02 March 2010

Trade is good for us! All of us?

Russ Roberts explains, and I agree, with two caveats:
  1. For more on the pain involved in creative destruction, consider the case in Malaysia, where capital did well but labor did not. This pain is important in societies dominated by agriculture, where free trade may hurt the majority.
  2. Russ missed a VERY important point -- much of our current prosperity and lifestyle is based on MINING natural resources (I use that word in its dynamic sense, which includes over-exploitation of "renewable" resources.) I know that we would be doing pretty well without mining, but our pace and level of consumption is NOT sustainable.
Bottom Line: Accurate accounting means that you count everyone and everything that's relevant. Miss something and you may think that a loss is a profit.

1 comment:

Josh said...

Also, the concept of specialization has really hurt our ability to sustainably grow foods, and it has warped our water regime as a result.

Specializing in particular crops or animals has created an unsustainable model, because agriculture thrives on multiple facets. Soil is not static, its nutrients shift and change, and the presence of multiple plant and animal types makes for a better-yielding system. Unfortunately, because of the illusion of efficiency, we organized our ag. systems by separating these facets.

Last, free trade ain't free unless labor is also free to move without regards to borders or transportation costs, and it ain't free unless governments are freely elected. The presence of totalitarian dictatorship within a "free" market system puts too much pressure to create an artificial comparative advantage in labor.