"Gary Coffman" wrote in message
...
On 12 Oct 2003 19:38:18 -0700, jim rozen wrote:
In article , Carl Byrns
says...
And what would you do, Ed? Close the borders to imports? Yeah, that'll
work.

Carl, you apparently haven't been following this tale
through its entirety. Ed has never suggested protectionism,
and has pointed out its folly to those who have.

Actually, Ed has proposed zero sum trade, and that is a form
of protectionism.

Where did you get that idea, Gary? Zero-balance trade is the whole basis for
the theory of Comparative Advantage, which, supposedly, is the theory under
which we justify trade with low-wage countries. Our policy makers just left
out the zero-balance part.

The history of free-trade theories is based upon barter systems, which
inherently result in zero-balance trade. If you try to do Ricardo's
arithmetic that demonstrates why it's mutually beneficial for low-wage,
low-efficiency countries to trade with high-wage, high-efficiency countries,
and if you don't assume a zero trade balance, it falls apart. Yet, our
policy makers talk about "comparative advantage" all the time, as if it
actually was working according to the theory.

Granted, a surprising number of them don't know what they're talking about,
as I learned when I researched my China article. They talk about
"comparative advantage," which has a specific meaning in economics, when
they really mean "absolute advantage," which is another thing altogether.

The US government frowns on offsets but they turn the other way, because, as
they've said, no US manufacturer of aircraft or military hardware could sell
anything anywhere in the world if they didn't accept offsets. But the
consequences of offsets haven't really been studied very well, as far as I
can determine. The idea that they're a bad thing seems to spring from an
ideological concept as an article of faith, not from empirical evidence.

If you want to see what a high-level Commerce official said about offsets a
few years ago, you could take a look at the sidebar in my September article
on defense procurement.

Ed Huntress