The Choice by Russell Roberts Assignment Example | Topics and Well Written Essays - 1000 words

The Choice by Russell Roberts - Assignment Example He claims that as a nation, America can specialize in producing televisions but it is much better for them to concentrate their resources on producing goods or services which they are really good at and leave the production of goods, like television, to other countries (Japan). This way they (Americans) better utilize their time and resources for making more money than as compared to Japan (Roberts 10). The reverse is also true for Japan, which may or may not be good at making drugs, which Americans are good at. Roberts provides a convincing argument on the theory of comparative advantage. I agree with Roberts that instead of protecting one's own industries and businesses, the trade should be shared to even the weaknesses and strengths of the world's economies. If America is good at making drugs and can fetch a higher price for them then it would be better to concentrate resources to market drugs to other countries. It should create a niche by developing drugs, (or any other products) to maximize its resources. Since time and labor are scarce resources in economic terms, it is logical that a country's authority makes the right choice to free trade regulations to help its industries to "swap" products. The real deal is the ability of the country to find the products that should be sold to other countries and chooses products which are cheaper in comparison. This is necessary for the theory of comparative advantage to work for an economy to earn profit from the "swap". Roberts makes this claim based on Ricardo's theory, assuming that other countries of the world are willing to trade as well and that all economies of the world are stable in their production and resources. However, what happens when an economy, A, is not stable? What will happen if the other country, B, is not willing to trade due to lack of "money" or lack of product to sell to A? In such a scenario, I believe the theory of comparative advantage will not wor of well.