|Reading: “The Stranger“|
|Activity: The International Trade Game – I have tweaked this for my own use. Contact me for more.|
Textbook Reading: Chapter 10 (Section 10.1; pp. 329-341)
The best way to understand economic interdependence is the classic pamphlet I, Pencil.
Here is a great article showing the economic interdependence required to produce the Pfizer vaccine:
a medicine with 280 different components, manufactured in 86 different sites across 19 countries, driven partly by the research of a son and daughter of Turkish migrants to Germany. That’s globalization in a needle
The Financial Times accompanied a report on disruptions to bicycle supply chains with this amazing interactive graphic:
This tweet went viral in 2021:
But this neglects how efficient container ships are:
Transporting a four-ounce pear cup from Buenos Aires to Bangkok to Los Angeles by container ship: 30g of CO2 emissions—plus 1g for every 56 miles the pear cup travels by truck.
Driving a typical U.S. car two city blocks in Manhattan (north-south): 35.6g of CO2 emissions. https://t.co/FYYNI3YzOI pic.twitter.com/2vNDtLGN5s
— Ryan Radia (@RyanRadia) September 17, 2021
Martin Wolf (2023, p. 64) argues that although the first wave of globalization was largely driven by innovations in transportation (e.g. the railway and steamship), the second wave was “the liberalisation of trade barriers and the fall in the cost of communication and data processing, which has made possible an unprecedented integration of production across the globe”. Although transport improvements (such as container ships and commercial jet aviation) have contributed, the main technology was pure trading. He also points out aht “nearly all emerging and developing countries still have substantially higher barriers to trade than high-income countries, partly because they postponed liberalisation until the late twentieth century”. As the graph below shows, reducing trade barriers remains a major opportunity to increase prosperity around the world:
For more on the Corn Laws see:
- Donald Boudreaux and Douglas Irwin on free-trade tips from 1846, The Economist, June 25th 2021
In Dave Chappelle’s Equanimity he does a bit mocking Donald Trump’s approach to jobs. With 19:46 remaining, he points out that if we brought jobs from China to the US then an iPhone would cost $9000. “Leave that job in China where it belongs! None of us want to work that hard. I want to wear Nikes I don’t want to make them”. Chappelle’s point is that it’s better to have cheap imports than low productivity manual labour.
A literary example of the recognition of an extended social order in the creation of seemingly trivial household items is David Lodge’s ‘Nice Work’ (1988) – see here.
This guy attempted to make a sandwich from scratch. It cost $1500 and took 3 months. It’s remarkable how cheap and plentiful sandwiches are, due to an extended global supply chain and division of labour.
This video shows the history of globalisation through some important maps:
This image shows how the word used for “tea” depends on the original trade routes:
Here are a collection of past student assignments:
Here we use basic demand and supply analysis to look at the welfare effects of trade intervention:
Modern globalization was partly fueled by technological advances such as containerization:
|Learning Objectives: Estimate the welfare effects of trade intervention
Focus on diversity: Deepak Lal is one of the most famous advocates of open trade policies. He was also a known skeptic of development economics. He passed away in 2020.