RE: Free Trade Benefits Everyone Re: *DO* we share a civilization?

[Baardwijk, J. van DTO/SLBD/BGM/SVM/SGM]

> -----Oorspronkelijk bericht-----
> Van: John D. Giorgis [mailto:[EMAIL PROTECTED]]
> Verzonden: Wednesday, August 01, 2001 1:40 PM
> Aan: [EMAIL PROTECTED]
> Onderwerp: RE: Free Trade Benefits Everyone Re: *DO* we share a
> civilization?

> >Marc is right on this one: he needs to find only one person that
> >doesn't benefit from free trade to prove you wrong. Can you prove to 
> >us that he won't be able to find such a person?
> 
> It depends how you define "better off."    If you really think that
> there is even *one person* in the candle-producing country that would
> not benefit from the import of lightbulbs, I am not sure that we have 
> much to talk about.

I'd like you to meet a friend of mine. His name is Hans, he's 70 years old,
and he was a candle-maker in Candleville, Candle Country. One day a man in a
big Mercedes came, and build a lightbulb factory in Candleville. This caused
a major crash in the candle market, and sent Hans into unemployment. He now
has to live of a meagre state pension (which is significantly below his
previous income). The only trade he ever learned was candle-making, and now
he's too old to learn new skills, and nobody needs a candle-maker anymore.
Nowadays, Hans spends his time walking around, and waiting for Death to come
and take him.

<sniff, sob, sniff, sob, sniff>

Hans doesn't see how he benefits from losing his job. Can you explain to him
that he's better off now that his job and a good part of his income have
vanished?


> >But will our candle-maker consider the net result a benefit?
> >Personally, I'd consider it a net loss if the price for cheaper 
> >lighting would be the loss of my job (and thus, my income).
> 
> It doesn't matter what the candle-maker considers.   The truth of the
> matter is that everyone benefits when the cost of lighting goes down,
> because that reduction in price gives everyone more money with which
> to create more demand for other products, and thus, other jobs.  

My friend Hans sold his candles at $1 a piece, and earned a nice $2,000 per
month that way. When the man in the big Mercedes came, Hans got unemployed
and saw his income drop from $2,000 to a mere $900 per month.

The lightbulbs are sold at $0.75 each. This means that Hans now has to spend
only $50 per month on lightbulbs, instead of the $125 he used to spend on
candles. In that respect, he's better off by $75 per month. However, his
income dropped by $1,100 per month. Bottom line: Hans has lost $1,025 per
month.

IOW: the price reduction did not give everyone more money -- it gave someone
LESS money...


> >John, do you even know what it's like to loose your job and income?
> >When something like that happens, it's NOT a consolation that the rest
> >of society will benefit from you losing your job. At a time like that,
> >*you* have a problem, a problem so big that you couldn't care less
> >about the rest of society.
> 
> IAAMOAC.   I would never expect to deny society a benefit simply so I
> could keep my current job.

IOW, you'd happily accept unemployment and a drop in income, just because
society as a whole would benefit from it? There is no guarantee that you
will find an other job, so you might spend the rest of your life with no
job, and little income.

If you would actually do that, you're either saint-like, or stupid. I'm
still trying to figure out which one it is... (Current status: the saint is
losing...)

Anyone else here who'd gladly sacrifice a great job and a very pleasant
income for the benefit of society? Anyone?


> Moreover, I could never be so narrow-minded.   Even though I produce
> candles, even I would recognize that lightbulbs are superior.  If I
> was honest, I'd employ them in my own home.   I'd also purchase goods 
> and services that were only made possibly by the superior lighting of
> a lightbulb.

That's what the man in the Mercedes told my friend Hans, too. Hans actually
agreed that the lightbulbs were superior. However, the man in the Mercedes
conveniently forgot one thing: he forgot to tell Hans that he wouldn't be
able to buy all those wonderful new things because with his significantly
lower income, he wouldn't be able to afford them...


> If my job becomes obsolete, it is my obligation to learn a new trade,
> ore else take a job as unskilled labor.   I may not like it, but there 
> are almost always unskilled jobs available.

Nice rhetoric, but unfortunately my friend is too old to learn new skills.
And nobody wants to hire him for unskilled labor, because they consider him
"too old for the job". And quite frankly, Hans isn't the energetic young man
he was 40 years ago.


> (And even when there are not low-tier jobs available, making goods
> cheaper to the entire society will boost GDP, and fuel job creation.

It would be beneficial to the US Bureau of Labor Statistics to replace mr.
Giorgis with mr. Smith, because mr. Smith can and will do the same job for
$300 per month less. Are you going to thank your boss when he tells you "mr.
Giorgis, you're fired"?

BTW, mr. Smith was unemployed, and you weren't. Now the roles are reversed:
you're unemployed, and mr. Smith isn't. How does this fuel job creation? No
additional jobs were created in the process, only the person doing that job
was replaced.


Jeroen

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