Economics is fun, part 4: Trade

[Chris]

Here he ties together previous points. He contrasts views of trade as zero-sum (win-lose) and non-zero-sum (win-win).


http://www.youtube.com/watch?v=cTt2HIftueE&list=PL06A6035D1EAF3D0E&index= 4&feature=plpp_video

[Conley]

This one reminds me of the first video concerning value.

Trades that benefit both parties and the very motivation for doing so. That wealth is not zero sum makes perfect sense on a micro scale but I have trouble applying it to nations.

Great discussion of foreign aid, "buy their stuff", but what happens when they don't have anything to offer? Singapore is an interesting example, we were discussing them the other day. I need to read more about how they developed and the distribution of their wealth.

[Chris]

"That wealth is not zero sum makes perfect sense on a micro scale but I have trouble applying it to nations."

Right, nations don't trade, they only try to manage trade.

[Conley]

"That wealth is not zero sum makes perfect sense on a micro scale but I have trouble applying it to nations."

Right, nations don't trade, they only try to manage trade.

Yes, and he makes a good point about how the European tariffs hurt the developing nations more than handouts could ever help them.

[Chris]

I looked up Singapore and saw they are one of the world's leading importers and exporters. Trade, trade, trade! Second behind Hong Kong in the 2012 Index of Economic Freedom (http://www.heritage.org/index/default).

[Conley]

Thanks Chris. It is interesting to me that some places like Hong Kong, Singapore, and Taiwan can do so well even in the absence of abundant natural resources.

Some more detail about Singapore from your link:

The foundations of economic freedom in Singapore are firmly sustained with strong protection of property rights and effective enforcement of anti-corruption laws. The government is very efficient, with competitive tax rates and low government expenditures. The regulatory environment is flexible and transparent, encouraging vibrant commercial activity. A strong tradition of openness to global trade and investment continues to boost productivity while facilitating the emergence of a more dynamic and competitive financial sector.
While the private sector has been the source of Singapore’s economic success, the government maintains a proactive role in guiding economic development. State ownership and involvement in key sectors remains substantial. A government statutory entity, the Central Provident Fund, administers public housing, health care, and various other programs, and public debt is over 90 percent of GDP.

The top income tax rate is 20 percent, and the top corporate tax rate is 17 percent. Other taxes include a value-added tax (VAT) and a property tax. The overall tax burden amounts to around 14 percent of total domestic income. With structural budget surpluses that sustain high public debt, government spending stands at 17 percent of GDP. The state remains involved in the economy through Singapore’s many government-linked companies.

[Conley]

Wealth disparity there is a matter of debate - a couple of articles:

http://www.businessweek.com/finance/occupy-wall-street/archives/2011/10/ms_rand_meet_singapore_mr_hayek_meet_norway.html

http://www.bloomberg.com/news/2011-05-05/singapore-wealth-gap-weighs-on-lee-s-ruling-party-before-vote.html

[Peter1469]

And if we don't want to make our enemies richer (the ME), then stop buying their stuff (oil). We can use alcohol as a substitute and do far more damage to them than a military invasion would!

[Conley]

And if we don't want to make our enemies richer (the ME), then stop buying their stuff (oil). We can use alcohol as a substitute and do far more damage to them than a military invasion would!

Absolutely. We can do far greater damage to them, improve our future, and not risk a single life doing it.

[Chris]

Trade has resulted in greater economic freedom in Hong Kong and Singapore, and as Milton Friedman argues in Capitalism and Freedom that can drive personal and political freedom, as it has there and elsewhere. Why would that not be true of the ME?

[Conley]

Unfortunately the governments we supported for many years in Iraq, Egypt, Saudi Arabia and other nations enforced the exact opposite of that. It is near impossible to undo the mess of our past policies.

[Chris]

True, their governments are hostile to liberty, as are terrorists, but I think, given a taste of economic freedom, the people might turn on both.

Otherwise these economic laws we're looking at are not true.

[Conley]

True, their governments are hostile to liberty, as are terrorists, but I think, given a taste of economic freedom, the people might turn on both.

Otherwise these economic laws we're looking at are not true.

True. I've often maintained that a few creature comforts for those people would go a long way toward making them more peaceful. No need for the degree of commercialism we have here in the States, but a better standard of living might well keep them from being in such a rush to meet Allah.

[Peter1469]

Trade has resulted in greater economic freedom in Hong Kong and Singapore, and as Milton Friedman argues in Capitalism and Freedom that can drive personal and political freedom, as it has there and elsewhere. Why would that not be true of the ME?

It could be, if they were interested in trade. They are interested, rather, in Jihad and world dominance. Oil is their money supply. I say choke it off and let them live in the 7th century paradise that they desire.

[Peter1469]

What is that quaint saying that they shout out just before they blow themselves up with innocents?

allah akbar?

[Peter1469]

Well with out oil money, Allah ain't sh!t.

[Chris]

It could be, if they were interested in trade. They are interested, rather, in Jihad and world dominance. Oil is their money supply. I say choke it off and let them live in the 7th century paradise that they desire.
I wasn't talking about political rules and terrorists, peter, but the people of the ME.

[Conley]

Is there no part 5 Chris? I've enjoyed this series. I'd hunt it down myself but I was expecting you'd keep going. Thanks.

[Chris]

Busy yesterday, I'll post 5...

[Peter1469]

Trade has resulted in greater economic freedom in Hong Kong and Singapore, and as Milton Friedman argues in Capitalism and Freedom that can drive personal and political freedom, as it has there and elsewhere. Why would that not be true of the ME?

Well then the people in the ME who want trade, personal and political freedom, better take care of those among them who do not-- before the policies of the West isolate them, in essence quarantine them.

[Chris]

Well then the people in the ME who want trade, personal and political freedom, better take care of those among them who do not-- before the policies of the West isolate them, in essence quarantine them.
Agreed, we have no democratic or humanitarian interest there.

[Peter1469]

Agreed, we have no democratic or humanitarian interest there.

Agreed

[donttread]

I think the trade issue is more about the distribution of wealth within each country

[Chris]

I think the trade issue is more about the distribution of wealth within each country

Under protectionist policies it is just that, redistribution of wealth to the wealthy. Take sugar protections. Limiting the import of sugar with tariffs only raises the price of it and allows the wealthy few in the industry to raise their prices while protecting them from competition.