Basic economics
by David Atkins ("thereisnospoon")
My fiancee is a graduate student at UC Santa Barbara in the Communication Department. Next quarter she is taking a class in economics. Her textbook is International Economics, 13th edition by Robert J. Carbaugh. A quick look at Dr. Carbaugh's CV shows a fairly balanced career with no direct evidence of wingnut ideological fervor. And yet, consider these passages from the first chapter:
International competition helps keep domestic producers on their toes and provides them with a strong incentive to improve the quality of their products. Also, international trade usually weakens monopolies.
I'm sure multinational conglomerates would be surprised to hear that.
As an economy opens up to international trade, domestic prices become more aligned with international prices; wages tend to increase for workers whose skills are more scarce internationally than at home and to decrease for workers who face increased competition from foreign workers...Increased competition also suggests that unless countries match the productivity gains of their competitors, the wages of their will deteriorate. It is no wonder that works in import-competing industries often lobby for restrictions on the importation of goods so as to neutralize the threat of foreign competition...
However, keep in mind that what is true for the part is not necessarily true for the whole. It is certainly true that imports of steel or automobiles can eliminate American jobs. But it is not true that imports decrease the total number of jobs in a nation. A large increase in U.S. imports will inevitably lead to a rise in U.S. exports or foreign investment in the United States.
Note that this is an article of faith among economists. No proof to back this up, nor any significant data. Simply an article of free-market faith.
In other words, if American suddenly wanted more European autos, eventually American exports would have to increase to pay for these products. The jobs lost in one industry are replaced by jobs gained in another industry. The long-run effect of trade barriers is thus not to increase total domestic employment, but at best to reallocate workers away from export industries and toward less efficient, import-competing industries. This reallocation leads to less efficient utilization of resources.
Simply put, international trade is just another kind of technology. Think of it as a machine that adds value to its inputs.
When these sorts of amazingly baldfaced lies aren't being pushed in the text, there is also the total lack of regard for basic human dignity, as when discussing the troubles of farmers in India due to free trade:
The simple solution to the problem of India's farmers would be to move them from growing cotton to weaving it in factories. But India's restrictive labor laws discourage industrial employment, and the lack of a safety net resulted in farmers clinging to their marginal plots of land.
Or this suggestion for how American workers might adapt to globalization:
The way to ease the fear of globalization is to help people to move to different jobs as comparative advantage shifts rapidly from one activity to the next. This process implies a more flexible labor market and a regulatory system that fosters investment. It implies an education system that provides people with the skills that make them mobile. It also implies removing health care and pensions from employment, so that when you move to a new job, you are not risking an awful lot besides. And for those who lose their jobs, it implies strengthening training policies to help them find work. Indeed, these activities are expensive, and they may take years to work. But an economy that finds its national income increasing because of globalization can more easily find the money for pay for it.
If this is the crap that is being fed to basic economics students, it's no wonder that the entire world's leaders have gone seemingly insane when it comes to economic policy. The entire economic profession has gone insane or been utterly corrupted.
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