On Mon, 22 May 2000, Doug Henwood wrote:
> >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.
Let's see if I've got this straight. The comparative advantage argument is that imports are by definition cheaper than the products they replace, so consumers have more money to spend on more products that induce more jobs. But this job loss argument is simply that prices are lowered because wages are lowered because of the threat of moving. Do you think that part dominates nowadays? If so, I guess than Mark could respond that, according to classical theory, everything that lowers wages will increase employment. And none of that is a good thing, whether it comes from trade or from local oppression. So he could feel justified in not counting it on the credit side of the ledger. Eventually the low unemployment rate would drive up wages, but it seems that under this scenario it would always necessarily be less than wages were driven down.
However, the culprit would then seem not to be trade but capital mobility. If we could increase the cost of moving we would diminish the threat. But it seems restricting imports would do nothing to diminish it, at least for industries with an export component.
Michael
__________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com