In my attempt to understand economics better, I've made friendly with Susan F. Feiner. I asked her a few months ago if she could address the issue of "fair trade" and this is what she sent me:
If my econ prof had swore like this I might have a PhD in it by now.
A friend and colleague, Robert Pollin (see PERI, political economy research institute) has done fabulous work on fair trade (and living wages). In his book Contours of Descent he works up an example asking "what would happen to US retail prices if the wages paid to workers in Mexican garment assembly factories in the maquiladora zone were paid a Mexican living wage?" The answer is surprising: US retail prices MIGHT go up as much as ten cents (on items that now cost around $25), or the price increase might be as little as a nickel.Like Pollin I think most Americans would be happy to pay ten cents more for a $25 shirt or pair of pants if they knew that meant the workers making the clothes were receiving a living wage.If you'd like I can explain the real reasons politicians regale us with tales of "free trade." Basically opening other weaker, poorer nations to our exports makes our trading partners dependent on us. Which feeds corporate profits. But few people in developing nations can buy much of what we make and export .. except for food stuffs. So the free trade mainly displaces the poorest farmers, making more unemployment in developing countries, without creating a single job here. A bad deal all the way around. Except for agri-businesses and the bankers who lend to them.
So after I wrote my Work it, Mom! piece this week, I sent Susan the link and asked her to please comment. AND WHOA BOY DID SHE! Here's a snippet, but please click the links to her comments. Skip my piece if you will, but read her comments. I have a much better understanding of what mess we're in.
OK, now to explain what the Treasury will do once it takes the dubious assets off the hands of the banks.
The banks and other players are holding BUNDLES of mortgages. Each bundle has upwards of 5000 mortgages in it. Some of the mortgages are sub prime, some are just fine, some are in foreclosure, some are already foreclosed, some were written fraudulently. A big F***ing mess.
If my econ prof had swore like this I might have a PhD in it by now.