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Strategies & Market Trends : India Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (352)	2/27/2004 12:48:35 PM
From: Sam Citron	Read Replies (1) \| Respond to of 2517

OK Cary, that's a valid criticism. I did not think it necessary to do a scientific study to prove that free trade regimes provide many benefits to autarchic ones. The basic argument from classical economics is that free trade encourages specialization of labor and comparative advantage. Rather than aiming at self-sufficiency, we are best off doing what we do best in the world and trading for the rest. I don't know that I have ever seen a formal proof of the logic of this. I can remember reading in the Wealth of Nations Smiths' persuasive argument that England would be better off if it set the American colonies free and allowed them to freely trade their goods instead of keeping them as colonies. You might have take a look at Book IV, Chapter III Of the extraordinary Restraints upon the Importation of Goods of almost all Kinds, from those Countries with which the Balance is supposed to be Disadvantageous as a starting point. econlib.org I would warn you, though, that economics is a "soft science" and the real world is not a laboratory upon which you can do scientific experiments with precision [no ceteris paribus controls are possible] so you may have to relax your evidentiary standards a bit. Perhaps now that one cannot escape noticing rising misery in Silicon Valley, it is appropriate to reexamine our assumptions. I'm glad you are rethinking the issues. That's always a good thing. Sensitivity to what is happening by close observation of sensory data is most encouraging, especially in mature individuals with great experience and investment in perceptual filters. The best economists IMO got their start in the field by observing poverty and human misery at close range and asking why. Empathy and compassion are always the best starting points. I strongly disagree with your characterization of the US position on trade as altruism. Free trade benefits all but it probably benefits the rich, the intelligent, the mobile, the entrapreneurial, the most flexible and those with the best communication infrastructures most of all. They are simply the best and most informed traders. That generally defines our traditional comparative advantage. Ironically, specialization of labor, which is promoted by free trade, can also produce a certain amount of rigidity as we may train many years to do something that may be highly valued and suddenly the price of these services declines abruptly due to foreign competition. The speed of this adjustment due to the sudden build up of the telecom infrastructure in India is unprecidented. It is as if a dam has been broken. An Indian software engineer wishing to sell his services at the highest wage need no longer apply for a visa to enter the US. He can now choose to work at any one of dozens of Indian companies that now do such work online. We have now wired the world and in the process have lost the online monopoly. Had we the foresight to carefully think through the consequences in advance, I can not help but wonder whether we might have "chosen" to develop the internet at all. Perhaps this issue also deserves to be an open question - whether all the labor-saving machinery in the world increases or decreases human misery. As an investor, I think I have the best job in the entire world. The job training is not particularly arduous. I have the best boss in the entire world. I get to choose my own inventory level and stock in trade as business conditions change. I can invest most anywhere in the world as long as there is a free capital market. I know the exact worth of my stock at every moment. I do not need to pay exhorbitant rent for a fancy office to attract the best customers. I can easily find markets with high liquidity and low trading costs. I have no employees I need to pay. And I have the opportunity to sharpen my skills every day by conversing with other traders and observing the market. For me, it affords a flexibility that practicing law did not. In that over-regulated field one can not even practice in another state without facing a mountain of red tape and licensing issues. I sometimes struggle with the issue of what the stock market investor contributes to society. Like anyone else I pay my taxes and do a little volunteer work in my community. My father practised law and invested as an avocation. He had no time for anything else, not even his children. He commuted two hours per day to his job in NY and spent another hour a day showering, shaving, doing the suit and tie thing. I'm a little more unkempt but much happier and I have much more time to enjoy with my children, to whom I will certainly convey my enthusiasm for the most rewarding and flexible job in the world. I read an interview with Marc Andreesen (sp) in which he suggested that EEs who lost their jobs could retrain to work in the biotech industry. He didn't seem to realize that "retrain" has not usually meant acquiring a Phd in a new discipline. This is true. It is also true that most biotech jobs can also be outsourced. Believe me, India and China are working at it. Protectionism is not the answer though. I believe the answer is entrepreneurship. There are no more safety blankets. We have inadvertantly leveled the playing field forever. The game is on! Sam