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No matter where you go to school, within the first week of every introductory economics class, the theory of comparative advantage will come up. Maybe you start off on a deserted island. There are two people, and in order to survive they need to catch fish and pick berries. Joe can catch 2 fish per hour or get 30 berries and Rex, having good coordination, can either catch 6 fish per hour or find 15 berries. How do you divide up the tasks?
One need not have taken an economics class to agree that obviously Joe should stick to collecting berries, and Rex, go after those fish! Stick to what you’re good at; don’t waste time.
Wow, you might exclaim, economics is so easy; if only I had checked out the ECON department when I was in college. What you should really be thinking is: what happens when Rex and Joe are valiantly saved by a helicopter and go back to the real world to live with other people? What do they do then?
Stepping off the island, I take this question to the U.S. Embassy in Thailand, where economic officers James Caruso and Peter Thorin are paid to think about perplexing things like this. In fact, this seemingly logical theory of comparative advantage is the premise behind free trade, the force that brought these two professionals to Thailand in the first place.
Thorin confirms that Rex and Joe were doing the right thing. He tells me that people should “just make what they’re good at and buy the rest.” This is why the US already has 12 bonafide Free Trade Agreements (FTAs) with 18 different countries under its belt—meaning every aspect of a country's economy is liberalized and uniform to US standards —and multiple pending negotiations with other developing countries.
“What you’ve probably heard,” Caruso confirms, “is that it [free trade] is an effort by the US to use its economic heft to negotiate unfair trade agreements by forcing other countries into it. But, every country we've negotiated with has lined up to ask for it, and
These countries see a competitive advantage in trading with the US.”
This is the case in Thailand: in 2003, Prime Minister Thaksin Shinawatra announced that he wanted to get closer to his chum, President George Bush by intertwining the two economies in an FTA. As precedent shows, the U.S. is not one to pass up an opportunity to spread its free trade ideals. Bush consented.
If this bilateral agreement is passed, all barriers to trade will be eliminated. Thailand will get higher preferential access to the U.S. market, a market that receives 20 percent of Thailand’s exports.
Caruso comments, “Thailand depends on trade. We matter to them a lot.”
But, beyond the gates of the U.S. embassy, villagers in the Northeast region of Thailand have a different idea of trade.
I pull up to a small restaurant that also functions as a market in the village of Kutchum. This restaurant is cooperatively run by the villagers. Most of the food is supplied by surrounding villagers' organic farms and gardens.
At a picnic table outside the Kutchum Rice Mill—the first in Thailand to be initiated, built, owned and run by its producers—Samwang Srimantha, a rice farmer in his late 50s, explains to me, “Self-reliance for people in this community means that we do it first. We come together and get stuff done without help from the government. That’s why our rice mill has been so successful—it started from us.”
He proudly remarks, “Now, we keep our wealth within our local area. By doing this we can focus on preserving our local knowledge, strengthening community bonds, and supporting the younger generation.”
I try to describe this concept at the U.S. Embassy, but they can't quite envision it.
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