Re: investment and unemployment

[Warren Mosler <mosler@xxxxxxxx>]

"ÁÎ×Ó¹â Henry C.K.Liu ¹ù¤l¥ú" wrote:

> Paul Davidson wrote:
>
> > At 11:47 AM 04/07/2000 -0400, Warren wrote:
> >
> > >Comparative advantage also assumes full employment as a precondition.
> > >Perhaps that is the most 'misunderstood' points among economists?
> >
> > Absolutely correct. Comparative advantage for the open economy is the
> > equivalent of Says Law for the closed economy.  It just is the wrong
> > principle  unless there is global full employment as i
> >   have noted in a number of places including THE ECONOMIST.
>
> The above conclusion is theoretically water tight. Since we are far from
> global full employment, not even near zero structural unemployment globally,
> and not likely to be in the foreseeable future, a condition that itself may
> be structural to the existing trade regime, does this mean that trade

I assume you meant 'free' trade?

> is in
> fact counter-productive economically unless full employment is set as a
> pre-condition?  Anti traders have made the argument that the net effect of
> trade on employment is in fact negative in many economies, even though
> positive in the export sector.  The AFL-CIO thinks it is true even in the
> US.  What is the post Keynesian view on this?
>
> Henry C.K. Liu

--
Warren Mosler
Director of Economic Analysis
III Finance

http://www.warrenmosler.com