Re: social credit in one country

william_b_ryan_at_hotmail.com
Date: 12/15/04 

Date: 15 Dec 2004 10:16:36 -0800

Here is a flaw in SC as I see it. One cannot inject
liquidity only for domestic output of production
otherwise international trade orgs will slam down on
that country.
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[REPLY] In respect to the retail credit, domestic
content requirements are not necessary nor are they
recommended. I thought that's what I said in the
post to which you are replying.
-

On the other hand a country which does not
differentiate will be, in effect, 'exporting' part of
their national subsidy to the benefit of the overseas
producer...
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[REPLY] Not really. There is a big difference
between "exporting" a credit that was costed or
"priced" into domestic production as opposed to
"exporting" a credit that was never "priced" into
domestic production. In the first case, exporting a
credit that was "priced" into domestic production
will immobilize an equivalent "value" in domestic
productive capacity; in the second case, where the
credit "exported" was never "priced" into domestic
production, the nation is exporting what is in effect
a costless piece of paper in exchange for a real good
that took real resources to produce. The nation is
in effect getting the good for free. The exporting
nation could have achieved the same effect in terms
of stimulus to its domestic economy by "printing" the
piece of paper itself, crediting it to its own
retailer to the benefit of its own consumer, and
thereby saving the real resources that it took to
produce the good that was exported for its own
domestic consumption.
-

Alas the "option" of (near) simultaneous SC globally
is unlikely to occur and as such is not a viable
alternative.
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[REPLY] Any "reform" that is dependent on
"simultaneous" enactment in other nations is pie-in-
the-sky cookoo land. The social credit accounting
adjustments do not depend on their simultaneous
enactment by any trading partner. Predatory foreign
trade, where aggressive exporters take advantage of
favorable conditions in foreign markets, is properly
addressed through import tariffs and quotas.
-

Thus the options that remain are to infuriate the
free trade environment by local protectionism OR to
encourage and grow a trade deficit to eventual
implosion as an ever-increasing proportion of the
productive wealth occurs abroad. It would just
exaggerate the effect of trade imbalance like a form
of short-circuit feedback loop.
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[REPLY] Firstly, as I noted above, the social credit
accounting adjustments would not exaggerate the
deleterious "effect" of trade imbalance because they
represent credit that was never "priced" into
domestic production in the first instance. To the
extent they are "exported" they effectively represent
foreign goods delivered to the importing economy for
free.

As to "infuriating the free trade environment," that
"environment" is largely the result of "free trade"
propaganda by forces that would erode national
sovereignty, for whatever reason. The implementation
of tariffs and quotas (actually, their re-
implementation) would not happen abruptly, but
gradually over a number of years in consultation with
the nation's trading partners and allies.

The perfect model of beneficial free trade is that
contemplated by the United States Constitution, which
prohibited restrictions between the states that were
members of the Union, but which protected the
domestic free trade area from predation from abroad.
The Constitution prohibits tariffs on exports, but
permits them on imports. Free trade is beneficial to
the extent there is a common system of laws, culture
and standards between the trading partners. To the
extent there is not a common system of laws, culture
and standards, it can be very detrimental. The
economic strength of the United States was built
throughout the nineteenth and early twentieth century
behind a tariff wall.
-

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