Archive for the ‘New Trade Theory’ Category

Krugman’s New Trade Theory Would Be Idiotic, Were It Not So Criminal, Enslaving Us All To China 

June 9, 2020

A problem preventing progress in the USA, thus the world is that plutocracy masters (and owns) the media, the universities, the international prizes, international organizations, and the intellectual discourse, even the haughtiest (as I have argued all top philosophy is in its grip, over as a vaccine against progress, rather than as a treatment against progress).

A famous example, the self-described “Conscience of a Liberal”, Paul Krugman. I stopped arguing with him, a few years ago, because I was tired of his censorship, and I was hoping Trump would demolish Krugman’s great work, GLOBAL PLUTOCRACY, and becoming all slaves to China. Krugman got the Nobel for his “New Trade Theory”. There have been Trade theories and practices since before the Bronze Age Era, the civilization of which collapsed spectacularly, and simultaneously, 33 centuries ago. 

Trade is engaged into for a myriad of complex reasons, from the point of a lance poking one’s behind, to “comparative advantage”. Trade was a matter of survival for hundreds of thousands of years, as local tribes couldn’t get that obsidian, or flintlock from far away, that is, necessary material to make superior weaponry. So much of trade theory consists into rediscovering the obvious and long-well-known. 

Even if it worked, NTT would work only between similarly sized countries. But China is much bigger, 40 tiimes bigger than the average country in population. I guess Krugman is reading that her for the first time…. And because it’s a dictatorship organized by US plutocrats, another type of dictators, decorated fro freedom by Obama, China is alway first, an advantage NTT venerates…

In NTT Krugman focused on returns afforded by scale. The bigger the industrial corporation, the cheaper quality/price it can fabricate goods. Krugman loves to talk in non understandable ways, here is on his own work: “The idea that trade might reflect an overlay of increasing-returns specialization on comparative advantage was not there at all: instead, the ruling idea was that increasing returns would simply alter the pattern of comparative advantage.” Whatever, the “Conscience of a Liberal” tries to obscure his evil work with what he calls “wonkish”.

New trade theory suggests that the ability of firms to gain economies of scale (unit cost reductions associated with a large scale of output) can have important implications for international trade… namely you will wallop the competition.

New trade theory suggests that: 

a)through its impact on economies of scale, trade can increase the variety of goods available to consumers and decrease the average cost of those goods.

b) in those industries when output required to attain economies of scale represents a significant proportion of total world demand, the global market may only be able to support a small number of enterprises.

c) Government may play a role in assisting its home based companies. This implies that all jobs will go to China, a dictatorship. Indeed, Chinese companies can achieve the largest scale: their interior market is nearly five times the US. Also it’s OK that China intervenes to assist its own behemoths: see point c).

Reading this, Stalin may have ordered Krugman send to Siberia for plagiarism. Stalin used to say:”Quantity is its own quality”. (He was referring to T34 tanks and planes, many of them from the US…) My point? none of this is new. What’s new is for richly educated economists (as they serve the rich) to discover those old truths.

As most Western European countries have no scale, they are just Hong Kong without financials, they will only be nations of “consumers”. But where will their money come from? Will they have to sell their children to the Chinese dictatorship?

“Variety And Reducing Costs” (one more lie!)

Without trade, nations might not be able to produce those products where economies of scale are important. With trade, markets are large enough to support the production necessary to achieve economies of scale. So, trade is mutually beneficial because it allows for the specialization of production, the realization of scale economies, and the production of a greater variety of products at lower prices.

NTT is either geographically challenged idiotic… Or takes us for geographically challenged idiots. His idiotic reasoning works only if the trading partners are all of the same size, roughly, and of the same political nature. But they are not. The average country population is only 35 millions, and the median country population is less than ten million, a fraction of one percent of the size of China. 

NTT is correct that the pattern of trade we observe in the world economy may be the result of first mover advantages (the economic and strategic advantages that accrue to early entrants into an industry) and economies of scale.

New trade theory suggests that for those products where economies of scale are significant and represent a substantial proportion of world demand, first movers can gain a scale based cost advantage that later entrants find difficult to match. The US and China have been acting accordingly, while piously preaching the opposite, namely economic liberalism, open borders. An excellent example is SpaceX, launched under Bush, which received billions under Obama, under the table (and above the table, from Trump). Now Space X excellent products will destroy all and any aerospace industry, worldwide… except in the countries which decide to have their own aerospace (China, Russia, India… others not clear…).  

Official Implications Of New Trade Theory:

Nations may benefit from trade even when they do not differ in resource endowments or technology (so the Europeans have been persuaded to open to China and the US, because they may benefit… just like a fly may benefit from being devoured by a spider).

A country may dominate in the export of a good simply because it was lucky enough to have one or more firms among the first to produce that good (as we Americans are always first we shall DOMINATE, because we dominated first). Bing first becomes a respected form of comparative advantage (watch Tesla opening a giant plant in Germany next year).

An extension of the theory is the implication that governments should consider strategic trade policies that nurture and protect firms and industries where first mover advantages and economies of scale are important.

If progressives want to progress towards human rights and a better planet, they will have to learn to realize they have been led by crooks who made “theories” to justify the disappearance of local employment, dignity, education and income, fostering instead exploitation by a dictatorship.

Does Krugman realize what an abominable role new Trade Theory has played in the imposition of global plutocracy? Apparently not. He spews, editorial after editorial, horrible insults about Donald Trump… But, remove the insults, and the substantial thing he complains about is less “New Trade”, a euphemism for selling the world to China, in exchange for getting cheaper goods, which presumably we will pay for with money produced by China, as China produces everything…

In many countries, dozens of thousands of death happened, during the Corochinavirus, because everything, including masks, were made in China. Thanks, NTT and its comparative advantage to… China. China had no more death than Sweden (China lies, of course) All these deaths in these other countries would not have happened if we had the right NECESSARY TRADE THEORY.

As long as the crooks and even their crooqkery, have not been detected… where is the hope?

Patrice Ayme