Vitaliy wrote:

>>> An economy which is 95% free, is worse off than an economy that is
>>> 100% free, all else being equal.
>>
>> Maybe, but who says that all else will remain equal if you go the last 5%?
>> There might be detrimental effects. And even if not, it again sounds a lot
>> like religion. Unproven, unprovable, and needs to be believed -- or not.
> 
> Gerhard, think logically. You said yourself that economically Brazil is 
> better off now, than it was during the period of isolation. Why would 
> removing the remaining 5% of the barriers have "detrimental effects"? It's 
> like saying, "I will leave my parking break engaged half-way -- because who 
> knows what will happen when I release it all the way?"

Ok, so let's start tackling this with logic. An analogy is a good thing
once in a while... 

We know that when switching a load, it is the more efficient the smaller
the other resistances in the current path are. Yet we often place
/deliberately/ resistances in the path: transistors (instead of relays,
which would have a lower resistance), fuses (that don't really do anything
during normal operation besides providing resistance). We often don't
remove those last percents of resistance in the load path, because they
serve purposes different from simply optimizing the free flow of current
through the load -- different, but not less important. 

What you seem to do, using this analogy, is trying to optimize the
efficiency of the current flow, forgetting about the different reasons why
there are other things in the current path. Of course a simple manual
switch is one of the most (electric energy-) efficient ways to switch a
light. But most of us are here because there are lots of /other/
requirements besides the free flow of current, and they get satisfied with
means that are less efficient in terms of free current flow, but overall
considered more desirable in certain circumstances.

Brazil is not at 95% yet, it's probably at around 50% or so. Difficult to
measure trade resistance in percent... and I'm usually on the side that
promotes more free trade (of both goods /and/ services). But I also
understand that these are /my/ arguments, and that the other side has
/their/ arguments, and neither of us can be sure to be right.


> Again, the difference is that when you open the borders for immigration, you 
> will have winners as well as losers. That is not the case when you trade 
> tangible goods.

AHA! Here it is: you don't really want free trade (which would be "free
trade of everything"), you want free trade limited to whatever doesn't
leave losers in the USA. See, that's what everybody wants, and that's why
we have trade barriers. You think that trade barriers on services are a
good thing, steel millers in the USA think that trade barriers on steel are
a good thing, Brazilian car makers (like Ford and GM :) think that trade
barriers on cars are a good thing, and so on. 

> Taking my comments out of the context is dishonest. I did not say whether
> that logic is good or bad, nor whether the US should or should not allow
> immigration from Georgia. All I did was try to explain what would happen
> if US did allow unlimited immigration from such countries, and why most
> Americans won't like it.

No, I understand that, and I don't think I took it out of context. Your
argument was exactly the same argument that people use when they defend
tariffs. It's just that you believe that free trade of goods will be good
in the end for both sides, and that you believe that free trade of services
will be bad for your side -- and use the same argument against free trade
of services that you counter when it is used against free trade of goods.
(Are you in the business of providing services? :)

> I thought we agreed that goods have either positive or zero
> externalities. 

No, I never agreed to that. I think that production of goods usually has
/lots/ of externalities, trade of good has externalities, possession of
goods can have externalities, and use of goods most often has. How can you
say that goods don't have negative externalities?

> Those that do have negative effects, should be treated as a special case
> -- this is one of the few instances where government intervention is
> necessary. 

Since all goods seem to have lots of externalities, that's possibly one
reason why there are so many regulations -- trade and otherwise?


> I do. Free trade is not synonymous with negative externalities, and does not 
> require government intervention.

I didn't say that it is synonymous. But preventing or remedying negative
externalities does require government intervention, and that's the
reasoning behind trade barriers (like the one you are defending against
free trade of services).

>> There are /many/ externalities... and whether they are negative or
>> positive usually depends on the angle. [snip]
> 
> No, it doesn't. If the third party (the one not directly involved in the
> transaction) is harmed by the transaction, you have a negative
> externality. For example, clearing the rainforest is definitely a
> negative externality. Vaccination is a prime example of a positive
> externality, where your chances of getting sick are reduced because
> other people got their flu shots. 

It of course depends on the 3rd party and its perception. "Harm" is usually
not a fact, it is a perception. "Lots of trees around the house" can be
both a harm and a benefit, depending on the point of view.

Clearing the rain forest is a negative externality /for you/, because you
believe this is something negative. It might not be an externality at all
for your neighbor; he just might not care (and you can't really measure its
effect at the place where you guys live). And it might be a positive
externality for the one or other guy who lived somewhere there or who went
there, because his personal life becomes better due to the influx of money
and infrastructure and, yes, even sometimes freedom. It's not as easy as it
may seem from a distance.

Same with vaccination. It has not only positive side effects. One of the
negative side effects is that it increases the stronghold of drug companies
on medicine, which in turn decreases the overall chance of getting a
non-commercial-drug treatment. A large part of what MDs know these days is
determined by drug companies' priorities. And an overall healthy population
is /not/ one of their priorities, that's for sure -- their economic model
implies that it isn't. Another side effect may be the creation of stronger
and more resistant strains, which in turn increases the dependency on
vaccines -- of course a side effect in alignment with the vaccine-producing
companies' priorities, but not necessarily in alignment with my
preferences.

You may disagree with my angle, or with anybody else's angle, but that
doesn't mean it's not there. Whether you see something as positive or
negative is a /judgment/, not a fact, and as such individually different.
So whether an externality is positive, negative or zero (negligible) is not
a matter of measurable fact, it is a matter of (individual) judgment. 


>>> What some people are implying is that we should create trade barriers for
>>> Brazilian beef, to remove the incentive to create new pastures for the
>>> cows.
>> 
>> That would not only probably not be effective, but also is not fair.
>> Not all Brazilian beef grows on burnt rain forest. By the same line of
>> thinking the EU could create a trade barrier for American beef...
>> ("American" means here "from the American continent").
> 
> Sorry, I'm a typical estadounidese. :-) I just don't know what other word to 
> use to mean "of the United States"

Somebody should create something :)

But I know, that's why I specified this different meaning here. I just
don't know what other word to use to mean "of the American continent" :)

> Trade sanctions would actually be quite effective in preventing
> deforestation (Brazilians can't eat all that meat themselves). Of
> course, I agree that it would be utterly unfair. 

This would require that beef export is the driving force behind the
deforestation. I don't think it is, and that's why in turn I don't think
that trade barriers would have much of an effect on it. Do you have any
numbers that indicate that beef production is instrumental in the
deforestation? Or that the major part of Brazilian beef comes from the rain
forest region? Couldn't find (quickly) any relevant numbers. (But then,
this is really not relevant for the free trade question...)

Gerhard
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