About imports and exports - and also China

Exports help the country and imports harm the country. China will get rich because it produces and exports everything. Or is it a little different?

Chinese Yuan
Chinese Yuan

Take the article with a clear view, it is a simplistic comparison.

China is afraid of a lot of people. However, according to a recent survey, investors expect it to be in "several" years of crisis. To understand these great contexts about a large state, we need to look at the issue of imports and exports and everything related to it. A parallel came to China. However, the truth is that Martin Pánek gave me the basis for that parallel.

Household trade balance

Imagine yourself in your own apartment. Some have to try their imagination, some don't (lucky). When you go to work, you export your labor and human capital from your territory. When you leave work, you import money (capital). People usually work for a fixed salary. It doesn't matter how the salary is set - you always have to spend some time working. Someone is willing to pay you for that time. So your work is somehow valued - you are exporting work at a price. More precisely: you balance the time in hours for the price of 100 crowns. You export an hour, you import a hundred.

There are a lot of people among us who say that we need to support exports. Among them is a group of people who say that the currency needs to be "cheaper" in order to export as much as possible.

It's an interesting consideration. In our example, it would look like this: you obviously want to work harder. That is why you will reduce your price of work - you will come to your employer and offer him to work for 50 crowns in one hour. At first, your boss will think you're crazy. Subsequently, he seizes the opportunity and nods with pleasure to your offer. It will start to keep you busy. You balance more work, more hours. However, you import less every hour. To get the same thing as before, you have to work harder. People usually don't like that.

Suddenly you find that you import little even for 50 CZK / hour. You decide to take a radical step: you give away your work for free (almost). You will reduce your salary to CZK 1 / hour!

The effect is almost instantaneous - work you have it over your head, you run here and there, you hardly interfere with your home. To earn what you used to have, you have to work days and nights. But you don't mind. You are satisfied! Above all, you want to export, because that's right!

Such people are called "workaholics." However, the initial enthusiasm for work is eventually replaced by collapse and some time inability to work.

Global workaholic

China was such a global workaholic. With its "undervalued Yuan," it did not harm the United States (as Barack Obama claimed), but rather to himself.

She's out of breath, like any real workaholic. At home, she is beginning to suffer from inflation, she is building dead cities for no one (and she has no time to complete them), small investments are spreading. The Chinese century may come, but it won't start now. It will start only after the crisis that awaits China.

So what made China so rich? It was not because of exports, as one might think, but because of imports. What makes students smarter? Because they go to school, or because they gain knowledge at that school? Everyone can go to school - some suffer the time, some study. He who "suffers" does not import anything - he is not educated. It can then be expected that the student who is actually learning will be smarter.

What preceded China's growth was opening up to the world. China first allowed imports into the country. As a result, she became rich. Technology, factories, production, knowledge were imported to China. Thanks to that, he has something to export for.

What will make you richer? That you go to work day and night, or that you bring a lot of money from that work?

Free!

In the US, it is now apparently trying to cut the price of the USD. This is evidenced by their monetary policy. President Obama says how "maintaining growth" is his mandate. Sorry, Mr. President, this is not your mandate. The only thing the Fed will achieve with its policy in the US is slightly higher inflation and the foundation for further bubbles and crises.

Artificially reducing the price of factors of production by state power is always counterproductive. Austrian business cycle theory can be grafted not only on money and capital, but also on other factors of production.

0 comments

  1. ad I recommend:
    http://devian.cz/2010/myty-a-legendy-o-cine-komu-skodi-levny-yuan/

    "To claim that cheap imports harm you is the same as saying that you are harmed when you buy meat from a butcher."

    damages, only that bastatically speaking is not visible. The first sign of damage is a decrease in the money supply of the state it imports. part of his money is tied across borders. this, on the other hand, means that even if China did not print new money, its money supply would increase due to the influx of money for the sale of its products.

    the second sign of damage is the liquidation of domestic producers or their departure abroad, which results in pressure on the growth of unemployment.

    then in economies like the American state, 70% of GDP is made up of services and not production, and the purchase of production is not made from savings, but on the contrary from debt. China gets rid of excess liquidity by raising money with Europe and the Americans.

    it is not just the Chinese government that is increasing its country's money supply. it is also increased by investors, foreign investors. you write about ghost towns, but no one has yet written that how many of these towns are due to foreign investment.

    if I have it summarized and I could quote Misesa and Hayek, but also Adam Smith and you would find out that they are mercantilists like BRNO !!!

  2. @Clara Shot - and don't speak for "economists". I also know some of them and they might agree. You know some, they might not agree. So not that "economists disagree", but "some would disagree." But it is so often that one does not thank everyone.

  3. I don't think the example is bad. It's the same as export / import, but small.

    The question is: does our cheap currency help us? Imagine you have a diamond in your hand. Will you say that it is too expensive for you and would you rather take a piece of iron? In this I think that our cheap currency does not help us. China is not rich in exports (exports are a cargo!), How does it help China that Lenovo costs 20 instead of 000?

    China's workforce is competitive because of cheap currency and low wages, but because of high efficiency and low wages… Efficiency makes it competitive.

    I recommend:
    http://devian.cz/2010/myty-a-legendy-o-cine-komu-skodi-levny-yuan/

  4. I think that example was wrong. You would have to work in a foreign country and devalue a koruna so that you could buy more koruna for a foreign currency and buy more in domestic stores. Then you will also appreciate the devaluation. That example is mixing apples with pears, and economists would not agree with you. In addition, a weak currency means a cheaper workforce, so better competitiveness in the market, hence more sales and more earned foreign exchange. What to add, I simply do not agree with you.

  5. So otherwise - if China did not import (nothing), it would never get rich - it would have nothing to export and nothing to export for. Of course, the shift made her richer, I agree with you. I'm just saying that imports are revenue and exports are cargo. And that we are richer in our efforts to maximize revenue (to be fair 🙂)…

  6. "And people get rich when they maximize revenue (however subjectively defined)"

    according to the theory of the Austrian school, however, you cannot maximize them, because they always act rationally 🙂

    I will give an example. why do people buy more expensive food (same, the same quality and quantity) in a store that is closer to their place of residence, even if only by 10 meters?

    I'll put it to action. it exports cheap and sunny goods, but it imports Japanese and European quality. but if they did not export anything, then they have nothing to say and they could forget about the proceeds. it would be the same example as if you were unemployed at home.

    PS, so you can talk about some returns (certainly not maximized :-)) only after you get the means to carry out the exchange on the market. China obviously has me, it has no debts, on the contrary, huge savings.

  7. @Kill Joy.

    Sure, I agree. I say this indirectly - the only thing I say in the article is that exports are costs and imports are revenue. And people get rich when profits are maximized (however subjectively defined) - when you go shopping for food, you export that money and import… food 🙂

  8. but, but… how about thinking a little about crime and family as well?

    at the act you stated, I quote:

    "So what made China so rich? It wasn't because of exports, as one might think, but because of imports. "

    and what about the family? you go to work one day and bring home money. you value yourself (your work) less, because only then can you have enough for exchange, market exchange. lenze what will I have money for when you bring it home? can they eat? no they don't!

    so you go to untie yourself again, you go to untie yourself, your work, your money and home, you bring goods and services, you bring the work of other people. it is an exchange, your constant humiliation with other people, with the work of others. it is the exchange that makes it "BOHATSIM".

    there is something at the end. the difference between import and export is USPORA, or DLH.

  9. Well written, F. Bastiat 🙂 would not be ashamed of such an easy-to-understand interpretation

  10. It is unreal how the myth of export promotion is rooted in people. At the same time, they say nothing more than that creating money out of nothing creates wealth…

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