In principle we could get back to full employment with large government budget deficits, but that is not going to happen for political reasons. Aggressive use of work sharing leading to shorter workweeks can also move us toward full employment, but this is also not something we are likely to see any time soon.
This means that if we want to get back to full employment, we have to reduce our $500 billion (@ 3 percent of GDP) trade deficit. (This is the intro econ on which all economists agree. It can even be found in Mankiw’s textbook.) Reducing the trade deficit means taking steps to lower the value of the dollar against other currencies. These trade agreements would be the obvious place to have currency rules. If we don’t address the currency issue here, where exactly are we going to do it?Real-World Economics Review
Correction to Mankiw: Economists actually agree, just because you call something “free trade” doesn’t make it free trade
Dean Baker
4 comments:
Ah the old "NO True Free Trader argument" ride again. The fact is the David Ricardo's theory is absurd on it's face and violates the laws of physics which no biological has ever built anything resembling free trade and why I countries that have developed has done so under protection and will continue to do so as a matter of physical law.
Think about it for a second. What countries have ever become a first world power by focusing on specializing on the agricultural output where it's initial comparative advantage lies? None. All developed economy diversify. Developed end is diversification by definition.
The different between an child and adult is that an adult has diversified they're skill set away from the basic elemental skills of a child. In no place, does one become more developed and advanced by losing skills and only having one productive output option.
Think about the physics of production. Why would it make sense to outsource production to a single specialized location and use massive amounts of energy to transfer all the inputs to that location then use even more energy and middlemen to move the output to the site of use?
According to David Ricardo that specialization costs less than localized and direct market distributed production.
Can any of you economists explain how their "free trade" free energy machine is even possible?
Every working man knows that specialization in physical labor is the lowest of low that one can get but ever economists says don't add skills cause that means a loss of comparative advantage.
Now you know when the lay workingman universally opposes the economist's praise of free trade. The whole of the life experience of a working pleb stands in direct contradiction the mindless airheaded math of the leisured academic economist.
That's a reason I claim that economics has been bourgeois (capitalist) economics from the outset. Neoclassical economics was a refinement of that to exclude economic rents and the power that enables rent-seeking from consideration. Neoliberalism is a political theory of transnational capitalist globalization based on it.
Once land is folded into capital to create a single factor where the other factor is labor, and capital is privileged because it is scarce, the assumptions determine the policy outcomes.
"Why would it make sense to outsource production to a single specialized location and use massive amounts of energy to transfer all the inputs to that location then use even more energy and middlemen to move the output to the site of use? "
It makes sense if you can get the foreign currency zombies to work for the equivalent of 3 rations of dog brain soup per day in your own state currency.... the lower real terms overcomes the cost of the energy even if it means moving the produce all the way around the globe.....
And the transport is getting much more efficient all the time (bigger ships, bigger cranes at the ports, double decker freight cars, wider Panama Canal, etc...)
rsp,
TPTB figure that the neoliberal, neo-imperial, neocolonial period has at least another 100 years to run, and by they, IBGYBG, so enjoy it while it lasts.
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