I'm not sure I understand you. We spend some of our productive
capacity making the stuff we sell in order to buy the 3% of our
consumption that are imports from poor countries. If those imports
were shut off, we would take that 3% of our productive capacity and
devote it to some other use. We wouldn't get the whole 3% back, but
we'd get some back.
I sense an ambiguity in the definition of "wealth" here. I'm acting
like a national income accountant, and you're acting like a
neoclassical economist, but one who wants a quantitative measure of
the gap between the indifference curves we are on and the
indifference curves we would be on if trade with poor countries
stopped tomorrow.
One thing is clear: if trade with poor countries stopped tomorrow,
*all* of Hawaii would quickly become one big coffee plantation...
Brad DeLong
>>>>>>>>>>>>>>>>>>>>
You render me too profound. All I'm saying is the
price paid for whatever is extracted from colonies
is likely to be less than in a situation where the
power relations were moved in the reverse direction--
where there was sufficient self-government or whatever
in the periphery to enforce a better deal for what is
extracted and exported.
>From the standpoint of income accounting, this means
net exports measured in actual 'market' prices is
biased upward. Imports are worth more than they
cost. I would expect this rent to show up in the
price of whatever products the imports contribute
to. In other words, the U.S. buys copper from
Mobutu for X per ton, whereas under Lumumba it
would have cost 2X per ton. So the value of a
ton means imports are understated by X, but the
extra X shows up in the price of copper wire
manufactured in the U.S.
Seems to me Doug's question is what is the
effect of the extra X on the growth rate.
And the sum of X's, properly discounted
to present value, is the reparations the
U.S. owes Zaire.
I don't do utility.
My reference point is the medieval notion of
just price.
mbs
