Tuesday, 7 February 2012

More MED mercantilism?

From Groping towards Bethlehem we learn that
[...] MED in its Briefing to the Incoming Minister pointed out that the high exchange rate means we are all a little bit richer? Don’t be silly. ‘Cause, see, it’s all about the exports. The opening sentence:
The Government’s aim of building a stronger economy will require a substantial increase in the share of exports in the economy.
The question I would ask of MED is, But why does building a stronger economy require an increase in the share of exports? In simple terms, doesn't building a stronger economy just mean producing more - and thus increasing our real wealth - and who we sell our output to doesn't matter?

I mean if we produce a widget here in Canterbury, does MED really mean that selling that widget to someone in Auckland doesn't help our economy, since it wouldn't increase the share of exports, but selling it to someone in Sydney does, since it does increase the share of exports in the economy?!!

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