James Ingram on Free Trade

This classic allegory was sculpted by James Ingram in his textbook  International Economic Problems (John Wiley, 1970). The summary presented below was written by Robert Schenk, and is available here.

There is a mysterious entrepreneur, Mr. X., who announces to the world that he has found several amazing discoveries that allow him to produce cheap televisions, automobiles, cameras, and other goods. He sets up a plant on a large tract of land along the coast of North Carolina; hires 5000 employees who are sworn to secrecy; and begins buying grain, coal, and machinery. As the trains of grain and coal roll into his factory, other trains full of televisions and automobiles roll out of his factory into showrooms across the country. Mr. X is hailed as another Edison or Bell, and his company becomes a favorite with Wall Street investors.

Consumers love Mr. X because his products are so much cheaper than what they could buy before. Of course, his competitors dislike him, but their attempts to get laws restricting his operations get nowhere. The Houses of Congress ring with speeches saying that some economic adjustment is an inevitable by-product of technological progress.

Then, one day a small boy trying out his new skin-diving gear accidentally penetrates Mr. X's security shield and learns Mr. X's secret. Nothing is produced at the factory. It is all a front for a giant import-export business. Mr. X transforms grain and coal into autos and televisions by trade. His secret revealed, Mr. X is reviled and his factory shut down. Members of Congress proclaim that the American standard of living has had a narrow escape from the threat of cheap foreign labor and urge more money for research in industrial technology.

Comments

[fCh]

Certainly, in 1970 the world could have taken all free trade one would throw at it! That's not so anymore. Without intellectual property and open markets in the developing world to services coming from the developed world there is no sustainable scenario. On the other hand, without a strong foundation in education in the developed world, the globalization scenario is again unsustainable. At least in the forms we've known for a decade or so...

fCh with http://imotion.blogspot.com

[Cheap Jordan 1]

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