Wednesday, May 10, 2006
Waiting for Taco Bell
While I was waiting for Taco Bell to open sunday morning, I decided to open my Bastiat book, which happens to live in my car. I decided to turn to the very last essay, titled something like "Protectionism and Free Trade".
Two important points:
Why are the net effects from trade are treated as a loss of profit by so many? An opinion of the contemporary cameralists believe that exporting more than you import=profit, whereas importing more than you export=loss(deficit). By this logic, which he touched upon, sailing a ship out into the middle of the ocean and sinking it is more profitable for a country, since the whole quantity was exported and nothing imported=total profit!
He also commented on comparative advantage (he used the analogy of cheese from Amsterdam and wine from France). I think it is important to recognize that all individuals, companies, and even nations (if you believe that) attempt to achieve a comparative advantage in some good or service. It seems that it follows from the simple division of labour through to specialization and the rational attempt to act in one's own self interest.
Two important points:
Why are the net effects from trade are treated as a loss of profit by so many? An opinion of the contemporary cameralists believe that exporting more than you import=profit, whereas importing more than you export=loss(deficit). By this logic, which he touched upon, sailing a ship out into the middle of the ocean and sinking it is more profitable for a country, since the whole quantity was exported and nothing imported=total profit!
He also commented on comparative advantage (he used the analogy of cheese from Amsterdam and wine from France). I think it is important to recognize that all individuals, companies, and even nations (if you believe that) attempt to achieve a comparative advantage in some good or service. It seems that it follows from the simple division of labour through to specialization and the rational attempt to act in one's own self interest.
