USA: $70,000
It's going to be a heinously asymmetric exchange. Good longterm trade demands equity. Not equality, but some basic equity. Australia's experience with US trade negotiations is that it's highly distorted and suits America better. The TPP was shedloads better without the US, for everyone else.
I'm not saying it's a bad aspiration, just "be careful what you wish for"
That said, NAFTA wasn't bad for Mexico. There's hope.
Parody of course... but highlights the complexities of trade arrangements as well as the absurdity of simply writing off a trade agreement as only harmful to the poorer entity.
Businesses can register in however many states they want, and state governments have no say on how the business is conducted in other states.
And California and New York’s population is not that big, the US south has quite a lot of people, and the #2 and #3 states in terms of population, so I doubt the premise that CA/NY standards are “taxing” consumers in the US south as implied earlier.
A single big state can and will enforce a product rule in their state, with the explicit knowledge that by doing so they will cause a change in the other 49. Many smaller states explicitly default their rules to some other state, eg Texas teaching.
Well, the federal government is very clear on that they can regulate anything that has an effect on interstate commerce. So, if you grow some corn for personal consumption that's regulated by the federal government because you wouldn't need to buy it on the open market which affects interstate commerce.
But yeah if you don't operate in a state there's a lot of difficulty in that state coming after you. However, that state may try to be a nit about federal rules if you do something they don't like (say operate a coal plant on the border of your state so pollution goes into not your state [1]).
[1]: https://whyy.org/articles/pa-coal-power-plant-closing-leads-...
Because each side can simply decline a transaction that doesn't help them.
On top of that, when your pool of resources are closer to skim, poor trade decisions result in health-harmful effects, which continue to contribute to poor decision making.
How is that different from when they buy from someone in the same country?
So while a single transaction has occurred, someone loses because of the trade agreement. This is because in a market that’s not theoretical there are actual people losing out. But this is the typical argument against free trade and protectionism - I assume it’s not new?
I’m sympathetic fwiw. But I think maximizing trade is generally good and don’t want to see a reversal. The real issue in my mind is trade allows for environmental, labor, and other regulatory arbitrage. If the benefits in pricing were just market based I’d be down with it no matter the pain. But that’s not really what’s going on. The regulatory arbitrage is a race to the bottom not just in wages or other spaces that in my belief stabilize over time, in irreversible spaces like destruction of the earth.
Good luck when the war starts and you can’t build weapons anymore because your source of strategic ressources are not under your direct control.
There are good reasons modern economists are so critical of Ricardo. You need to take what he wrote with a major grain of sand. The actual situation is a lot more nuanced.
Even in the sort of useless basic neoclassical models there are a million exceptions to this rule like incubation of infant industries, resource extraction, national defense and health, and so on.
And nobody sane even believes that stuff any more. Trade can benefit societies or destroy them. Details matter.
Our services, though immensely useful, are not absolutely necessary for their business to function and frankly are much more of a burden than a benefit for them at this point. Yet they cannot refuse to do business with us, and must pay for services that are unnecessary every month until either this obligation becomes part of what kills them, or their fortunes return to the state they were in a year ago.
I'm sorry, but your belief is simplistic, shallow and naieve to the realities of business and trade as they are actually practiced.
I obviously know little about business and "trade", because this strikes me as odd. I mean, I get that it's contractual, but how could a well-written contract not anticipate a time when doing said business with you would be detrimental to the company forced to pay...
And, long term, such a situation hurts both parties, because if "this obligation becomes part of what kills them", the business on the receiving end also loses a customer.
I'm a bad business man and would probably let them off the hook for a while so they can recover. In my dreamworld this will build significant amounts of longterm goodwill.
Fortunately most managed just fine, however a few of our customers really struggled as they had almost zero income due to the lockdown. These had asked for a pause of the SaaS contract they had with us.
My boss agreed to this, after all these had been good customers for years and if they survived would likely still be.
Of course my boss was in a relatively comfortable position, given that our other customers were doing fine, so we had plenty of income.
Now, if the downturn was more self-inflicted that kinda changes things a bit I guess. Still, we operate in a niche market, so my boss makes a point to keep good relations with our customers as the people tend to shuffle around between the companies in the niche.
I'm confused!
The power imbalance between parties makes "simply declining" as real a possibility as Plato's Forms.
In a perfect world with almost all degrees of freedom removed, yes, you're correct. But the world is not perfect, ensuring a beneficial transaction to both parties for every transaction is simply intractable without infinite time/computational resources to brute force a solution, every time.
To expand on the dogmatic proclamations economists are prone to making, this is why almost all natural and formal scientists have conscious or unconscious disdain for the claim that economics has a claim to the same epistemological rigour as other sciences.
You can't extrapolate results and lemmas from within a domain of discourse to the outside world.
Even the best economic models and the real world are not isometric. Implying that they are has so far resulted in some fantastic and incomprehensibly efficient systems but also an untold amount of human suffering.
“Give me 10 dollars or I stop supporting your industry and threaten famine”
Trade includes leverage and threats
Plenty of dictators will happily sell off their country's natural resources to line their own pockets, and the same general principal holds true for many other types of transactions.
If both don't think they'll be better off doing the trade, it won't happen. No one else is materially affected.
You can think of this as how trade creates wealth!
Not true. There can be winners and losers in 'trading' and usually there are. For example, the native americans and europeans being a prime example.
> Because each side can simply decline a transaction that doesn't help them.
Not if one side is much stronger and liable to invade or punish you. The past 500 years is essentially a story of europeans invading/'exploring' to get better 'trade terms' from natives, africans, indians, chinese, ottomans, japanese, etc.
The biggest winners of trade in the last 500 years were europeans and the biggest losers are everyone else.
Honest and direct question: how much drug trafficking adds to the GDP of a country? [1] I think we need a realpolitik/freakonomics approach to these discussion to get the whole picture and take decisions.
[1] https://www.washingtonpost.com/politics/2019/06/24/do-mexica...
$0. The underground economy isn't included in GDP calculations. This was a major reason why China and India both tried to force cashless transactions so as to tamp down on the more egregious forms of tax evasion.
[1] The Relationship between Economic Growth and Money Laundering, a Linear Regression Model
Probably somewhere around a 30-50% increase in true GDP based on similar investigations done in India and China.
EU and China in particular have been far more aggressive than the US has in pursuing their interests against smaller countries. Australia in particular has been subject to unprecedented economic coercion and manipulation by China. It's not pretty.
But still trading ultimately does benefit both sides.
China has gotten far more out of trading with the US than the US has, and that is accounting for the significant amount of free stuff that China effectively donated to the US in exchange for worthless paper. Trade relations favour the side who adopts the most liberal economic posture.
I have never seen these terms used in international relations. In American English, I take them to be synonymous with equality outcome versus equal opportunity. How does that map to entire nations?
It's never been synonymous with equality of outcomes.
For example, equal opportunity might dictate that you consider both women and men for a job position, giving women equal opportunity. But equity demands that they'd be paid the same for the same work.
Which is equality of outcomes. (What “fair” means is the entire debate. Redefining fair as equitable doesn’t move us forward. Maybe we have this contortion because equality of outcomes became synonymous with communism, so now we get equity and equality with no bearing for those terms’ histories.)
This redefinition of “equity” is modern and regional to parts of America. It sounds like it’s based on equity in law [1], but it’s not. That newness and regionality makes it difficult to predict what someone launching it into a new domain, like international relations, means, hence why I asked.
It's not though. Equality of outcomes would be something like, we should all make the same salary. But equity says that discrimination or favoritism should have no impact to the salary you make, you should make a salary that's purely dependent on the work you're doing.
Or another example. If black people represent 20% of the population, but companies boards are 100% made up of white members. Equality of outcomes would say that you'd need the same amount of white and black board members, 50/50. But equity would say you need 20% of them to be black, thus proportional representation.
Equality of outcomes can itself be unfair, like in that example. Equity is about fairness.
When has equality of outcomes not been synonymous with communism? I mean, communism has more to it, but equality of outcomes is one of its propositions. Everyone should make the exact same money, no matter what they do.
Equity distinguishes itself from that, by focusing on fair outcomes, that remove prejudice and addresses discrimination.
So my read of OP about international trade was similar to how I think of equity. They're saying that the trade shouldn't be made by the rich country as a way to take advantage of a poorer country such as paying a lot less than what it would pay for the same if trading with a richer country or sourcing something from within their own country, just because the poor country is more desperate.
Ever been to Detroit?
Germany auto handled global trade just fine.
That’s the argument of those who got extremely rich while selling off Americans globally dominant manufacturing position and abandoning large swathes of the country. There are more important things to a nation in the medium to long term than cheap trinkets and a small minority becoming wealthier.
To your point though, Michigan absolutely needs to continue diversifying its economy. It has prestigious education yet tremendous brain drain. Wages are low, yet some costs like auto insurance are among the most expensive in the nation.
It's very hard to do that and then think there was nothing we could have done differently and better with our post-1970's industrial and trade policies.
More accurately it’s basically every part of the country that’s not a city oriented towards finance or media.
We’re talking millions upon millions of families shattered, communities left to die, whole areas racked by joblessness and addiction, and a society more unequal than ever.
My argument would be that we shouldn’t have fucking done that. It’s possible to invest in and support domestic manufacturing. The Europeans aren’t this dumb they haven’t gone down this road.
The US shouldn't have been allowed to negotiate anything in the TPP; they should have just been allowed to sign on or not, after everything had been negotiated among all the other nations.
> USA: $70,000
China: $12,000?
The two economies are highly integrated, especially in the auto sector where parts move back and forth multiple times for a single vehicle, and manufacturing plants in Ontario playing the role of slightly-cheaper-skilled labour integrated into a continent-wide system. But the trend in the last 20 years has been a one-two-punch with the movement of manufacturing capital to China, but also to Mexico, putting Canadian workers in secondary industries at a disadvantage.
Didn't help that the previous conservative government heavily promoted primary industry (primarily raw oil exports) over secondary; pushing resource exports over manufacturing, letting the dollar rise, etc. And then after that, Trump stirred up a trade war around steel and other exports, etc. That has improved, and with a weaker dollar, Biden in power, and cooling relations with China... manufacturing has started to improve here again. But it's not a long term good situation, I think.