Comments (11)

• Internation Trader

  Yes David, all those things you point out are true. But they have nothing to do with individual citizens trading with eachother to improve the quality and looks (that suit sucks) of their lives.

  All the things you point out are being held together by trade not because of it.

  Your list of issues is entirely caused by governments interferring in the peaceful exchanges of individuals across local, provincial and national borders.

  Published: April 2, 2007 8:32 PM

• Sudha Shenoy

  What about: the knitting needles: steel or bone? the cobblers' tools & the shears -- were they steel? And where were they made? The spinning-wheels: where were they made? What tools were used? Where were _those_ tools made? The axes to chop down the trees for the wood for the spinning-wheels? And so on...

  Even in the 17th century in England, the entire realm was involved in producing a workman's shirt..

  Published: April 3, 2007 12:49 AM

• gene berman

  She could've read "I, Pencil" and saved some aggravation.

  The ironic thing about the exercise is in the locale. In colonial days, the entire area around Philadelphia produced textiles of various types--by the hundreds of tons--for the market in England (and beyond, perhaps).

  In those days (learned in a visit to a small museum in Mystic, CT), New England was shipping lumber and stone abroad, though chiefly to places like NYC, Philadelphia, etc. Those cities got their fuel for urban transportation (hay--what else?) from their surrounds but also from the NE farms. And ice cut from lakes in Maine got shipped not only to the cities but as far as South Africa and India (packed in straw).

  My dad (d. 2005 aged 96) used to say that, when he was young, there were 64 streams big enough to have had names within Philly's city limits but he could only remember 53 of them--less than half a dozen are still recognizable, the remainder put underground. And the counties surrounding were equally endowed. All those--back in the colonial days--had one or more mills along their banks devoted (mostly) to textile production--some for domestic consumption but chiefly for export.

  One of the most important observations made by Mises--in the context of economic understanding critical to proper awareness by everyday people--is that international trade is not merely the extension of domestic trade but, rather, its origin: it is the demand for the fruits of foreign competitive advantage on local markets everywhere that fuel the intensification of local specialization and capital-formation in order to produce the "surplus" available to trade for that of distant others. Interference in foreign trade damages domestic conditions inevitably and directly.

  Published: April 3, 2007 6:14 AM

• David White

  Internation Trader,

  Things are being held together by massive government/banking collusion, else the entire fiat-based "globalization" scam would have already collapsed.

  But it will collapse, and sooner rather than later:

  http://www.newswithviews.com/Devvy/kidd260.htm

  Published: April 3, 2007 8:27 AM

• Sudha Shenoy

  ??? Long-distance trade has existed since Palaeolithic times. Production & consumption started becoming global in the late 15th/early 16th century. By the late 19th century for all DCs, 'foreign trade' (exports & imports combined) constituted the major part of production. The US was the sole exception.

  In 2002, American exports & imports combined came to less than 14.3% of world trade. nonamerica had nearly 86% of the total. How does the tail wag the dog?

  Published: April 4, 2007 9:22 AM

• David White

  A global trading system based entirely on non-asset-based, irredeemable currencies is unique in history and has resulted in a "liquidity" bubble the likes of which the world has never seen.

  In fact, I stand corrected on where it's all coming from, as Bill Bonner over at The Daily Reckoning writes:

  "The world's credit system is no longer controlled by banks, and thus, no longer under the control of bank regulators. Instead, there is a huge pool of liquidity outside of the banking system. A news item last week spoke of giant 'dark pools' of liquidity that 'do not publish quotes on the open market.' But how much
  bilge is sloshing around in these dark puddles? How do they work? Where does the money come from?

  "We don't know. But we know that pools of liquidity do not really make the world a richer place. They just increase the odds that you will step into something...like Enron or New Century...and sink."

  And because it's essentially a massive Ponzi scheme, once one part of it sinks, it all will, the only question being when.

  Published: April 4, 2007 9:42 AM

• Sudha Shenoy

  Trade is of goods & services: real things. Have a look at the _mountains_ of trade stats around: eg from the OECD. They list (at SITC 3-digit level)both imports & exports for all DCs; also services. Taking UN publications into account, trade figures go back to the 1950s; figures for before 1939 are available from (eg) League of Nations publications. Both quantities & range have sky-rocketted: of _real_ goods & services.

  Published: April 5, 2007 3:44 AM

• David White

  It's not a question of whether massive amounts of goods and services are being traded globally; it's a question of how long the financial system that is propping them up can hold together:

  "The US right now is absorbing 80 per cent of global savings. Well, when you hit 100 per cent, the music stops and leading figures, people like Paul Volcker, the former Chairman of the US Federal Reserve, people like George Soros, the great speculator, have all made statements that they fear a major financial crisis within the next five years because the system is unsustainable."

  And they said so over a year ago:

  http://www.abc.net.au/worldtoday/content/2005/s1446716.htm

  
  

  Published: April 5, 2007 10:42 AM

• Sudha Shenoy

  1. Gross Capital Formation [savings & investment] as a % of GDP in 2002: US, 18.4%. Other 22 DCs: The average was 19.9%, ranging from 26.7% (Portugal -- !!) to 16% (UK, who else?). Thus the American savings-cum-investment proportion was about average, as compared with other DCs. There's an awful lot of savings & investment going on in the other DCs.

  GCF as a % of GDP, 2001: Indonesia, 22.4%; Korea, 20.9%; Hong Kong 38%; Singapore, 24.5%; Malaysia [2002] 26%. -- There's an awful lot of savings invested _in_ these (& other) territories.

  2. For some more perspective: take US capital inflows. I will look at 2004, which was a reasonably average year (in 2002 capital inflows were abnormally low.)

  _Private_ capital flows into the US in 2004 equalled some 7.3% of the value of world trade in 2002 (we're just looking for perspective.) _Official_ capital inflows in 2004 (into Uncle Sam's grubby paws) equalled 3.9% of the value of world trade in 2002.

  There's an awful lot of output, out there in nonamerica.

  3. The Oz Broadcasting Corp, by the by, is ultra-left. So they _love_ to hear that the capitalist sky is falling.

  Published: April 5, 2007 2:06 PM

• Björn Lundahl

  David White,

  Hi, you and I seem to agree on much, but I am afraid that I cannot see what international trade has to do with the instability that central banks and fractional reserve banking causes.

  The fiat monetary system causes the business cycle but international trade does not.

  It is probably true that, to a certain degree, foreign investments in the U.S. are really malinvestments but so are also, to a certain degree, American investments done abroad. An isolationistic U.S. trade policy would cause less foreign malinvestments in the U.S. but also more malinvestments in the U.S. done by American businesses.

  I do believe that, I am sorry to say, it is really counterproductive for a libertarian to propagate against free trade.

  
  Best regards

  Björn Lundahl
  

  Published: April 7, 2007 2:16 AM

• Björn Lundahl

  The Emperor's New Clothes

  People are led to believe that trade restrictions between regions or countries “create jobs at home”, which they certainly do not. If people had the opposite belief that “free trade” between regions or countries “creates jobs at home”, that would also be an incorrect belief. Trade restrictions or free trade does not cause unemployment or cause employment in a region or country. Trade restrictions only lower the standard of living, hamper competition and restrict liberty. If for instance, the EU imposes tariffs on Chinese textiles, the Euro will appreciate against the Chinese Yuan (the value of the Euro will increase relatively to the Chinese Yuan). This depreciation (decrease in value) of the Chinese Yuan against the Euro, in this example, is caused by a smaller demand for Chinese textiles and therefore a smaller demand for Europeans to buy the Chinese Yuan. Because of this change in exchange rates, prices of goods from the EU to China will be generally higher and prices of goods from China will be generally lower (apart from textiles). As you can imagine, this will increase employment in the European textile sector, but decrease employment in other sectors. At the whole, unemployment will not change but trade between the regions will be lower. Specialization, competition and living standards in the EU region will be hampered. The tariffs will only serve special interest that is the textile manufacturers and their employees. Surely, we want our representatives to serve the common good and the common man and not special interests!

  Someone might complain that the Chinese are intervening in the exchange markets to keep their currency artificially low and that they are not letting market forces to appreciate their currency, and therefore my statement about free trade, in this case, is not applicable. Free trade, someone might think, is presupposed by freely fluctuating currencies with no Government intervention (also called clean floating exchange rates). Certainly I do not want Governments to intervene in exchange markets, but actually it is the Chinese that are in this case the losers and we are the winners. We should be glad that China is suppressing the rise of its currency, and the Chinese people should be mad about it. When market prices indicate that, for example, a project is unprofitable; investors naturally stop investing in such a project. Otherwise, factors of production such as land, capital, and labour would be wasted. Every government manipulation of market prices is a step toward economic breakdown and chaos. Land, capital, and labour that are invested in the exporting business in China because of a suppressed currency, have changed the economic structure in China and are mal investments, unprofitable for the nation to undertake, and we are getting something free. We don't need to export anything to pay for this "extra importation of Chinese products”. To make my statement more obvious, we could consider that if the Chinese currency would be suppressed to no value at all (which would not be possible to realize), the Chinese would be working for nothing and we would get goods and services from China for free (which is, naturally unprofitable for China to undertake), then the market forces in the EU (if market forces would not be hindered by Governments) would reallocate land, capital and labour for other uses and to those fields which the Chinese are not able to compete (even if the Chinese were working and exporting to full capacity, that will not, by far, be enough to satisfy all our wants, in other words, their GNP is by far, too small). The increases in production which mentioned reallocation of recourses leads to are our extra bonus. We should applaud this and the Chinese people should revolt!

  If you want to know more about floating exchange rates, go to;

  http://www.hooverdigest.org/974/friedman.html

  
  Productivity and trade will flourish more intensively with one currency* than with several different currencies, and even with one currency, market forces will smoothen out any imbalances between regions, cities or countries. We do not worry, for example, about the balance of payments between London and Manchester, Berlin and Munich, Paris and Bordeaux or Stockholm and Göteborg etc. If, for example, London exports more to Manchester than Manchester exports to London, the demand for goods and services will be greater in London relatively to their supply, and also relatively to the situation in Manchester. Because of this, prices will go up in London and therefore will exports from London to Manchester contract, as well as, imports from Manchester to London will expand. This happens all the time and we do not even know about it and therefore do not worry about it. Governments do create problems all the time.

  
  If we really want increased competition, why not adopt free trade between nations. Why does the EU and the USA not follow that path? The reason is that they do not want increased competition.

  For an example, I quote from answers.com;

  “In the United States, the decade from the mid-1980s to the mid-1990s saw import quotas placed on textiles, agricultural products, automobiles, sugar, beef, bananas, and even underwear—among other things. In a single session of Congress in 1985, more than three hundred protectionist bills were introduced as U.S. industries began voicing concern over foreign competition”.

  Go to;

  http://www.answers.com/import+quotas?gwp=11&ver=2.0.1.458&method=3
  
  Only Governments can be so silly to reject great offers and bargains. Individuals doing the same thing would be considered mad.

  The essence with above statement is that Governments hinders competition, lower our standard of living, promote special interests and they make excuses for this with faulty theories and propaganda.

  
  Björn Lundahl
  Göteborg Sweden

  * A gold standard. See also “What Has Government Done to Our Money?” by Murray N. Rothbard.
  http://mises.org/money.asp

  
  

  Published: April 7, 2007 2:27 AM