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Roundabout Means of Production

Here’s a letter to AlterNet:

Arguing for policies that artificially enhance the profits of U.S. corporations by preventing consumers from buying foreign goods, William Greider writes, as you describe it in a lead-in to his article, that “America must start producing for itself” (“With the World Economy on the Brink, America Must Start Producing for Itself Again,” Nov. 5).

America already does produce – everything – for itself.  Just as Mr. Greider produces for himself by writing books that he then exchanges for his home, his car, and his clothing, we Americans produce things for ourselves by specializing as producers in what each of us does best and then exchanging the fruits of our efforts for all of the goods and services that we consume.  Trade is simply another stage in the production process by which we transform the particular things we form with our hands and minds into the wide variety of goods and services that we consume.

As University of Rochester economist Steve Landsburg points out, Iowa farmland is planted thick with acre upon acre of cars – cars that grow from the ground looking like corn but which, when put on ocean-going ships, are transformed forthwith into Toyotas, Volkswagens, and Kias.

Donald J. Boudreaux

UPDATE: Tim Worstall e-mailed to remind me that David Friedman also uses this idea of producing in this roundabout way.


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