Donald Boudreaux in Cafe Hayek

Specialization and Trade

Here’s the PowerPoint presentation that I used for my second lecture at the 2011 Cato University (held this year, btw, in one of my favorite towns: Annapolis, MD).

Because of several questions that I received after my first lecture, I began this second lecture with a brief review of the state of manufacturing in America.  I used several of the great graphs that Mark Perry made available over the past few years at Carpe Diem.  Of course, in my verbal remarks I explicitly acknowledged that these graphs are from Carpe Diem – and I encouraged the attendees to check out that indispensable blog.

Then I reviewed, first, Adam Smith’s explanation of the benefits of specialization, and, second, David Ricardo’s explanation (the principle of comparative advantage).  I also combined Smith with Ricardo.

I concluded – after some too-quick remarks on various theories of the industrial revolution – by encouraging the attendees to read Deirdre McCloskey’s Bourgeois Dignity.

Stagnating Middle-Class?

Here’s a PowerPoint presentation that I gave as part of a lecture that I delivered today at Cato University.   It’s an updated version of these two posts – here andhere – on shopping today in a Sears catalog from Fall/Winter 1975.

In this presentation, I calculate how many hours each non-supervisory worker earning the average nominal hourly wage of such workers had to work in 1975 to buy a variety of ordinary goods, and how many hours each non-supervisory worker earning the average nominal hourly wage of such workers must work in 2011 to buy similar (or, really, in almost every case far superior) or comparable goods.

The dollar figure beside each photo from the 1975 Sears catalog is the 1975 price(s) of that product(s) adjusted, using the CPI, into 2011 dollars.  (The photos of the various pages of the 1975 Sears catalog, BTW, were taken with the camera in my iPhone.  Just FYI.)

Before starting this PowerPoint presentation, I showed this recent clip from Robert Reich – one of many, many instances of people insisting that ordinary Americans are no better off today (at least materially) than they were since just before the age of alleged laissez faire descended upon us circa 1980.

This presentation, of course, does not prove that middle-class Americans are today better off than were middle-class Americans of the 1970s.  Other factors must be controlled for and considered and factored in.  But this presentation, I fancy, does strongly suggest that the oft-heard claim of middle-class stagnation should bear a much heavier burden of proof than it seems to bear in popular discussions.