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Home Publications Blogs Beat the Press The New York Times Comes Out Against Free Trade in China

The New York Times Comes Out Against Free Trade in China

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Friday, 24 December 2010 06:47

That was the topic of its lead editorial which complained that China did not respect U.S. style intellectual property. Patents and copyrights are government granted monopolies that allow items like prescription drugs to sell at prices that can be several thousand percent above their free market price. This leads to the same sorts of economic distortions that would be predicted from tariffs of this size. As a result of this protection, software and recorded music and movies, which would otherwise be available at no cost over the Internet, can instead command high prices.

Given the enormous costs associated with patent and copyright protection it is not surprising that China would not be anxious to impose these costs on its economy. There are more efficient mechanisms for financing research in prescription drugs and creative and artistic work. It is understandable that China will only agree to accept these costs that it will demand something important in exchange, for example the option to maintain a seriously over-valued exchange rate that gives its goods a huge advantage in international trade. In effect, a policy that imposes U.S. style intellectual property rules on China is redistributing income from manufacturing workers and non-college educated workers (who disproportionately work in manufacturing) to companies like Pfizer and Microsoft and their highly educated workers.

Comments (4)Add Comment
Merry Altruism and A Happy Incremental Year Mr Whose Your Nanny
written by izzatzo, December 24, 2010 7:50
Any economist knows that trading overpriced, inefficient protected intellectual property for overpriced, inefficient dollars is trade nevertheless, reflecting comparative disadvantage and distorted currency exchange value to make at least one party much better off without making the other party any worse off than it would have been anyway - it would have traded with another country on the same terms anyway.

Stop trying to bring down free market trade and the value of the dollar during the holiday spirit of interdependent utility functions. Give the gift of austerity that keeps on giving - supply side opportunity - not demand side socialism that keeps on taking.
Crony Capitalism
written by Ron Alley, December 24, 2010 8:15
This article and two companion pieces,

http://www.nytimes.com/2010/12...ns.html?hp and
http://www.nytimes.com/2010/12...f=business

highlight the role of crony capitalism in federal trade policy and the trade relationships among American corporations, the federal government and China.

This is merely crony capitalism at work.
...
written by fuller schmidt, December 24, 2010 10:22
Farmers of scarce arable land in Mali are being told by Mo Qaddafi that he owns their land now and they have to move. Everything is always about rent: "This land is all mine and you have to pay me if you want to live". Stupid omnivore humans.
...
written by diesel, December 24, 2010 11:33
Dean, although you've written about this topic innumerable times, this is the first time (to my knowledge anyway) you've explicitly drawn the conclusion that this amounts to "a policy that...is redistributing income from manufacturing workers and non-college educated workers (who disproportionately work in manufacturing) to companies like Pfizer and Microsoft and their highly educated workers."

Formerly you were content to show the intellectual dishonesty of those who loudly extol the virtues of the free market, while enjoying the benefits of protection, but this statement directs our attention to unacknowledged attitudes towards class.

Drawing attention to our collective unconscious class mores is not polite. If you're not careful, you'll find yourself sitting on your own pumpkin amongst Thoreau, Socrates, Buddha, Twain and Jesus and not sharing a crowded velvet cushion with people of wealth and good breeding.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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