Thursday, 2 May 2013

We are reminded that "competition" between places is a dangerous myth


They all do it. Governments, politicians - even supposed economists - proclaim stuff about the "competitiveness" of a nation or a region. We hearken to terms like "the global race" (copyright David Cameron) or to stuff like this from U.S. Under Secretary of Commerce for International Trade Francisco Sánchez:

As the Obama administration has said before, we have the best workers and the best businesses in the world, and if the playing field is level, America always wins.

All good and patriotic but the point of trade isn't to win some sort of race. It is - or should be - that genuine "prizes for all" situation. The whole point of international trade is that everyone benefits. We should not concern ourselves with such nonsense as "level playing fields" since they are of no value to us. Even if the other side has tariffs and trade restrictions, we still benefit from opening up our borders.

We benefit because the whole point of trade is buying stuff not selling stuff. If some foreign country is foolish enough to dump goods on our consumers at below their cost, that is brilliant for it means we get lower prices - more value from the stuff we sell at above cost price!

And since Paul Krugman is the best economist on trade around right now let's finish with a quote from him:

My objective in this essay is to try to explain why intellectuals who are interested in economic issues so consistently balk at the concept of comparative advantage. Why do journalists who have a reputation as deep thinkers about world affairs begin squirming in their seats if you try to explain how trade can lead to mutually beneficial specialization? Why is it virtually impossible to get a discussion of comparative advantage, not only onto newspaper op-ed pages, but even into magazines that cheerfully publish long discussions of the work of Jacques Derrida? Why do policy wonks who will happily watch hundreds of hours of talking heads droning on about the global economy refuse to sit still for the ten minutes or so it takes to explain Ricardo? 

Since trade is the thing that both makes us human and also makes us rich, go and read the rest of Krugman's essay. And stop with this "global race" rubbish and this Porterian mumbo-jumbo of national or regional competitiveness.


1 comment:

Anonymous said...

What you seem to be missing, and is also well-demonstrated in your previous post about Shelter, is that the politics of envy is running rampant at the moment. It is the sentiment that socialism is utterly dependent upon – “I can’t have what you have, so why should you be allowed to have it?”

The Frankfurt School of thinking has wormed is way into the entire ethos of the West. One of its principles is to ensure that everybody is beholden to the State for their jobs – this has nearly been achieved in Scotland, where about 95% of the workforce live off the tax-payers’ teat; this is also the dream of many in the rest of the UK; it is rapidly becoming the norm in Europe, and the “Land of the Free” is also following that path, with a disproportionately large armed services, the FBI, CIA, NSA, and many others, all for “homeland security”. Unless we can get a leader who has the strength to end it, civilisation as we know it is doomed; we will all be under the yoke of the all-powerful State, as it crushes us into lower and lower expectations, and destroys any hope of realisation of dreams, grinding us into deeper and deeper poverty, both material and spiritual. George Orwell was only out by a few decades.

Radical Rodent