Self-sufficiency is the road to poverty

Here is an extract from a wonderful article by Russell Roberts

We don’t export to create jobs. We export so we can have money to buy the stuff that’s hard for us to make—or at least hard for us to make as cheaply. We export because that’s the only way to get imports. If people would just give us stuff, then we wouldn’t have to export. But the world doesn’t work that way.

It’s the same in our daily lives. It’s great when people give us presents—a banana bread or a few tomatoes from the garden. But a new car would be better. Or even just a cheaper car. But the people who bring us cars and clothes and watches and shoes expect something in return. That’s OK. That’s the way the world works. But let’s not fool ourselves into thinking the goal of life is to turn away bargains from outside our house or outside our country because we’d rather make everything ourselves. Self-sufficiency is the road to poverty.

And imports don’t destroy jobs. They destroy jobs in certain industries. But because trade allows us to buy goods more cheaply than we otherwise could, resources are freed up to expand existing opportunities and to create new ones. That’s why we trade—to leverage the skills of others who can produce things more effectively than we can, freeing us to make things we otherwise wouldn’t be able to afford.


here is a nice aitel advertisement that explains “There is no wall, that can keep us apart if only we talk to each other”

 

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10 thoughts on “Self-sufficiency is the road to poverty

  1. People who want to turn the U.S. into a nation, competing for low-skilled jobs, should take a hard look at themselves. Education and innovation are the key to prosperity. We want high-skilled jobs and not low-skilled jobs.

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  2. @amit…
    bro good to see u after a long time 🙂

    @Avinash…
    the answer to ur question lies in the line just after that statement…

    let me take u back to the origin of barter….

    because they found that some men could weave clothes better than others, some men could make pottery for the entire village, gather wood for not only themselves but also for 4-5 other families… a farmer could produce a lot of surplus grains…
    so essentially instead of all them doing everything, the men starting doing what they did the best (what maximizes their productivity) and trade their surplus for goods or services that they desire, but cannot produce…..

    essentially u work ur ass off not because u r workaholic, but because u want to pay for ur house, ur car, ur food etc. getting a job is a means to achieve it not the end.

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  3. read http://en.wikipedia.org/wiki/Beggar_thy_neighbour

    1. in the long run it does not matter whether you have fixed or floating exchange rates because the imports will be at international levels and this will cause the local wages and price of local produce to adjust via inflation… something you have clearly seen hapenning when the devaluation of indian currency caused inflation and rendered the 100 rupee bill worthless.

    2. think yourself in the market and china as a discount store as long as you can buy stuff from the store at a cheap price.. do you care?

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