he news lately leaves little doubt that we are living in interesting times. "China knocks on reserve-currency door," reported the Economist on August 5, 2015. In less sanguine terms, Barron's reports that "Oil is not well," explaining why Saudi Arabia is tapping the bond markets and commenting on low crude oil prices. One learns that Brent crude hovering around $50 per barrel is much lower than the break-even $80 per barrel price for Saudi Arabia.
Modern data visualization tools display crisp charts on the U.S. Census website. China is the number one supplier of the imports into the U.S., the charts show. Chances are that you already knew it from the last trip to Walmart or the Dollar store.
So far we've been paying mostly in dollars and so has the large part of the world. But, could buyers of goods and services be yearning for the Yuan? The answer might lie in the velocity and the volume of the exchange of goods and services between nations—otherwise known as international trade.
In these interesting times, the book "A Splendid Exchange – how trade shaped the world," by William J. Bernstein is greatly enlightening. It's a remarkable journey through time and periods of momentous changes. Hardly anybody remembers the maniac tirades of the Red Guards, in Maoist China few decades earlier, hell-bent on calamitous confrontations just like the rabid extremists parroting "Death to America."
Bernstein, a noted financial theorist and historian, takes the reader through journeys along the treacherous routes of the Silk Road on camel backs or anything that was capable of moving cargos. He describes the occupational hazards faced by the traders traveling by roads, waterways. or by sea.
The reader can feel the smoothness of the yarn and can visualize Roman Emperor Elagabalus don the fine silk imported from a far off land he could only imagine in his mind. Chances are that the mighty Roman Emperor couldn't care less if the fine apparel he wore was designed on a Lenovo laptop or by the apple of his eyes. He was, after all, the Emperor of the mighty Roman Empire and perhaps not bothered by modernity. Imaginative human inventions and creative products were to follow much later.
Bernstein takes the readers through the corridors of history and along the exploratory voyages of legends like Vasco Da Gama. He traces the Dutch Spice route. One of the most interesting chapters is the narration about Henry Bessemer and his inventions. “Steam and steel wrought a trade revolution not only on world’s oceans but also on it rivers, canals and land,” he explained.
Quoting Cordell Hull, the longest serving Secretary of State: “we learned that a prohibitive protective tariff is a gun that recoils on ourselves,” the author describes the period when “outraged Europeans organized boycotts of our products.” Bernstein attributes the armed conflicts between nations to the ill effects of the Smoot-Hawley Act. “World trade fell dramatically during the Smoot-Hawley years,” he wrote.
Making the case for international trade, Bernstein quotes John Stuart Mill who wrote “the economic advantages of commerce are surpassed in importance by those of its effects which are intellectual and moral.” Presenting a bird’s eye view, a graph of the real value of world trade in 1998-dollar terms shows a continuous steep rise.
In the pages that pass, the reader becomes familiar with the General Agreement on Tariffs and Trade (GATT) and the several rounds of negotiations and treaties. Then in 1995 the World Trade Organization (WTO) emerged. An illuminating comparison of per capita Gross Domestic Product (GDP) between the countries that are considered ‘open’ versus ‘close’ to world trade makes a convincing case in favor of reducing or eliminating trade barriers.
“World trade has yielded not only a bounty of material goods, but also of intellectual and cultural capital, an understanding of our neighbors, and a desire to sell things to others rather than annihilate them,” concluded Bernstein who got his epiphany in Germany in a Berlin hotel lobby consuming the complimentary lunch—an apple with a label proclaiming “Product of New Zealand.”
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A Splendid Exchange: How Trade Shaped the World
August 22, 2015
T
he news lately leaves little doubt that we are living in interesting times. "China knocks on reserve-currency door," reported the Economist on August 5, 2015. In less sanguine terms, Barron's reports that "Oil is not well," explaining why Saudi Arabia is tapping the bond markets and commenting on low crude oil prices. One learns that Brent crude hovering around $50 per barrel is much lower than the break-even $80 per barrel price for Saudi Arabia.
Modern data visualization tools display crisp charts on the U.S. Census website. China is the number one supplier of the imports into the U.S., the charts show. Chances are that you already knew it from the last trip to Walmart or the Dollar store.
So far we've been paying mostly in dollars and so has the large part of the world. But, could buyers of goods and services be yearning for the Yuan? The answer might lie in the velocity and the volume of the exchange of goods and services between nations—otherwise known as international trade.
In these interesting times, the book "A Splendid Exchange – how trade shaped the world," by William J. Bernstein is greatly enlightening. It's a remarkable journey through time and periods of momentous changes. Hardly anybody remembers the maniac tirades of the Red Guards, in Maoist China few decades earlier, hell-bent on calamitous confrontations just like the rabid extremists parroting "Death to America."
Bernstein, a noted financial theorist and historian, takes the reader through journeys along the treacherous routes of the Silk Road on camel backs or anything that was capable of moving cargos. He describes the occupational hazards faced by the traders traveling by roads, waterways. or by sea.
The reader can feel the smoothness of the yarn and can visualize Roman Emperor Elagabalus don the fine silk imported from a far off land he could only imagine in his mind. Chances are that the mighty Roman Emperor couldn't care less if the fine apparel he wore was designed on a Lenovo laptop or by the apple of his eyes. He was, after all, the Emperor of the mighty Roman Empire and perhaps not bothered by modernity. Imaginative human inventions and creative products were to follow much later.
Bernstein takes the readers through the corridors of history and along the exploratory voyages of legends like Vasco Da Gama. He traces the Dutch Spice route. One of the most interesting chapters is the narration about Henry Bessemer and his inventions. “Steam and steel wrought a trade revolution not only on world’s oceans but also on it rivers, canals and land,” he explained.
Quoting Cordell Hull, the longest serving Secretary of State: “we learned that a prohibitive protective tariff is a gun that recoils on ourselves,” the author describes the period when “outraged Europeans organized boycotts of our products.” Bernstein attributes the armed conflicts between nations to the ill effects of the Smoot-Hawley Act. “World trade fell dramatically during the Smoot-Hawley years,” he wrote.
Making the case for international trade, Bernstein quotes John Stuart Mill who wrote “the economic advantages of commerce are surpassed in importance by those of its effects which are intellectual and moral.” Presenting a bird’s eye view, a graph of the real value of world trade in 1998-dollar terms shows a continuous steep rise.
In the pages that pass, the reader becomes familiar with the General Agreement on Tariffs and Trade (GATT) and the several rounds of negotiations and treaties. Then in 1995 the World Trade Organization (WTO) emerged. An illuminating comparison of per capita Gross Domestic Product (GDP) between the countries that are considered ‘open’ versus ‘close’ to world trade makes a convincing case in favor of reducing or eliminating trade barriers.
“World trade has yielded not only a bounty of material goods, but also of intellectual and cultural capital, an understanding of our neighbors, and a desire to sell things to others rather than annihilate them,” concluded Bernstein who got his epiphany in Germany in a Berlin hotel lobby consuming the complimentary lunch—an apple with a label proclaiming “Product of New Zealand.”
