Imports are a benefit, exports are a cost. Is it clear now?

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Imports are a benefit, exports are a cost. Is it clear now?

By Stephen Gordon

This entry was posted in Trade. Bookmark the permalink.

65 Responses to Imports are a benefit, exports are a cost. Is it clear now?

  1. Ben says:

    The wealth of nation A is 1000 Dollar. The wealth of nation B is also 1000 Dollar.

    You are President of nation A and have to choose between 3 alternatives which influence the future wealth of the two nations as follows:

    1. Nation A: 1200 Dollar and Nation B 1400 Dollar
    2. Nation A: 1200 Dollar and Nation B 1200 Dollar
    3. Nation A: 1200 Dollar and Nation B 800 Dollar

    Which alternative would you choose and why?

    Reply

    Nihat Reply:

    @Ben,

    I’ll take the easy answer: option 2 ’cause there is karma.

    Reply

    WARREN MOSLER Reply:

    3. less competition for resources.

    but of course your whole prop is problematic as expressed.
    i’m only guessing at what those numbers might actually represent.

    Reply

    Nihat Reply:

    @WARREN MOSLER,

    Exactly. Hence my cop out :)

    Reply

    Ben Reply:

    @Nihat, instead of wealth, lets call it GDP,and don’t care about the unrealistic numbers.

    the point is, would you choose a policy (if you are able to do so, even if this would be fanciful), that would enrich another nation more than your own nation, a policy that would both nations equally enrich, or a policy that enriches your country and impoverishes the other nation.

    I try to clarify, what the ‘real’ game is all about.

    Nihat Reply:

    Ben, when you put it that way, dodging it is harder.

    I think, the ‘real’ game varies with time and space (countries). So long as different but mutual needs are met and parties are fully informed and not coerced, I wouldn’t be concerned with karma (hey, maybe I do believe it).

    Maybe an exception [c/sh]ould be made about non-renewable resources (i.e., treat them to strict Moslerian logic :).

    I try to think of ‘real’ as anything non-financial, non-money, and its accounting is always gonna be subjective (I guess).

  2. Ivan Ivanoff says:

    No dispute in the fact that while China sends “real goods and services,” and we send nothing to China, China emerged as an economic and military power rapidly. At the same time, the U.S. weakens as an economic power, because you can not have a strong economy that produces nothing. A decline in the economy will inevitably lead to the decline of the U.S. as a military power. Economic and military power can not be based on consumption as we are strong in consumption.
    What happens if China want to exchange their dollars for “real goods and services?” There are two options. One is China to buy whatever we let it. But this means that America should be much stronger than China economically, militarily and politically. The second option is China dictate what they want to buy from us. They will dictate if they feel strong enough. And then China will not buy cars, boats, real estate, and will purchase high-tech companies, technologies and resources. And the buyer will be the Chinese state. I do not want to imagine what will happen at the second option.
    In this sense, the theory should be considered accurate only under certain conditions. True to some extent, not completely.
    U.S. free lunch can continue only if that America remain a superpower. But America can not remain a superpower if only consumes without producing. I.e. You should seek some balance.
    In MMT noticed contradiction. According to the theory after 30 years American workers have to be productive enough to allow them to produce enough goods and services to support pensioners. And why no mention of Chinese imports, which currently is a benefit to America? Perhaps the author is not sure that after 30 years a benefit that America still has it. But more important is another. How not produce offspring will rely on workers after 30 years to be very productive?

    Reply

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