« "Rather good at it" | Main | An academic problem? »

September 14, 2016


Feed You can follow this conversation by subscribing to the comment feed for this post.


At the risk of flogging a dead horse, this video steam rollers the automation case:


The video is 15min long and two years old!

It has it's own Wikipedia entry.

Re: Free Trade
Free Trade, Recardian Equivalence: It is a religion to Economists, free trade fails when one party has nothing to trade with the other, that the other wants, then the first party is excluded from tradeable goods supplied by the second party (or visa-visa).

On Newsnight right wing economists were arguing against the importance of manufacturing because the UK's economic advantages was in services.

This is lunacy, as manufactured goods are physical and need to be physically manufactured and distributed (even by robot).

Services are frequently non-rival and non-exclusive, easily reproducible and low capital intensity. So import substitution is practical for countries, and the market for services tends to be local and culturally specific.

High value difficult to re-produce manufacturing (like Rolls-Royce areo-engines), are how the UK exports.

FIRE Economy
Not banking or insurance which is in any case parasitic, just like fashion which as a result follows the money.


The FIRE economy and Neoliberalism has failed.


Good. Looks like you globalists intend on weakening nation states are screwed regardless...

Along with easily implemented immigration controls and banning banks from lending for forex trade ("free movement of capital") fronts, looks like the cult of free trade is collapsing as well...

The argument for unrestricted free trade by Ricardo’s principle of comparative advantage requires a number of stated or hidden fundamental assumptions to work properly, as follows:
(1) domestic capital or factors of production like capital goods and skilled labour are not internationally mobile, and instead will be re-employed in the sector/sectors in which the country’s comparative advantage lies;

(2) workers are fungible, and will be re-trained easily and moved to the new sectors where comparative advantage lies.

(3) it does not matter what you produce (e.g., you could produce pottery), as long as you do it in a way that gives you comparative advantage;

(4) technology is essentially unchanging and uniform; and

(5) there are no returns to scale.
Assumption (1) doesn’t hold today and what happens is movement of capital under the principle of absolute advantage (Lavoie 2014: 508). This results in a type of race to the bottom for industrialised countries that do not protect their industries.

(2) is of course highly questionable. (3), (4) and (5) are utter nonsense. Abstract pro-free trade arguments often seem to make the implicit assumption of full employment, or the effective tendency to full employment, in all nations as well, which is yet another mad and unrealistic assumption (Lavoie 2014: 508).

Movement of capital to a place where it has absolute advantage tends to cause de-industrialization in Western countries, as capital moves to nations with the lowest unit labour and factor costs, and higher wage countries experience falling wages, high unemployment and rising trade deficits.

A country like China actually makes the process worse by actively intervening via mercantilist industrial policies to promote offshoring of manufacturing to their country. But even if this intervention didn’t happen, unrestricted free trade would still have deleterious consequences for the high wage countries.

The argument for pure free trade is built on sand and is almost wholly intellectually bankrupt if it is supposed to be describing the world in which we live. A longer analysis is here. This theoretical incompetence in neoclassical and Austrian economics on the issue of free trade is accompanied by a blockheaded ignorance of the real-world success of protectionism.

The argument for free trade would be a joke, if it didn’t have such disgusting and terrible consequences for real human beings.

Bill Mitchell from today:

"the way the Left fell prey to what we call the globalisation myth and started to believe that the state had withered and was powerless"

Its not that it "withered"... many dont see it at all... this is another bias in this cohort against spatial cognition... this cohort has trouble seeing boundaries and interfaces...

They will then say the ones that do are the "xenophobia!" people...


Let me just take a moment to give kudos to the excellent work done by the CPB. They may not be as good as they were under Coen Teulings, but they are still pretty good.


Trade - free exchange between individuals - is mutually beneficial. It's not a competition between nations, it's not a 'global race', and it's not a winner-take-all game of international treaty poker. The whole bloody point is that both participants gain.

And yet we're constantly told in America that we need to work harder, work longer hours, revamp our education system, graduate more engineers, or the "Chinese/Japanese/Koreans/Germans/whoever will 'eat our lunch'!!!"

We're also told that trade deficits are a serious problem threatening our financial stability. Clearly, unless exports and imports are perfectly balanced, you're either going to be in deficit or surplus, and all the deficit countries seem to be perennially "broke" and tightening their belts, usually by selling off the state and shredding the social safety net in the service of "fiscal responsibility."

Serious question: How is any of this reconcilable with the idea that trade is not a zero-sum game of winners and losers?

It sure looks like a competition to me.

The comments to this entry are closed.

Why S&M?

Blog powered by Typepad