Does International Trade Lower W

["Peter.Dorman" <23215MGR@xxxxxxx>]

A few quick thoughts in reply to Nathan's post about the ECONOMIST.

(1) I would be interested in how "unskilled" labor is defined.  Much of the
transfer in employment has been in occupations commonly defined as
"semiskilled".

(2) To what extent should we expect reductions in labor costs to be passed
through as lower prices?

(3) Many of our imports from developing countries are indirect and do not show
up in the trade stats.  For instance, a considerable percentage of the value
added in Japanese-produced cars is attributable to intermediate inputs from
lower-wage East Asian countries.

BTW, I spent the week constructing and then deconstructing neoclassical trade
theory for a class I am teaching.  I must say I found Daly & Cobb's critique
(from FOR THE COMMON GOOD) less compelling than when I first read it.  (I used
it as an assigned reading.)  The fixation on capital mobility is misplaced, in
my opinion.  Or, more exactly, capital mobility is a necessary but not
sufficient basis for the replacement of comparative advantage with absolute
advantage. The missing piece is exchange rates, of course, and there is no
critique in their work of the role exchange rates play in mainstream theory.
I was somewhat irritated to have to develop this on my own in class.  Does
anyone out there know of a reading that does this and is suitable for
undergraduates?

Peter Dorman