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Growing cars in Iowa

[T]here are two technologies for producing automobiles in America. One is to manufacture them in Detroit, and the other is to grow them in Iowa.

Here’s the detailed technology by which you grow cars in Iowa:

First you plant seeds, which are the raw material from which automobiles are constructed. You wait a few months until wheat appears. Then you harvest the wheat, load it onto ships, and sail the ships eastward into the Pacific Ocean. After a few months, the ships reappear with Toyotas on them.

Who could object to such a nice technological alternative?

Today, I am beginning to teach trade in my Principles of Economics class. This is a classic folk description of international trade first advanced by David (son-of-Milton) Friedman and then quoted by Steven Landsburgh (the source of the quotes here) in his marvelous book The Armchair Economist. David quoted it again in his own book Hidden Order: the Economics of Everyday Life.

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9 Comments

  1. Dan Kyba wrote:

    The concept is more tellingly presented by Tony Allan: “Virtual Water”.

    Posted September 14, 2010 at 9:22 am | Permalink
  2. Steve wrote:

    There’s this technology they have in Africa where someone writes on a piece of paper and sends it across the Atlantic. A few months later t-shirts arrive.

    People object because the technology destroys local indsutry and undercuts the local market.

    http://goodintentionsarenotenough.com/2009/09/donating-shoes-aid-fads/

    Posted September 14, 2010 at 12:44 pm | Permalink
  3. Slaney Black wrote:

    While that’s a good answer to the question “how do we obtain cars?” it’s not a complete answer to “how do we structure an economy?”

    Despite DWL from industrial policy it may be desirable for a government to favor production of good x if there is some sort of positive externality associated with it. For example…
    * It confers some sort of military or geostrategic advantage.
    * It provides insurance against macro-shocks, such as fluctuations in commodity prices.
    * It is more likely to produce valuable knock-on technologies, or desirable social effects.

    Posted September 14, 2010 at 11:20 pm | Permalink
  4. p baker wrote:

    That’s a cargo-cult! Pacific Islanders saw white men arrive in WW2, construct landing strips and then magically big birds landed full of cargo. So they copied them, but it didn’t work too well.
    So with wheat growing in developing countries, not many cars arrive, at least to the farmers that grew the wheat.

    Posted September 15, 2010 at 3:05 am | Permalink
  5. c-sez wrote:

    > Then you harvest the wheat, load it onto ships, and sail the ships eastward into the Pacific Ocean.

    I’m glad you’re teaching economics, not geography.

    Posted September 15, 2010 at 9:35 am | Permalink
  6. Kun Lao wrote:

    US is also printing cars and other stuffs.

    Posted September 15, 2010 at 11:16 am | Permalink
  7. Lightning wrote:

    If only we can buy seeds and a Lamborghini pops in my garden after months showering it with love, sunlight and water. If a lambo is too exaggerated, a Honda CIVIC TYPE R will do fine for me :P

    Posted September 20, 2010 at 11:02 pm | Permalink
  8. Lightning wrote:

    ok, i’ll even consider Mr Bean’s car

    Posted September 20, 2010 at 11:05 pm | Permalink
  9. Jolene wrote:

    “First you plant seeds, which are the raw material from which automobiles are constructed. You wait a few months until wheat appears. Then you harvest the wheat, load it onto ships, and sail the ships eastward into the Pacific Ocean. After a few months, the ships reappear with Toyotas on them.”

    That’s really an extraordinary technology to produce automobiles. :)

    Posted September 23, 2010 at 11:48 am | Permalink

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