1  2  Next

<strong>Written By:</strong> jensonj
<strong>Date:</strong> 2005-12-19 14:22:47
<a href="/article/72247168-trade-is-important-but-its-not-the-whole-pie">Article Link</a>

Even people who think trade is a good thing sometimes talk as though it was the biggest part of the economy.

One in four jobs in Washington state depends on international trade, the highest percentage in the nation. As Seattle economist Dick Conway has pointed out, each trade-related job produces enough income to generate 2.6 jobs elsewhere in the economy. You wouldn't want to see those jobs just disappear.

On the other hand, if 25 percent of our jobs depend on trade, 75 percent do not. Most of what gets produced in the United States stays in the United States. And despite all the hand-wringing and hoo-ha about foreign trade, it has changed little, growing from 20 percent of the nation's economy in 1980 to 23 percent in 2003, the most recent year for which numbers are available.

People sometimes get confused by this because if you look at the raw numbers for volume of trade (total imports and exports) — $574.6 billion in 1980 (in inflation-adjusted dollars) to almost $2.6 trillion in 2003 — you can get the impression that trade is the whole economic story.

What people forget is that the whole U.S. economy has grown, from $2.8 trillion in 1980 to nearly $11 trillion in 2003.


<a href="http://seattletimes.nwsource.com/cgi-bin/PrintStory.pl?document_id=2002689741&zsection_id=2002119995&slug=sell18&date=20051218">http://seattletimes.nwsource.com/cgi-bin/PrintStory.pl?document_id=2002689741&zsection_id=2002119995&slug=sell18&date=20051218</a>





[Proofreader's note: this article was edited for spelling and typos on December 19, 2005]

   

article says.....Dick Conway has pointed out, each trade-related job produces enough income to generate 2.6 jobs elsewhere in the economy. You wouldn't want to see those jobs just disappear.

interesting , but where are these figures coming from, and as for jobs diasappearing it has already happened to millions of americans and canadians because corperate world wants to hire on the cheap, this is just the beginning , there will be more lay-offs and if people do not work, how will they buy product ???


article says.........Most of what gets produced in the United States stays in the United States. And despite all the hand-wringing and hoo-ha about foreign trade, it has changed little, growing from 20 percent of the nation's economy in 1980 to 23 percent in 2003, the most recent year for which numbers are available.


again that is myth, and again where are these figures coming from, if these are US government figures, i would be very careful in believing a totalarian regime that now exists in the US.....as for canada, trade is needed, big-time, but the way we have been selling our resources at rock bottom prices, what will we have left to trade, human beings ???


article says.........What people forget is that the whole U.S. economy has grown, from $2.8 trillion in 1980 to nearly $11 trillion in 2003


again i question the figures.......this means absolutly nothing to those millions who have lost their jobs to cheap wages.....how can any country compete with another country when wage factors are extreme, and who will buy those products when you have no money......

   

What people forget is that the whole U.S. economy has grown, from $2.8 trillion in 1980 to nearly $11 trillion in 2003<<

One has to wonder about the figures envolving inflation. A car selling for $13 K in 1980 will be $30 K today. Cost of living has increased but some say the annual income of a wage earner hasn't increased the same percentage. The figures for the economy is usualy based on profits and not earning power.

   

While we're talking about cars, or vehicles in general, between 1955 and 75 the price of an average vehicle doubled. In 1975 I bought a brand new Dodge Tradesman 200 hd. van for $5,600 in Vancouver.

That was about the time when the crime wave of neoclassical economics was forced on the world, starting around 1973

In the next 20 years, under the new economic system, the price of the same vehicles increased by 800 to 1000%. Then we have to add to it the fact that while people were able to service their vehicles in the past, now they have to pay incredible service and parts charges for these impractical, mobile sculptures without bumbers, headlights costing hundreds, the slightest scratch over $1000.

I drive a 25 year old Chev pickup in excellent condition and low cost parts. I can replace an alternator in about 10 minutes for about $125. On a new vehicle I couldn't even find it and to replace it would cost $800 to 1000.

As far the overall cost of living is concerned, I would say, if wages had kept up with the the inflation, the minimum wage in Canada should be around $50/ hr. today. In the '60s and early '70s we could feed our family of 5 very well on a weekly grocery bill of about $25. When we first moved here in 1979, our monthly budget for everything, including heating and gas , for the 3 of us was $350. A barrel of gas, for 205 litres, was about $35 or 37.

Today, when we have our own organic food production and have 3 large freezers full of meats and vegetables, our very simple monthly grocery budget for 2 is $350. Prices have doubled and tripled since the NAFTA in 1993 and are increased every time we go shopping, twice a month, while our indexed old age pensions increase by a few pennies. In some cases we see price increases of $1. in 2 weeks. My wife calculates that our grocery bill increases by about $10/month, while our supermarkets are fighting for who can jack them up faster.

So much for the wealth creating globally competitive marketplace.

Ed Deak, Big Lake, BC.

   

Your points are well made Ed. You can also add that anything we buy today has no longevity. VCR-CVD-?. Nothing is made to last and have to be replaced. Something newer is coming tomorrow so buy today. It's cheaper to replace then to repair. The local garages can't afford the software to locate the problem in your car. In a few years that software will be a collectors item and no one will be able to fix the car. Buy a newer car to save on gas. $30K + still buys a lot of gas.

   

Exactly. All these so called "cheap products" are cost transfers on future generations in the forms of depletion, pollution and sickness, but economists and politicians love it, because it jacks up their fraudulent GDP figures.

I have a printer, about 4 years old, with very low cost ink cartridges, but my friends with newer printers tell me that when their ink runs out, it is cheaper for them to buy a new printer, than replacement cartridges. Hope mine will last for a while yet.

The same for computers. I was looking for a new computer, as the CD burner died on mine, and when the saleswoman heard that this one is 4 years old, she was surprised, as today they build them to last only for 1-2 years, in her own words. So, I'm having one custom built by an expert with parts that will last for years and to hell with new technologies and those who make them. The interesting part is that the price of my custom built one won't be any more than the store bought junk.
Ed Deak.

   

<<All these so called "cheap products" are cost transfers on future generations in the forms of depletion, pollution and sickness, but economists and politicians love it, because it jacks up their fraudulent GDP figures.>>

If GDP figures are fraudulent, then we probably should use something else as a standard for African relief or Kyoto targets. Maybe the richest country in the world is actually Mali?


<<my friends with newer printers tell me that when their ink runs out, it is cheaper for them to buy a new printer, than replacement cartridges.>>

Your friends should get dot matrix printers then. They are very reliable and ink is cheap. Of course they suck, but heh, they are old.

<< and when the saleswoman heard that this one (burner) is 4 years old, she was surprised, as today they build them to last only for 1-2 years>>

Was this saleswoman expert speaking on behalf of the entire CD burning industry or just the greater Big Lake, BC area?

<<So, I'm having one custom built by an expert with parts that will last for years...>>

So...this "expert" and his "parts that will last for years" is using old CD burning technology then?

<<and to hell with new technologies and those who make them.>>

Come on Ed. Maybe your 25 yr old car/alternator story is believable (even if 1980 emisssion standards make Gaia cry) but a CD burner? Your ludite, "to hell with new technology", neoclassical economy thing seems a bit absurd when talking about laser printers and CD burners n'est ce pas? What's next...dial up internet?

Sean

   

"If GDP figures are fraudulent, then we probably should use something else as a standard for African relief or Kyoto targets. Maybe the richest country in the world is actually Mali?"

GDP is not fraudulent. It's a metric. It's only fraudulent if you perform the calculation and then claim an answer other than the one you achieved arithmetically. Or if you claim such a coarse statistic means something it doesn't, or predicts results it does not. Or if you claim that to criticise the policy application of the statistic is to imply that the opposite is true.

I'm not here to defend Ed, he's a grownup and can do that himself. But what is *your* point in advancing such absurd argument? If you have contrary facts, present them: it is more important that useful facts rise to the top than that those you believe to be misinformed are put in their place.

   

Ed was the one who said GDP was fraudulent.

Sean

   

Ed no doubt speaks of the application of GDP in justifying certain policies with which he disagrees.

My response again:

1) GDP is a calculated metric, it can't be "fraudulent" unless someone lies about the answer.
2) Application of GDP to support certain political/economic concepts can border on the faudulent (it's called misrepresentation). Especially true when it is used to establish as universal, inarguable, truth something that may only be at best generally true.
3) Suggesting that someone who contests a given application of such a metric must therefore support some absurd opposite *certainly* qualifies as a fradulent misapplication. Lies, damn lies, and statistics.

The rest need not be restated, I believe I was clear.

   

Ed, it's not that the parts are expected to wear out in a couple of years, it's that they are expected to be obsolete by then. It's an important distinction.

That said, you are far better off buying a custom-built computer, mostly because HP/compaq/etc tend to put cheap parts in a shiny case and charge you double because most people don't know any better. It's pretty much the difference between Subway and McDonald's; if all you care about is the cheapest price, then you're going to get something with poor quality.

Another benefit of a custom-built computer is that it tends to put more money into the local economy, since your expert has work and will purchase the parts from local stores.

---
Your mantra has been your opinions are stifled due to their contrary nature, when they are actually stifled for being without perceivable foundation.

   

Any system that accounts only credits, without debits, claiming the overall figures as an "income" is not only fraudulent, but suicidal. Herman Daly wrote extensively on this and Stiglitz was fired, as the chief economist of the WB for questioning their practices based on the GDP, etc.

E.g. The GDP accounts the repairs and the rebuilding of damages caused by natural disasters as credits. The more accidents we have, the more doctor's bills and funerals, the higher the GDP. No debits either for material, or human losses.

Also, the sale of resources is not an income but a conversion, yet it is calculated as income by economists and governments. How could any business survive on such accounting system, when some of the major business benefits are the "deductibles"?

Where are the figures on depletion, human losses, etc.

"Productivity" is accounted as the least wages bringing in the largest monetary intakes. E.g If a company fires most workers and replaces them with automation, then pockets the wages of the fired workers, it is counted as "growth of the productivity" of the remaining workers, without accounting the resulting liabilities in the forms of transferred costs on society and the environment, when the fired workers have to hit new resource bases for their survival needs. Yet this waste is also accounted as growth of the GDP etc. other garbage.

I have debated this years ago on various World bank and other worldwide economic forums, where people used their own names, and received only platitudes in reply, plus information from all over the world on other systems, that could and should replace the GDP. Even got a congratulatory message from the Office of the Chief Economist of the WB.

I'm not promoting any other system, but, for example, there is the GPI, or General Progress Indicator, which is far superior in concept and morality to the GDP, but it is only one of many. It was tabled as a Private Members Bill in the federal Parliament, but never got anywhere, just as Martin and the Chretien govt. voted for the Tobin Tax, but never put it into practice, fearing the wrath of their owners.

As far I'm concerned, the GDP is being used to mislead the public and sell the benefits of the neoclassical system, when, in reality, it is the biggest crime wave in history, set up and maintained to enhance the powers of a ruling sector.

Ed Deak, Big Lake, BC.

   

"Ed, it's not that the parts are expected to wear out in a couple of years, it's that they are expected to be obsolete by then. It's an important distinction."

Important distinction indeed. Also note that your skyrocketing *monthly* grocery bill isn't much less than you pay for a custom-built CPU with power that a bank could barely afford 2 decades ago. Moore's Law continues apace, and I shudder to think a maker of human laws might try to put the breaks on it.

Long-distance-transported food has been artificially cheap in north america for decades now, and the proportion of income spent thereon has been low compared to other nations. Perhaps prices are rising because they should: at the supermarket I'm noticing the premium on organic (at least in some areas) is falling relative to non-organic.

Perhaps greater concern should be placed on the rising costs of other baseline essentials, relative to income increase. Fifty years ago the "G&A" of the average household was propertionally lower in many cases: insurance, transportation, utilities, debt interest, taxes. Many of these things can be eliminated or reduced; many people don't, for various reasons.

   

"As far I'm concerned, the GDP is being used to mislead the public "

Ah, there's the rub. Again, GDP in and of itself is merely a calculation. Any sane person who stands back and looks at the arithmetic would agree GDP does not and cannot account for certain things.

I remember studying thermodynamics of power generation, and sitting through a lecture wherein the professor illustrated via charts that:

1) General standard of living had risen over the last half century
2) GDP had risen over the last half century
3) Energy consumption had increased proportionally to GDP
4) Therefore, energy consumption = prosperity and conservation/energy efficiency was foolish and wrong

So, we managed, through the clever use of economic theory, to eliminate the notion of second law efficiency (useful work/energy input) from macroeconomics (the context was "so do your job as an engineer, your obligation is to your employer's bottom line period, don't worry about any of that other stuff").

GDP is the dividend, in dollar terms, of second law efficiency - pure inputs, add 'em up. It's the quotient we're all arguing over, and I would submit that only the most brain-dead or disingenuous, even of neoclassical economists, would try to pretend an objective answer exists.

   

This is off the GDP subject, but an important part of economics.

You're correct on the subject of the cost of long distance, imported foods. But this is the result of the planned destruction of the family farm system, which, in my experience, is the most cost and physically efficient method of food production, yet abhorred by economists, as it is beyond their comprehension. The plan is to separate the producers from the users and so jack up the GDP etc fugures.

Food producers, either here in North America , or anywhere on Earth, are not receiving the correct renumerations for their products and the majority of the costs are set by the middlemen involved. Either for transports, bank charges, distribution etc. Thus, although the prices are going up every day, the farmers see nothing of it. I can name long known food products, grown and made in Canada, where prices increased by 50% in the past 2-3 months, without any rational reasons, apart from corporate profit, and stockmarket demands for more.

Then, to keep the remaining major agribiz operators, "get big or get out", in business, government has to pay them so they can sell their products offshore, to ruin the economies of other countries. This is called "subsidies", but I have yet to see a correct definition of what a subsidy really is. As far I'm concerned, so called "free trade" and "globalization" are the biggest subsidy schemes for a special interest sector, in history.

E.g. The destruction of the self sufficient Indian dairy production system with "free trade" Danish imports, and the resulting mass suicides of Indian farmers, now spreading to South Korea. In Canada apoprox. 10% of farmers are forced to quit every year, probably more in the past 3 years with the BSE hysteria.

As far organic produce prices are concerned, they don't have to be any, or much higher than those of chemical farming. I have been involved in corporate chemical farming, and for the past 26 years in organic farming.

I can sell the most beautiful and tasty organic veal for $3/lb., although we'll have to raise this with our costs rapidly going up, yet, there're no buyers to speak of. At the same time people are paying twice the prices for chemically pumped up garbage meat and just recently, we saw an ad from a supermarket, owned by BC's billionaire Jim Pattison, for $15./lb. People will pay 5 times the price to Jim, rather than to a small producer, for professionally butchered, custom cut, government inspected meat.

Also, imported organic produce is nuked at the border, that kills all food values, canceling all benefits.

Neither was there any price reduction in the stores when we were getting .19 and .25 cents, or even nothing, for our beef. Just a year ago we gave away a 5 year old, 1,500 lb. bull, for nothing. That amount of meat brings in between $5, to 10,000 in a fast food joint.

Yet, according to theory, this is the "good economics" of specialization, in other words, higher costs and prices commanded by planned incompetence.

Ed Deak, Big Lake, BC.

   

1  2  Next