A parable about trade

04/10/2012 § Leave a comment

7.20 am, in a mall in Christchurch.

I’m sitting at a cafe, the first customer of the day. So first, in fact, that they aren’t even ready to serve me.

I watch the mall stores get ready. The butcher, the baker, the sushi-maker. Not exactly ‘Il est cinq heures, Paris s’eveille’, but not without its charms.

The barista shooshes up a couple of coffees and takes them to the butcher. It occurs to me — not every shop has a coffee maker. It sounds trivial, but it tells us something. Why don’t they? Coffee making is not hard, the technology is widely available.

This is a great example of specialisation. Espresso makers cost a bit, and getting more coffees per machine is good. Baristas get a technique going, learning to make coffees better and faster. The butcher could, of course, make coffee and chop meat. But he can do better focusing on just the one.

Next, the barista comes out of the butcher’s shop, and she’s carrying a couple of packages of meat. It doesn’t look like meat for the cafe, but something to take home. There we go — trade. Her coffee for his meat. At a ratio mutually agreed. Because they trade, they can specialise. She doesn’t have to butcher her own meat. It isn’t so much ‘taking in each other’s washing’, it’s more exchanging washing for baking.

The mall is its own economy, small producers trading amongst themselves. So, sales to mall customers are like exports from Mall-land. It becomes clear what trade can provide.

Why do we go to the mall?

  • to benefit from specialisation — just like the butcher and the barista
  • to get stuff we can’t get elsewhere – stuff we can’t make ourselves regardless of how hard we try
  • to get different stuff — yeah, I could have coffee at home, but coffee out is a change.

International trade isn’t any different in principle. We get stuff we can’t produce here — rare minerals, tropical fruits. We can also focus on doing some things well — milk powder, merino wool. And we can have more diversity — climb each other’s mountains, ford each other’s streams.

It works for the barista and butcher, and it can work for all of us.

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