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Post by Michael on Jun 13, 2007 12:56:04 GMT -6
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Post by unlawflcombatnt on Jun 13, 2007 14:49:57 GMT -6
Here is a good Paul Craig Roberts article on offshoring. It seems more economists are starting to wake up to the truth.Yes, and it's about time. This is another excellent article by "comrade" Paul Craig Roberts. In this latest article, reference is made to his previous March 15, 2004 article. That article is also worth reading, as well as reading some of the articles from the links in that article. The Missing Case for Free TradeBelow is an excerpt which also contains links to previous Roberts' articles. " Free trade is based on the principle of comparative advantage. For comparative advantage to operate, two conditions are required: (1) a country’s factors of production must seek comparative advantage within the country and not move to absolute advantage abroad, and (2) countries must have different relative costs of producing different goods.
When free trade theory originated two centuries ago, climate and natural resources were important components of GDP. Climate and natural resources could not migrate, and countries’ different climates and resource endowments meant that relative costs varied among countries.
In today’s modern economies, production is based primarily on acquired knowledge. Modern production functions operate the same regardless of their location. There is no necessary reason for the relative costs of producing manufactured goods to vary from one country to another. Only the absolute costs vary, with the advantage going to countries with large excess supplies of labor.
Economists and pundits mistake offshore production and outsourcing for trade, whereas in fact they are merely the substitution of cheap foreign labor for expensive first world labor.
It is nonsense for economists and pundits to claim that the US benefits from the loss of jobs, capital and technology when economic theory tells us that all three are needed for economic development.
Economists need to catch up with their discipline. The latest work in trade theory is Global Trade and Conflicting National Interests, by Ralph E. Gomory and William J. Baumol, published by MIT Press in 2000....The full article can be found at The Missing Case for Free Trade.
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Post by blueneck on Jun 13, 2007 17:28:43 GMT -6
What makes Roberts and his fellow "blasphemer" Blinder credible is they once were ardent supply siders and globalists, both of whom now see the results of those whacked out theories. Thye have intimate knowledge of the "dark side" so their criticisms become that much more valid.
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