THE PARABLE OF THE SUPERMARKET
By José Raúl González
Do you want to free yourself from free trade? Here’s how…
Checking my family budget I realized something terrible. My family had a trade deficit with the supermarket. Meaning that, every week, we buy food from them but they do not contract any service from us in return. This means that my family was running a trade gap (as they say). Horrified, I realized it was exactly the same situation that my country was in since we, Guatemalans, import more than we export to the US. It was my duty, as the head of my family, to take the initiative and correct this situation.
The thing started to worsen when I realized that my whole condo was in the same situation. I thought of immediately calling for a general assembly of the condominium to correct this dangerous situation of economic dependency that jeopardized our food security. Moreover, if nothing was done, we were running the risk of the supermarket eventually keeping all our money… And when such time arises… how would we support ourselves?
Here was my plan: the supermarket would have to immediately hire our professional services, at a fair price, in order to start reducing our trade deficit. Otherwise, we would be forced to proceed and establish commercial sanctions by creating our own Bolivarian Free Trade Area; named as such since two of my neighbors are Venezuelan.
The proponed sanctions would include a boycott to the supermarket (closing our borders as they call it). All the members of the community would start growing our own vegetables, fruits and we would raise our own cattle and chicken. Alter all, our condo had plenty of unused land (called gardens) and we could use them for our new needs.
All trade between neighbors would be free and just since it would be among equals and not with an imperialist giant (the supermarket) with whom there were obvious asymmetries. Our newly won economic and food independence would be, finally, guaranteed. We would have also achieved our precious goal of reducing the trade deficit with the supermarket!
After finishing drawing the plan, I asked my wife to call on the meeting ASAP. She carefully analyzed it (in about ten seconds) and the recommended that, in order to protect my reputation, I should not expose myself to making such stupid proposal. I was very disappointed. After all, these were the same preoccupations and recommendations I was hearing from economists, politicians, activists and social and
religious leaders.
Eventually I had to admit that it was very stupid… don’t you think? And if it wasn’t going to work for my condo why would it work for my country? So, I guess we should not worry about the anti free trade rhetoric. Better pay attention to your wife’s advice instead of paying attention to the recommendations of the so called “social leadership”. Common sense and free trade definitively go hand and hand.
Checking my family budget I realized something terrible. My family had a trade deficit with the supermarket. Meaning that, every week, we buy food from them but they do not contract any service from us in return. This means that my family was running a trade gap (as they say). Horrified, I realized it was exactly the same situation that my country was in since we, Guatemalans, import more than we export to the US. It was my duty, as the head of my family, to take the initiative and correct this situation.
The thing started to worsen when I realized that my whole condo was in the same situation. I thought of immediately calling for a general assembly of the condominium to correct this dangerous situation of economic dependency that jeopardized our food security. Moreover, if nothing was done, we were running the risk of the supermarket eventually keeping all our money… And when such time arises… how would we support ourselves?
Here was my plan: the supermarket would have to immediately hire our professional services, at a fair price, in order to start reducing our trade deficit. Otherwise, we would be forced to proceed and establish commercial sanctions by creating our own Bolivarian Free Trade Area; named as such since two of my neighbors are Venezuelan.
The proponed sanctions would include a boycott to the supermarket (closing our borders as they call it). All the members of the community would start growing our own vegetables, fruits and we would raise our own cattle and chicken. Alter all, our condo had plenty of unused land (called gardens) and we could use them for our new needs.
All trade between neighbors would be free and just since it would be among equals and not with an imperialist giant (the supermarket) with whom there were obvious asymmetries. Our newly won economic and food independence would be, finally, guaranteed. We would have also achieved our precious goal of reducing the trade deficit with the supermarket!
After finishing drawing the plan, I asked my wife to call on the meeting ASAP. She carefully analyzed it (in about ten seconds) and the recommended that, in order to protect my reputation, I should not expose myself to making such stupid proposal. I was very disappointed. After all, these were the same preoccupations and recommendations I was hearing from economists, politicians, activists and social and
religious leaders.
Eventually I had to admit that it was very stupid… don’t you think? And if it wasn’t going to work for my condo why would it work for my country? So, I guess we should not worry about the anti free trade rhetoric. Better pay attention to your wife’s advice instead of paying attention to the recommendations of the so called “social leadership”. Common sense and free trade definitively go hand and hand.
posted by Guest Blogger at 7:42 AM
1 Comments:
Your parable is nice but there are a few weaknesses in your argument, if indeed you can call it an "argument" since you neglected to explain any particular reason why your wife was correct.
In the microcosm you describe, the imports from the supermarket create a trade imbalance between the supermarket and the condo.
In real life this is not a problem because the inhabitants of the condominium go out to work (probably at least some at the supermarket), and bring cash (ie foreign currency) back into the condominium. In terms of your model this is an export.
The inhabitants of the condominium spend only a small proportion of what they earn from their exports (ie their jobs outside the condo) on food at the supermarket.
Therefore, the condominium actually has a very healthy trade surplus overall.
Now the interesting thing is what happens when the people in the condo lose their jobs, ie exports drop. Not being an economist I`m not remotely qualified to tell you, though I can tell you that it`s hard to shop in a supermarket without any money to buy things.
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