Wednesday, March 16, 2016

Cosmpoplitan complexity

You would think that Smithian specialization and exchange as the basis of our prosperity is a no-brainer. Sad to say, you would be wrong. This WSJ op-ed notes (once again) the sad state of political discussion on this issue in the U.S. this year. It's not just Trump. Cruz, Clinton and Sanders pander to the same "low-information" (polite expression) crowd.

All of them make personal consumption choices that involve many supply chains that cross multiple international frontiers. This includes your pair of Bentleys, Mr. Trump. Even U.S.-label autos are sure to include all sorts of parts that cannot be said to be "domestic."

Establishing any boundary beyond which trade is taboo (my front yard, my city, county, state, country, hemisphere) means higher costs. All of this may seem abstract when "the best argument against democracy is a five-minute conversation with the average voter." (W. Churchill)

Nevertheless, supply chains and their cosmopolitan complexity is the story. It must be emphasized again and again.


David Autor and Russ Roberts discuss winners and losers re trade with China. All shocks are redistributive, even ones that are net beneficial.


Economists react to the conversation.