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Quotation of the Day…

… is from a 2007 interview that Russ Roberts did with economist Paul Romer (who is a co-winner of the 2018 Nobel Prize in Economics):

Russ RobertsDo we really care if the television was invented in the United States versus Russia? Do we really care where the car was invented or where the next great breakthrough comes from? Does it matter?

Paul Romer: No, we don’t and it’s a really good point to emphasize. People often use these national comparisons as if it’s a race where there’s winners and losers. I often tell my students, “Any time you’re thinking about rivalry between countries, reframe the question as rivalry between states in the United States.”

Would it upset us if we lived in Illinois and Intel was making microprocessors in California? Is it bad for us that Intel develops microprocessors? Of course not. We’re glad they make them and we’re happy to use them. We get the benefits from using them. Does it make people in Illinois any worse off if people in California grow richer or develop new technology? Absolutely not. People in Illinois are better off being able to trade with California and people in California are better off being able to trade with people in Illinois and New York and the rest of the country.

So this notion that there’s a kind of a rivalry with winners and losers when we think about nations, it’s really very misleading about the underlying economics. This, by the way, was one of the advantages the United States had in the early part of the twentieth century. We were already a big free trading block when a lot of the world was still relatively closed.

DBx: One of the achievements of trade is that it allows each of us to enjoy the fruits of the minds and hands of all of the rest of us. Because I can trade with you, I need not do for myself what you can do for me better, or at lower cost. And while nothing prevents me, here today in my home in Virginia, from working to invent the likes of some new drug, some new app, some new fusion-cuisine dish, or some new clothing style, if for whatever reason I fail to do so, so what? I can spend the income that I earn from doing what I do – lecturing and writing about economic matters – to acquire these marvels from those who do invent these marvels.

The people with whom I trade are not so much in competition with me as they are cooperating with me. “I’ll do this for you,” says I to them, “if you do this for me.” With astonishing regularity, they agree. We’re all made better off. Further, it does not matter one whit if the person with whom I want to trade is Lee, my next-door neighbor in Virginia, or Li, my fellow human being in China.

And when a third party obstructs my ability to trade as I see fit, that third party obstructs my ability to cooperate productively with others. Such obstructions are anti-social.