8cda82da_brary_of_Economics_and_Liberty__ast_Highlights_HIDE_HIGHLIGHTS
[Time] 4:04
Fundamentals of trade, trade makes us wealthy. Tendency is to see trade in goods as moving stuff around, better to have stuff you like and can't make. But that ignores the role of division of labor, specialization, increasing the size of the pie. Adam Smith, and David Ricardo. Smith's full title, asks what causes the wealth of nations. Wealth is created by division of labor and specialization in opening chapters. Observed that it causes wealth, 1. by reducing time spent moving task to task; 2. repetition increases skill; 3. specialization makes it more likely that machines will be invented, which releases human labor. Is that a negative, as opposed to craftsmen, unemployed? Foreign v. domestic labor. Ultimate resource is human labor; economizing on it makes us better off. Ricardo, principle of comparative advantage, Paul Samuelson said of it that it's the one thing in economics that is both true and non-obvious. Boudreaux's book's goal is to explain it. If Joe can do something at a lower cost than Sam, then Joe should specialize in doing that and Sam the other thing; and they should trade. They should do this even if Joe can do both things better than Sam. Kathy runs errands across campus to deliver documents, sacrificing less than department chairman would, even if it takes her more time because her legs aren't as long. How much of what you consume could you have produced? the people in your town? Virtually nothing. All around us in modern society.
Don Boudreaux on Globalization and Trade Deficits | EconTalk | Library of Economics and Liberty