Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Tuesday, June 14, 2005

The Benefits of Free(r) Trade:
a Small Example

My older son, David Ricardo Palmer, recently returned from a visit to Arizona. When I met him for coffee at Starbucks, he was proudly wearing a new pair of cotton slacks that he had bought at a Target store in Phoenix for only $10 [similar pants are available from Wal-Mart for between $12 and $15 (all prices in U.S. dollars)]. They looked great on him, but maybe that's just because he's a good-looking guy.

I asked him how much he thought he'd have to pay for them if there weren't free (-ish) trade in textiles and clothing.

We decided maybe $60 [is that the list price for a pair of Dockers or something similar but more upscale?], but perhaps that was a bit too high. I do recall, though, paying 4 or 5 dollars for a pair of polished cotton slacks (with a belt thingy on the back but with no perma-press and no stain resistance) back in the mid-1950s. At the same time, starting salaries for assistant professors were about $5 - $6 thousand, so relative to those incomes, it shouldn't be too surprising if pants prices had increased by nearly tenfold in 50 years.

Lucky for consumers, pants prices have only doubled or tripled in 50 years, thanks to free trade and innovation.
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