February 11, 2003

A Short Dialogue on International Trade in Agricultural and Fishery Products

"Okay. One of the things that we are going to eat for lunch has travelled 9000 miles--almost halfway around the world--to land on our table. What is it?"


"Very good guess. But no. Bananas come from the Caribbean and Central America, and travel only 3000 miles or so to get here. It's the smoked salmon, from Tasmania, island off of the southeastern tip of Australia."

"I've heard that most animals native to Tasmania are endangered. Is that true?"


"It's certainly true that large Tasmanian marsupials are under very heavy pressure from introduced Eurasian forms that fill the same niches..."


"But does anybody have an idea why I would buy smoked salmon from Tasmania--Royal Tasmanian brand?"

"So that you can torture your children with another boring lecture about international trade, the international division of labor, and the importance of human pwogwess through the mutual weduction of twade bawwiews?"

"Plausible, but not true in this case..."


"Because they were cheap?"

"Yes, exactly, why were they cheap--half the price of Alaskan smoked salmon?"


"Either because you got a bargain, or because you don't know something about the quality of Tasmanian salmon that you really should know."

"Both excellent possibilities. Remember the man who was over for dinner last week? The one who asked you what you thought was the most common name of a city in the United States? He won the Nobel Prize in Economics for developing ways to think about your second possibility--that we're about to eat something that tastes really nasty. But I think the first possibility is more likely. Why is salmon from Australia a bargain right now?"


"You tell me, Dad."

"Because Australians want to buy a huge number of imported goods right now, and their demand for U.S. dollars is high. Because their demand for U.S. dollars is high, they've pushed up the price of the U.S. dollar in terms of Australian dollars. That means that the Australian dollar right now is cheap--about 50 U.S. cents. And that means that things made in Australia--like Tasmanian smoked salmon--are cheap too."

"Well, we'll find out if it's really such a bargain very soon."

"BANANAS EXPLODE!" [General sustained laughter]

"It's too bad we've never been to visit Tasmania..."

"Well, right now a Tasmanian fish has come to visit you. But somehow that's not the same, is it?..."

Posted by DeLong at February 11, 2003 03:05 PM | TrackBack
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