Nik is a great political cartoonist. His caricature skills, sense of irony and wit are superb. But U.S. political cartoonists need not worry about competition because Nik draws for La Nacion, a Buenos Aires daily.
Unless you follow Argentine politics, you won’t appreciate Nik’s genius. Cartoons are not “tradeable,” the term economists use for goods or services that can be readily exported or imported.
Whether a good is tradeable or not is increasingly important. Modern technology has shifted some of the boundaries between tradeables and non-tradeables. Workers who faced no overseas competition a decade ago might face it now.
For years the dividing line largely followed the division between goods and services. Most textbooks said something like “a tradeable is anything that can be put in a crate and loaded on a ship.”
That distinction never was ironclad, however. Some services have been traded for centuries. Even before the American Revolution, insurers in Philadelphia and New York covered risks back in Britain. U.S. engineers designed bridges in Latin America by the late 1800s. Wealthy foreigners have come to the Mayo Clinic for a century. Thus, trade in services per se is nothing new.
Some services never will become tradeables. Shingling houses in St. Paul requires the physical presence of workers. My barber in Peru gave great haircuts for 50 cents, but hair can’t be cut over a distance of 4,000 miles. Programmers and data-entry workers might need to worry about competition from India or Barbados, but plumbers, mechanics and hair stylists don’t.
While physical goods “can be put in a crate,” not all are tradeable in practical terms. When I lived in Peru 25 years ago, the price of rice in Lima was only slightly lower than it was back home. Rice is dense, easy to ship and stores well in inexpensive facilities. In contrast, Peruvian potatoes were much cheaper than in the United States. Potatoes are bulky and heavy relative to value, and are perishable. They are physically tradeable but there is little trade.
Yet we regularly eat grapes and cherries from Chile. These crops have much higher value than potatoes. The technology of refrigerated shipping containers makes Southern Hemisphere fruit readily available during U.S. winters.
The trend of new technology is to increase the number of tradeables. Cheap telecommunications put India into software development and customer service. Faster, cheaper bandwidth might allow Indian physicians to read MRI and CAT-scan imagery nearly as quickly as someone in the same room as the patient.
As more surgery is performed in a minimally invasive manner with fiber optics and catheters, it might be possible someday for a surgeon in one country to manipulate surgical tools inside the body of a patient in another country. This might allow Indian doctors to operate in the U.S., but it also means that U.S. doctors could operate in scores of other countries. Then, gall bladder surgery would be a tradeable.
© 2006 Edward Lotterman
Chanarambie Consulting, Inc.