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PostThoughts on Balance of Trade, Autarky (Eugenio Battaglia, Italy, 10/17/20 3:29 am)
I am a great fan of the WAIS posts from my good friend Tor Guimaraes, but this time (October 16th) I was perplexed by one sentence.
Probably this is due to the brainwashing carried out by our mainstream politicians/media, which in order to justify Italy's role of colony of the Empire and the so-called European Union, cite Italy's huge national debt of 136% of GDP (as in the US) and rising with the Covid-19 pandemic.
By the way, in 2019 Russia had only 16%, Japan 238%, China 47%, etc.
History shows that an Empire with a huge debt is doomed in the long run. The great strength of the US was not only that it was isolated by two oceans and weak countries on the north and south, but also because it could have/produce everything that it needed. A foolish idea is crossing my mind: Mexico cannot invade the US with an army but being smart it is invading the US with undocumented immigrants like the Africans and Asians are doing with Italy, but this is another story.
Therefore I am perplexed by Tor's sentence, "Since there's nothing inherently wrong with importing more than we export in total," or better the sentence is correct only if the commercial debt is compensated by other revenues such as transportation freight (but the US commercial fleet has been reduced), tourism (but in a pandemic crisis, the infrastructure of the tourist sector has become an additional debt), etc.
I believe that some autarky, especially for vital production, is necessary. After that, free trade is acceptable--seeking, however, a balance of imports/exports.
I know that autarky is now a bad word, so I will quote from the article "L'Autarchia e gli Sviluppi del Commercio Estero" by Carlo Conti on the Rivista Internazionale di Studi Sociali, March 1940 edited by the Catholic University of the Sacred Heart in Milan:
"Autarky does not condemn international trade, but aims rather at rendering it reciprocally more convenient. Besides, it strengthens their base through a more rational valuation of the energies and resources of the interested countries in a wider field of international possibilities."
JE comments: For the last half-century, autarky has indeed become a bad word. Now we associate it with dysfunctional nations like Cuba and North Korea. I once read however that autarky is practiced everywhere--on a little sphere known as Planet Earth. The Conti quote above is rather confusing, but I think it says that autarky is good and doesn't necessarily preclude international trade. Can we derive any lessons from this 80 years later?
Crises tend to bring out calls for autarky. An example: the lack of domestically produced equipment to combat the pandemic. But then the crisis subsides, and we forget.