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Quotation of the Day…

is from pages 47-48 of Deirdre McCloskey’s important 1994 collection Knowledge and Persuasion in Economics:

Trade in the mainstream economic view is not zero sum.  To be sure, from the factory floor it looks like zero sum, which gives [Lester] Thurow’s metaphor the appearance of common sense.  To a businessperson “fighting” Japanese competition in making automobiles, her loss is indeed Toyota’s gain.  But the competitive metaphor looks only at one side of the trade, the selling side.  Economists see around and underneath the economy.  Underneath it all (as the economists say, in their favorite metaphor) Jim Bourbon of Iowa trades with Tatsuro Saki of Tokyo.  A Toyota sold by Japan pays for 2,000 tons of soybeans sold by the United States.  But at the same time a Japanese and an American consumer are gaining soybeans and an auto.  One kid gets another kid’s pet frog in exchange for giving up his jackknife.  Both kids are better off.  If we look on nations in the way we look on kids making such exchanges we can see that both nations win a little something.