Trade Treaties and Minimum Wages

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  • “Free markets lead to thinking, that eternal enemy of politicians.”
    – P.J O’Rourke, On the Wealth of Nations

    Gordon a.... | April 11, 2016 | Reply

  • I do not believe that it was the responsibility of a ‘global’ economy, and one sided trade deals, many sponsored by Harper, to bring China out of their working conditions of a decade or two ago. And this, at the expense of Canadian jobs and the integrity of Canadian manufacturing.

    I would comment on quality and I have two prime examples, a toaster and a coffee machine, six months and three months old, respectively. Both have failed and I now await replacements.

    I have had a fridge which was made in Ontario and finally retired after fifty-five years of service. It still ran well but the door gasket was shot.

    I have had toasters which lasted fifteen years and often were replaced only because I wanted something fancier.

    I have a US made Corning Electric coffee pot which is fifty years old and still works perfectly.

    I have a coffee maker which is made in Germany and is an antique with no features, but it still works.

    These days are past, so we have huge container ships devoted to bringing Chinese garbage to San Diego on a weekly basis, and returning with empty containers. It makes one wonder where the ‘trade’ has gone in free trade.

    What is sauce for the Chinese workforce is not sauce for the Canadian consumer.

    Another risky facet of trade with the Orient is food stuffs. I hold these products in fear and with contempt, as I have no idea of the conditions under which they were processed.

    Your mention of Wally World leads me to the hardware department and the shoddy tools for sale. Some of the finest names in tools are now mis-manufactured in the Orient. Stanley, DeWalt, etc.

    Retailers are so uncertain of the quality of the merchandise they handle that they will only replace within fourteen days. It is in the loading door and out the front door and, if it fails while on warranty, it becomes your problem to deal with some adjustment agency.

    I hope that Clinton or Trump manages to reverse the trend and re-open all the idle plants and get people back to work. That will surely spread to Canada.

    Bob Tuttle | April 11, 2016 | Reply

  • The opposition of Trump and Sanders to trade liberalization/globalization effectively is a demand to override consumers’ choices in order to gain votes of those who would benefit from such restrictions.In an open market, anyone is free to make “buying local” a major factor for their purchases. It seems clear that, for many goods (computers and cars to name two),most consumers rank quality and price ahead of location of production. Trump and Sanders cannot accept this and demand the power to require consumers to purchase “made in the USA”. They should read Adam Smith and Ludwig von Mises to better understand that expanding the division of labour internationally (i.e. allowing people to do what they do best and trade freely) will increase living standards for us all.
    I question whether enacting minimum wage laws is a good thing. If wage rates in an open market tend to reflect the marginal productivity of the employees,then any employee producing at less than the minimum wage will tend to be priced out of a job.The least productive (entry level) jobs will either be lost or not created as employers will have an incentive to invest in automation vs labour. The result may well be that some workers will benefit from higher wages but only at the expense of others not able to find work.

    Steve Chipman | April 9, 2016 | Reply

  • I had coffee with a number of friends yesterday. The discussion centered around the “Yarmouth Ferry subsidy”. Trump’s quotes ” stupid, incompetent, bad deal, bad negotiator”, were prevalent. The eventual conclusion was N S needs a Donald Trump to call these politicians out. If it has to be someone who is a buffoon or bombastic, so be it— things have to change.
    Bill, you put forward a good theoretical argument in favour of free trade agreements. I generally agree with the points made by Jon Coates. The real world does not follow theory, the real world countries act in their own best interests. Free trade agreements are best made where the participants have similar values, similar processes and a similar standard of living. Free agreements between democracies and dictatorships, between the rich and the poor, between market established currencies and rigged currencies, will only produce winners and losers. The losers, the western democracies with higher standard of living, will not accept that very long.
    Free trade agreements should not be looked at, or justified, as social programs which are designed to transfer wealth abroad. Even socialists like Bernie Sanders and now Hilary Clinton have come to realize the harm done to their own citizens by such distorted agreements. Thus the Donald Trumps of the world have a message that resounds.

    barry h | April 9, 2016 | Reply

  • Another part of the problem is the way countries like China work the system. First, they devalue their currency to a very low level to create a higher competitive market advantage. Then, they steal: ideas, patents and processes. If they have no cost for creating the product, profits are higher.

    What needs to happen to bring balance to the trading system is for first world countries to take a two part approach to creating fairer trade. First, put a price on moving production to another country. Make the top executives of the beneficiaries of this movement go live in the countries in which they are making their products. Leave them to the tender mercies of the Chinese justice system. Let them rely on Chinese rights to protect them. Right now these people are getting a free ride. Now, they enjoy the protection of first world citizenship and all that it conveys while making enormous profits. Do you really think the Walton’s would be willing to move to China? The next step is the imposition of very high tariffs on products coming from places like China, something equal to the benefits derived from pegging the currency at a low level.

    Putting what amounts to a price on the rights of these people and the protection of a system which is ruled by law may cause the end of outsourcing. Next, repeal laws which subsidize outsourcing. Finally, with adequate tariffs to neutralize unfair trade tactics should make production in the First World more attractive.

    Nobody should ever be afraid of free trade so long as all parties are also engaged in fair trade. Right now, the game is rigged and the western world is paying an unfair price.

    Jon Coates | April 8, 2016 | Reply