Tuesday, April 03, 2007

Globalisation is inherently good

As trade routes develop and the geographical reach of trade spreads, people are inherently better off. There is a law in economics, referred to as the law of comparative advantage, which states that the added option of trade is always an improvement over no trade, because even if one party is completely poor and unskilled, they still have a comparative advantage that they can use (i.e relatively cheap labor for example)

Protectionism and restrictions on trade are harmful. The most familiar kind of protectionism is when people suggest only Australian made products should be available to the market. Or that foreign imports should have a tariff or quota placed upon them.

This argument, although widespread, is utterly dishonest, which is plain to see if you extend the argument from your country, down to your local city, or suburb, or street ? Why not buy only bread that is made by people in your city, or computers that are manufactured by people in your suburb, or clothing that is made by people in your very household ?

Here is an illustrative example. A Philadelphia woman tried to produce a suit using only materials and labor from within 100 miles of her home. Suits typically cost between $300 and $1000 for the designer end. Look at how much effort went into producing this particular suit:

PHILADELPHIA — When educator and designer Kelly Cobb decided to make a man’s suit only from materials produced within 100 miles of her home, she knew it would be a challenge. But Cobb’s locally made suit turned into a exhausting task. The suit took a team of 20 artisans several months to produce — 500 man-hours of work in total — and the finished product wears its rustic origins on its sleeve.

“It was a huge undertaking, assembled on half a shoestring,” Cobb said at the suit’s unveiling one recent afternoon at Philadelphia’s Institute of Contemporary Art.

“Every piece of the suit took three to five pairs of hands to make,” Cobb added. “Every garment you wear took three to five pairs of hands to make too, but you don’t know whose hands or where.”

Cobb’s suit (see photo gallery) is a demonstration of the massive manufacturing power of the global economy. Industrial processes and cheap foreign labor belie the tremendous resources that go into garments as simple as a T-shirt.