If I'm at the age when it takes too much time and physical strain to trim the shrubs and hedges that run the length of all sides of our property, some of which reach 10 feet in height for privacy, then what makes economic sense for me is to specialize and exchange — to do more of what I do best and what's most profitable, and pay someone with the right skills and equipment to do the landscaping.
That's why I'm writing this column about trade instead of washing my car.
I majored in economics and have some writing experience, so it's faster, easier and more satisfying for me to do this column and trade some of the cash I earn for it to a car wash, because of its specialization.
The car wash does a faster and better job than I can of removing brake dust, brightening wheels, vacuuming carpets, cleaning the undercarriage and getting water spots off at the exit with a hot-air blow dry.
Exchange, whether between individuals, states or countries, enables each side to specialize in what it does best, then trade. Such exchanging promotes efficiency, expands overall output, improves quality, and increases competition and income.
Given variations in skills, climate and resources among U.S. states, for instance, it made economic sense in terms of price, quality and efficiency for Pennsylvania to make steel, Florida to produce oranges and Alaska to export salmon.
It was advantageous for Pittsburgh's economic development to specialize in steel production in the 19th and 20th centuries, rather than trying to grow oranges in expensively-heated greenhouses in winter or transporting hordes of workers with tackle boxes into the city in summer to try their luck at pulling stupendous catches of king salmon out of the Monongahela.
More glamorously, New England Patriots quarterback Tom Brady and his Brazilian supermodel wife, Gisele Bundchen, are cases in point for the economic benefits associated with specialization and trade.
For each, the initial specialized task was getting into and staying in top physical form. That was followed by dedication to becoming exceptionally accomplished performers, topping the competition, respectively, in passing yards per game and perfecting the strut and the striking of a pose on the world's most fashionable runways.
As reported by Sports Illustrated in February 2017, CelebrityNetWorth puts Brady's net worth at $180 million, Bundchen's at $380 million.
Back to steel and trade, especially relevant with President Trump's tariff agenda: The easy position says American steel output and employment will increase if we hike the price of imported steel with a 25-percent tariff.
It gets more complicated, and factual, when U.S. job losses caused by retaliatory tariffs against U.S. exports are also considered, as well as the inflationary impact on U.S. consumers and producers as tariffs create higher prices for both imported and domestic steel and cause layoffs at U.S. manufacturing firms that raise their prices to compensate for higher steel input costs in their production processes.
Ralph R. Reiland is associate professor of economics emeritus at Robert Morris University and a local restaurateur (rrreiland@aol.com).
