1/6
This NYT article shows just how confused many economists continue to be about trade. They worry that because in recent years a few economies have been implementing trade and industrial policies, this means an end to free trade and free markets.
nytimes.com/2024/04/17/bus…
This NYT article shows just how confused many economists continue to be about trade. They worry that because in recent years a few economies have been implementing trade and industrial policies, this means an end to free trade and free markets.
nytimes.com/2024/04/17/bus…
2/6
This turning away from free markets, they say, will constrain future growth.
Leave aside that industrial and trade policies have often expanded growth, their worries show just how little they understand what free trade and comparative advantage mean.
This turning away from free markets, they say, will constrain future growth.
Leave aside that industrial and trade policies have often expanded growth, their worries show just how little they understand what free trade and comparative advantage mean.
3/6
The world turned away from free trade decades ago. The large, persistent surpluses that have characterized global trade since the 1980s are largely the consequences of beggar-thy-neighbor trade policies aimed at boosting domestic growth a the expense of trade partners.
The world turned away from free trade decades ago. The large, persistent surpluses that have characterized global trade since the 1980s are largely the consequences of beggar-thy-neighbor trade policies aimed at boosting domestic growth a the expense of trade partners.
4/6
In a world of comparative advantage and free trade, these large persistent surpluses could not exist. That's because export success would normally lead to wage growth which, in turn, would lead to surging imports.
In a world of comparative advantage and free trade, these large persistent surpluses could not exist. That's because export success would normally lead to wage growth which, in turn, would lead to surging imports.
5/6
The fact that it hasn't is proof that wages have been directly and indirectly suppressed to subsidize manufacturing "competitiveness", with the costs of demand suppression exported to trade partner in the form of the export of excess domestic savings and trade surpluses.
The fact that it hasn't is proof that wages have been directly and indirectly suppressed to subsidize manufacturing "competitiveness", with the costs of demand suppression exported to trade partner in the form of the export of excess domestic savings and trade surpluses.
6/6
What these economists see as trade interference, in other words, might better be described as attempts through trade and industrial policies to reverse the impact of beggar-thy-neighbor policies abroad.
carnegieendowment.org/chinafinancial…
What these economists see as trade interference, in other words, might better be described as attempts through trade and industrial policies to reverse the impact of beggar-thy-neighbor policies abroad.
carnegieendowment.org/chinafinancial…
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