Trade for trade sake?

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In response to the pending and current international trade situations (CNOOK, POTASH, etc) I made the observation "Canadians sell off the raw natural resources only to buy them back again as processed, value-added goods... creating the economic multipler known as jobs in other countries." and called for an end to this behavior

It was recently presented by a commenter that "if the Chinese have cheaper labour let them manufacture the consumer goods so people here can focus on other goods or services. Then they can trade to the benefit of both parties. It's a pretty good deal."

That attitude might be all well and good if there were to be sufficient demand for those "other goods and services" to replace all the jobs lost to 'cheaper' Chinese manufacturing processes for those consumer goods...

But, since most of the "labor" involved in goods production is pretty ubiquitous wouldn't the same 'cheaper labor" eventually apply to those same "other goods and services" Then would this eventuality - spiralling of jobs transferring to areas of lowest labor cost - create an effective global race to the bottom of wages, and living standards, in order to maintain a minimum level of employment?

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Recent comments

  • i agree
    November 24, 2012 - 22:54

    The UK lost most of its primary producers (mines, manufacturing, etc) and became a net importer and an economy of goods & services providers because its currency was strong and it "made sense" financially - what a mess over there now!