhone and put it back together, you're good.
> If China decided tomorrow to increase the costs of the electronics they export, you'd have to accept that.
"China" doesn't decide the costs of electronics, individual businesses do. But even if China was dumb enough to slap tariffs on their own exports, there are plenty of alternatives. There is no monopoly. In fact, China is doing the exact opposite: They are artificially lowering the value of their currency to stay competitive.
You should also really look into how electronics are actually produced, there are numerous countries involved in it, each specialized into particular parts:
http://www.worldstopexports.com/electronic-circuit-component...
> It's not just a single monopoly, the problem is that entire industries are gone, and it'd take decades to train workers and regain the institutional knowledge.
Actually, a lot of institutional knowledge remains with the companies that just use labor abroad. However, it also leaks into the domestic industry, that's why you have a lot of companies complaining about "IP theft" from China.
The broader point remains: There is no monopoly. There is plenty of competition. Even if for a "relatively" short period of time (decades) there where to exist a monopoly, it could only sustain its higher prices for so long as it stays unprofitable to rebuild that infrastructure. At that point the "monopoly pricing" becomes "fair pricing".
> In our household, we're now spending 71% of our budget on rent and utilities.
You should probably look into what building regulation (artificial scarcity) does to the price of rent. You can't blame free trade for that.
> Under more protectionist policies, I might pay 20% more for products, but I'd also be making 20% more wages — and as result, I'd be better off (in fact, my disposable income after rent, utilities and food would almost triple)
First of all, why do you assume that rent and utilities would not rise in tandem with the cost of goods? Why do you believe rent in Silicon Valley is so high? It's the scarcity combined with the high wages of the tech workers.
Secondly, you are losing your competitive advantage. You are worse off.
Not entirely of course, but the ratio of labor to productivity is really large, they don't engage a lot of workers to begin with. Look at how much larger the electricity costs are than labor:
If there is a constant threat of the prices being lowered again, it will be pointless to reinvest in restarting competition - the monopolist at any time can lower the prices back down.
Also, in some fields the monopolistic position gives network effects to the producer that cannot be replicated by an upstart, making a competition unlikely.
They seem to be taking a pretty big loss. Surely Friedman didn't expect them to just "take one for the team." I don't know. Maybe he did? Not sure.
Protecting the local steel industry might be good for the steel workers, but it raises prices for everyone else in the economy who consumes steel. Now certainly every time someone's job is disrupted by competition it is personally tragic, but why do the interests of one particular interest group weigh in larger than the well-being of everyone else?
then, if I interpret this correctly, Friedman's idea truly was that laid-off steelworkers "take one for the team"
What about all the people that lost their jobs as a result of technological progress? What of those poor ice pickers, who lost their livelihood to the invention of the refrigerator?
so, what regulatory or governmental policies and programs did Friedman think could actually help people once they arrive in that state? what can an economist say about policy for workers whose livelihood disappeared?
That must be why economies such as China, Japan, and South Korea stayed economic basket cases in the late 20th century. Because of their protectionism.
This worked quite well for countries building up their own industries (Brazil, Korea, Japan, possible China).
"As Friedman used to point out, if Japan wants to subsidize its steel at the cost of their own taxpayers, just take the cheap steel and be thankful for it."
It becomes a problem if a country like China with state capitalism uses this to systematically destroy other industries.
The argument for free trade is an efficiency argument (comparative advantage, Ricardo, Hecksher-Ohlin yada yada) that it's unambiguously better, but it's predicated on redistribution: The reason that free trade is unambiguously better is that you can compensate all the "losers" of free trade so that they're as well off as before, and you still have extra income left (to distribute, in theory, as desired politically).
Economics mostly shies away from inter-personal utility comparisons (they're hard to grapple with) and prefers the notion of "pareto improvements" (where at least someone is better off without anyone being worse of). Trade theory uses this device of redistribution to show that a free trade is a pareto improvement.
But then, in the real world, many advocates of free trade suddenly forget about this part of the argument, and when some sectors of society profit handsomely and many (often workers) end up on the street, they suddenly remember their free-market credentials and argue that no, one cannot redistribute, the free market is optimal and fair and pays everyone their marginal product and yada yada yada.
Funny, that amnesia in the middle.
Similarly, hard working immigrants travel from poor countries to rich countries to do menial work that rich people can't be bothered with. They often send some money back home.
If the US can sell their excess maize in poor countries, it lowers the cost of food for the poor people in those countries. (Especially true when the local harvest is poor)
To understand why comparative advantage is an advantage, you must consider the alternative: Economic protectionism. It results in inefficient allocation of labor, because everyone's job is protected. Everyone pays more for everyone else's labor, everyone is less productive. This affects the poor the most, because they spent the biggest share of their income on basic goods and services.
Of course there are economic winners and losers, but by attempting to fully protect everyone, everyone becomes a loser, as evidenced by the countless failed attempts at socialism.
I'm not sure why people fail to see the benefits of free trade and specialization in their own lives. Just imagine working all day long, out in field, just to put food on your own table! Why would it be a good idea for certain size groups and not others?
Now the remarkable thing about free trade/specialisation is that we can help those people and still be better off overall. And I'm arguing that in some case we should actually do that.
I'm really not sure what's so complicated about the argument: Economic analysis shows that with free trade a country as a whole can afford more than without (which is insufficient to state that everyone is better off, thus insufficient to state that the country is better off), and using the device of redistribution/compensation you can show that everyone in that country can be made better off.
Then explain the current resurgence of protectionism right now. This redistribution argument has very little to do with trade, and actually undermines it. You don't have to go very far to see the impact automation has had and will have on certain segments of the population, so why are we muddying the waters with the downside of free trade here?
Now I agree with you that those affected by trade (and technological advances), or who are vulnerable should be helped. Since there's always some other threat out there to our collective prosperity, there's really no reason why we can't talk about tax policy, UBI, education at the same time. But we can't kill these geese laying the golden eggs.
Sorry, I meant nobody is denying the benefits of free trade in this discussion here.
> This redistribution argument has very little to do with trade
But it does. Trade only makes everything better if you do redistribute. That's the whole point. Without redistribution, it's expected and even legitimate that some sectors object to, and reject free trade.
But it has.
Comparative advantage shows you that the country as a whole can afford more with free trade than before.
But one of the theoretical consequences of the Heckscher-Ohlin trade model [1] is factor price equalisation, ie in once country wages might fall while returns to capital increase. Inevitably, there are winners and losers.
Now, since economics rightfully shies away from inter-personal utility comparison, that does not tell you whether the country as a whole is better off; unless you invoke redistribution, such that everyone has at least as much as before (now you can say that everyone is (weakly) better off, and some strongly, and thus the country).
This is well understood (see eg [2] for some more on this issue, quoting James Kwak, & I'm pretty sure Krugman has articulated the same). (This, btw, is not an argument from authority, but an answer to "I don't know where you got the idea")
> Of course there are economic winners and losers, but by attempting to fully protect everyone, everyone becomes a loser
How about comparing to northern Europe, and not some dystopia nobody is arguing for anymore?
My point was that the case for free trade is good and valid, and it rests on (and should go along with) redistribution/compensation.
[1] https://en.wikipedia.org/wiki/Heckscher–Ohlin_model
[2] http://www.samefacts.com/2015/05/everything-else/free-trade-...
An individual worker, whose livelihood is destroyed and who is unable to perform any other form of work (unlikely, but conceivable) will of course have less than before. I don't see anybody making the argument that every single individual will be better off (that's obviously wrong), but the purchasing power of every individual income will increase.
You can make an argument that such inequalities should be mitigated by some income-redistributing measure or another, but that's orthogonal to comparative advantage itself.
Free trade allows exchanges that make both involved parties better off, but possibly harms others (higher cost producers). This can be done without redistribution.
It is interesting that you suggest that existing producers deserve compensation. Why? Do they have some innate right to their previous business model or profession?
Sugar producers in the US have been protected for decades by trade policy that increases the costs for all sugar consumers in the US. I don't know that they deserve that protection but it would be cheaper to just compensate them at a decreasing rate to get them out of the business, rather than perpetually enforcing higher sugar prices.
Oops, make that centuries - the US sugar industry developed in part because of tariffs https://scholarworks.montana.edu/xmlui/bitstream/handle/1/25... page 18 "Ballinger (1975) asserts that when the United States acquired the Louisiana Territory in 1803, the fledgling sugar industry there immediately benefited from tariff protection, hence spurring its development." Do they still deserve compensation if harmed by free trade? They've already been compensated by unfree trade...
Is it?
Lets assume a real FTA with the EU and Mercosul. Result? EU agriculture will nearly collapse, and Brasilian industry will nearly collapse. Sure, prices of electronics, cars and consumer goods will be lower in Brazil and food prices will be lower in the EU.
Trade barriers helped countries like Brazil, Korea, Japan and likely China to build up their own industries before agreeing to FTA. I am in favor of FTA but I am not sure that they are a solution to every problem.
There are valid reasons for protectionism, but prosperity isn't one of them.
As a German living in Japan for the past four months I somewhat doubt that's going to change a lot. Maybe some lower prices in speciality stores, but I can't imagine my local supermarkets to stock more different cheese or that demand is rising just because a small piece of Camembert costs still expensive 3€ instead of 4€ (roughly converted from ¥), which I buy for 50 Cents in Germany.
The prices are also so high, because it's an exotic food with no use in the local cousine, meaning low demand.
One of the best international treaties I've heard of
Do you have any other stories of common EU/US items that are rare in Japan?
[0] - https://www.seriouseats.com/2016/07/whats-really-in-american...
- Cheese. Good Cheese is expensive.
- Milk is expensive
- Floss and mouth wash was uncommon and expensive until recently.
- dentures cleaners were super expensive (I use them for a retainer)
- Wine is expensive. Both, western and Chinese
It doesn't really 'go' with a lot of the cuisine. I mean, if you handed me donburi with cheese in it I'd probably say, "Okay, that's weird but it could work so let me try it," but I'm wracking my brain trying to think what other dishes you could fit in it. Certainly ethnic food from Europe and the Americas, but how else would you go about naturalizing cheese into the diet?
I could see a donbury followed by some mild cheeses.
Perhaps stronger cheeses might even go with bonito flakes or other dried fish products. I'm sure some experimentation in pairing could yield some interesting results.
Oh boy.
While it's frequently used as a topping in Italian cousine, it's nearly exclusively eaten on top of slices of (dark) bread as a standalone dish in German cousine (though Germans eat a lot of Italian food).
The most American use of cheese (i.e. not Italian cousine related) is maybe the cheese flavored corn-snacks (e.g. cheetos).
But I think we might have also inflicted 'cheese food' (cheese 'flavored', processed food) on the world and I do apologize for that.
These products are incredibly common in Japan and can be found at any super market or convenience store in the country. Japan loves cheese too... just not as much as Europe or the US.
[1] https://www.amazon.co.jp/dp/B0084X5UBE/
I think price above value is a somewhat good indicator how commonly used a product actually is. The Camembert you linked also costs between ¥400 and ¥600 in my local supermarket. That's a 5-8 times price increase to Camembert of the same or I think even larger size in German supermarkets. The price imho indicates this is a exotic rarely used speciality.
Milk and Jogurth on the other hand have only a smaller 30-50% price increase to German supermarkets for the same quantity and quality. I also see Japanese frequently buying these.
Very common in the UK too
Interesting point. I think with horror of the "1000 year old eggs" in China. Kimchi is somewhat more agreeable... somewhat.
I'm American and grew up with cheese and love cheese, but after having eaten all of those other things, you realize that the disgust factor of, say, a colorful, pungent chunk of blue cheese is exceptionally high. The smell, the texture, the mouth feel, the method of preparation, the source.
If you're a cheese lover than you're pretty much already at the top of the mountain in terms of disgusting foods. Internalize that notion and most other foods from around the world are a breeze.
A Chinese friend of mine loves to regale listeners with tales of eating things consider outre even by famously expansive Cantonese standards (live mice etc), but he considers the idea of eating rotten, moldy cow lactations (blue cheese) to be beyond the pale.
(although depending on cheese, animal rennet may not be used)
Disgusting foods tend to strongly correlate with certain types of preparation, like fermentation, involve animals or animal byproducts, exhibit certain kinds of textures (e.g. soft or mushy), or have certain types of odors (e.g. rancid). That's what I meant by cheese being objectively disgusting--all the characteristics of cheese fall into categories that strongly correlate with disgusting foods.
Obviously each person's particular tastes and preferences are highly subjective. But from an anthropological viewpoint we can make some objective classifications because there are near universal qualitative characteristics of foods that various cultures find disgusting.
Some types of disgust are likely strongly innate rather than cultural, but that's beside the point. For example, for all I know Inuit might be much more likely to find simple vegetable preparations disgusting, so that the objective quality of vegetable soups generally being non-disgusting might simply be an artifact of the dispersal of human populations. But that wouldn't make qualitative classifications any less objective. A factor doesn't need to be innate, it just needs to be common.
God, I'm getting homesick again. Food is such an essential part of feeling home and you only realize this once it's missing for long enough. Eating good European cousine in Japan is complicated and pretty expensive.
Your parent was talking about japanese food so this is a bit of a non-sequitur ...
And you will never, ever, see cream cheese on sushi in Japan.
But again, the discussion was what traditionally Japanese food might go well with cheese. That it's not used today is not a counter argument in this discussion.
Cream cheese isn't popular in Europe either.
It might not be the first choice of most Japanese, if they kew about it, but neither is pizza. Pizza is, like cheese in supermarkets, an overpriced exotic or tourist meal. Sandwiches are a notable exception of affordable western style food here.
> Cream cheese isn't popular in Europe either.
It actually originated in England and it's extremely popular in Germany. You can find multiple types even in Aldi (the cheapest supermarket with smallest selection in Germany).
I'm honestly curious on what experience you are basing your conclusions. It seems to me it's based on short trip tourism.
- Japanese people aren't ignorant. They don't want cream cheese on their sushi, or gobs of mayonnaise or whatever else you are accustomed to. The california rolls you enjoy are not the same as Japanese cuisine eaten by Japanese people living in Japan.
- Aldi supermarkets aren't really representative of Western European tastes. You can find American food anywhere in Europe if you look for it.
> Aldi supermarkets aren't really representative of Western European tastes.
Sure, what do I know about food representative of Germany as a German. ¯\_(ツ)_/¯
But maybe sushi in local Kansai supermarkets isn't representative of Japanese culture mixing new stuff with traditional cuisine. ¯\_(ツ)_/¯
[1] Japanese curry with cheese
Now that's effectively a big news worth sharing!
Reminds me of the guy who brought a shitload of blue cheese to Brazil and was surprised that he could not find it in his fridge anymore. Asking his domestica (household helper) she answered: Oh, yes, I threw it away. It was totally rotten!
[0] https://en.wikipedia.org/wiki/Free_trade_agreements_of_Canad...
We have noticed a few things (kiwi fruit for example), becoming a lot cheaper lately(heck lopia had 12 for 600 yen last month!)
Bilateral trade negotiation is exactly what Trump wants thought that's causing all of this shit.
The EU also signed a trade deal lowering tariffs with Canada (CETA) last year.