It has to be recognized that countries have a need to trade with each other. Some have raw materials which others do not. There are natural resources such as minerals which are found in some countries and not others, agricultural production is suited to some countries but not others and expertise may be available in some countries and needed by others. There is always a need to trade with others and imports have to be paid for with exports.
Many countries are considering global free trade. However this allows businesses to exploit cheap labour in one country and exploit the markets of a richer country. In the process this will mean that the rich markets will get poorer with unemployment while the poor countries will fail to develop properly because their internal market is poor. Labour in China and India is cheap at the moment and their economies are growing as a result of trade into Western Countries
Consider what will happen in due course as these countries improve their labour wages and internal markets while the Western countries will have lost their skills and expertise to manufacture and have large unemployment because their labour costs are too high. While there is a need to import and export each country should be in a position, or should put itself into a position where it can manufacture such things as basic clothing and food lines. It should not be importing goods which it can make particularly if it is importing on price and the originating country is poor because the wage base is poor. At present Western countries do this because their tax systems make labour and the cost of production too high and they will also chase away capital investment with their taxation policies.
In the longer term it will not pay any country to be a continual importer or exporter of goods and services. The worst position is to be a continual importer and not to be able to pay the debts. It does not pay to be a net exporter in the longer term because it means that someone else is a net importer and there is a danger that they will not be paid.
There is bound to be imports of products or services which are not available in a particular country and to pay for those imports there have to be exports, countries need to export their excess resources. There is a lot to be said for following a free trade policy but countries must be allowed to develop their own industries and be able to protect them during that development. All countries need to strive for a full employment policy and therefore cannot allow themselves to be swamped by cheap products from countries that have a poor internal economy i.e. have a cheap labour policy. We will reach a situation where it would not be acceptable for the cheap labour of one country to be exploited in order to export cheap products when that labour is not paid sufficiently well to create a market into which another country can export. Each poor country must strive to bring its average standard of living up while remaining competitive in the market place.
Businessmen will always look to make bigger and bigger profits, but they too have to take into consideration their market place and in particular the economic situation in their base country. At This stage the global market is growing because of population growth but population growth is a problem and some countries have started to take action. India and China have taken steps to curb population growth. Sweden has found that it needs to reduce working hours. Britain has found that it needs to curb immigration. However it really needs some global decisions on the subject. Countries within the EU for instance have to rebuild their economies and bring back people from countries like Britain. They will all need to change their tax systems to achieve this and places like China will need to develop their internal markets to make up for any losses in exports as things change. Much of Africa and the Middle East will need to develop their economies and stop the exportation of people to solve their population and unemployment problems.
It has to be remembered that poor people make for a poor country.
WORLD CURRENCY UNIT
It may well be considered necessary to introduce a World currency unit probably administered by the World Bank for all international transactions. There would be no currency notes or coins - just ledger entries. All other currencies would be local and pegged in terms of the international currency. All international transactions and such things as traveller's cheques would be in the international currency.
As imports exceed exports so the currency would be devalued to make its
imports more expensive and its exports cheaper so that a balance of imports and exports can be achieved world wide. The World Bank would be in a position to monitor balance of payments for countries and recommend when revaluations or devaluations take place. It could also offer an advisory service on where to purchase imports or sell exports. If there is going to be Global Trade there needs to be co operation between nations.
IMPORT TARRIFS AND DUTIES AND GLOBAL FREE TRADE.
In a free trade world there would still be a need from time to time to introduce
import restrictions through duties and tariffs. When this happens it would seem just for the duty or tariff to be split between the importing and the exporting country. Too often in the past some imported goods have suffered high import taxes and the importing (rich) country has made more revenue from taxes than the exporting (poor) country from its sales. In the event that a country wishes to introduce a separate tax or higher VAT tax on a product to curb its use - alcohol and tobacco for instance- that could be acceptable on the basis that it is a tax to deter consumption and would apply to all products in that category where ever sold or manufactured and it would not be considered an import duty.
Countries like Greece and Italy urgently need to make the change to improve their investment and employment situations. Countries cannot survive with such huge unemployment positions.
Recent surveys indicate that China has a stronger economy than America which has always been the world leader. However if one looks at the internal economies the picture will be different. China is very dependent on exports and reliant on Global economic conditions. However these exports are often undermining the importing country’s economies. Of note is the fact that China’s economy despite its huge earlier growth has and will continue to suffer with the unemployment situation throughout the EU.
It is vital for the World’s leaders to sort out how to cope with the future and it is equally vital for all to realise the need for employment in the different economies to provide the World with its spending power bearing in mind that computers and robots have very limited requirements for goods and services.