Re: Shaking Up Trade Theory
From: Tim Keating (NotForJunkEmail_at_directinternet11.com1)
Date: 11/29/04
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Date: Mon, 29 Nov 2004 02:39:28 -0500
On Mon, 29 Nov 2004 06:22:43 GMT, Igor <jjweatherby@houston.rr.com>
wrote:
>Tim Keating wrote:
>
>> On 27 Nov 2004 23:57:45 -0800, MrPepper11@go.com (MrPepper11) wrote:
>>
>>
>>>BusinessWeek
>>>December 6, 2004
>>>
>>>SHAKING UP TRADE THEORY
>>>For decades economists have insisted that the U.S. wins from
>>>globalization. Now they're not so sure.
>>>By Aaron Bernstein
>>>
snip... I will respond only to statements directed towards my
comments. Thus, expect some major snipping.
>Why? Has the author read the article. I wish he would cited the issue. I
>do not remember reading that article. I am not saying it does not exist.
>I may have browsed over it but I would like to know how recent it is so
>I could read it.
You're responding to the business week article..
Are you now claiming the author didn't read his own article??
more snip..
>>>Global Labor Pool
>>>
>>>The central question Samuelson and others raise is whether unfettered
>>>trade is always still as good for the U.S. as they have long believed.
>I am not sure about this I would like to see the analysis. Reporters
>often know nothing about economics and get it wrong.
>
>
>
>> "The iron law of wages is also simple and logical. It says that wages
>> will tend to stabilize at or about subsistence level.
>
>Very old and outdated. You forgot to note that this assume NO
>TECHNOLOGICAL ADVANCES. It made sence in Ricardo's day because
>technology was more stagnant than today. Robert Solow's model was called
>the NEO-CLASSICAL model but it had the same prediction when
>technological growth was 0. It is well known today technology growth
>stops real wage stagnation.
No more outdated than is other theory of comparative advantage..
It's a statement about the human condition and capitalism.
If given the chance, mankind will enslave one another so that a
very few will gain most of the benefits.
>
> That seemed
>> inevitable to Ricardo, since while workers are necessary, and so have
>> to be kept alive, they have no hope of any better treatment since they
>> are infinitely available, replaceable, and generally interchangeable.
>>
>
>Wrong again. The problem was with population. Population was tied to
>food. If wages improved diet of the poor improved they lived longer.
>Child mortality rates dropped. The increase in population in turn
>increased labor supply with NO increase in labor due to new technology.
>Real wages dropped back to substistence level. If they dropped below
>they would rise again as people died and labor supply decreased. THIS IS
>BASED ON THE ASSUMPTION TECHNOLOGY IS STAGNANT. It is the old Malthus
>arguement.
Nothing in Ricardo's statement is wrong..
In fact for the most part you're agreeing with him.
But, Ricardo was from the 18th century and his faith in any
technology would be fairly limited.
The existence of a huge labor supply will drive wages down to
subsistence level. He doesn't mention that inevitably there will be
short term fluctuations on either side equation.
Yes, pop growth in India is out of control. China is not far
behind. The overpopulation may well doom the planet. But first it
will enslave the lower classes of all 1st world countries whom trade
freely with those over populated countries.
>> Ricardo's wage theory has seemed untrue. The supply of competent
>> workers in a given place is not unlimited; neither workers nor
>> industry are perfectly mobile, and labor demonstrated in the 19th and
>> 20th centuries that it could mobilize and defend itself. The iron law
>> of wages would seem to function only if the supply of labor is
>> infinite and totally mobile.
>>
>
>It is not only supply that is important here. REAL wages have risen due
>to increases in demand caused by labor becoming more productive. The
>productivity has been caused by education and technonlogical change.
>There really are not many economists even how study this and can tell
>you the full story so I not surprised this account blunders so badly.
er no.. Improved productivity in the face of limited demand will
simply remove the need for additional workers. Hence, a pure
capitalistic system would demand a rebalancing and elimination of
surplus workers.. (Die off). A society which attempts to prevent
this will be doomed as a whole. (Increases the overall cost of it's
citizens in the name of social justice, thus placing the whole society
at a cost disadvantage.)
>> Unfortunately that day, for practical purposes, has now arrived,
>> thanks to globalization. "
>>
>
>Globalization has caused technology to increase faster not slower. Trade
>has allowed for exchange of ideas and projects without borders.
Idea's always flowed freely..
Projects in this context is an undefined term..
Globalization in its current form, indicates that Ricardo's Iron law
will determine mankind's fate.
more snip..
>>
>> It as has already happened, and will continue. So much so, that
>> students are activity seeking other less vulnerable professions.
>>
>
>Wow. You mean students intutive understand the market and switch job
>goals when they find there is too much supply some where WHAT A CONCEPT.
>Will this decrease in the rate of growth of IT workers not help offset
>the increase in foreign IT workers?
No.
More snip..
>
>> The assumption that only lower paid workers suffer is wrong.
>>
>> Overall wages and salaries in the US have registered just 0.4%
>> growth over the most recent three year period. That number isn't
>> adjusted for inflation or pop growth. In a nut shell, nearly all US
>> workers are losing ground by at least 10% a year.
>>
>
>Is this real terms? .4% in real terms is much better than .4% in real
>terms in the 1980's the inflation rates have been about half of what
no.. Just in case you haven't look lately..
The recently published inflation rates are mostly propaganda.
The actual rate is far .. far.. higher.. probably in excess of 10%.
>they were before. Is .4% bad? What is the long term trend. I can easily
"Is 0.4% bad?" . Yes, extremely bad..
>look it up I just wonder if you know.
0.4% for three year period is in absolute terms.. Hard dollar
accounting.. No adjustment whatsoever for inflation or anything else.
The information is located in the US government's monthly treasury
statements. Since 1992, a portion of the US tax code includes a
flat tax, (No deductions allowed), on all wages and salaries paid to
any employee.
Those tax receipts have a separate line item on each MTS. Compare
the FINAL year to date number for Sept FY2004 with FY2001. (0.4%
growth in medicare tax (flat tax) collections == 0.4% growth in
overall wages and salaries paid. ).
There is simply no recorded parallel in US history for this type of
event..
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