Naked Economics by Wheelan, Charles (spanish books to read .txt) 📕

might have something to eat for breakfast. The bottom line is that our standard of living is high because we are able to focus on the tasks that we do best and trade for everything else.

Why would these kinds of transactions be different if a product or service originated in Germany or India? They’re not, really. We’ve crossed a political boundary, but the economics have not changed in any significant way. Individuals and firms do business with one another because it makes them both better off. That is true for a worker at a Nike factory in Vietnam, an autoworker in Detroit, a Frenchman eating a McDonald’s hamburger in Bordeaux, or an American drinking a fine Burgundy in Chicago. Any rational discussion of trade must begin with the idea that people in Chad or Togo or South Korea are no different from you or me; they do things that they hope will make their lives better. Trade is one of those things. Paul Krugman has noted, “You could say—and I would—that globalization, driven not by human goodness but by the profit motive, has done far more good for far more people than all the foreign aid and soft loans ever provided by well-intentioned governments and international agencies.” Then he adds wistfully, “But in saying this, I know from experience that I have guaranteed myself a barrage of hate mail.”1

Such is the nature of “globalization,” the term that has come to represent the increase in the international flow of goods and services. Americans and most others on the planet are more likely than ever to buy goods or services from another nation and to sell goods and services abroad in return. In the late 1980s, I was traveling through Asia while writing a series of articles for a daily newspaper in New Hampshire. In a relatively remote part of Bali, I was so surprised to find a Kentucky Fried Chicken that I wrote a story about it. “Colonel Sanders has succeeded in putting fast-food restaurants in the most remote areas of the world,” I wrote. Had I realized that the idea of “cultural homogenization” would become a flashpoint for civil unrest a decade later, I might have become rich and famous as one of the earliest commentators on globalization. Instead, I merely noted, “In this relatively undisturbed environment, Kentucky Fried Chicken seems out of place.”2

That KFC restaurant was more than the curiosity that I made it out to be. It was a tangible sign of what the statistics clearly show: The world is growing more economically interdependent. The world’s exports as a share of global GDP have climbed from 8 percent in 1950 to around 25 percent today.3 U.S. exports as a fraction of GDP grew from 5 percent to nearly 10 percent over the same stretch. It is worth noting that the bulk of the American economy still consists of goods and services produced for domestic consumption. At the same time, because of the sheer size of that economy, America is one of the world’s largest exporters, behind only China and Germany in total value. The United States has much to gain from an open, international trading system. Then again, so does the rest of the world.

Having made that case in many different venues, now I get hate mail, too. Sometimes it’s actually kind of clever. My favorite is an e-mail that came in response to a column arguing that a richer, rapidly growing India is good for the United States. After the usual introduction arguing that my job should be outsourced to some low wage country as soon as possible, the e-mail concluded, “Why don’t you and Tom Friedman [author of the pro-globalization book The World Is Flat] get a room together? The world isn’t flat, it’s just your head!” Others tend to be less subtle, such as the e-mail with the subject line: YOU SUCK!!!!!!!!!!!!!!!!!!!!!!!! (Yes, that is the exact number of exclamation points.)

All those exclamation points notwithstanding, nearly all theory and evidence suggest that the benefits of international trade far exceed the costs. The topic is worthy of an entire book; some good ones wade into everything from the administrative structure of the WTO to the fate of sea turtles caught in shrimp nets. Yet the basic ideas underlying the costs and benefits of globalization are simple and straightforward. Indeed, no modern issue has elicited so much sloppy thinking. The case for international trade is built on the most basic ideas in economics.

Trade makes us richer. Trade has the distinction of being one of the most important ideas in economics and also one of the least intuitive. Abraham Lincoln was once advised to buy cheap iron rails from Britain to finish the transcontinental railroad. He replied, “It seems to me that if we buy the rails from England, then we’ve got the rails and they’ve got the money. But if we build the rails here, we’ve got our rails and we’ve got our money.”4 To understand the benefits of trade, we must find the fallacy in Mr. Lincoln’s economics. Let me paraphrase his point and see if the logical flaw becomes clear: If I buy meat from the butcher, then I get the meat and he gets my money. But if I raise a cow in my backyard for three years and slaughter it myself, then I’ve got the meat and I’ve got my money. Why don’t I keep a cow in my backyard? Because it would be a tremendous waste of time—time that I could have used to do something else far more productive. We trade with others because it frees up time and resources to do things that we are better at.

Saudi Arabia can produce oil more cheaply than the United States can. In turn, the United States can produce corn and soybeans more cheaply than Saudi Arabia. The corn-for-oil trade is an example of absolute advantage. When different countries are better at producing different things, they can both consume more by specializing at what