Beat the Press

Dean Baker's commentary on economic reporting

7/26/2006

The WTO is Not Free Trade

It would be nice if reporters were forced to read what they write before it appears in the paper. What do they mean when they say “free trade?”

What makes increasing patent and copyright protection (an essential part of recent U.S. trade agreements) free trade? These are government granted monopolies. Isn’t that obvious? Yes, they serve a purpose in providing incentives for innovation and creative work, but ALL forms of protection serve a purpose, that doesn’t mean that they are not protectionism.

Also, it really is infuriating that reporters cannot recognize the protectionism that sustains relatively high salaries for professionals and reporters. If we had free trade for doctors, lawyers, accountants, etc. we would have standardized licensing requirements so that smart students anywhere in the world would have the same opportunity to train and get a job in these professions in the United States as a kid born in New York. Any economics reporter who thinks we have this situation now should be fired on the spot. Obviously, they have no idea what they are talking about.

Also, if we had free trade in reporters, I could start a newspaper and start filling its staff with smart, energetic reporters from developing countries who would be very happy to work for much lower salaries than the current staff. If we had free trade, I would not have to claim that I could not find a qualified citizen for these jobs. I could just say that I hired reporters from the developing world because they would work for less. This is illegal now and as a result, reporters earn higher salaries than would otherwise be the case. Again, if an economics reporter cannot understand how they benefit from this protectionism, they are not qualified for their job.

28 Comments:

  • At 6:41 AM, Anonymous Anonymous said…

    Yes, they serve a purpose in providing incentives for innovation and creative work, but ALL forms of protection serve a purpose, that doesn’t mean that they are not protectionism.

    The critical difference is that one can make a decent arguement that copywrite and patents have a net societal benefit (one that fades longer term) whereas barriers to trade/services have an overall loss that is felt immediately.

    By the way, watch how quickly your call for international lawyers, doctors and journalists comes to pass.

    I'm betting in less than a decade.

     
  • At 8:14 AM, Blogger Jeff Caldwell said…

    Fascinating--what law(s) currently prevent(s) you from hiring low-wage reporters from other countries now?

     
  • At 10:40 AM, Anonymous BottyGuy said…

    OK I see the point about Lawyers and Doctors both of which have self saving licensing requirements. In accounting the grunt work seems to be shipping overseas now, the official signing off remains protected. Expensive medical procedures can be done in India if the travel costs are small in comparison to the procedure cost.

    I don't see anything preventing you from off-shoring your reporters, editors, production. Bringing H1-B reporters into the US does not really cut costs since they would still demand close to US reporter wages, and it's not "trade" since the reporters output would be US output.

    In fact it seems that you seem to be suggesting that using immigrant labor is some form of "trade". My experience in the technology field is that immigrant labor is US output by a new US labor force.

     
  • At 11:15 AM, Anonymous Erik L. said…

    BottGUY-

    If you think that doctor licensing procedures are self serving I ask you to think about the following. How about we change the system so anyone can be a doctor and practice medicine but each must be very forthcoming about whether or not he is licensed. Would you go to an unlicensed doc for your appendectomy?

     
  • At 11:16 AM, Anonymous Erik L. said…

    Dean-

    I realize you need to fill your blog but isn;t this the same point you make every few days?

     
  • At 11:25 AM, Anonymous BottyGuy said…

    Erik L.

    I didn't say or mean "self serving" I said "self saving" which probably isn't the right term. Basically my issue is that they have fairly non transferable state licensing requirements that make it difficult to transfer licensing from one jurisdiction to another jurisdiction.

    If there was a National, or even better International method of qualifying doctors professional mobility would not hinder a doctor from going where the money is.

    From some personal experience I'm not sure that our current licensing requirements actually guarentee competence, but I suppose its better than nothing.

     
  • At 2:22 PM, Anonymous S Brennan said…

    Dan,

    Could we include CEO's in your protected class of professionals?

    Protected by corporate rules [government] that give them the vote of those stockholders who do not vote against them.

    Consider how this would work in politics, one side, say Republicans get all the votes of those who did not vote...hmmm...at least it would clean up elections, Republicans wouldn't need the help of Diebold or the Supremes.

     
  • At 5:22 PM, Blogger Dr. Tax in Sacramento said…

    Dean-

    This is the second time you have made the bald faced assertion that copyright and patent protections are in opposition to free trade. I am not sure how you make the connection. Granted that the DCMA - the most recent US law - went a bit (or a lot) too far in protecting copyrights.

    But how are copyrights different from other property rights which are fundamental to any kind of free trade? Intellectual property needs some protections in the international markets or else you have the unbridled copying of materials that you have in places like China. Our first revisions in copyright laws (and the first much more reasonable standards) came about in part because authors like Dickens were getting ripped off by American printers who were getting copies of his books and then simply resetting them into type with an American masthead. That is not free trade.

    Ultimately there need to be limits on copyright - as Jefferson commented these rights should pass into public domain at some point. But there need to be some kinds of reasonable standards.

     
  • At 7:28 PM, Anonymous dale said…

    Dr. Tax,
    Reread the second paragraph of Dean's post.

     
  • At 10:29 AM, Blogger Dr. Tax in Sacramento said…

    Dale-

    I did read "What makes increasing patent and copyright protection (an essential part of recent U.S. trade agreements) free trade? These are government granted monopolies. Isn’t that obvious? Yes, they serve a purpose in providing incentives for innovation and creative work, but ALL forms of protection serve a purpose, that doesn’t mean that they are not protectionism." the first time. But I disagree with the premise. In the first place - some copyright law is internationally developed (or at least coordinated) - in the same way that the commerce clause allows trade in the US - one needs a series of standards which allow the right of property in commercial transactions. Markets without some reasonable right of property are not markets.

     
  • At 10:43 AM, Anonymous Joe Populist said…

    Dr. Tax sed: But I disagree with the premise. "In the first place - some copyright law is internationally developed (or at least coordinated) - in the same way that the commerce clause allows trade in the US - one needs a series of standards which allow the right of property in commercial transactions. Markets without some reasonable right of property are not markets."

    No---that your self-interest rationalizing something that benefits YOU at the expense of someone else.

    Tariffs protect property rights---they protect businesses from being destroyed by dumping. For instance, China, which doesn't allow the yen to free float on the marketplace, is artifically lowering it's prices to destroy US business. Or in the 80's, when Japan and the US were engaged in a war to dominate the semiconductor business---remember that? The Japanese semiconducters were dumping memory chips on the US market below their cost of production for the sole purpose of driving US manufacturers out of business. (After all, it worked in the electronics industry).

    Bottome line Dr. "Tax"---you are a hypocrite...You support "protectionism" that benefits YOU, and support "free trade" that benefits you.

    You can't have it both ways. Either you support protectionism or you are a free trader. If you want it both ways, then you're just a liar.

     
  • At 10:59 PM, Blogger unlawflcombatnt said…

    Has anyone ever heard the phrase "2 wrongs don't make a right"? The problem isn't that we're "protecting" doctors and lawyers. The problem is that we are not protecting other professions. Our government needs to work more on protecting jobs and workers in all professions, and less on "protecting" the profits of multinational investors.

    And, for the record, professional licensing not only protects the licensee, it protects the public from unqualified practitioners of that profession.

    Regarding medicine, there are thousands of foreign M.D.s practicing in this country. There is only minimal impediment to their practicing in this country.

    What really sets American-trained MDs apart is that American medical education is considered the best in the world. And the selection process for getting into medical school is more difficult in the U.S. than anywhere else in the world. That's not just the opinion of those in this country. It's the opinion of the international medical community as well.

     
  • At 7:14 PM, Blogger Bob Cramley said…

    hmm, you right!
    Yesterday i write about 10 benefits of the WTO trading system in my blog, if it's intresting - WELCOME!

     
  • At 7:50 PM, Anonymous sexy bikinis said…

    They have special provisions that take into account the situations that developing countries face. They also spell out when and how governments can protect their domestic producers, for example from imports that are considered to have unfairly low prices because of subsidies or “dumping”. Here, the objective is fair trade.

    Just as important as freer trade — perhaps more important — are other principles of the WTO system. For example: non-discrimination, and making sure the conditions for trade are stable, predictable and transparent.

     
  • At 4:45 PM, Anonymous dehumidifiers said…

    I would say that many US citizens who are against the free trade agreements are narrow minded and as usual simply wanting to eat their cake and have it...I have noted that many of the advocates against the free trade are willing to accept the benefits that it brings to the US (no matter what it is) but not willing to accept whatever may be sacrificed to gain these benefits.

     
  • At 3:28 AM, Anonymous infection cure said…

    what the meaning of WTO?

     
  • At 7:56 AM, Anonymous Anonymous said…

    We are not hearing enough about the reality that Anti-American countries can destabilize the West without firing a bullet. They can undermine our economy as proof the socialism is better than capitalism. I worry that Sarah Palin & McCain are too hard line and not diplomatic minded to make peace with our neighbors.


    Bolivia was first. Honduras is now joining in the fray:

    Expulsions stoke US-LatAm dispute

    A series of tit-for-tat expulsions has left the US without ambassadors in three Latin American countries.

    Bolivia and Venezuela have expelled their US envoys, accusing Washington of trying to oust Bolivia’s government.


    Meanwhile, Honduras has refused the credentials of a new US ambassador, postponing his appointment.

    In a separate development, Nicaragua’s President Daniel Ortega said he supports Bolivia, but did not announce whether he would take any action against the US envoy in Managua.

    The Russians are flying Blackjacks over the region while three Latin American countries are suspending ambassadors. Y

    Daily Report: Honduras Joins Chavez, Russians May Move Into Cuba and Vietnam

    http://www.worldthreats.com/?p=156
    1. Honduras has joined the Chavez-led Bolivarian Alternative for the Americas, saying that it will help them fight their poverty crisis and that the international community has failed to provide aid. This comes after Venezuela offered to double the amount of its aid to Honduras. President Zelaya then said that Honduras’ “decades-long relationship of dominance by the United States” had hurt the country. The Bolivian Alternative now consists of Venezuela, Cuba, Nicaragua and Bolivia.

    The U.S. has to seriously consider that a Chavez-led Latin American bloc may emerge. Hopefully, Chavez’ recent missteps in trying to make himself a dictator will hurt all the leaders who have embraced him and his anti-American socialist ideology.

    2. A Russian general is warning that Russia may begin a new military presence in Cuba and Vietnam as a reaction to U.S. pressure. He notes that Russia could restart electronic intelligence gathering bases in Cuba and send battleships to the country.

    The Russians have also made statements about moving into Syria as well. It appears that Russia is trying to become the leader of an anti-American bloc. While these public statements are frightening, they are simply overt admissions of what Russia has done beneath-the-radar for a long time. Russia’s courting of rogue nations is hardly something new.

     
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