Bear Flag Republic Radio Weblog

< 10:12:44 AM        >

It's not really about trade but about labor arbitrage. Companies producing for U.S. markets are substituting cheap labor for expensive U.S. labor. The U.S. loses jobs and also the capital and technology that move offshore to employ the cheaper foreign labor. Economists argue that this loss of capital does not result in unemployment but rather a reduction in wages. The remaining capital is spread more thinly among workers, while the foreign workers whose country gains the money become more productive and are better paid.

Bing!  What does this mean for the US?  Global equalization of incomes (a rapid decline for the US and a slow rise for the rest of the world).  A rapidly increasing trade deficit.  Climbing budget deficits.  AWOL multinationals.  Radical intrastate income inequality.  Political unrest.  Protectionism.  Domestic terrorism.  The list goes on....

There is no silver lining for Americans.  Unfortunately, our economists will continue to believe the world is flat.  The invisible hand and comparative advantage will provide, they will intone.  Time for some new thinking. [John Robb's Weblog]

comments < 10:11:21 AM        >

Model of beach shore line erosion found to be wrong. The model is used world-wide to make predictions about shore line erosion, including related to models of climate change. Quote: "What startles me is why people think they can take a mathematical equation that requires only a navigation chart and actually predict what sea level rise will do. The answer is because everybody thinks that if it's done mathematically it's sophisticated and state-of-the-art." [Edward Mitchell: Common Sense Technology]
comments < 10:10:08 AM        >