For the theory to work, profits gained from the trade need to be reinvested in the same country. Both the capital and labor need to stay within the same country or there is little benefit to the country
===

How do u know this to be true? This is where mathematics is clearly superior to words.

If you know how to prove the "Gains from Trade" theorem, you will realize that factor immobility is NOT a critical assumption driving this result.

Trade hurts some Americans, no one is denying that. But the benefits outweigh the losses. It is just that it is more obvious who are the losers.

As for all those Americans who are protesting when IT firms shift their jobs to India, where wages are cheaper, I bet these Americans are the ones that drive an hour just to shop for groceries at Wal-Mart Supercenter.

Did they ever feel sorry for the mom and pop stores in the neighborhood who can never compete with the low prices of Wal-Mart?

Hal, the "Other Losses" part of your chart is covering some of the text.

I, on the other hand, believe in free trade.

Eric: Thanks for the table notice: not as pretty now, but legible (note that I did "Preview" it and it previewed fine :-)

As to religion, on the other hand, I believe we still have the freedom to believe anything we want.

As far as mathematics goes, may I present the humble bumblebee, which doesn't know that mathematically it cannot fly?

"Trade hurts some Americans, no one is denying that. But the benefits outweigh the losses. It is just that it is more obvious who are the losers."

As far as the quote goes, that's simply a statement of faith on your part.

Currently, the average American household income is down, more people are out of work, fewer people have health care and the rich are relatively richer than ever, with more of the same in the wings.

It's quite obvious who the losers are.

I would like to note that free trade would be a good idea in theory, however, the United States, Canada, Mexico and Europe don't practise it.

Agri-business is hugely subsidized (my favourite example are the urban farmers in downtown Detroit who get subsidies to grow crops on abandoned city land). Softwood lumber, steel, etc. the whole schmeer of terriers and barifs.

And then there is the 8 million strong black market in illegal labour in the US, which is one of the biggest sources of money in the Mexican economy, second to oil.

And certainly those in charge of the multi-nationals think employment and wage erosion is a good thing, because it keeps the help in line. What's the future like? Imagine a Donald Trump in your face, yelling "you're fired", forever.

However, I hear the dinear is doing well.

Thanks for the additions, Jim.

Agri-subsidies and immigration are both issues close to my heart because they are far too deep into our wallets. I'll be doing more on both in the future.

To further flesh out the jobs picture:

There's much more to come. The Wall Street Journal reported Monday that IBM plans to shift up to 3,000 high-paying programming jobs overseas to China, India and Brazil this year alone. In all, by 2006, IBM expects to save US$168-million a year moving programming jobs abroad to take advantage of $12-an-hour wage rates in India versus $56 in the United States. A host of politicians, economic think-tanks and job nationalists see these offshore operations as prime causes of the "jobless recovery" that is supposedly humbling the U.S. economy.

Eastman Kodak Co ... will eliminate from 12,000 to 15,000 jobs and result in annual operating-cost savings of $800 million to $1 billion by 2007, according to Kodak estimates.

So back to my original point, which you have not answered. Why should we believe this remark you made?

"For the theory to work, profits gained from the trade need to be reinvested in the same country. Both the capital and labor need to stay within the same country or there is little benefit to the country"

Is this statement a matter of faith too?

The short answer: the Theory of Comparative Advantage says that wages of individual workers will rise in both countries trading, and the report I posted shows the contrary.

More generally, there are numerous problems with the concept of Free Trade and the Theory of Comparative Advantage, starting with the plethora of assumptions required for it to work (look it up) and continuing with the "warpage" imposed by things like huge government subsidies to various industry segments.

The reality is that there is no example of "Free Trade" in the world today, and it's likely there never was, nor will ever be.

NAFTA certainly is not it. The IMF and World Bank undermine it. And governments, like ours, will always be jockeying for an "absolute advantage" instead of just leveraging the "comparative advantage" that the theory says will do great things for the entire world.

If you're really interested, you should do some online research. There's a lot of discussion, some theoretical, some biased, but enough to provide a very interesting picture if approached with an impartial attitude of wanting to learn.

One of the sub-topics to look for is "opportunity costs." I think that's where this country has really screwed up in the last two or three decades - they've exported the opportunities, too.

Kelvin, you are aware that economics is nothing more than a consentual hallucination, right?

It isn't based on science and has none of the grace of the arts. The best expression of economics is three card monte in Times Square, and you're visiting for the first time.

Interesting piece on CBC radio tonight about how the cheap labour factories in Mexico are being undermined by cheap labour factories in China.

Jim, Business Week magazine did a thorough piece on it in their December 22nd issue.

I found it interesting that companies are writing off $100's of millions of investments they made in Mexico just 5 years ago. Apparently it's cheaper to just, say, shut a $250 million plant built in 1999 in Mexico and start manufacturing in China.

Very scary.

" IBM plans to shift up to 3,000 high-paying programming jobs overseas to China, India and Brazil this year alone."

That link no longer works, so here's another.

And a couple of other data sources:

"the key assumption of international factor immobility:

Clarifications on the case for free trade

The U.S. joblessness report for February 2004 stunned
observers and investors alike - instead of creating
the forecasted 125,000 new jobs, the entire U.S.
economy only managed to produce 21,000 additional
jobs. That left the 'official' unemployment rate
steady at 5.6 per cent - I say 'official', because
those people who've simply given up looking for
jobs are dropped from the 'official' count, and in
many areas no jobs exist once a big plant closes
and moves overseas [ergo, there are soon 'no j
jobseekers' there!].

What with downsizing, jobs being sent off-shore,
a ho-hum economic recovery, plant closings and
layoffs, I thought some good folks here might
benefit from the results of my own diligent search,
and applied research, on this topic:

'What Color Is Your Parachute' Site, this
book has got to be the 'Bible' for all
serious job hunters!:
http://www.jobhuntersbible.com/

'Quintessential Job Hunt' Site. 'Search jobs!
Post a Resume!' Well, they're enthusiastic, anyway...
!http://www.quintcareers.com/jobhunt.html

These guys are good! An executive I know had just
about given up when they took him on, got him
a job interview with a large company president
and a solid job offer - all in two days!
http://www.johnwhitleystrategicconsulting.com

Monster of a job site! Great resource:
http://english.monster.ca/geo/siteselection.asp

Its Canadian 'twin'...
http://www.workopolis.com/index.html

The Riley Guide: Employment Opportunities and
Job Resources on the Internet
http://www.rileyguide.com/

Job-Hunt.org 'Online Job Search Guide...your
objective source of the Web's Best Job Search
Resources http://www.job-hunt.org/

RiteSite Executive Careers Service - looks
pretty helpful, if you're searching via the Net...
http://www.ritesite.com

And if YOUR job hasn't gone to India or China
yet, don't be surprised to find out that it's been
secretly packing its bags - 14 million more U.S.
technical, professional and managerial jobs are
now estimated to be at risk of 'off-shore downsizing'!

396,000 quit looking, keeping that unemployment rate where it was.

And we wouldn't have had even the 21,000 rise in jobs if the government hadn't hired - you guessed it - 21,000 people last month.

And if Peter Atkinson's links don't work for your employment status, I'd like to add a few of my favorites:

* Eat_The_Rich.com

* letsstormtheirgatedcommunities&killthefuckers.org

* recipes_for_boiled_golfers.com

* guillotine_builders_assoc.org

i am muneer, i am upper sticher & sample maker, i have more than 6 years expeirence & furr jacket maker also thanks

I have a very stupid question regarding all this:

Most big U.S. companies, and even more of the smaller ones get breaks here and there, not exactly bail outs, but low interest loans or even a few handouts.

If these companies have a large number of employees who are out-of-country, do they still get the same breaks?

I'm not sure I like that boiled golfers one...sounds kinda painful!

that sucks...not even a real web site! must be a .org or something...