What is Comparative Advantage?

Had a good exchange in the comments section (and on Twitter) yesterday about David Ricardo’s Law of Comparative Advantage. My point in writing “Eat. Pray. Lovin’ It.” was to illustrate that people have always liked to pick up quickly prepared food. Workers willingly trade their money to save the expense (time and money and hassle) of food preparation. We trade what we are best at, and the act of trading in turn saves both time.

Matt Ridley‘s simple explanation is what I understand Comparative Advantage to be:

WTO Poised for Biggest Success in Years

 

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The Food-Miles Dilemma

English: Over Farm produce The vegetables and ...

Produce with labels listing their food miles. Image via Wikipedia

In Michael Pollan’s New York Times essay, The Food Issue – An Open Letter to the Next Farmer in Chief , he says, “[W]hen we eat from the industrial-food system, we are eating oil and spewing greenhouse gases.”

It would seem to be a no-brainer that local produce needs less fuel to get to market than something that had to be carted halfway around the world, but cargo trucks and railcars carry more than pickups and vans can, so their fuel cost per pound is often less. Farm-to-market fuel is a small piece of the farm-to-table energy pie with transportation accounting for a small slice of the energy pie.

Household storage and preparation of food uses more than twice the farm-to-market energy (32 percent). Thankfully, we don’t hear pleas for us to give up refrigeration and eat only raw foods to eliminate the energy costs of storage and preparation. Oh, wait. We do hear that.

It is fashionable these days to decry “food miles.” The longer food has spent traveling to your plate, the more oil has been burnt and the more peace has been shattered along the way. But why single out food? Should we not protest against T-shirt miles, too, and laptop miles? After all, fruits and vegetables account for more than 20 percent of all exports from poor countries, whereas most laptops come from rich countries, so singling out food imports for special discrimination means singling out poor countries for sanctions. Two economists recently concluded, after studying the issue, that the entire concept of food miles is a “profoundly flawed sustainability indicator.” Getting food from the farmer to the shop causes just 4% of all its lifetime emissions…A New Zealand lamb, shipped to England, requires one-quarter as much carbon to get on to a London plate as a Welsh lamb; a Dutch rose, grown in a heated greenhouse and sold in London, has six times the carbon footprint of a Kenyan rose grown under the sun using water recycled through a fish farm, using geothermal electricity and providing employment to Kenyan women. – The Rational Optimist, Matt Ridley

Tyler Cowen points out that Pollan (in The Omnivore’s Dilemma) also “argues against free trade in agriculture, on the grounds that the economics will bankrupt family farms and destabilize the market; Pollan fears centralization and the industrial mode of production. He does not note, however, that New Zealand has moved to free agricultural markets—virtually no subsidies or tariffs—and its farms, including family farms, have flourished. Nor should we forget that farm protectionism, as practiced in the EU and elsewhere, costs billions and damages economic development in poorer countries that might otherwise ship foodstuffs to the wealthier West.”

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Will Living Simply Help Save the World?

Jane Goodall 3

Image via Wikipedia

Last month, famed primatologist Jane Goodall was quoted on the Huffington Post as saying, “The world is in a horrible mess … We need to starting changing (sic) the way we live, from the clothes we buy to the food we eat. We need to change our greed and materialism. We need a critical mass to realize that we need money to live, rather than to live for money.” Or, to put that another way, “Live simply, so that others (including non-human species) may simply live.”

Now I have enormous respect for Dr. Goodall; her studies into the habits of chimpanzees shifted our thinking about primates, but I disagree with her assertion. As counterintuitive as it sounds, it is because we want to buy more stuff that our world even becomes ever more sustainable.

Dr. Goodall may base her statement in logic and The Litany: that is, we are killing ourselves because the more of us there are, the faster we consume the natural resources we humans depend upon for our very survival.

We have heard The Litany for so long it becomes almost calming.

“The water is polluted and the air is worse. We’re washing away topsoil from our farmland; and what we aren’t washing away, we’re paving over. The more technology we manufacture, the less livable becomes our world. Humans produce too many babies. Our exploding population increases poverty and misery and decreases habitat for every other living thing that we share this tiny and fragile world with.”

The only thing is, The Litany has been with us for thousands of generations. Consider this second-century quote from the early-Christian writer, Tertullian, “We are burdensome to the world, the resources are scarcely adequate for us…”

This is not to say that, collectively, we do not affect our world significantly–we do–in good and bad ways. I am only saying that our impact is decreasing due to our acquisitiveness.

You see, the more we trade goods and services, the more we trade ideas as well. Matt Ridley, author of “The Rational Optimist,” says ideas “have sex.” Like DNA recombining to make unique individuals, bits of ideas cross-fertilize with others to make better ways of doing things. “In a nutshell,” Ridley writes [PDF], “the most sustainable thing we can do, and the best for the planet, is to accelerate technological change and economic growth.”

It will be technological change (caused by trade) that makes the world more habitable for all its species, and not a decision to spend less on luxuries. History bears this out:

  • Land was freed up from agricultural production not by eating less meat, but by using machines for farming (since machines don’t need pasture).
  • It was the discovery of how to use coal, instead of wood, to power machines that saved forests, not from deciding to use less wood.
  • More land was freed up by making each acre more productive via synthetic fertilizers and pesticides, not by fasting once a week.
  • Whales were saved from extinction, not by lowering the amount of whale oil one bought, but by people buying the newer and more affordable kerosene (derived from coal) for lighting.
  • Even habitats can benefit from trade. According to Susan Hecht writing in the publication, Nature, El Salvador’s forests have increased, not shrunk, due to globalization, Salvadoreans working abroad send remittances to relatives so they no longer have to clear forests for subsistence farming.

While logic and The Litany tell us that we will run out of resources very soon, humanity’s track record for thousands of generations shows the world has become less polluted and more resilient. Prophets have preached “the end is near” since the dawn of man–they still do. But, far from being the world’s executioner, globalization and the consumerism it cultivates, are its salvation.

So, will living simply help save the world? In a word, no.

Living simply will simply not save the world. But globalization will.

 

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