>On Sat, 20 May 2000, Doug Henwood wrote:
>
>> If imports keep domestic prices down, then people (those who don't
>> lose their jobs to imports, of course) have more money to spend on
>> other goods. We can argue about the relative importance of the two
>> influences - lower prices vs. job loss - but to ignore the lower price
>> angle is analytically incomplete.
>
>If I understand it correctly, the comparative advantage argument is that
>that extra money is not only spent on other things that wouldn't otherwise
>have been bought, but those things are produced by people that wouldn't
>otherwise have been employed -- so that even imports produce jobs. Do you
>and Mark agree that part's not true? If so, can you send me to a good
>critique of it?
I don't think it's wholly untrue; Mark seems to think it is.
Ricardo's world was one of immobile capital. In a world of mobile capital, bosses can move plants or threaten to move plants to drive down wages - the job loss and wage depression argument. But if lower wages result in lower prices - and the evidence of the import price indexes supports this - then those not disemployed or wage-cut have money to spend on things that would not otherwise have been bought. So I don't think it's fair to look only at the job-destroying, wage-cutting aspects of imports. Like I say, I'm no econometrician, but I wouldn't want to try to defend that position against someone who was.
Doug