History

History

Food trade is an important part of economic history.  Europeans literally sailed across the world to spice up their dinners, and they stumbled across the Americas in the process.  Here are some good resources to learn more:

How the Spice Trade Changed the World

Lecture Slides from Oregon State

Adam Smith, who is considered one of the founders of economic thought, argued against the European “mercantilism” ideology.  Mercantilists believed that a country should export more than it imports because that would bring in gold.  Smith criticized government polices that were restricting trade in order to maintain a “favorable balance of trade.”  He advocated for free trade laws allowing countries to export the goods they have an advantage in making and import what is relatively more expensive for them to make.

David Ricardo formulated the theory of comparative advantage 200 years ago. In my little example, that is the idea that one island can produce Nutella more efficiently than the other island, so they have a relative advantage.

Around the same time, Thomas Malthus gave his gloomy prediction that, as the human population grows, we will run out of land to grow noms, and then people will starve (if they are not killed by war or disease first).

The human population has since increased far beyond Malthus’s wildest dreams. We are able to do that because:
1. The earth does not grow along with the economy and population.  Since there is only so much land to grow food on, we increase our output through new technology that allows us to get more noms out of our limited resources.
2. Increased specialization and exchange. Ex. People in Kansas can get oranges from Florida in exchange for wheat.

International food trade policy remains an important topic of debate today.

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