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Lawrance G Lux

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Benefits of Trade
By Lawrance G Lux
Last edited: Thursday, November 27, 2003
Posted: Thursday, November 27, 2003

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This is only a sketch of my ideas, and does not make pretence of being literature.

Trade contains many complex elements. Exports actually conjure Externalty Costs to Consumers, as Exports reduce domestic supplies; this inciting a increase in Price, to buy limited supply or capitalize excessive supply. This Externalty Cost is not computed in most analysis of Trade, but it is very real and present.

Imports compete with domestic supply, and thereby constrict domestic production; this producing excessive Capital Costs, loss of Labor Wages, and inferior Growth rates due to less Profits and Wages.

Trade, after all this is said, must be considered essential and benefical; especially in Resource aquisiton. The above elements do impact, though; generating a examination of Trade in terms of volume, as Trade moves from a Plus to a Negative.

I have conducted some rudimentary evaluations, and believe no more than 3.7% of GDP could be effected by Trade. For this analysis, I have used some observations of the German economy during the two World Wars, minus the munitions industries.

I believe Trade must be considered in terms of a Bell curve, whose apogee should therefore be 3.7% of GDP. The baseline should be the level of Imports. The left half of the Bell curve reflects benefical trade, while the right half of the Bell curve reflects externalty costs of Trade. This is considered the normal split with Imports equaling Exports. Export surplus shifts the benefit line to the Right, while Export deficits shift the benefit line to the Left.

The Above seems like an appropriate means to evaluate Trade benefit or loss.

Lawrance George Lux



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