The visible hand in economics

The luxury of cheese: A reply

Posted on: March 4, 2008

There was an article in the Dominion post by Linley Boniface. In the article she talk about how cheese used to be a staple, and now it is a luxury.

Now I find I don’t need to argue with her, as she practically makes her own case against herself in the second paragraph, namely:

Bikes were always second-hand, a new coat was a purchase that needed to be weighed up for months in advance, and meals in restaurants were for birthdays only. When I think back to my childhood, the only thing I can remember being given access to in unlimited abundance was cheese.

So she is saying that people can now afford bikes, new clothes, meals in restaurants etc but not cheese.  The reason for this is that we are trading with countries that make these things more relatively more efficiently than we do, it’s called comparative advantage .  I’m willing to pay a higher price of cheese for the lower price of goods such as TVs, cars, computers etc, but then again I don’t like cheese 😉

She also levels the claim that we aren’t hearing enough about the issue (which by itself is a lie – there are several articles a week on it) because it is the poor that are suffering.  However, aren’t the poor gaining from access to ridiculously cheap manufactured goods (washing machines, clothes, shoes, TVs).  If they are actually net losers from trade out there, then why don’t we compensate them (akin to Kaldor-Hicks) – wait a second we do with the level we set welfare payments.

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