The last chapter is almost every textbook on introductory economics discusses international economics. Unfortunately, many courses don't get to the end of the textbook, and the students miss the most interesting area of economic study. One subject in that last chapter is always the Law of Comparative Advantage.
A full discussion is beyond the scope of this brief blog, but that law demonstrates that nations become more prosperous when they make and export their high-margin goods and import low-margin goods. It is the intellectual basis for globalization, which I enthusiastically support.
But, notice that nations become more prosperous, not necessarily individuals, and certainly not equally. It was always known that governments would have to provide political solutions for job retraining and relocation assistance to displaced workers. Unfortunately, only token efforts were made. As the misery of those displaced or disadvantaged workers increased worldwide, immigrants became an increasingly convenient scapegoat, which demands a political response, not an economic one. Trade policy has also become a popular scapegoat, usually on both sides of the trade agreements, but that also demands a political response, not an economic one.
The bad news is that government gridlock has prevented the political solutions. That gridlock now drives the call for political action from the halls of an impotent Congress to the bellicose campaign trail. Government has failed to release some of the expected pressure building from globalization. Now, we have Trump, Sanders, and Brexit!
Yes, the bathwater has been soiled with immigration and trade issues by the politicians, but I pray we don't throw out the baby, which is globalization. Once you understand Comparative Advantage, globalization will become YOUR baby too!
A full discussion is beyond the scope of this brief blog, but that law demonstrates that nations become more prosperous when they make and export their high-margin goods and import low-margin goods. It is the intellectual basis for globalization, which I enthusiastically support.
But, notice that nations become more prosperous, not necessarily individuals, and certainly not equally. It was always known that governments would have to provide political solutions for job retraining and relocation assistance to displaced workers. Unfortunately, only token efforts were made. As the misery of those displaced or disadvantaged workers increased worldwide, immigrants became an increasingly convenient scapegoat, which demands a political response, not an economic one. Trade policy has also become a popular scapegoat, usually on both sides of the trade agreements, but that also demands a political response, not an economic one.
The bad news is that government gridlock has prevented the political solutions. That gridlock now drives the call for political action from the halls of an impotent Congress to the bellicose campaign trail. Government has failed to release some of the expected pressure building from globalization. Now, we have Trump, Sanders, and Brexit!
Yes, the bathwater has been soiled with immigration and trade issues by the politicians, but I pray we don't throw out the baby, which is globalization. Once you understand Comparative Advantage, globalization will become YOUR baby too!
