Saturday, May 24, 2014

Essence of free trade

The essence of free trade: Buy the products you do not have an advantage (low-wage products for us) and sell those products that we have advantage (Hollywood, high tech, farm products...). You do not want to grow sugar cane in Alaska as an extreme example.

The US is one of the few countries in the world that we can cancel trading with foreign countries for the sake of more jobs. However, we have to enjoy a $50 toaster and dump all the chicken feet to the ocean instead of shipping them to China as a delicacy there.

As times go, China will move up the value chain (today, it is far higher than 10 years ago). China depends on trade more than us. That's why they are loaning us so much. However, at one point they have to kill the goose that lays the golden eggs for the remaining meat or bones for soup.

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