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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: neolib who wrote (261044)	4/8/2008 8:54:46 PM
From: TimF	Read Replies (3) \| Respond to of 281500

I wouldn't go as far as saying trade deficits don't matter. I think that their importance may be overrated by some, and generally their exact results not very clear, but "not matter", no I wouldn't say that or agree to that. The correct way to make the argument would be to say: We should retreat from this field, because they can do it better (i.e. cheaper) and instead concentrate on this other field, because we can do it better But that isn't really the free trade argument. A free trade economist wouldn't rightfully tell anyone to retreat from any field, he would rather allow competition, and whoever picks up market share picks up market share. The idea of some command to retreat from a particular market because the economist doesn't think someone can compete would not be a free market idea. If we lose most semiconductor fabrication to China I don't see that happening, at least at the high end. I guess, in addition to my more libertarian ideology, and free market economic understanding, I support free trade more than you do because I'm more confident in America. I don't think that we can't compete in general with China or other countries. The larger a potential market becomes, the more likely IMO, that a single player might capture the market because of economies of scale. Even the biggest markets don't generally have economies of scale such that one company serving the world market will have a serious scale advantage over two or 10 companies serving the market.