… is from page 13 of Menzie Chinn’s and Douglas Irwin’s superb 2025 textbook, International Economics:
There are tradeoffs. If the United States wants to produce more food, it can do so by devoting more of its labor force and land to agriculture. However, that means fewer workers are left to producing clothing and other goods. Similarly, the United States can produce more steel by devoting more of its labor and capital to steel production, but then fewer workers and less capital will be available for the production of other goods.
DBx: Sounds trite. And in a sense it is. Even a child, in familiar circumstances, understands the reality of trade-offs – for example, that her spending one more hour watching t.v. is one less hour that she can spend playing outside. But when politicians and pundits talk about international trade, they too often lose sight of the reality, and inescapability, of trade-offs. They presume that, say, if Americans are led by protectionist policies to produce more steel, that’s the end of the story. We Americans produce more steel, as if this steel is free. Little or no thought is given to what we Americans necessarily produce less of.
And also too often, when we economists point out this reality, in addition these days to being dismissed as “elites” or “cosmopolitans,” we are also accused of wishing ill for the American economy.
