Hairsplitting

Here is a fine example of Economists splitting hairs. All the Economists, including Mark Thoma himself, argues what economic model to use when. The only one I trust completely in the discussion is Ricardo, and maybe him only because he is dead. All the rest tend to utilize whatever economic model best suits their current argument. Now, the Reader and I know I understand damned little of much of the Trade argument; even Ricardo could not convince me with the simple model. We do know that the entire Argument revolves around a set of Relative effects, and which should be considered in the ascendency.

What amazes me is the lack of concentration upon the real Relativities. Here are listed a number of Considerations which I feel are most impactive on the Trade Issue:

1) Competition between domestic and foreign industry in the same Products will always produce Economic Profits as well as Normal Profit ratios for the Importer, else there would be no dedication to the Trade (lower foreign Production Costs are not passed on to the Consumer in greater degree than required to acquire Purchase impulse by Consumers).

2) The first Statement given, combined with other peripherical bounds, will always limit the Profitability gained in lower Consumer Prices to somewhere between 7-10% of contained Domestic supply of Product, which is diminished by any Welfare payments which must be forwarded by reduced Domestic production.

3) The benefit of lower Consumer Prices is spread over the entire Economy, while the contracyclical impact is focused in Domestic production, where the force is massive and Life Standard distortion. The benefits of Trade remain so diffused, with intervening increasing Price levels of other Domestic suppliers, as to be nonexistent; ask Anyone if their Household Expenditures have shown vast reduction since the passage of NAFTA. The loss from Trade currently extends to about 12 million Households who have lost up to 17% of Income when evaluated in 1990 Dollars.

There are various other issues which are very important in Trade (for example: How much increase in U.S. energy needs are consumed by transportation of foreign Goods in real Percentage terms?). Education and Training Costs have vastly increased under the impact of necessary Retraining, which would not have been necessary under domestic production levels of the Past. Outsourcing has led to declining Employment, declining Wages, and declining Tax revenues; all while Welfare payments have increased above the natural Inflation rate. Economists like to automatically assume that Trade is beneficial, but I am not so sure. lgl