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Specialization and Trade

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Here’s the PowerPoint presentation [2] that I used for my second lecture at the 2011 Cato University (held this year, btw, in one of my favorite towns: Annapolis, MD).

Because of several questions that I received after my first lecture, I began this second lecture with a brief review of the state of manufacturing in America.  I used several of the great graphs that Mark Perry made available over the past few years at Carpe Diem [3].  Of course, in my verbal remarks I explicitly acknowledged that these graphs are from Carpe Diem – and I encouraged the attendees to check out that indispensable blog.

Then I reviewed, first, Adam Smith’s explanation of the benefits of specialization, and, second, David Ricardo’s explanation (the principle of comparative advantage).  I also combined Smith with Ricardo.

I concluded – after some too-quick remarks on various theories of the industrial revolution – by encouraging the attendees to read Deirdre McCloskey’s Bourgeois Dignity [4].