TRADING WITH EUROPE AND “WHAT’S THE POINT IF THE GOVERNMENT CAN JUST DESTROY IT?”

2/14/13

For the last few semesters, I’ve taught an MBA course in business economics at Northern Illinois University (“NIU”) known as Finance 500.   While I like exercising my pedagogical skills at any course, I probably enjoy this class the most because of its wide-ranging discussion of topics that matter with input from students from a wide variety of career, educational, ethnic, and national backgrounds.   One of the greatest compliments I’ve received was a comment on an anonymous student review of the class a few semesters ago:

“I learned a lot of practical economics in this class even though I didn’t think I was.”

While the English could have been better, the sentiments could not have been.

I require my students to get a subscription to the Wall Street Journal (which students can get for about $30 for at least the duration of the semester) and regularly assign articles that illustrate concepts we discuss in class or that I otherwise find interesting.   I expanded a bit in today’s article assignment and thought my readers, in addition to my students, might find my comments interesting:

FINA 500:  PROPERTY RIGHTS AND TRADE

2/14/13

Today’s (i.e., Thursday, 2/14’s) Wall Street Journal features two front page articles that are especially relevant to our discussions during the last few class sessions.

“Broad Trade Deal on the Table” discusses the efforts of the U.S. and the European Union to reach a sweeping trade deal that would eliminate, or come close to eliminating, all tariffs and trade restrictions between the two entities that already have the world’s largest trading relationship.

One would think that this deal should be easy, or about as easy as a trade deal could get, given the relative similarity of the two economies, their nearly identical stages of development, the cultural affinity of the two areas, and the comparatively small disparity of wage rates in the U.S. and Europe.   Those supposedly in the know, however, think it might take two years to iron out a deal.  I would be betting that it will be agricultural issues that will bog down the talks, hopefully not to the point of breakdown.

The other page A1 article worth reading is “Tensions Mount as China Snatches Farms for Homes.”   The article illustrates the desultory impact government corruption has on growth, as we discussed last week.   It also highlights the importance, the necessity, really, of the enforcement of property rights for economic development.  Note especially a quote in the article’s fifth paragraph:

“(Mr. Fu) has no heart to start another business.  ‘What’s the point if the government can just destroy it?’”   A stark real world example of a concept we discussed in a very real world class, eh?

I think I might make this announcement a post on my blog.

Have a wonderful Valentine’s Day.