Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
In the February 15 issue of the Journal of Commerce Magazine, University of MD economics pofessor Peter Morici makes a distinction between "free trade" and a new term that he coins "open trade":
No economic policy could better serve Americans than genuine free trade, but open trade policies are failing Americans.
He explains how currency manipulations are actually preventing Americans from reaping the benefits of trade:
The U.S. exports $1.6 trillion in goods and services a year, and these finance a like amount of imports. This raises U.S. GDP by some $170 billion, because workers are about 10 percent more productive in export industries, such as software, than in import-competing industries, such as apparel.
Unfortunately, U.S. imports exceed exports by another $400 billion, and workers released from making those products go into non-trade-competing industries, such as retailing, where productivity is at least 50 percent lower. This slashes GDP by about $200 billion, overwhelming the gains from trade, and requires displaced workers to accept lower wages.
The entire piece is worth reading. Go to: http://www.joc.com/node/416649
Journal of Economic Literature:
Atlantic Economic Journal: