Economics 101

A Quick Reminder about Trade

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My summer students have been learning about trade in their classes, and as they study the myriad of issues surrounding this core economic concept, I thought it might be a good time to remind everyone of a basic truth about trade: it allows us to serve others.

You may never objectively be the best typist, software engineer, little league coach or PTA president than anyone in the world, but that doesn’t really matter. What does matter is that we acknowledge the unique way in which we are created, and acknowledge that this uniqueness puts some boundaries and parameters around what we should do and should not do in terms of our vocational calling. Because I know my gifts, I am certain that I should not put effort into being an accountant or a veterinarian. I do know that I can hone my skills as an economist and then trade them through the market.

I bet if you look back on your own life and think about the situations to which God has called you, you would be reminded that those situations were meant for you because you brought some unique skill set to the table. In fact, God was able to use you in those situations because of the unique way he created you. That doesn’t mean that we will never be engaged in work that is not scary, new, or uncertain. But the market order is a unique, earthly construct to allow us to serve others by specializing in our skills and talents.

We don’t live in a vacuum. We don’t have to do everything, which is a relief! Can you imagine what it would look like to have to grow the food you eat, grow the coffee beans, purify the water, and make your clothes— all just before you left the house in the morning? The market offers us a unique way to trade our skills for the skills of others. In this way, I can focus on producing things that are lower-cost for me to produce and I trade those things for my salary. People around the world do this every day. If you clean houses, work at the gas station, or operate a truck you are engaged in serving others through trade. This trade which happens through the labor market connects us to one another.

The story of I, Pencil was told in awe of how something so simple (in this case, a pencil) is so complex to create. Not one person in the entire world knows how to make a pencil and all of its construction happens without a human mastermind. It happens because we trade based on our gifts, or our comparative advantage. Trade frees us from having to try to do everything, but allows us to do a few things which we can do better than others.

So whatever your skills, whether you are a CEO, a hot dog vendor, or a museum curator, you provide a role in serving others. By pursuing your gifts and skills with excellence and refinement, you free others from the worry and burden of having to do that. This is one important aspect of faithful stewardship that God has given us through trade and the market process.

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  • Pete Smith

    Comparative advantage. Do what you do best, that thing for which God has fitted you. Do it to his glory and trade with others. Excellent.

  • There’s a connection here to how Paul talks about the church as a body, with different members performing different functions. No one does it all, nor should they. Yet, when we all bring our contributions to bear it edifies the whole church.

  • WHAT you will gain the greatest rewards for doing depends not only on (God and) your abilities and the things you like more (and less) to do. They also depend on the abilities and choices of (all) those around you and the rewards THEY command for doing those things. This is the RELATIVE part of relative advantage.

    As the world changes and/or you move from one place to another in it, this context also changes. So what you do might well change from time to time and place to place, especially if you don’t happen to be the proverbial “one trick pony.” Even if you are, your one trick itself might change from time to time, if you live as long as, say, I have (71 years).

    Can you say, “career change?” You might do well to learn, if you can’t.

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