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Jibba
United States22883 Posts
On March 04 2009 07:01 L wrote: Among them is William Easterly who, even as a heavy pro-free trader, thinks the IMF/World Bank/WTO have done a wonderful job fucking up third world development.Some would argue that the IMF and Development banks have been incredibly disruptive and have proliferated Boblion's scenario. | ||
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Ecael
United States6703 Posts
On March 04 2009 07:34 Jibba wrote: Uh... the Ricardo model is seen as nothing but a theory in the development community, since it's usually not applicable in real economics. Capital liquidity is extremely high and from a rational choice perspective, it simply doesn't play out that they will or can develop a comparative advantage. When it is developed, it is only temporary and is often not sustained long enough to stimulate full industrial growth. Again, I beg of you, stop looking at it in terms of economics theory (which as Moltke pointed out is not as much of a hard science as it would like to believe) but in terms of public policy from the US and other countries involved. Theoretically, if every country engages in free trade it should be beneficial for all, but the first country that puts a protectionist policy in place is immediately going to become richer than its counterparts. Thus we have a giant fucking game theory model in which free trade cannot exist, and every single country uses modified levels of "strategic trade policy" to outdo eachother. Except I agree with you and never said anything about free trade being wholly good in every possible scenario, the posts thus far are addressing the principles rather than the practicalities of the situation. Also, such a world model is seen in how we have largely bilateral trade agreements rather than an international agreement due to the interest groups in question and the want to continue to use some degrees of protectionist policy, I certainly don't mean to disagree with that, and if my post read that way my apologies. Now, about the Ricardo model, I've said already that it fails to address the proper nuances of international trade, the point here is to educate someone else about the concept of comparative advantage rather than to say "Because Ricardo model says comparative advantage would result in trade being profitable to the parties involved 100% free trade w/o trade barriers of any kind is vital". EDIT - The more I type the more I feel that this thread is moving too quickly among different tracks and I am missing something as to what's being discussed. Also, about the IMF/etc, I've mentioned a few post earlier that I was only bringing them up as the organizations that pumps capital, as the original reason I brought them up was to address Boblion's part about infrastructure being built. For a more practical evaluation of their successes and failures I can't say I am educated enough to say anything. | ||
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Jibba
United States22883 Posts
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warding
Portugal2397 Posts
On March 04 2009 07:34 Jibba wrote: Uh... the Ricardo model is seen as nothing but a theory in the development community, since it's usually not applicable in real economics. Capital liquidity is extremely high and from a rational choice perspective, it simply doesn't play out that they will or can develop a comparative advantage. When it is developed, it is only temporary and is often not sustained long enough to stimulate full industrial growth. Again, I beg of you, stop looking at it in terms of economics theory (which as Moltke pointed out is not as much of a hard science as it would like to believe) but in terms of public policy from the US and other countries involved. Theoretically, if every country engages in free trade it should be beneficial for all, but the first country that puts a protectionist policy in place is immediately going to become richer than its counterparts. Thus we have a giant fucking game theory model in which free trade cannot exist, and every single country uses modified levels of "strategic trade policy" to outdo eachother. Hold on.... Why would the first country engaging in protectionism become richer than its counterparts? | ||
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Boblion
France8043 Posts
On March 04 2009 08:06 warding wrote: Hold on.... Why would the first country engaging in protectionism become richer than its counterparts? Because it can help his own industries ? :> | ||
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warding
Portugal2397 Posts
Even if there is a prisoner's dilemma here, it is an iterated one with possible punishments. | ||
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il0seonpurpose
Korea (South)5638 Posts
http://news.yahoo.com/s/ap/20090303/ap_on_go_pr_wh/obama_taxes Obama wants to raise taxes on the wealthy and is met with opposition from both parties. Why is it such a bad proposition? | ||
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Boblion
France8043 Posts
On March 04 2009 08:10 warding wrote: At the expense of the internal consumer. Overall long-run welfare would be negative. Not if the new industries are flooding foreign markets :p You seriously need to take a look at Japan's history. I guess we will end up in an ideological argument but i'm convinced that some apects of protectionism are needed, at least for developing countries. You don't agree and that's fine. Anyway i can't really make the kind of posts i would like because of my poor English so it's a waste of effort  It would be off topic anyway. | ||
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warding
Portugal2397 Posts
OK let's leave it at that. I'd still like to hear from Jibba on why there would be a clear advantage in adopting protectionism though. | ||
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Boblion
France8043 Posts
edit: oh well i can't read properly T-T lol Read "unions" instead of "nations" lol. I'm tired. | ||
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CursOr
United States6335 Posts
On March 04 2009 08:11 il0seonpurpose wrote: I don't know much about economics but this caught my attention: http://news.yahoo.com/s/ap/20090303/ap_on_go_pr_wh/obama_taxes Obama wants to raise taxes on the wealthy and is met with opposition from both parties. Why is it such a bad proposition? there isnt really much of a differance between Dem and Rep in this counrty, although a lot of effort is put forth to make it seem so. though the ideas themselves dont look too bad to me, but the lobbying intrests in washington start to get pretty active when people start talking about things like taxing pollution and big business more. i think that is something most people would support, but that is why most people are insulated from the decision making process  | ||
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ahrara_
Afghanistan1715 Posts
On March 04 2009 06:55 cUrsOr wrote: i was dead serious. isnt that comparative advantage? the could grow wheat to feed themselves, but opium makes much much more money. so they grow opuim for lots of money, they can buy all the wheat they want, and other things too. i think it was the taliban that really started this.. but the fact that they get more Value from the opium, isnt that comparative advantage? seriously. ah sorry, i thought you were making a cynical remark. it's not really comparative advantage. afghanistan is uniquely equipped to grow opium for a bunch of different reasons. that's absolute advantage. it's obviously that afghanistan (my motherland) has much to gain from exporting its opium. an example of comparative advantage is if the US was better equipped to grow opium than afghanistan. afghanistan retains the comparative advantage even thought it does not have an absolute advantage because the US, instead of growing opium, could spend that effort and money on something much more productive. in order to grow opium, the US has to give up much more. | ||
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CursOr
United States6335 Posts
lemme ask you something also serious. does a country with cheaper labor have a comparative advantage over ones without? or is that considered a resource or something? | ||
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Jibba
United States22883 Posts
On March 04 2009 08:34 warding wrote: Well there's also the example of Portugal. We had a lot of protectionism until we joined trade organisations in the 50's and 60's, and later the EU in 86. Our industries were protected, and were miles behind other nations because they didn't have to face international competition. When we finally started opening up, there was a flood of foreign capital and knowledge, and finally our industries were forced to compete internationally and adopt more efficient practices. In the second half of the 20th century we were the second fastest economy in the world, behind Japan, if I'm not mistaken. OK let's leave it at that. I'd still like to hear from Jibba on why there would be a clear advantage in adopting protectionism though. Portugal handled it poorly, Japan did not. They still operate within competitive markets outside of their borders, with the gained advantage of subsidies, health care, weak unions and lack of domestic competition. The American auto industry, while doing well in China and Europe, has gotten wrecked domestically and many of the root causes are things that would have been alleviated to a large extent if they were Japanese and not American. In the long term, it is a problem if there is backlash from the rest of the countries who have remained open (which won't happen), but at the same time the chances of falling behind are decreased because their industry will always have an advantage over the other country's similar industry. Also, you have to keep in mind that politicians aren't elected every 15-20 years. It's in their best interest to pursue immediate growth (which is why you need to consider this on different levels of public policy, not simply in terms of macroeconomics) and it can be rationalized in a way that will protect them. Interest groups (unions) are looking out for their own rational interest, and they're what are behind a lot of bills and help put people into power. It's not intentionally dirty, it's just a function of a pluralist democracy. The interest group and congress person has a constituency who will be greatly pleased if the tariff goes up to protect their industry, and even if congress makes the prudent decision not to, they may just be replaced by someone who will. It's a problem, but you can hope to have counter forces or other ways to please the interest group. It is a prisoner game though, only with more variables then can be calculated. | ||
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Jibba
United States22883 Posts
I have no problems with any of the proposals in that yahoo article. | ||
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warding
Portugal2397 Posts
Overleveraged American consumers need to deleverage, but increased saving means less consumption and a deeper recession. We need SOMEONE to consume but it would be irresponsible for overleveraged consumers to spend at this point. Making it worse, increased saving is not really gonna translate into new investment coz of the problems with the banking system and that companies don't seem to be very interested in investing at a time of sharply declining demand. All the while, it was a very low savings rate that helped us get into this mess. aaaAArgh! | ||
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il0seonpurpose
Korea (South)5638 Posts
On March 04 2009 11:33 warding wrote: Anyone got any thoughts on the paradox of thrift we're facing? Overleveraged American consumers need to deleverage, but increased saving means less consumption and a deeper recession. We need SOMEONE to consume but it would be irresponsible for overleveraged consumers to spend at this point. Making it worse, increased saving is not really gonna translate into new investment coz of the problems with the banking system and that companies don't seem to be very interested in investing at a time of sharply declining demand. All the while, it was a very low savings rate that helped us get into this mess. aaaAArgh! Yeah it really sucks, seriously. | ||
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Jibba
United States22883 Posts
On March 04 2009 11:33 warding wrote: Anyone got any thoughts on the paradox of thrift we're facing? Overleveraged American consumers need to deleverage, but increased saving means less consumption and a deeper recession. We need SOMEONE to consume but it would be irresponsible for overleveraged consumers to spend at this point. Making it worse, increased saving is not really gonna translate into new investment coz of the problems with the banking system and that companies don't seem to be very interested in investing at a time of sharply declining demand. All the while, it was a very low savings rate that helped us get into this mess. aaaAArgh! My thoughts are I hope they don't pass more tax refunds because I don't know what they think they can accomplish. Like you said, everyone is saving, which is normally what people are supposed to do, except for now when everyone needs to go buy a big screen TV. | ||
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Ecael
United States6703 Posts
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gchan
United States654 Posts
On March 04 2009 08:11 il0seonpurpose wrote: I don't know much about economics but this caught my attention: http://news.yahoo.com/s/ap/20090303/ap_on_go_pr_wh/obama_taxes Obama wants to raise taxes on the wealthy and is met with opposition from both parties. Why is it such a bad proposition? From the article, it seems that Republicans oppose the taxes because, quite simply, they are tax increases. Some Democrats oppose the taxes because part of the bill is to slash tax benefits of charitable contributions from the wealthy. If this were to happen, the affluent would donate a LOT less money to charity and many nonprofits would go the way of the dodo. I oppose the taxes because the taxing scheme would absolutely punish the upper middle class (those between $250,000 - $750,000). What Obama doesn't seem to realize is that you are only taxed on the cash flows you have during the tax year. Most super high networth taxpayers have their wealth in capital assets (stocks, bonds, real estate, etc), and if you don't cash them in (ie.sell them), you're not getting cash flow from them...so you don't get taxed on them. These taxpayers certainly have enough cash on hand already that they will probably just hold off selling their assets until the next administration comes in with more favorable taxes. So that puts the burden on the people who are right below the super affluent--the upper middle class. A lot of the upper middle class are in that financial position because they are small-mid business owners and becuase they are operating an active business, they continually have cash flows in and out. Every dime they make from their business cannot avoid taxes and it will very harshly punish the businesses of this size. Whats even worst is that they /should/ encourage these businesses to expand and grow because these are the businesses that are large enough to not bankrupt, but small enough to create competition. Obama is going to discover once his tax hikes kick in in 2011, the actual tax revenue will be a lot less than projected. | ||
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