Corporations leave the west at an amazing pace. Atleast there hiring does...

[Imran Siddiqui]

Another ridiculous assumption that the followers of Adam Smith make is that resources are prefectly mobile. And that is why they assume that prices and wages are the same everywhere. If resources were mobile there would be no shortages or surpluses. Come on Imran, don't you know what market equilibrium is?

A. Adam Smith the poster responded well to it.

B. Market equilibriums are DIFFERENT for different markets. Smith did not ignore that wages and prices are different for different markets in different countries.

C. The assumption that SOME resources are perfectly mobile only happens when both countries are free trade capitalist (ie, following Smith). To insinuate that land (which is a resource) is mobile at all is crazy. Smith knew about mercantalism, and realised that even then free trade would be benefitial.

You clearly do not understand what the anti-globalization movement is about.

Don't be too hard on him. There are sooo many different groups in the anti-globalization movement it is hard to see what the goals are. The anarchists and communists may wish for what you are saying, but the trade unions sure don't.

[Imran Siddiqui]

Assuming there were no barriers to trade what would stop the bad workers from moving to where the higher wages are?

Now who is the one making 'faulty' assumptions .

There are plenty of barriers to trade in the world today, which is why the disparity is so great. That and the fact that productivity IS different in different areas and Smith DID believe that people in certain regions were smarter and that is why wages are different.

[DuncanK]

Originally posted by Imran Siddiqui
B. Market equilibriums are DIFFERENT for different markets. Smith did not ignore that wages and prices are different for different markets in different countries.

I honestly don't know how to have a discussion with someone who thinks they know everything about economics and I'm sure didn't really catch on in economics class. Probably because he thought he knew more than the professor

[DuncanK]

Originally posted by Imran Siddiqui

Assuming there were no barriers to trade what would stop the bad workers from moving to where the higher wages are?

Now who is the one making 'faulty' assumptions .

I'm cerainly not making these assumptions. I'm only trying to explain a theory to you which you seem to subsribe to.

[DuncanK]

Originally posted by Adam Smith
But the factors themselves do not have to move in order to have gains from trade. Instead, countries can trade the goods which embody those factors. This result, known as the Heckscher-Ohlin Theorem, shows that gains from trade exist regardless of short-run fixities. Swedish economist Bertil Ohlin won the Nobel Prize in Economics in part for this work.

I don't know why you bring this up. I'm not saying that gains can't be made from trade. I'm saying that when companies move operations overseas simply to take advantage of cheap labor (even if they build capital there) the world economy takes a loss.

[DuncanK]

Originally posted by Adam Smith
The fact that wages differ does not show us that there is no perfect competition. Rather, it indicates that the productivity of labor differs across regions, or that there is some fixed factor of production (local labor, natural resources) which does not move between regions.

One more point on this. The primary determinant of wages is negotiating power. The secondary determinant is supply and demand. Labor tends to be more productive when there is a shortage, because capitalists have an incentive to invest in productivity to lower their wage cost. In this way labor productivity actualy decreases wages in the short run. In the long run it does nothing to determine wages.

[Imran Siddiqui]

I honestly don't know how to have a discussion with someone who thinks they know everything about economics and I'm sure didn't really catch on in economics class. Probably because he thought he knew more than the professor

Likewise

[Ned]

Originally posted by Ramo

You clearly do not understand what the anti-globalization movement is about. I consider myself militantly pro-free trade, for instance, but I also consider myself to be a member of the anti-globalization movement.

We are advocates against protectionism, in general, particularly protectionism on the part of developed states. It's just that we see things like people being murdered because they they're uppity enough to organize against their employers bad.

Honestly, I don't know why we allow ourselves to be branded as anti-globalizationists, as we are the ones who are fighting for freedom and justice in the world.

I didn't understand what a anti-globalist was. So I asked. I am basing my statements on the answers I got, here, by Duncan and Che, primarily.

What I heard is akin to this: 1st world companies should not place means of production in the third world for three reasons:

1) it hurts the enviroment in the third world;
2) it reduces job opportunities and labor rates in the 1st world; and
3) it makes the world economy more vulnerable to a world recession.

Now that Duncan has brought it up, this somewhat amount to a modern variant of mercantilism where the third world is to be denied modern technology and the means of production. They exist only as markets and sources of raw materials.

This is why I concluded that anti-globalists are the enemy of the third world.

[Ramo]

The vast majority of advocates of anti-globalization I've met certainly do not believe Western capital should stay in the West. It's primarily an anti-protectionist movement.

[Imran Siddiqui]

What about the unions, Ramo? They seem to be at the forefront of the anti-globalization movement.

[Ramo]

It's true that the unions are protectionist, however I wouldn't call them at the forefront. The anti-protectionists, not the unions, have been primarily the ones who have been demonstrating, etc. against globalization.

[Adam Smith]

DuncanK:

Another ridiculous assumption that the followers of Adam Smith make is that resources are prefectly mobile.

It shows us that resources are not mobile and therefore perfect competition can not exist.

I'm not saying that gains can't be made from trade.

I'm saying that when companies move operations overseas simply to take advantage of cheap labor (even if they build capital there) the world economy takes a loss.

I can't tell exactly what you are saying, but you seem to be arguing that gains from trade exist only if there is perfect competition; perfect competition is a ridiculous assumption; therefore gains from trade don't exist.

Gains from trade exist any time there is mutually beneficial voluntary exchange. Otherwise, why trade? Perfect competition is the simplest case, a straw man. If there is perfect competition, then we get the full benefits of trade. If any of the assumptions underlying perfect competition do not hold, we still get benefits, but not as much as we could have. The fact taht countries can trade goods which embody their fixed factors of production is just one example of how violation of an assumption underlying perfect competition still leads to the genreal result.

When you say "the world economy takes a loss" you appear to be saying that there are no gains from trade. That is not the case.

[Ned]

Originally posted by Ramo
The vast majority of advocates of anti-globalization I've met certainly do not believe Western capital should stay in the West. It's primarily an anti-protectionist movement.

Anti-protectionism means globalization, not anti-globalization.

I simply do not believe you Ramo. I have a hard time believing that the demostrators are free traders.

[DuncanK]

Originally posted by Ned


I didn't understand what a anti-globalist was. So I asked. I am basing my statements on the answers I got, here, by Duncan and Che, primarily.

What I heard is akin to this: 1st world companies should not place means of production in the third world for three reasons:

1) it hurts the enviroment in the third world;
2) it reduces job opportunities and labor rates in the 1st world; and
3) it makes the world economy more vulnerable to a world recession.

Now that Duncan has brought it up, this somewhat amount to a modern variant of mercantilism where the third world is to be denied modern technology and the means of production. They exist only as markets and sources of raw materials.

This is why I concluded that anti-globalists are the enemy of the third world.

Ned,

I'm not realy anti-globalization. I know there are benefits to trade. I just also know that the system benefits the corporations the most. Also, when the corporations are simply exploiting cheap labor it's bad for the whole system overall.

[DuncanK]

Originally posted by Adam Smith
DuncanK:

I can't tell exactly what you are saying, but you seem to be arguing that gains from trade exist only if there is perfect competition; perfect competition is a ridiculous assumption; therefore gains from trade don't exist.

Gains from trade exist any time there is mutually beneficial voluntary exchange. Otherwise, why trade? Perfect competition is the simplest case, a straw man. If there is perfect competition, then we get the full benefits of trade. If any of the assumptions underlying perfect competition do not hold, we still get benefits, but not as much as we could have. The fact taht countries can trade goods which embody their fixed factors of production is just one example of how violation of an assumption underlying perfect competition still leads to the genreal result.

When you say "the world economy takes a loss" you appear to be saying that there are no gains from trade. That is not the case.

I mean to say that the goods could be produced and distributed more efficiently if they were produced closer to where they are consumed. When a corporation builds a factory overseas and closes one here just to take advantage of cheap labor I call it a loss because overall I believe that less is produced and consumed in the world.

If two nations trade goods because they can be produced cheaper in each respective country regardless of wages then sure, there are benefits.