I confess to being surprised at Romer's column. I thought more highly of her - and this particular topic is a pretty expansive one for her to have missed the mark by such a wide margin. Her approach is clearly a purely academic one, which is what shocks me the most.
Manufactur
ing is bigger than making some things and "internati
onal competitio
n" in the pristine vacuum of economic theories screams "naive." It's so if for no other reason than "competiti
on" isn't just from simple, benign entities.
Every nation should provide as much of the basic sustaining activities needed for their nation to survive shocks ("external
ities"). In cases where other nations become hostile or aggressive (militaril
y or economical
ly), if your nation can't say, "Fine, I'll just make those myself," when push comes to shove, then your nation has become subjugated to some degree to those other nations.
It's this same blind faith in "rational markets" that gave us the awesomenes
s of regulation
-free financial entities - and that has worked out great for the world, hasn't it? Maybe relying on the natural good will of the market isn't the best foundation for economic policy.
Wow.
Read the Article at HuffingtonPost
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