Comments on: Witless on Trade

By: Anonymous

Anonymous — Wed, 16 Sep 2009 05:43:00 +0000

You are talking about collective net GOOD and BAD. What is good/bad for the collective, is not necessarily good/bad for everyone. Thieves can do quite well at the expense of the greater economy. And the greater economy can do quite well at the expense of a minority slave class.

By: Anonymous

Anonymous — Tue, 15 Sep 2009 22:34:00 +0000

I remember hearing similar tirades against the Japanese twenty years ago.

Our dear Ducktor seems to long for the Good Old Days of Smoot-Hawley.

By: MWG

MWG — Tue, 15 Sep 2009 16:56:00 +0000

Please refrain from responding to muir as every single point he makes here has been made AND responded to in past threads.

By: roversaurus.

roversaurus. — Tue, 15 Sep 2009 16:07:00 +0000

I am convinced that most people must be convinced of two things in economics.

The first is that “Manna from Heaven” is always a GOOD thing economically.
The second is that destruction is always a BAD thing economically.

There are FAR, FAR too many people who simply can not grasp these two concepts. You don’t need to get esoteric in your descriptions.

By: Anonymous

Anonymous — Tue, 15 Sep 2009 15:55:00 +0000

“China has protectionist policies…. they are taking over the worlds economy and buying up America.”

“We on the other hand have opened up our trade policy and now our debt to them as well as other trade debt seems casually related to 30 years of wage stagnation, job loss and the current economic collapse we see around us. ”

“Likewise I can point to a time when our country had many tariffs and protectionist policies and WE WERE the ones rising to world economic dominance.”

http://en.wikipedia.org/wiki/Correlation_does_not_imply_causation

“It clearly is not and policies chasing such ideological dreams result in real world catastrophes.”

Yes, the world is frightfully complex. And remember, *all* economic policies must fundamentally operate at the micro level, regardless of macro intentions. Considering those two facts, at what level then do you think governments should aim for their desired outcomes?

By: Anonymous

Anonymous — Tue, 15 Sep 2009 15:43:00 +0000

It seems to me that demand for U.S. Dollars is being supported by Chinese Government exchange rate controls. Since an increase in money demand relative to supply is deflationary, the Chinese must have been exerting a downward pressure on prices denominated in U.S. Dollars. An intervention of this kind would “bottle up” inflation until the day the Chinese decided to return the exchange rate of U.S. Dollars to the discretion of the market. Future price increases could have been offset by productivity gains (and still might to some extent), but the U.S. economy seems to have been heavily malinvested in housing.

By: muirgeo

muirgeo — Tue, 15 Sep 2009 14:38:00 +0000

You can call him witless but what are the real world results? Where is the congruency between them and your explanation of how things work?

China has protectionist policies…. they are taking over the worlds economy and buying up America. We on the other hand have opened up our trade policy and now our debt to them as well as other trade debt seems casually related to 30 years of wage stagnation, job loss and the current economic collapse we see around us. Likewise I can point to a time when our country had many tariffs and protectionist policies and WE WERE the ones rising to world economic dominance.

The reality doesn’t fit the neat academic high minded theory. Trade policy as well as economics in general are clearly far too complex to follow the nice simply ideas of libertarian principles. We all want the world to be neat and simple and straight forward. It clearly is not and policies chasing such ideological dreams result in real world catastrophes.

By: joenorton

joenorton — Tue, 15 Sep 2009 12:33:00 +0000

You might want to check out my favorite Paul Krugman article (ok 2nd favorite next to his paper about Interstellar Trade) which can be found here: “Ricardo’s Difficult Idea” http://web.mit.edu/krugman/www/ricardo.htm

BTW I second Don’s suggestion of reading THE CHOICE, I loved that book.

By: Moggio

Moggio — Tue, 15 Sep 2009 12:23:00 +0000

Thank you! With all due modesty, I understand “comparative advantage” and why you say in your post “he here commits the sophomoric error of mistaking assumptions used to simplify the explanation”. I was looking for a text that explains that the principle of comparative advantage still holds under “non standard” assumptions (except with economies of scale). Thanks again.

By: Anonymous

Anonymous — Tue, 15 Sep 2009 11:26:00 +0000

Moggio,

By the way, the best book to start with is the VERY accessible THE CHOICE, by Russell Roberts.

By: Anonymous

Anonymous — Tue, 15 Sep 2009 11:23:00 +0000

Moggio,

You can start with this short essay on comparative advantage (and with the links found at the end of it):

http://www.econlib.org/library/Enc/ComparativeAdvantage.html

By: Moggio

Moggio — Tue, 15 Sep 2009 11:15:00 +0000

Please could you recommend an economics textbook or a econ. hyperlink that could help me to better understand your post. Thanks.