≡ Menu

Quotation of the Day…

… is from page 136 of my great teacher Leland Yeager’s, and David Tuerck’s, still-relevant 1966 book, Trade Policy and the Price System (original emphasis; link added):

Knowing the principle of comparative advantage, the reader should be able to pinpoint the error in all such theorizing [that claims to show that protective tariffs on widgets are justified if domestic firms can produce each widget using fewer resources than can foreign firms].  For trade to benefit all countries, a commodity need not be supplied only by those that make it most “efficiently” in some real-cost sense.  Efficiency comparisons are beside the point.  If we Americans can import widgets and pay for them by exporting goods that cost us less than producing the widgets ourselves, we gain, regardless of whether widget production is physically more efficient here or abroad and regardless of what makes the foreign widgets so cheap.

DBx: On comparative advantage, see also here.