First trade paragraph in" 2005 Economic Report of the President" Refuted
The first paragraph of the "Modern International Trade" section of the introductory "Overview" in the 2005 Economic Report of the President reads:
"Chapter 8, Modern International , examines the benefits of and discusses the progress the Administration has made in opening global markets. Open markets and raise living standards both at home and abroad. Any move toward economic isolationism would threaten the competitive gains made by U.S. exporters while harming U.S. consumers and firms that benefit from imports."
My response:
The statement, "Open markets and raise living standards both at home and abroad" is an unsubstantiated statement; it is a statement that lacks meaning, because the higher living standards allegedly produced by free trade, could be rooted in ephemeral impermanent sources of national wealth and income such as money borrowed from abroad, and cash on hand due to sale of assets to foreigners.
The paragraph talks of threats to competitive gains made by US exporters. Fact is, there is no such thing as a US exporter. Rather, there are US based businesses, who make sales in their own nation, while at the same time they make sales abroad. It is superstitious to assume, that sales to foreigners have a greater value than sales to domestics, simply because one type of sale crosses a geo-political line in the sand. If gains made by "exporters" due to free trade are outweighed by losses they experience due to a fall in demand in domestic markets, then, despite any "competitive gains" such exporters are making, the result is a loss for the exporters. Therefore to simply declare that competitive gains made by US exporters are threatened by "moves to isolationism", is meaningless.
Likewise there is no such thing as a "US consumer"; in reality, with a few exceptions such as the wealthy who do not need to bother working, there are consumers who also do the opposite of consuming, which is working and earning. If the harm generated by "free trade" in terms of its impact on US "consumer" income streams outweighs the benefits derived from "free trade" by such so-called "consumers" in terms of prices of goods, then, despite the fact that US "consumers" are harmed as consumers by "isolationism", the "free trade" does them no good. Thus, again, the mere statement that "US consumers" are "harmed by isolationism", is meaningless.
The mere fact so called "economic isolationism" "threatens competitive gains made by US exporters," is meaningless, because the question is, would the harm to such "competitive gains" caused by "isolationism", outweigh, as a consideration, the advantages to be found in such "isolation"?
As for firms that benefit from imports being harmed by "economic isolationism", again this is meaningless. If the benefits that accrue to society via "economic isolationism" outweigh the harm done to importers through "economic isolationism", then the "economic isolationism" is worthwhile, despite the fact that it "harms importers". If domestic income streams dry up because they have been diverted to foreign lands through free trade, then domestic consumers will not have any money to spend on imports, as a result of which the importers will go bankrupt.
This Economic Report of the President is obsessed with the hundreds-of-years old theories of Ricardo. Ricardo's theories in the eyes of many academic nuts, prove all kinds of things they do not prove at all. Ricardo's mistake was that he ignored the benficial spinoffs produced for economies when domestic producers spend their money in the country creating chain-reactions as money is spent and earned. Yet one thing his theories do illustrate, is that just as certain producers have a "competitive advantage" in terms of cost-effective production over others, so also, ( I would add), certain producers have a "competitive advantage" over others in terms of their ability to make sales to given groups.
The problem with the "free trade", is, that it diverts income streams that are harvested by producers, exporters and importers from domestic markets; these income streams are diverted to foreign markets, where the US producers suffer "competitive disadvantage" relative to the foreign producers for whom those foreign markets is home turf.
If there was an economy on the moon, the doctors, lawyers, restauranteurs, carpenters, tailors, teachers, and dancers on the moon, would then, of course, be in a much better position to harvest income streams generated on the moon through free trade, than earthly lawyers, doctors, restauranteurs, carpenters, tailors, teachers, and dancers would be.
@2005 David Virgil Hobbs
http://www.angelfire.com/ma/vincemoon
"Chapter 8, Modern International , examines the benefits of and discusses the progress the Administration has made in opening global markets. Open markets and raise living standards both at home and abroad. Any move toward economic isolationism would threaten the competitive gains made by U.S. exporters while harming U.S. consumers and firms that benefit from imports."
My response:
The statement, "Open markets and raise living standards both at home and abroad" is an unsubstantiated statement; it is a statement that lacks meaning, because the higher living standards allegedly produced by free trade, could be rooted in ephemeral impermanent sources of national wealth and income such as money borrowed from abroad, and cash on hand due to sale of assets to foreigners.
The paragraph talks of threats to competitive gains made by US exporters. Fact is, there is no such thing as a US exporter. Rather, there are US based businesses, who make sales in their own nation, while at the same time they make sales abroad. It is superstitious to assume, that sales to foreigners have a greater value than sales to domestics, simply because one type of sale crosses a geo-political line in the sand. If gains made by "exporters" due to free trade are outweighed by losses they experience due to a fall in demand in domestic markets, then, despite any "competitive gains" such exporters are making, the result is a loss for the exporters. Therefore to simply declare that competitive gains made by US exporters are threatened by "moves to isolationism", is meaningless.
Likewise there is no such thing as a "US consumer"; in reality, with a few exceptions such as the wealthy who do not need to bother working, there are consumers who also do the opposite of consuming, which is working and earning. If the harm generated by "free trade" in terms of its impact on US "consumer" income streams outweighs the benefits derived from "free trade" by such so-called "consumers" in terms of prices of goods, then, despite the fact that US "consumers" are harmed as consumers by "isolationism", the "free trade" does them no good. Thus, again, the mere statement that "US consumers" are "harmed by isolationism", is meaningless.
The mere fact so called "economic isolationism" "threatens competitive gains made by US exporters," is meaningless, because the question is, would the harm to such "competitive gains" caused by "isolationism", outweigh, as a consideration, the advantages to be found in such "isolation"?
As for firms that benefit from imports being harmed by "economic isolationism", again this is meaningless. If the benefits that accrue to society via "economic isolationism" outweigh the harm done to importers through "economic isolationism", then the "economic isolationism" is worthwhile, despite the fact that it "harms importers". If domestic income streams dry up because they have been diverted to foreign lands through free trade, then domestic consumers will not have any money to spend on imports, as a result of which the importers will go bankrupt.
This Economic Report of the President is obsessed with the hundreds-of-years old theories of Ricardo. Ricardo's theories in the eyes of many academic nuts, prove all kinds of things they do not prove at all. Ricardo's mistake was that he ignored the benficial spinoffs produced for economies when domestic producers spend their money in the country creating chain-reactions as money is spent and earned. Yet one thing his theories do illustrate, is that just as certain producers have a "competitive advantage" in terms of cost-effective production over others, so also, ( I would add), certain producers have a "competitive advantage" over others in terms of their ability to make sales to given groups.
The problem with the "free trade", is, that it diverts income streams that are harvested by producers, exporters and importers from domestic markets; these income streams are diverted to foreign markets, where the US producers suffer "competitive disadvantage" relative to the foreign producers for whom those foreign markets is home turf.
If there was an economy on the moon, the doctors, lawyers, restauranteurs, carpenters, tailors, teachers, and dancers on the moon, would then, of course, be in a much better position to harvest income streams generated on the moon through free trade, than earthly lawyers, doctors, restauranteurs, carpenters, tailors, teachers, and dancers would be.
@2005 David Virgil Hobbs
http://www.angelfire.com/ma/vincemoon
posted by David Virgil at 2:32 AM
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