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This always felt quite subjective to me. There's also the tautological paradox where price is defined by trade, so the trade balance will always be equal by an
by TZubiri 2y ago
This always felt quite subjective to me.
There's also the tautological paradox where price is defined by trade, so the trade balance will always be equal by any measure, if country A exports 1T bushels of wheat and country B exports 1 computer chips, we subjectively know who is winning in the exchange, but it will tally up to equal values in the balance sheet.
- ViktorRay 2y agoI think many economists would argue that both countries are winning in this exchange. Many would argue that such a transaction would be an example of a “positive sum game” where each side gains more than they lose.
- TZubiri 2y agoOh yeah that trade can be positive sum is a given. And that most trade is generally positive sum is also a quite reasonable take that we seem to share. That said, even if a trade is positive for both parties, the surplus/profit of a trade might not be (and mathematically almost never is) 50/50. In the example outlined 1B wheat for 1 computer chip might be positive for both countries, but everyone would agree that the exporter of 1 chip is getting the better end of the positive sum trade.