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Trade-balances-must-balance-in-every-community

Page history last edited by Alex Backer, Ph.D. 11 years, 2 months ago

It's well known that countries have a trade balance, and that imports plus changes in savings and loans given out must equal exports plus new debt plus subsidies (am I forgetting something here?). It's perhaps less obvious that this must happen at the level of each smaller community, too. Visit any small town, and you will note that most of what the population consumes is "imported" (I use quotes, as the term is usually reserved for national economies, not local ones) from elsewhere. Yet the only way for the town's population to pay for those goods, but for any subsidies and loans received or savings consumed, is for it to "export" goods or services of equal value. It seems hard to believe that a small town could export enough to support the consumption of the entire town. In particular, only a fraction of any population will be devoted to "export" activities, whilst the whole population will consume "imported' goods, but somehow the exports of that fraction must bring enough cash in and be distributed enough for the entire population to afford its imports. The town's livelihood depends on the export community. This will give the owners of the export companies tremendous political clout in the community, even if they don't amass great wealth, i.e. if their companies are big revenue producers but not big profit makers. Witness American automakers. So next time you visit a tiny village, look for the town's exporters. Look for what the village does for the world. Because if you find anything from outside the village in it, the world has something of the same value from the village, too.

 


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