Joseph F. Cotto: America remains firmly caught in the Great Recession’s clutches. How do you think that our country can reclaim its economic vitality?

Dr. Paul Craig Roberts: The US cannot reclaim its economic vitality, which US corporations have sent abroad to India, China, and elsewhere, unless it can retrieve the offshored middle class jobs. The only way in which the US can retrieve its middle class jobs is to tax US corporations according to the geographical location at which value is added to their product.

If corporations produce domestically with US labor, they would have a low tax rate. If corporations produce abroad they would have a high tax rate.
The tax rate can be calculated to more than offset the lower cost of foreign labor and, thus, cancel the excess profits that corporations make from substituting low cost foreign labor for US labor.

Cotto: Prominent economists and politicians often say that free trade will only benefit America in the long run. What are your opinions about this idea?

Dr. Roberts: Ralph E. Gomory and William J. Baumol have proven conclusively in their 2000 MIT Press book, Global Trade and Conflicting National Interests, that David Ricardo’s free trade theory was incorrect from the beginning. Therefore, the free trade issue is mute and a red herring.

Jobs offshoring is not free trade. Even if free trade theory was correct, jobs offshoring is pursuit of absolute advantage, the opposite of comparative advantage, which is the basis for the free trade argument. The economists who continue to advocate free trade and continue to confuse jobs offshoring with free trade are simply incompetent and professionally ignorant.

http://www.paulcraigroberts.org/2012...ig-roberts-ro/