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Russell Roberts the host of the weekly podcast, EconTalk and co-creator of the Keynes-Hayek rap videos. His latest book is How Adam Smith Can Change Your Life. He is also a John and Jean De Nault Research Fellow at Stanford University"s Hoover institution.
Free trade and technological progress come with some undeniable human costs. Why are those costs worth it? Because almost everyone becomes wealthier and human capital is freed to pursue more valuable activities.
What does the future hold for economic life in the United States? Will we move toward greater freedom or less? What role will ideas and rhetoric play, if any, in making sure that the direction is one that lovers of freedom prefer?
Supply-and-demand analysis is the bread and butter of classroom economics. All over America as the leaves change color and college commences, professors of economics are shifting supply and demand curves and showing how the price of a good changes in response.
Daniel Sumner is in trouble. Sumner, an agricultural economist at UC Davis, has been accused of betraying his country. What has Sumner done? Given the charge, you might assume that he has aided terrorists or leaked nuclear secrets. Or perhaps shared some sophisticated technology with America's enemies.
Suppose gasoline became so expensive that getting oranges to Wisconsin raised their price to $3 each. If that price were expected to persist for a long time, there would probably arise a Wisconsin citrus industry with all the trimmings. Orange orchards would be planted near the Illinois border where the weather is warmest.
I really shouldn't tell you this, but Cape Cod is a very beautiful place. I shouldn't mention its beaches with their towering sand dunes. I shouldn't mention the golden eagle I saw soaring over the marsh near the cottage where we stayed on vacation. I shouldn't mention the charm of the Cape Cod baseball league, where college players try to show major league scouts they can hit with a wooden bat and where the fans get in for free and the dogs and toddlers are unleashed.
At the heart of almost all economics is the idea of mutually beneficial exchange. When two people voluntarily engage in an activity, economists assume that both parties are better off. Otherwise, one of them would have refused the deal. It doesn't mean people don't make mistakes—sure they do.
Roughly 180 years ago David Ricardo discovered comparative advantage. He showed that trade benefits both trading partners even when one is less productive than the other across all activities. There are gains from trade and specialization even in that case.