Chapter 7: Trade and Technology (pages 89-98)
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Page 92: On the shipping container, see Marc Levinson’s The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
Page 93: Pareto improvements are discussed in more detail in 7 of the micro book.
Page 94: More here about the Luddites. Regarding electricity and the candle industry, see Frédéric Bastiat’s famous 1845 “candlemakers’ petition“.
Page 96: The inspiration here comes from a story credited to James Ingram’s International Economic Problems (1970).
Chapter 8: The Classical View of Trade (pages 99-110)
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Page 100: Both of the quotes are from Adam Smith’s Wealth of Nations (1776), and both appear in Alan Blinder’s essay on free trade on econlib.org.
Page 101: Mog and Ooga discuss comparative advantage in more detail in chapter 5 of the micro book; the idea originates with David Ricardo (1772-1823). Paul Krugman won the 2008 Nobel Prize in economics “for his analysis of trade patterns and location of economic activity”; the “trading with aliens” idea in this chapter are an allusion to one of the funniest pieces of economics humor ever, Krugman’s “The theory of interstellar trade” (Economic Inquiry, 48: 1119-1123, 2010). Krugman’s basic idea of how countries can gain from trade even if they’re similar can be thought of in terms of family cooks: You and I might be equally good at making soup, but if each of us can make two gallons of chicken soup (or two gallons of potato soup) with less effort than it takes to make one gallon of each then we can gain from trading by having one of us make chicken soup and the other one make potato soup.
Page 106-107: A fascinating episode dealing with outsourcing comes from a media firestorm that erupted in early 2004; see “Bush Econ Advisor: Outsourcing OK” (CBS News, Feb 13 2004) as well as this blog post (“Outsourcing Redux) by Greg Mankiw, the econ advisor in question. (PS. At least one reader thinks that the “families named everything” line is the best part of the whole book 🙂
Page 110: The joke about “on the one hand, on the other hand” is in part a reference to Caroline Postelle Clotfelter’s pioneering collection of economics humor, On the Third Hand: Wit and Humor in the Dismal Science
Chapter 9: Complications (pages 111-124)
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Page 111: As noted above, the quote here is from Adam Smith’s Wealth of Nations (1776). Here’s a link to the quote via Google Books.
Page 112: Regarding environmental issues, a terrifically thought-provoking article is the Larry Summer memo from 1991.
p113: A thought-provoking read is this op-ed by Princeton economist Alan Blinder: “Free Trade’s Great, but Offshoring Rattles Me” (Washington Post, May 6 2007). The reference to the Hatfields and the McCoys concerns a famous feud in the late 1800s. An opposing view about natural security is Allen Sanderson’s amusing “Declaration of independence” [from coffee] (Chicago Tribune, Mar 30 2011).
Page 115: The “trade could make everyone worse off” line is a reference to my own “ten principles of economics” YouTube routine. It’s a real example, at least in theory; see the example in footnote #3 of the ten principles text version.
Page 118: Triangle Fire: A Half-Hour of Horror is a thought-provoking story about sweatshops in the U.S. last century. The Economist (“The birth of the New Deal”, March 19 2011) notes that “400,000 attended the memorial service for those who died, in part, because they could not unionize.”
Page 119: On the possibility of buying and selling kidneys, see Michael Finkel’s fascinating “This Little Kidney Went to Market” (NY Times, May 27 2001).
Page 120: The quote at the top is a paraphrase of Joan Robinson (Economic Philosophy, 1962, p45): “[T]he misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.” (Direct quote here via Google Books.)
Page 121: See “Where Sweatshops Are a Dream” (NY Times, Jan 14 2009) by the Times’s left-wing columnist Nicholas Kristof. (On his blog he posts this follow-up.)
Chapter 10: Foreign Aid (pages 125-138)
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Page 129: Elinor Ostrom shared the 2009 Nobel Prize in economics “for her analysis of economic governance, especially the commons”. She is a political scientist (not an economist) and is the first woman to be awarded the economics Nobel. (Some argue that Joan Robinson should have been the first, decades earlier.)
Page 132: Muhammad Yunus and his Grameen Bank won the 2006 Nobel Peace Prize “for their efforts to create economic and social development from below”. The joke about “no collateral, no credit, no problem” is just a joke, but it’s also a reference to payday loans or TV ads like this one for Frankie and Johnny’s Furniture. Interesting articles about microcredit include “India Microcredit Faces Collapse From Defaults” (NY Times, Nov 17 2010), “Microfinance’s Success Sets Off a Debate in Mexico” (NY Times, April 5 2008), and “Microfinance Under Fire” (NY Times blog, Mar 21 2011)
Page 134: More here about Innovations for Poverty Action (also mentioned in a great Nicholas Kristof op-ed (“Getting smart on aid” [NY Times, May 18 2011]) and M.I.T.’s Poverty Action Lab, which was co-founded by economist Ester Duflo, subject of a New Yorker profile (subscription required) on May 17 2010. Mexico’s Oportunidades program is one of the most famous “conditional cash transfer” programs that give money to poor families as long as they keep their kids in school, get vaccinated, etc.
Page 135: More on using cash prizes to promote vaccine development can be found from http://www.vaccineamc.org, e.g., this 2009 post about pneumococcal disease. Michael Kremer, the economist behind this idea, is touted as being worthy of a Nobel Prize for this work.
Page 138: On foreign aid and farm subsidies, OECD 2010 says that farm support programs in OECD (i.e., rich) countries in 2009 totaled $253 billion “or 22 percent of total farm receipts”; the Highlights document (linked from here) says that “total support to the agricultural sector… was estimated at USD 375 billion (EUR 267 billion)… equivalent to 0.9% of OECD GDP.” By comparison, the UN Human Development Report 2005 (linked from here) says that “rich countries collectively now spend 0.25% of their gross national income (GNI) on aid” (they note that this is “lower than in 1990 but on an upward trend since 1997”) and that “Agriculture is a special concern. Two-thirds of all people surviving on less than $1 a day live and work in rural areas.”
Chapter 11: Foreign Currencies (pages 139-150)
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Page 145: More here on currency crises,
Page 148: Robert Mundell won the 1999 Nobel Prize in economics “for his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas”. Mundell has also appeared multiple times on the Late Show with David Letterman, including an appearance on Oct 17 2002 to read the “Top Ten Ways My Life Has Changed Since Winning The Nobel Prize”. (No. 10: Can end almost any argument by asking, “And did you ever win a Nobel Prize?”)
Page 150: The joke about 5 minutes left being only 4 minutes Canadian is a classic stand-up line, but as of this writing (2011) the U.S. and Canadian dollars are about equal. To see if the joke works now, check out recent US/Can exchange rates.