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To: Publius Maximus
Those exploding American exports that free traders keep promising us have never materialized

You don't know what you're talking about. Exports keep going up.

16 posted on 02/20/2003 11:02:36 AM PST by lasereye
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To: lasereye
You don't know what you're talking about. Exports keep going up.

Actually I do know what I'm talking about. The trade balance keeps getting worse, despite the increase in exports. That we are transfering wealth by investing more of our capital each year in foreign production for domestic consumption cannot be disputed. That same capital invested in domestic production for domestic consumption, instead of trade, would cause twice the wealth at home. By encouraging international division of labor (which is different than trade), we are decreasing the per capita capital investment in domestic labor, i.e., decreasing our standards of living, and we are increasing the per capita capital investment in foreign labor. Increased exports are more than offset by increased imports, and the effect is a net loss of capital.

The formula for GNP is C + I + G + X - M. Since M has been consistently worse than X for the last 40 years, the government decided to use the term GDP, which conveniently sets aside M, to avoid having to show red ink.

Now if X + M were spent on C instead, our DNP and GDP would increase by exactly that much. If X and M were equal, then entire capital expended in trade would amount to a wash - the "zero sum" that free traders claim doesn't exist.

Now the reality is we have to trade. But we do not have to "free trade" - which is to say, we do not have to engage in division of labor with other countries. The cost for the privledge to trade with us should be an ad valorum tariff. The cost for free trade - i.e., division of labor -- should be statehood, in which case the division of labor might really be beneficial to all involved. But few people think of trade in this way, because of the low degree of mental rigor applied to the issue in our colleges and our talking head shows.

75 posted on 02/21/2003 8:56:06 AM PST by Publius Maximus
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