… is from page 11 of Menzie Chinn’s and Douglas Irwin’s superb 2025 textbook, International Economics:
There is a parable about an entrepreneur who invents an amazing machine. Wheat, soybeans, lumber, and oil are fed into one end of the contraption. As if by magic, smartphones, coffee, and tea, and all manner of clothing and apparel come out at the other end. The inventor is praised as a genius – until further investigation reveals that the wheat and the other inputs were being secretly shipped to other countries in exchange for the electronics and apparel that later emerged. When this news is made public, the inventor is denounced as an unpatriotic fraud who is destroying jobs.
DBx: Here are some questions for all protectionists, left, right, and center (and please disregard national-security concerns as these questions concerning such a hypothetical machine are about its economic consequences). Do you think that if such a machine were indeed invented, the results for the people of the home country would be bad? Do you think that government officials should be trusted to know if and when to obstruct the operation of such a machine? If you would admire the genius of the inventor of this machine and applaud its ability to transform lower-valued inputs into much higher-valued outputs, can you explain why you object to the operation of an actual such real-world machine, like the one pictured beneath the fold?
Please show your work if you believe that when the machine is called “cargo ship,” its results differ meaningfully from any other machine that transforms lower-valued inputs into higher-valued outputs.
