Re: trade and unemployment

see, comment at the end


-----Original Message-----
From: Paul Riesz <priesz@itn.cl>
To: wsn@csf.colorado.edu <wsn@csf.colorado.edu>
Cc: gkohler@accglobal.net <gkohler@accglobal.net>
Date: January 1, 2000 7:39 PM
Subject: Balanced trade


....>snip
>
>Such policies would benefit the great majorities in first world countries,
>through retaining jobs in many of their manufacturing plants and
>recapturing the full vitality of their economies. But they would also
>benefit the populations of their trade-partners, where governments would
>have to increase wages and promote consumption by many different means in
>order to effect the required increase of their imports.
>
>MY CONCLUSION: IN THE LONG RUN TRADE CAN ONLY BE REASONABLY FREE, IF IT IS
>ALSO REASONABLY BALANCED.
>

COMMENT:

Paul, I agree and disagree. Agree-- that trade matters. Embargoes can be
very damaging, see Cuba or Iraq today, or the retaliatory protectionism of
the 1930's which you mentioned. Disagree --  I understand where you are
coming from with respect to trade theory, but "balanced trade" per se does
not seem to do the trick. Take Canada, for example. We have fairly balanced
trade *AND* persistent high unemployment (in the 8-10% range over the last
two decades). Thus, "balance" per se in our trade does not solve our
unemployment problem. Something else is required. While you think in terms
of "trade balance", I am thinking more in terms of "world demand" and how
the income distribution in  the world-system affects world demand (and,
hence, trading demand and job creation).  By the way, Happy New Year! (I
forgot to say that in my last posting.)

Gert Kohler