Exports and Employment / by kevin murray

Trade between different countries and different cultures has been around for millenniums, in which, the basic theory, stipulates that one of the main reasons that countries trade with each other, is that one country may lack a natural resource such as oil, or even the ability to grow or produce food items efficiently, whereas another country has a comparative advantage over another country in the production of certain goods, because they have cheaper labor, better natural resources, and/or better tools, so that the invisible hand of commerce creates an equilibrium between the demand and the supply of goods, globally, creating a more efficient world of which, consumers of such, as well as nation-states, are able to reap the benefits of more goods, available for a cheaper cost and price-point than if the world was non-globalized.

 

Of course, it doesn't take a genius to recognize, that the true value of goods, especially over the long term, may not be determined correctly by people, let alone countries, for within the general give and take of trade, it is not always a win-win scenario, but more often one country or one people receives far more in its trading value than the other party, depending upon many factors, including the sophistication of the parties involved; for detailed information, analytics,  and intelligence,  is of immense value, in comprehending the appropriate value of a given trade.

 

So too, not all markets, are fairly balanced, that is to say, within a country, domestic manufacturers can be and have been undercut by foreign imports into their country, in which the domestic manufacturers cannot possibly compete, not because they are incompetent or inefficient within their domain, but mainly because they do not have the sophistication of tools, or the cheaper labor, or the tax advantages, or the subsidies that have been created by the foreign competitors in order to undercut their pricing, and thereby, take their market share away.  While, the domestic consumers of such foreign products, may indeed be able to purchase goods at a lower price-point, there are unintended consequences for this happening, in the sense that domestic labor will now suffer reduced employment in that field, and hence will require more governmental unemployment as well as other social services aid, in addition to the fact that domestic industries that are decimated by foreign imports, can often result in bankruptcies, and  fundamental changes in capital investments domestically, that will reduce the diversity and breadth of such investments in countries, that now will rely almost exclusively upon certain foreign goods to sustain their needs, without having a voice on those practices within those countries.

 

Additionally, part of the reason why exports are so important to manufacturers in the first place, is that when monies are not allocated fairly to the greater society as a whole, than the very people that live within that society, are unable to purchase goods domestically, not because they have no desire to do so, but primarily because they do not have the necessary monies to do so.  This creates a dangerous feedback loop in which the manufacturers of such; care more about profits and new markets through export, than helping to create employment domestically and thereby ameliorating domestic labor situations, instead of leaving that trouble to government agencies and government departments to address.  This then creates a mindset within manufacturers that they must have access to foreign markets in order to maintain their growth and profitability so that such exporting is the only perceived way that they can compensate for having domestic markets that are unable to purchase all that they have to sell at a fair price, in which because of these exports, the importers of such, find that some of their domestic institutions and employment are adversely impacted.