Egregious Indian protectionism against trade in services

For many decades, India was one of the most protectionist countries in the world. This did great damage to growth and knowledge in India. Tariffs dropped from ridiculous levels to ridiculous levels in the early 1990s and then got stuck there. Yashwant Sinha, as Finance Minister, initiated a remarkable program of cutting the peak rate by five percentage points every year. This worked very well: It steadily got rates down and also gave a roadmap to the domestic industry about what would happen next.

In January 2004, Jaswant Singh as Finance Minister announced further cuts to customs duties even though it was not part of the budget. This was criticised in the press as being a `populist’ move. I thought it was a big day in India’s history: when a Finance Minister feels that trade liberalisation is so important that it cannot wait for February 2005 (since Feb 2004 was to be a vote on account), and when he gets criticised on the grounds that this is populist.

While there is more ground to cover on removing barriers to trade in goods (e.g. barriers to trade in agricultural products), by and large, India is doing well on this. The old instinctive protectionism has subsided. Two big areas for work remain. First, all customs duty rates are not yet at zero. And, we have one big gap: the lack of a proper GST, through which we would get to residence-based taxation. The GST on imports would be charged on imports, giving parity between a factory just inside the border and one just outside. And, the zero-rating of exports would mean that the GST burden suffered by a non-resident is refunded to him. The fundamental law of tax policy in this age of globalisation is: You do not tax non-residents.

Does this mean that we’re in good shape on trade liberalisation? No. The big gaping problem is trade in services. Most of world GDP and India’s GDP today is services. Even if we do full free trade on agricultural and non-agricultural goods, that only covers 40% of GDP. The real story of international trade is now in trade in services.

With trade in services, old-style Indian protectionism reigns. For the first time now, we have some hard data on this. The World Bank has released a `Services Trade Restrictions Database‘ which measures protectionism in services across the world. To get the story about what was done, read the voxEU column by Aaditya Mattoo, Ingo Borchert and Batshur Gootliz. Here’s the key picture:

The graph puts per capita GDP (in log scale) on the x axis and the measure of barriers to services trade on the y axis. Values of 0 imply perfectly open and values of 100 imply perfectly closed. The regression line shows us that by and large, when countries get richer, they reduce restrictions. The score goes down from roughly 40 (on average) for the poorest countries to roughly 20 (on average) for the richest ones.

India sticks out as an outlier, with a score of above 65.7. We are more restrictive than Iran. Only Ethiopia is more restrictive than India, among all the countries of the whole world. Here is some more detail about what is going wrong:

This shows us the variation of India’s restrictions by sub-sectors and by modes. While there is some variation, it is all appallingly bad. If we only got to the conditional mean for the Indian level of per capita GDP, we’d have to get the score from 67.5 to roughly 37.5, which is a big decline. And there is no reason to stop there; we need to eliminate protectionism far beyond what’s seen in the conditional mean.

To be open to trade in today’s world is to be open to trade in services, given the preponderant share of services in GDP. What we are doing is profoundly wrong. We always had an instinctive sense that India does worse on trade in services when compared with trade in goods. The World Bank has made a great contribution by building a comparable database across countries, to give us a concrete sense of where we are and how bad things are.

If we want to harness gains from trade in goods, we have to open up to trade in services also. Finance, transportation, and other services are the vital glue that makes trade in goods possible. Our mistakes on services trade liberalisation are holding back our gains from trade in goods also.

You may like to also see older blog posts: Globalisation: the glass is half empty, 28 January 2011, and Getting to a liberal trade regime, 15 December 2009.

Flaws in the Defense of Free Trade

But there’s more to this than meets the eye. What we don’t see are the hidden costs of protectionism. The first is the waste from using costly production methods. Protectionism changes manufacturers’ incentives, and they use capital and labor that could have been better-used elsewhere to produce (say) cars. The economic imagination is useful here. If people weren’t making cars, they could be making medical devices. Or tacos. Or automotive repair services (it stands to reason that if you can build cars, you can probably also fix them). Or any of a number of other things. As Russell Roberts points out in The Choice, there might be some short-run costs for workers who have trouble retooling; however, free trade leads to new opportunities for the next generation.

Replace the word “protectionism” with the word “regulation,” and note that the resulting paragraph makes a compelling case against government regulation. The altered paragraph also explains why free trade is terrible idea at this point in time: there are a massive number of regulations imposed on businesses by the federal government. Allowing for free trade, then, will not make the country wealthier. Rather, all it will do is decrease the cost of consumable goods while simultaneously transferring wealth to foreign businesses. As such, supporting free trade during a time of high domestic economic regulation is akin to supporting government-based foreign aid.

The second cost comes from the fact that tariffs increase the price of cars. When prices rise, people demand less of something. Consumers are worse off because they have fewer cars, and the cars they are no longer buying are cars that would cost less than consumers are willing to pay in the absence of tariffs. Interventions like tariffs raise the incomes of some workers by impoverishing others.

As mentioned before, there are a large number of governmental regulations that hinder the domestic economy. If tariffs were enacted to enforce regulatory parity, prices would naturally go up (or the quality of products would go down) as a response because consumers would have to bear the costs of their government’s regulatory interference. In a democratic country like the US, citizens would have to live with the consequences of the choices their elected representatives make. Thus, by simultaneously desiring free trade and a high degree of regulatory “protection,” Americans are essentially saying that they want societal luxury goods (like minimum wage, reduced pollution, worker safety, etc.) without having to actually pay for them. Unfortunately, nothing is free in this world, and the cost of regulation will be paid for, either in the form of higher prices, in the form of diminished capital, or in the form of increased debt.

The third cost comes from the change in incentives when it is discovered that people can raise their incomes by getting favors from the government. At best, favors from the government are a zero-sum transfer from one group of people to another. In reality, however, people use scarce resources to effect these transfers. Consider just one cost: the cost of flying to and from Washington, DC. The plane that is flying auto executives and union representatives from Detroit to DC could be used for something else, like flying people from Detroit to New York for business or from Detroit to Los Angeles for a vacation. The prospect of subsidies, tariffs, and other benefits from the government means that people will take valuable resources that could have been used to create wealth (planes, the time and energy of flight attendants and pilots, bags of roasted peanuts) and instead use them to transfer wealth. On net, we’re all worse off.

It is true that one government intervention usually begets another. What’s ignored is that not all second-order governmental interventions are irrational or illogical. While the initial tinkering in the economy usually leads to unintended and undesirable consequences, it does not follow that further interventions will do the same. And thus, while it is better for the government to not tinker in the first place, it is ludicrous to suggest that further tinkering will always be a net negative. Furthermore, if we take Carden’s argument at face value, the most appropriate response would be to focus our energy on deregulating the domestic economy instead pursuing free trade, since the domestic economy plays a much larger role in consumers’ lives than foreign trade.

Incidentally, coupling a highly-regulated domestic economy with free foreign trade is economic suicide in the long run because the domestic producers will their ability to innovate to be quite stifled (what with regulation and all), and so they will outsource their innovation to freer countries that offer comparable labor markets. And since production usually initially occurs at the same place as the innovation that leads to said production, it stands to reason that the innovative industries of the future will begin outside of the highly regulated economy that has encouraged outsourcing via free trade.

As should be clear, Art Carden’s argument suffers from the same flaws as all the others made by free traders: it’s shallow, ignores economic complexity, and is based on highly idealistic economic theories instead of actual reality. As such, his policy prescriptions should be ignored.

Chuck Moulton: Open Letter to Gary Johnson on the "Fair" Tax

I’m not going to post the whole letter here — you can read it at Independent Political Report. And you should. As a teaser, here’s the opening:

Main libertarian objections to the Fair Tax:
1. The prebate would start a new welfare entitlement.
2. The transition would redistribute from savers to borrowers.
3. There is a danger of getting BOTH an income AND a consumption tax.
4. Advocates disingenuously quote a 23% rate when it is actually 30%.
5. Advocates use protectionist rhetoric to sway populists.

Also well worth a read is Jason Gonella’s open letter to Johnson, which covers some other issues.

And two pieces on the “Fair” Tax by LP presidential nomination candidate R. Lee Wrights (here and here).

And finally, while I don’t by any means claim to be “the father of libertarian opposition to the ‘Fair’ Tax,’” I can claim to have done a bit of writing on it long before it became a football in the Libertarian Party’s 2012 presidential nomination process — see here and here.

Free Trade Fallacies

I sympathize with the sentiment, but this is a dumb way to analyze free trade:

Decades of outsourcing manufacturing have left U.S. industry without the means to invent the next generation of high-tech products that are key to rebuilding its economy, as noted by Gary Pisano and Willy Shih in a classic article, “Restoring American Competitiveness” (Harvard Business Review, July-August 2009)

The U.S. has lost or is on the verge of losing its ability to develop and manufacture a slew of high-tech products. Amazon’s Kindle 2 couldn’t be made in the U.S., even if Amazon wanted to.

First, how can Gary Pisano and Willy Shih be sure of the keys to the future?  The eight-track used to be the way to the future of music; the laserdisc used to be the future of home movies (as did HD-DVDs).  How can anyone say with any degree of certainty that high tech products are the key to the future, especially in light of diminishing marginal returns?  The simple fact of the matter is that there is no way to predict what people in the future want, and there is no need, then, for this sort of histrionics.

Second, who says manufacturing is the key to future wealth?  What makes Apple products so popular isn’t their manufacturing specs; it’s how they’re marketed.  It may be that marketing is key to the future, especially if consumers become considerably more concerned with status.  As such, focusing on America’s ability (itself a logical fallacy) to manufacture certain products is shortsighted and unnecessary.

Finally, why is the ability to manufacture high-tech products considered a hallmark of American competiveness instead of domestic economic policy?  If one truly wants to understand why American manufacturing has declined, one need look no further than the federal government’s domestic economic policy.  It has become increasingly anti-business and anti-manufacturing over the past decades, and more supportive of foreign trade.  As I have demonstrated many times now, this combination is eventually going to prove fatal to American businesses.

Thus, the problem isn’t that “America can’t manufacture a Kindle,” it’s that American businesses are being increasingly hamstrung by the American government.  The solution, then, is to repeal the economically destructive laws put in place by the government; it is not lamenting over the decline of high-tech manufacturing.

Foreign Trade Revisited

The current support for free trade is based on the supposition of defending consumers from higher prices. What the higher prices would indicate, if they were allowed to occur, is that American production is being destroyed. The laws of supply and demand would bear this hypothesis out because the cumulative effect of domestic economic regulation is to reduce supply of goods produced. Since demand either stays the same or increases (population trends in America aren’t negative yet), the net effect will be increasing prices.
As noted, foreign trade counterbalances potentially rising prices by increasing the supply of goods offered. Foreign nations do not have the restrictions on labor or environmental effects that plague American businesses, which means that they can produce goods cheaply, enabling them to remain profitable.
Foreign trade, then, redirects consumption away from American producers, who could be competitive if the government allowed them, to foreign producers. Free foreign trade policy coupled with oppressive domestic regulation has the same effect as direct subsidization of foreign business, which begs the question: why is the American government subsidizing foreign business?
The answer is not particularly clear-cut. Most conservatives who support free trade don’t view it as subsidizing foreign producers; they view it as defending consumers. And most leftists don’t view foreign trade as a way of destroying business; some see it as imposing proper regulations on business. Actually, leftists are all over the map on this. Pro-union leftists oppose foreign trade; enviro-leftists either support it as a way to encourage raising foreign environmental standards while some oppose it as a way to encourage raising foreign environmental standards. It might help to note that Bill Clinton signed NAFTA into law, and Paul Krugman has written a book defending free trade.
Additionally, multi-nationalists generally support free trade because it destroys national identity and power, and because it undermines the American economy. Of course, some of the latter is America’s own doing: there’s no need for America to handicap its own business with high taxes and excessive regulation.
At any rate, the current policy of foreign trade is quite damaging to the American economy. This does not require import quotas and high tariffs per se, but it requires that foreign producers be held to the same standard as domestic producers if they wish to sell in America. To have a policy which grants special advantages to foreign producers at the expense of local producers is simply asinine.

Trade Agreements and the Free Market

This sounds familiar:

Later this year, the Obama administration and Congress will seek bipartisan votes to pass free trade agreements with South Korea, Colombia and Panama. With 87% of global economic growth over the next 5 years taking place outside of the United States, trade supporters believe these agreements will create jobs and prosperity by helping American companies tap into fast-growing export markets.

Opponents disagree. They argue that “NAFTA-style” trade agreements hurt rather than help the U.S. economy — and polls show that much of the public agrees.

But is this conventional wisdom correct? Or do trade deals work? As Washington gears up for hard-edged debates about trade, it’s worth exploring some common misconceptions about free trade agreements.

This line of argumentation reminds me of Milton Friedman’s attempt at defending central banks. Friedman took the approach that the free market was the bees’ knees at everything, except money. Likewise, trade proponents take the approach that the market is good, but then somehow manages to conclude that we need the government to step in and a) create an artificial legal entity (the corporation) and b) enter into trade treaties with foreign nations.
Somehow, all this government interference is defended in the name of the free market, and those who don’t accept this new gospel are branded as ignorant or worse. There is good reason to be wary of governmental interference, seeing as how virtually all interference is destructive, inefficient, or counterproductive.
If trade proponents are truly concerned about free trade, they would first oppose the massive tax and regulatory burdens placed on domestic production and trade. Then maybe their message of increased foreign trade would seem more sincere.

Increasing Complexity And Violence

The transition from the Industrial Age to the Information Age is resulting in a sea change between protection and extortion. As the world gets increasingly complex the result is a diminishing ability to extort while at the same time tools of protection are getting cheaper and more powerful. The arbitrary walls are coming down.

SPECIALIZATION

I was sitting in trial today observing Bill Rounds, co-author with me of How To Vanish.com, as he was questioning a witness. This particular case is an example of complex business litigation that has been up and down the appellate ladder many times. The subject matter is fairly esoteric and even worse the law is unsettled. While unrelated to the case, the plaintiff is a world renown surgeon.

During questioning by Bill’s opposing counsel a funny scene happened. Bill stood up and the judge remarked, “Sustained.” The court reporter stopped and asked, “Was there an objection?” The judge replied, “No, but Mr. Rounds stood up and the coming objection is sustained.”

INCREASING COMPLEXITY

Those 5-8 seconds in the court transcript are but the faintest traces of an incredibly complex thinking process that the two attorneys and judge understood and applied which was backed by hundreds of pages of code and cases. Yet, I am almost sure that neither the surgeon nor the jury even knew there was a virtual ping-pong match being played.

But for the attorneys and judge the surgeon’s work is equally incomprehensible. And the work of engineers, architects, computer scientists, etc. are equally indecipherable to those outside the circle. Such is the modern world that is multiplying in complexity.

Everywhere complexity is increasing from the tadpole in the pond to the manmade computer operating system. But manmade complexity that is beneficial for humanity takes work. Bridges do not design and build themselves. As humanity has progressed so likewise has the economy from hunting and gathering to plows and silos to railroads, satellites and spaceships.

But all this time there have been malefactors and nefarious individuals that seek to destroy and wield violence like a dagger focused on the economy’s heart seeking coercion instead of consent. After all, the power to destroy and inflict pain, while immoral, is power nonetheless. A power wielded by those sadists who enjoy terrorizing innocents.

PROTECTION AND EXTORTION

The irony of government is that it attempts to provide protection through extortion. And like the blackmailer or extortioner the government’s ability to tax depends on the same vulnerabilities as extortion or the Godfather’s offer that can not be refused. As the Industrial Age progressed so likewise the nation-state rose because the assets created were larger and thus the need for protection was greater. After all, the capitalists either paid off those who could leverage violence against them for extortion or paid a military force capable of defending with brute force any attempted shakedown.

But the relentless advance of technology is blunting the sharp edge of violence’s dagger. Protection is being made easier to provide while extortion is being made more difficult to carry out profitably.

Why is this? A basic mathematical law: multiplying is easier than dividing. A simple example is that 3*3*7*11*13 is much easier to solve than reducing 9,009 to its prime components.

Or another example would be encryption. I like the open-source Truecrypt and in June 2003 the US National Security Agency reviewed and analyzed the design and strength of AES-256 encryption finding it sufficient to protect classified information up to the Top Secret level.

In effect, with this free tool I can spend ten seconds encrypting a text file that can take years of focused processing power to decrypt. And just for fun perhaps it only reads “Haha if someone wasted the resources to decrypt this!” But why transmit sensitive personal or business information without such protections? After all, recently 30,000 Hotmail passwords were compromised in a security breach and posted on the Internet. An ounce of prevention using free encryption software can be worth a pound of cure repairing a stolen identity.

PROTECTION IN THE INFORMATION AGE

During the Industrial Age the leverage violence could exert was much greater and is being greatly reduced in the Information Age. Thus the scale is tipping in favor of protection and away from extortion with its attendant allocation of scarce resources through bureaucracy. The digital infrastructure is allowing the previously unseen but highly complex range of systems to be perceived; Facebook is a prime example.

Then that perception is being harnessed in extremely productive ways through multiplication; as a result the economy is following economic law and moving away from inflexible command and control systems towards spontaneous adaptive mechanisms. But government systems still dragoon resources from higher-value complex uses to lower-value primitive uses. As Frederic Lane wrote on page 383-384 of Venice, A Maritime Republic:

Every economic enterprise needs and pays for protection, protection against the destruction or armed seizure of its capital and the forceful disruption of its labor. In highly organized societies the production of this utility, protection, is one of the functions of a special association or enterprise called government. Indeed, one of the most distinctive characteristics of government is their attempt to create law and order by using force themselves and by controlling through various means the use of force by others.

From machines to microchips, factory to laptop, mass production to small teams or even the lone entrepreneur the gigantic institutions of the Industrial Age are being reduced to smaller and smaller parts. As the Information Age advances the risk of violence decreases because as the scale of an operation declines so likewise does its potential for sabotage or blackmail and the increased location independence afforded by the Internet multiplies the inherent safety an asset or individual enjoys. Despite Sulter’s proclamation at 2:08, “I want this country to realize that we stand on the edge of oblivion. I want everyone to remember *why* they need us!” But we, humanity, do not need them even if they think they can clean up some oil.

CONCLUSION

For those who rely on coercion instead of consent the transition to the Information Age is being particularly harsh to their immoral business models. They are now opposing both natural and economic law. The financial elite and political elite of America and Europe are now beginning to infight. This is resulting in the State losing legitimacy in the eyes of the masses.

While the time frame is likely far into the future, first the European Union will collapse and later the United States. But this is not uncharted territory but instead a trend of the nation-state collapsing under its own weight which started with the Berlin Wall and Russia. To avoid being collateral damage I elucidated several tips in chapter six of The Great Credit Contraction.

My next book, which I have co-authored with Bill Rounds, is currently with the publisher and hopefully will be available within a couple months. It will magnify the suggestions from chapter six and I think many will find it tremendously useful. As an old Chinese proverb says, “Of all the thirty-six ways to get out of trouble, the best way is – leave.”

DISCLOSURES: Long physical gold, silver and platinum with no interest in the problematic SLV, Streettracks Gold ETF Trust Shares or the platinum ETFs.

Protectionism, Recession, Recovery: Looking Back and Looking Forward

In thinking of protectionism, the Great Depression, the Great Recession, and what might come next, here are two interesting angles.

Governments with their backs against the wall

Ideally, stabilisation using monetary and fiscal policy, alongside actions by the private sector, should restrain the decline in consumption, and yield conditions which are not too harsh for households. At the time of the Great Depression, much less was known of economics. Pegging the currency to gold meant giving up monetary policy autonomy; the US Fed succumbed to contractionary monetary policy once you take into account the closure of banks; the fiscal policy response at the time was miniscule.

It has been argued that the the Smoot-Hawley Tariff Act came about in the US in June 1930, at a point in time where the politicians were coming under enormous pressure to do something. After seven months of inaction by macro policy, with mounting difficulties in the economy, the politicians succumbed to protectionism. This appears to have been of decisive importance in sending the world down the destructive path of competitive trade barriers and cometitive devaluation. In the graph made famous by Barry Eichengreen and Kevin H. O’Rourke, at month 7 there was almost no decline in world trade. Douglas A. Irwin is worth reading on this.

Protectionism adversely impacts the recovery

Greg Mankiw and Scott Sumner point out one more channel through which Smoot-Hawley damaged prospects for the recovery was through the impact of protectionism on confidence.

The private sector saw protectionism as symbolising government backing away from responsible thinking in economics, and responded with a weakening of investment demand. This served to exacerbate the downturn.

Will this time be different?

The bulk of world GDP is now endowed with inflation targeting central banks. This ensures that monetary policy will be counter-cyclical: under bad business cycle conditions, inflation forecasts will drop below targets, and central banks will use every trick in their book to push inflation back up to target.

Fiscal policy has responded well this time around, thanks to better understanding of business cycles when compared with 1929. But there is little headroom to go further.

The world has as little ability to rein in some players engaging in competitive devaluation (e.g. China) today, as was the case in 1930. But with the bulk of world GDP being placed with inflation targeting central banks, the extent to which such tactics will be used will be relatively limited.

So far, we have had an upsurge of protectionism, but nothing on the scale of that seen from 1930 onwards. This could partly reflect the dramatic actions which governments have undertaken through monetary and fiscal policy, through which politicians have been able to reduce the domestic political difficulties that go along with business cycle downturns. But if, in coming months, the world economy remains mired in recession, then we could get fresh pressure to do something. In a recent voxEU post, Jeffrey Frieden points out that the path of adjustment of macroeconomic imbalances and currency distortions will involve political pain along the way, which could spillover into protectionism.

Some protectionist decisions could reflect bargaining tactics aimed at getting China to reduce or end their market manipulation of the currency market. But if there is an upsurge of protectionism beyond this, it will further damage the recovery by hurting investment, giving a spiral of bad economy -> protectionism -> reduced investment demand -> worse economy.

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Getting to a Liberal Trade Regime

I wrote two columns on trade liberalisation in Financial Express:

Also see:

Symposium at the Korea Society (NYC): The Perils of Protectionism: Korea’s Investment Challenge

On February 25, 2009, Henry Seggerman-who manages the successful Korean International Investment Fund, was the guest speaker at a Korea Society (based in New York City) symposium entitled The Perils of Protectionism: Korea’s Investment Challenge. He is also a noted columnist for the Korea Times and a contributor to other noteworthy publications such as the Wall Street Journal and the Far East Economic Review.

The discussion went off to a promising start. Seggerman began with a brief historical review of the infamous Smoot-Hawley tariff bill which U.S. President Herbert Hoover signed into law over the objections of over a thousand economists nationwide. It dramatically raised tariffs above what already existed-on thousands of imported goods and is often blamed for igniting the trade war that subsequently caused the collapse of world trade, further exacerbating the Great Depression. At this point, I thought he should have continued by indicating that the law was later in repealed in 1934-and followed it up with an expanded discussion on the need to maintain access to worldwide markets and the efforts being made to prevent trade wars from recurring-especially through channels such as the G.A.T.T. (General Agreement on Tariffs and Trade), bilateral trade negotiations, and the World Trade Organization.

Instead, Seggerman quickly turned to more recent events such as the 2008 controversy over the sale of American beef in South Korea and the mass protests over false allegations in the Korean media that these imports put citizens at greater risk for Mad Cow disease. He made an excellent point by linking this nationwide hysteria to Korea’s beef producers who have a virtual monopoly on the market and thus could charge five times the world market price for their products. Seggerman took note of how these attitudes and policies have led to a decline in foreign investment in Korea-which is sorely needed at a time when the country is struggling to maintain its economic status. He also touched on the current state of “free trade” treaties and correctly pointed out that certain products are often excluded to protect politically-favored industries-such as beef, in Korea.

On the other hand, I thought his comments about the American auto industry were just a little too harsh, even though I agree that the Detroit automakers and their unions are largely responsible for their problems and I am generally opposed to billion-dollar bailouts of the magnitude that they are seeking.

Seggerman should have stayed an course by perhaps examining the historical background of economic development of South Korea with a critical look at the popular view that protectionism was largely responsible for its success, especially with the rise and domination of the Chaebols-or large corporate conglomerates. Instead, I thought he went in the wrong direction by delving into the politically contentious and sensitive topic of U.S. immigration policy-taking a one-sided position that appeared to favor an “open borders” viewpoint while demonizing opponents in the media such as Pat Buchanan and Bill O’Reilly-by highlighting controversial statements or by showing emotionally-charged incidents such as the recent report of a racially-motivated murder of an Ecuadorian immigrant. Seggerman’s premise was to somehow equate those two issues together: in other words, to favor immigration restriction can be just as bad as supporting trade protectionism.

However, I believe that to be a simplistic and misleading notion that ignores the complex factors that separate these two issues. Seggerman appeared to have basically ignored the fact that there are legitimate concerns and arguments against the immigration policy that he advocates; he is in favor of legalizing the status of what could be perhaps as many as twenty million undocumented aliens living in this country, for instance. One could argue that these people help the economy by working at menial jobs that so many U.S. citizens often reject, but that flies in the face of current economic reality with millions of Americans out of work and desperately seeking whatever employment is available. Others have pointed out that undocumented aliens also avail themselves of certain free, taxpayer-funded services (e.g. including some that are related to healthcare, free primary and secondary public education for their children, and whatever else they can obtain) -which may offset whatever economic benefit they provide the country. In accordance with current rules and guidelines for federal and state assistance, legalizing their immigration status means that the government must provide access to a host of government-subsidized social programs since most of these people-particularly those with low-income status, would undoubtedly qualify on the basis of need. That would require increased funding and the likelihood of higher taxes to pay for them. Given these and similar concerns, it is not surprising that many Americans have reservations about liberalizing immigration policy as proposed by Seggerman.

All in all, there were substantive points made during this symposium, but I thought that injecting the subject of immigration into a time-constrained, limited discussion on trade protectionism, was not appropriate. Although I do not believe that any reasonable person would support extreme measures such as blanket restrictions on immigration, neither do I think that the alternative has to be an “open borders” policy, either. At any rate, this was not the proper forum for such a discussion.

If Seggerman had stayed on topic and just emphasized the U.S.Korean trade relationship, global trade in general, the consequences of protectionism, along with perhaps a look the historical background and recent U.S. trade policy with Asia (which he neglected to mention), I think the symposium would have been much more effective and informative. Seggerman could have made a much better case against protectionism and promoted the cause of free trade by limiting discussion to just those issues.