The key logical fallacy in the case made by mainstream economists for free trade - Politics | PoFo

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A 28.25 minute talk by Prof, Dr. Steve Keen.

Ricardo's theory [a 200 year old theory by the "economist" and (literally) con man, Mr. Ricardo] of trade is in many ways the foundation of conventional economic thinking: output and welfare can be increased by removing barriers to markets reaching equilibrium prices. In this case, the barriers are restraints on international trade, and output and welfare are increased by each country specializing in the good(s) in which it has a comparative advantage.

The key fallacy in the argument is the belief that machinery can be switched from one industry to another without loss. They can't. Machines are specific to each industry, a simple reality that mainstream economists have ignored for two centuries.

When you take this into account, machinery is in effect destroyed [or sold and moved to another country] in the less competitive industries when trade is deregulated, and whether trade enhances output and welfare in the long run depends more on investment and economies of scale than on specialization.

Link :
This reminds me of when I was a night security guard in a toothpaste tube factory. All the equipment was imported from Germany along with the Germans to install it. Just to make toothpaste tubes. You take a round aluminium pellet and strike it really hard. :)
Decky wrote:We had Thyssen-Krupp coming in to install machines in the land rover factory when I was working there. :knife: Yes that's right as in Krupp armaments. Who won the damn war anyway?

The damn capitalists, Decky. That's who. :hmm:
You all,
There is not one reply that is on point.
Economics tries to prove things by logic, Deductive logic.
The thing is deductive logic starts with assumptions. Premises, definitions, axioms,postulates, etc.
To prove things all the assumptions *must* be true.
Formally, it goes "IF A, B, C, D, & E are true, then F is true." But, F is only true *IF ALL THE ASSUMPTIONS ARE TRUE*.
Macroeconomics can't deal with the real world so it makes "simplifying assumptions" about it. Many of these are obviously false.
An example, Assume that all the players in the market have full and complete knowledge about all relevant facts about the transaction being made. This is obviously false. any proof that relies on this assumption is therefore, invalid.
How in the world does anyone at all let economists get away with this?
Here we see economists assuming that the capital in the 2 countries is like money and can easily be converted from making steel into making wine. Nuts.!! Double nuts because the grapes take years before you see enough of them to make wine. Plants take time to mature. Decades even.
Yes, reality doesn't care what economic theory is being used, but there are powerful forces in the economy that do care. Truth doesn't matter to them. What matters is their personal bottom line.

For example, one to 2 decades ago a billionaire gave millions to endow a Univ. in the south [Univ. of Georgia?] to fund an Economics Dept. on the condition that it only or mostly teach the Austrian School of Economics. Of course they took it.
There are of course the whore-scientists who do what they are paid to do; however, ideology is a far more potent drug to induce bias. People who see everything though the prism of socialism or the free market forget that these models of the economy are just abstractions, which leave out a lot of substance. Both don't even exist in their pure form. Most economies are regulated and most economies have a social component. Instead of talking about such abstracts, it would be more useful to consider which form of the social market economy is most suited to which economy.

Furthermore, more important than theories of this type are drivers such as imperialism and technological innovation, which are largely ignored by economic theory. "Free trade" regulated to the advantage of the empire is not the same as free trade regulated in the common interest of all market participants.
Eight replies and not one has disagreed with this main point.
That the whole basis of free trade being a good thing is based on a false assumption.
In so far as people see that free trade has hurt them or their nation, they think they see evidence that proves that free trade is not a good thing.
So, the theory based on a false assumption and evidence that the theory doesn't work as promised === the theory is full of shit.

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