Umm, well….

This is simply wrong. It is not true that we are outright losers from exports, and it is unambiguously not true that we are the only winners from imports, at entire cost of those who export to us.

At which point he bumbles off to talk about money being used in settlement.

But imports are the point of trade, they’re the work of others that we get to consume. Exports are a cost to us, they’re our work that others gain by consuming. Tracking pieces of government issued paper doesn’t change that.

17 comments on “Umm, well….

  1. Murphy criticises Bill Mitchell because…..

    “First, it seems Bill cannot help but be hyper-aggressive….

    Second, Bill turns tedium into an art form….

    Third, and by far the most important, is the fact that Bill is just so often hopelessly wrong.”

    Murphy is beyond parody.

  2. “Whether on his blog or in person his [Bill Mitchell] presentation ability is dire. I [Richard Murphy] frequently give up the will to live long before getting through a third of one of his ramblingly incoherent blog posts. No wonder he can accuse people of not reading all he has written. Even if you were willing to do so and survive the experience you would often be none the wiser, so confused is his presentation of what are essentially simple ideas.”

    Comedy Gold from the master of the 15 line long unpunctuated sentence

  3. so Richard Murphy – degree in economics and accountancy from southampton who trained as a chartered accountant and is a professor in practice for 3.5 days at a technical college versus Mitchell holds the following degrees: PhD in Economics, University of Newcastle, 1998; Bachelor of Commerce, Deakin University, 1977; and Master of Economics Monash University, 1982. He completed a Master’s Preliminary at the University of Melbourne in 1978 (with first-class honours).Since 1990, Mitchell is a professor at University of Newcastle, New South Wales. From October 2012 to 2014, Mitchell was a Professor of Economics at Charles Darwin University, Australia. I know who my money’s on to understand MMT better. It also appears Mitchell has a sense of humour “Mitchell often refers to the economics discipline, and especially the academia, in disparaging terms, stating, only half-jokingly, that his work as a musician does less damage to people. “I think my economics profession is very dangerous,” he says” Against the potato with his vanity and paper thin tolerance of any criticism .

  4. I own a company that makes widgets. The domestic market is saturated. I learn that industries in a foreign country need widgets which I can supply at a competitive price. I sell widgets to those foreign industries. To the dismay of ivory tower economists, I benefit greatly therefrom. This is what they call “exports.” I call it “marketing.”

    The party line on exports is so far off the mark that it’s obvious that the theoreticists have never ever had to run a business.

  5. I’m sorry, all this ‘imports are the bit we want’ stuff is bollocks. Its entirely possible for a country import nothing and export lots. Would that country be impoverished? No it would be very wealthy.

    Whereas a country that imported lots and exported nothing would be bankrupt in short order.

    I know which country I’d prefer to live in.

  6. I sell widgets to those foreign industries. To the dismay of ivory tower economists, I benefit greatly therefrom. This is what they call “exports.”

    Specifically, you benefit because you happily receive foreign currency in return: currency which can then be used to buy those countries’ exports (or a mix of exports and assets.)

    Whilst you yourself may not wish to buy foreign stuff, you know that others do and will happily trade currencies with you.

    Its entirely possible for a country import nothing and export lots. Would that country be impoverished? No it would be very wealthy.

    Why would it export stuff in return for nothing? That’s like spending a lot of time and resources making stuff then piling it in a big heap and burning it. In fact that would probably be more efficient than going to all the hassle of exporting it. Clearly it would be the poorer for such a policy.

    Whereas a country that imported lots and exported nothing would be bankrupt in short order.

    If payments were still in gold then possibly. But the point is always being made here that exports are precisely the cost of having imports, so I don’t think there’s any disagreement here.

  7. Why is Germany considered an economic powerhouse and very wealthy country, and Greece a basket case then? One runs a massive surplus on imports vs exports, and the other a massive deficit. Surely everyone wants to live in Greece , because they’re getting all those ‘free’ imports, and Germany is a wasteland with roaming bands of bandits, because they’re exporting all their wealth, right?

    Bollocks on stilts. Exports make a country wealthy, because its allows them to afford imports, having imports does not create exports. So the important bit is the exports, not the imports.

    If I have an income of £100k, it allows me to live a £100k lifestyle. Spending borrowed money to have a £100k lifestyle does not create the income to sustain it.

  8. Not quite the right analogy.

    There’s the capital and current accounts. If you’ve a million in assets then you can selloff 10% of them a year to gain that £100 k lifestyle. Same with a nation. Any deficit on the current account is, by definition, a surplus on the capital account. Foreigners sending capital in is the same thing as us selling off capital assets.

    Our sales of capital stuff to foreigners is, by definition, the mirror image of our buying more current stuff from foreigners.

    Now the question becomes, well, what happens when we sell all the country? Or even, will that happen?

    Haven’t got the figures for the UK but I do for the US. Recent years have seen the US creating anew in the region of $8 and $9 trillion of new wealth a year. They’re selling, net, to foreigners some $500 billion of wealth a year to finance that trade deficit. This can go on forever and the foreigners will end up with ever smaller portions of total US wealth.

    On that individual level, it’s a million in assets, liquidating 100k a year of them to finance the lifestyle, but making millions more each year in new capital value. Owning a decent chunk of Amazon, selling bits of it to fund living, doesn’t seem to have been a bad deal for Jeff Bezos.

  9. For my sons I Tim time out to read Spud ‘s hatchet jo, Peter May’ s attempts and Bill Mitchell’s response to May.

    Southerner and Jim: Your exports(actually your sales) haven’t made you richer at all. They have put currency in your pockets, but you are not richer until you have exchanged that currency for something you like, something you want. Then you are richer.

    Bill Mitchell actually wrote that experts represent opportunity cost. He did not say – in fact he is clear he is saying the opposite – that the act of exporting makes you poorer. It is the opportunity cost you must accept in order to import what you desire.

    Ritchie wrote abuse and (deliberately?) miss-represented Mitchell’s argument.

  10. @ironman – i doubt he deliberately miss -represented Mitchell’s argument – that would presume that he understood it in the first place. As for the abuse that was deliberate – and he ponders why he can’t get a job and laughably suggested that he should have entered politics . The man is moron.

  11. “Recent years have seen the US creating anew in the region of $8 and $9 trillion of new wealth a year. They’re selling, net, to foreigners some $500 billion of wealth a year to finance that trade deficit. This can go on forever and the foreigners will end up with ever smaller portions of total US wealth.”

    Sorry, but if you think the US’s current situation is sustainable long term then I’ve got several bridges I’d like to sell you.

    The US is living on the fact that it has the modern equivalent of a (seemingly) exhaustible gold mine when gold was money – the US dollar printing rights. It can print dollars and people are stupid enough to give them stuff for it, because the dollar is the reserve global currency. That situation is not going to last forever, and one day the US will have to live within its means, just like the country whose gold mine runs out, or indeed whose oil wells run dry.

    No one has answered my question as to why Germany (export surplus) is a rich country and Greece (export deficit) is a poor one. According to you its the other way around……..

  12. Its entirely possible for a country import nothing and export lots. Would that country be impoverished? No it would be very wealthy.

    Ah, but it’s wealth is implicit in the fact that it now has money to be spent on foreign things, even if it chooses for the moment not to spend that.

    If a country sold lots of exports and then burnt the money that they got in return, it would indeed be impoverishing itself.

    Wealth means nothing other than delayed consumption.

  13. And why do export earnings have to be spent on imports? Why can’t they be spent on stuff produced within the exporting country? Why are imports seen as the only way a country can get hold of what it needs? How about producing stuff at home?

    Take the Arabs for example – all their oil money – should they just import everything, or start investing their export earnings at home to create something that can sustain them when the oil runs out?

  14. And I’m still waiting for the oh so clever economists to explain why Germany is poor and Greece is rich, according to their ‘imports are better than exports’ concept?

  15. Easy enough. Average labour productivity in Germany is higher than it is in Greece. Therefore the people in Germany are richer than they are in Greece.

    No puzzle to it at all.

    But Germany, running a large export surplus, the people are poorer than they would be if it didn’t run a large export surplus. They can consume less than they could if it imported more. The Greeks are richer than if they tried to make everything at home.

    As so often, we’ve two effects going on, one dwarfs the other. Productivity’s vastly more important than trade. But the trade balance effect is still there.

    Stick glass upon a human, still not going to see like an eagle, even if better than before.

  16. ” Average labour productivity in Germany is higher than it is in Greece. Therefore the people in Germany are richer than they are in Greece.”

    So why keep saying ‘imports are better than exports’? Exports are just the natural result of some countries being more productive than others. Any amount of imports isn’t going to make an unproductive country more productive, and eventually will bankrupt it. And reducing exports won’t make a productive country poorer either.

    If a factory exports 100% of its output, and for some reason it gets closed down, has that country become wealthier or poorer? And if a factory gets opened somewhere that then exports 100% of its output has the country become wealthier or poorer?

    Its all this sort of ‘trade is always good’ rigid ideology that ends up with ghost towns of drug addicts and welfare claimants while the work has all gone overseas, and people like you tell the poor sods whose jobs have gone that they’re wealthier as a result.

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