November 24, 2007

IF NOT FOR THE DISCREDITED ONES, DEMOCRATS WOULD BE RUNNING ON NONE AT ALL:

Why We Trade: We’re used to shrugging off all sorts of rhetorical gobbledygook from our politicians. But when you hear U.S. presidential candidates start to mouth off about free trade, watch your wallet: A discredited 14th-century theory of economics is enjoying a dangerous renaissance in the 2008 campaign (Russell Roberts, 19 November 2007, Foreign Policy)

As a thought experiment, take what would seem to be the ideal situation for a mercantilist. Suppose we only export and import nothing. The ultimate trade surplus. So we work and use raw materials and effort and creativity to produce stuff for others without getting anything in return. There’s another name for that. It’s called slavery. How can a country get rich working for others?

Then there’s the mercantilist nightmare: We import from abroad, but foreigners buy nothing from us. What would the world be like if every morning you woke up and found a Japanese car in your driveway, Chinese clothing in your closet, and French wine in your cellar? All at no cost. Does that sound like heaven or hell? The only analogy I can think of is Santa Claus. How can a country get poor from free stuff? Or cheap stuff? How do imports hurt us?

We don’t export to create jobs. We export so we can have money to buy the stuff that’s hard for us to make—or at least hard for us to make as cheaply. We export because that’s the only way to get imports. If people would just give us stuff, then we wouldn’t have to export. But the world doesn’t work that way.


They come awfully close though to just giving it to us and then take the tiny bit they do charge us and buy our debt with it, which we repay at a fraction of what our 401k's are paying. It's dang close to the long sought free lunch.

Posted by Orrin Judd at November 24, 2007 6:32 AM
Comments

Our major export products are greenbacks and our culture. We send them paper and they send us everthing we need to live like Americans. Sounds fair to me?

Posted by: morry at November 24, 2007 8:10 AM

We export law and government, which the world gladly consumes. Deeds not words.

Posted by: Lou Gots at November 24, 2007 9:23 AM

And the kicker is its a good deal for them.

Posted by: Perry at November 24, 2007 9:47 AM

When it's time to pay, they get our devalued green papers.

The problem comes when we buy toxic toys from the Chinese, they use our devalued papers to buy our manufacturing factories and high technologies, such as 3Com's military techs.

Posted by: ic at November 24, 2007 3:23 PM
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