Deadly Innocent Fraud #5: The trade deficit is an unsustainable imbalance that takes away jobs and output. Facts: Imports are real benefits and exports are real costs. Trade deficits directly improve our standard of living. Jobs are lost because taxes are too high for a given level of government spending, not because of imports. By now you might suspect that, once again, the mainstream has it all backwards, including the trade issue. To get on track with the trade issue, always remember this: In economics, it’s better to receive than to give. Therefore, as taught in 1st year economics classes: Imports are real benefits. Exports are real costs. Hopefully if everyone has grasped the fundamentals of MMT so far, Warren Mosler’s arguments won’t need any further explanation. It is difficult to disagree with them per se but the advocates of MMT may lose many of those who should be friends and allies if they are pressed in too insensitive a fashion. At the time of writing, 300 Qantas workers are reported to be about to lose their jobs in Melbourne. Due to the strength of the A$ it makes sense for Qantas to service their planes overseas rather than in Australia which is likely to turn out be the real, if not the stated, reason given by Qantas management. IMO . It is a typical case of an imported product replacing a local product. It is doubtful Qantas workers will be too receptive to an argument of “Imports are real benefits. Exports are real costs”. They may well be real benefits to Australia as a whole in terms of increased profits to Qantas and even in lower fares for Qantas passengers. Increased government spending could help find extra jobs for Qantas workers but they might be forgiven for thinking that to be extremely unlikely in the current political climate. The new jobs may well be less skilled and less well paid if if they are created. WM seems to be aware of potential problems in pushing this argument too far. Later in his book he allows that “Industries with Strategic Purpose” shouldn’t be totally exposed to the mechanisms of a free market. The example given is the US Steel industry. Steel would not be the only strategic industry. Just about any industry can be considered to be strategic, to a greater or lesser extent, even the operation of a commercial airline. So some care is probably in order with this argument, and maybe extra thought too on just what constitutes a ‘strategic industry’.
Archives
Pages
Topics
Blogroll
- 3 spoken
- alittleecon: There is an alternative
- Bill Mitchell – billy blog
- Bond Economics
- Human Rights Political Journal
- Mike Norman Economics
- Modern Money Mechanics
- Modern Money Mechanics MMT Simplified
- Modern Money Network
- Mugwump Post
- New Economic Perspectives
- Ralphonomics
- Think Left
- Warren Mosler – The Center of the Universe
- What Is Modern Monetary Theory? Robert Nielsen
Past Posts
- A Fairy Story
- A Lesson in Economics from Stephanie Kelton !
- A looming demographic time bomb?
- A Simple Four Sector Model of an Economy
- An economic quiz!
- An Independent Scotland will need its National Debt!
- Are Government Bonds Just Another Form of Money?
- As an online economic discussion grows longer, the probability of a comparison involving the Weimar Republic or Zimbabwe approaches 1
- “All of the economic research that allegedly supported the austerity push has been discredited”
- Balancing the Budget !
- Big Scary Numbers #2: Everyone in the UK owes £34,281.54
- Big Scary Numbers: Like the UK National Debt is £2,228,300,000,000
- Bill Mitchell and Randall Wray
- Booms and Busts
- Boots, Economics and Politics
- Borrowings and Lendings
- Budget Deficits: a Burden to our Children and Grandchildren?
- Can commercial banks create money out of thin air?
- Can Commercial Banks Create Money out of Thin Air? #3 The “creation of money” by private banks in the process of lending leads only to the removal of money from the economy
- Can commercial banks create money out of thin air? (2)
- Can government debt ever be termed good, bad or irrelevant?
- Classical economists don’t understand real people or real economies.
- Do we need to balance our books in Australia? Yes, maybe, except they already are!
- Doctor Who and the Dalek invasion of Planet Earth 2150. The MMT version.
- Economic Imperialism: Fact or Fiction?
- Ed Balls Promises to Wreck the UK Economy by 2020
- European lemmings!
- European lemmings!
- Eurozone electors have been sold a lemon!
- Follow me on Twitter?
- Future Funds and a Biblical story.
- German euros and Greek euros. Are they really the same?
- Germans don’t understand how currency unions need to function.
- Germany vs Greece. The end game?
- Germany vs Greece: The battle commences!
- Greece hasn’t got a debt problem. It has a lack of growth problem!
- Greek debts cannot be repaid in euros!
- Help! Australia is Running out of Money!
- High Unemployment in Britain is its own Government’s Fault. No-one else’s!
- How come that nearly everyone, gets it all wrong on money and the economy?
- How to Balance the Government Budget. The MMT way!
- How to Balance the Government Budget. The MMT way! (Part 2)
- How to win and lose elections
- How to win and lose elections. (2)
- I don’t promise to pay the bearer on demand… but we’ll give you two fives for a ten!
- If Dollars and Pounds are Really IOUs it Must Logically Follow that Government Debts Need Never be Repaid!
- Is there really a “skills shortage”?
- John Quiggin, MMT and Russia
- Keeping it Simple
- Loan repayments destroy credit money. Right? Wrong. They don’t.
- Loan repayments destroy credit money. Right? Wrong. They don’t. (Part2)
- Loan repayments destroy credit money. Right? Wrong. They don’t. (Part2)
- MMT – Economics for the Political Right?
- MMT Humour
- MMT Humour – Money and Babies
- MMT is gaining followers!
- MMT: The antidote to nonsensical economics.
- MMTers: Does Adair Turner have a point?
- Money, Government Bonds, and Quantitative Easing
- More on why fiat currencies have a value.
- Muddled Thinking Watch # 3 Hugh Pym of the BBC with his coloured sweets
- Muddled Thinking Watch #2: The Bank of England is wrong… in its claims QE creates no inflationary pressure writes Andrew Lilico
- Muddled Thinking Watch #4: “British economy too reliant on people spending money” Christine Lagarde IMF!
- Muddled Thinking Watch #5: “Increase taxes to balance the budget, the revenue well is not dry” Greg Jericho. The Guardian.
- Muddled Thinking Watch #6: Trade figures show long road ahead to rebalance Britain’s economy. Larry Elliot. The Guardian
- Muddled Thinking Watch #7: Chuka Umunna on Labour’s pre-GFC Deficit
- Muddled Thinking Watch: “We will need decades of austerity not years” writes Philip Booth in the Daily Telegraph
- Nationalisation Costs Nothing and Privatisation Raises Nothing!
- Neo-liberal thinking!
- Neo-Liberalism virus infects the UK Labour party! They want a government surplus without a trade surplus!
- Never mind the deficit just vote for the recovery!
- No government debts need ever be repaid !
- Note to the beancounters of this world: If you plant beans, you can grow more beans!
- On BBC tv NEWSNIGHT
- One (or maybe slightly more) Line Responses to Common Neo-liberal Arguments
- Positive Money : A Fallacy Built on a Little Known Truth. (Part 1)
- Positive Money : A Fallacy Built on a Little Known Truth. (Part 2)
- Positive Money : A Fallacy Built on a Little Known Truth. (Part 3)
- Revaluing the Swiss Franc
- Spending = Income! The Government needs to run a deficit to balance the books!
- Stand by for the next UK crash! ETA 2016
- Steve Keen Explains why Quantative Easing is not Inflationary and can’t simply be Considered Money Printing.
- Tesco announces plans to open 40 new skips across country
- The British left needs to discuss more than the UK’s membership of the EU.
- The Concept of Money Speed. Fast and Slow Money.
- The Earth is not flat!
- The economics of a budget surplus: Something to think about before making rash promises
- The EU: Progressive or Reactionary?
- The Euro Cannot Survive Without Greece!
- The Euro could work so why doesn’t it?
- The Government isn’t living beyond its means!
- The Half-Life of Money
- The Japanese own their own debt so they don’t have a problem. Right?
- The National debt: Is it a bad thing and is it too large?
- The world owes $57 trillion. Who the F*** to? Mars? Jupiter?
- The world owes $57 trillion. Who the F*** to? Mars? Jupiter? #2
- Thoughts on the Euro
- Three Sector Balances Haven’t Gone Unnoticed by the Economic Mainstream
- Tony Benn (1925 -2014) An honourary MMTer?
- Tony Benn: Every time I see a person in a cardboard box in London I think that person is a victim of market forces!
- UK Debt is a Myth!
- Unemployment, Currency, Taxation and the Job Guarantee ! The MMT view.
- Unfunded Promises? No such thing!
- Want a Budget Surplus? Easy. Devalue the Pound!
- Want to make your business card worth something? Easy. Start a protection racket!
- Warren Mosler’s Department Store Analogy – An Extension
- Warren Moslers 7 Seven Deadly Frauds of Economic Policy #1
- Warren Moslers 7 Seven Deadly Frauds of Economic Policy #2
- Warren Moslers 7 Seven Deadly Frauds of Economic Policy #3
- Warren Moslers 7 Seven Deadly Frauds of Economic Policy #4
- Warren Moslers 7 Seven Deadly Frauds of Economic Policy #5
- Warren Moslers 7 Seven Deadly Frauds of Economic Policy #6
- Warren Moslers 7 Seven Deadly Frauds of Economic Policy #7
- Wasting Resources and Wasting Money. Which is worse?
- What Is A Government Bond?
- What is the National Debt? A Ultra Short and Simple Explanation.
- What the Government don’t want you to know about taxes! But it’s easy enough to work out anyway.
- When Joe says he wants a surplus, he means for government but a deficit for everyone else!
- When Joe says he wants a surplus, he means for government but a deficit for everyone else!
- Who controls the economy?
- Who’s running the smarter economy: the UK or Germany?
- Who’s running the smarter economy: the UK or Germany? #2
- Why do they lie to you?
- Why Governments Can’t Choose to Run Balanced Budgets #2
- Why Governments Can’t Choose to Run Balanced Budgets.
- Why not give control of the fiscal deficit to the Bank of England?
- Why, sometimes I’ve believed as many as six impossible things before breakfast. (or what’s so hard about MMT)
Podcasts
Recommended Links
Twitter
Videos
Info