An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Saturday, April 25, 2015
Ramanan — Free Trade? Heterodox Dissent
Useful quotes from Joan Robinson and Wynne Godley. Definitely keepers.
"If I have unemployed people, rather than trading with you I’m better off having those people make things even if they’re less efficient than you are. .... If I don’t have full employment, then free trade is a rounding error." . "None of this is to say that trade is always bad, it is important and necessary, but must always be managed." . "If Korea or Japan had taken Western economists’ advice, as Ha-Joon Chang has pointed out, they’d still be growing silk and rice, which is what they had an advantage in: not making some of the best cars in the world, which is what the US had a comparative advantage in."
While MMT may say "don't worry about the unemployed because we will use functional finance budgeting to maintain full employment and offer a JG just in case," the reality is that MMT is not running things. The reality is that if you have a good job you have to fight to keep it.
Macro cannot be used to shape the economic fabric. Let's say what we want about Germany or Swiss, but their medium business fabric and how unions where ingrained with it was very healthy for the social fabric, until bankers started to ruin it all. Too bad they got the macro captured by neoliberalism.
For what good is MMT if all you have left is a future of bullshit-jobs shuffling paper in Wall St. and selling toys (made somewhere else) at Walmart. that's terrible and unhealthy for the social fabric.
Both parts of policy are important and sometimes "imports are a real cost". "Free trade" is simply evil.
Speaking of social fabric, a study was recently released suggesting that national happiness is directly proportional to social fabric. To the degree the fabric is frayed, dissatisfaction rises.
"The reality is that if you have a good job you have to fight to keep it."
The reality is that you are looking at things from a single country point of view.
The reality is that you can use the generosity of the rest of the world to push up the standard of living by constantly pushing the living wage higher - since the rest of the world is supporting you.
If the political will is there.
And then there is the question of why you think you are worth more in real terms than somebody in China or Japan?
You have to use the comparative advantage trick, but use it to drive real capacity. So pull down all those old factories and just build new modern ones as a way of using up the 'spare' labour. Work on better robots.
All of which requires strategic vision at the political level.
Leaving it to the 'invisible hand' just means that firms run down the existing capital for as long as they can get away with it and then go bust or 'merge' with an asset stripper while constantly worrying about whether they are exporting enough.
Capitalist competitive structures can quickly lock themselves in a downward spiral rather than a virtuous one.
@Neil, what "you are worth" depends on how much power you yield.
"Looking at things from a single country point of view" is called nationalism. Nationalism has been proven to work, globalism has only worked for the 1%.
Ian Welsh reposted his blog on free trade.
ReplyDelete"If I have unemployed people, rather than trading with you I’m better off having those people make things even if they’re less efficient than you are. .... If I don’t have full employment, then free trade is a rounding error."
.
"None of this is to say that trade is always bad, it is important and necessary, but must always be managed."
.
"If Korea or Japan had taken Western economists’ advice, as Ha-Joon Chang has pointed out, they’d still be growing silk and rice, which is what they had an advantage in: not making some of the best cars in the world, which is what the US had a comparative advantage in."
While MMT may say "don't worry about the unemployed because we will use functional finance budgeting to maintain full employment and offer a JG just in case," the reality is that MMT is not running things. The reality is that if you have a good job you have to fight to keep it.
Macro cannot be used to shape the economic fabric. Let's say what we want about Germany or Swiss, but their medium business fabric and how unions where ingrained with it was very healthy for the social fabric, until bankers started to ruin it all. Too bad they got the macro captured by neoliberalism.
ReplyDeleteFor what good is MMT if all you have left is a future of bullshit-jobs shuffling paper in Wall St. and selling toys (made somewhere else) at Walmart. that's terrible and unhealthy for the social fabric.
Both parts of policy are important and sometimes "imports are a real cost". "Free trade" is simply evil.
Speaking of social fabric, a study was recently released suggesting that national happiness is directly proportional to social fabric. To the degree the fabric is frayed, dissatisfaction rises.
ReplyDeletehttp://www.bloombergview.com/articles/2015-04-24/why-north-europeans-are-the-happiest-people
"The reality is that if you have a good job you have to fight to keep it."
ReplyDeleteThe reality is that you are looking at things from a single country point of view.
The reality is that you can use the generosity of the rest of the world to push up the standard of living by constantly pushing the living wage higher - since the rest of the world is supporting you.
If the political will is there.
And then there is the question of why you think you are worth more in real terms than somebody in China or Japan?
You have to use the comparative advantage trick, but use it to drive real capacity. So pull down all those old factories and just build new modern ones as a way of using up the 'spare' labour. Work on better robots.
All of which requires strategic vision at the political level.
Leaving it to the 'invisible hand' just means that firms run down the existing capital for as long as they can get away with it and then go bust or 'merge' with an asset stripper while constantly worrying about whether they are exporting enough.
Capitalist competitive structures can quickly lock themselves in a downward spiral rather than a virtuous one.
@Neil, what "you are worth" depends on how much power you yield.
ReplyDelete"Looking at things from a single country point of view" is called nationalism. Nationalism has been proven to work, globalism has only worked for the 1%.
Why "build new modern" factories and "work on better robots" in the US if you can do it cheaper in China due to cheaper labor and fewer regulations?
Agree that "Capitalist competitive structures can quickly lock themselves in a downward spiral rather than a virtuous one."