Trade Theory Quotes

Economists have understood since the Victorian era that the main benefits of trade come from comparative advantage: the idea that people can specialize in what they're good at and then benefit from exchange. The principle is no more mysterious than specialization in the labor market.

What nobody wants to discuss is whether or not the black-and-white argument about trade - you're either a free trader or you're a protectionist - is the right one. It's the old 19th century argument.

Thousands of important and intelligent men have never been able to grasp the principle of comparative advantage or believe it even after it was explained to them

Beneficial in theory, so-called free trade agreements far too often have been detrimental to the United States economy and the manufacturing sector that forms its central pillar.

Litmus test: If you can't describe Ricardo's Law of Comparative Advantage and explain why people find it counterintuitive, you don't know enough about economics to direct any criticism or praise at "capitalism" because you don't know what other people are referring to when they use that word.

There is a phrase in trade theory; it's called "kicking away the ladder." First you violate the rules - the market rules - and then by the time you succeed in developing, you kick away the ladders so others can't do it too, and you preach about "free trade."

Governments do not necessarily act in the national interest, especially when making detailed microeconomic interventions. Instead, they are influenced by interest group pressures. The kinds of interventions that new trade theory suggests can raise national income will typically raise the welfare of small, fortunate groups by large amounts, while imposing costs on larger, more diffuse groups.