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Thu 17 Apr, 2014 06:28 am
I will start my question with the qualification that I am pretty new at the science of economics and at the moment I am keeping it simple. My question is:
On a country scale, imports = exports neglecting any savings or borrowings made by that country. With this rationale, money in equals money out.
In this way, each country gets to trade the goods it is most efficient at producing or those it can sell as a product of scarcity.
Through each trade, money is exchanged back and forth, in essence it is recycled.
Each cycle however boosts economic wealth as the goods or services traded remain with the purchaser or undergo a value add operation to be cashed in upon at a later date.
New goods and services are continuously being brought into the cycle to fuel more trade. A large portion of this trade is materials and finished goods correct?
Now to me I look at this and I know that a lot of these goods have a one way path. I buy something, it has it's useful life and then I throw it away. The cycle is not a loop like that for money. By my reasoning then, doesn't more trade and improved living standards for all (the idealised economic world of free trade) put more burden on the natural world? Also by my reasoning, to reduce this, wouldn't the answer have to be a trade in recyclable items?
@SimpleEngineer,
Simple answer: yes. Particularly if nonrenewable resources are the bulk of the trade.