Editor’s note: maybe not a great idea

Okey Chigbo, Editor-in-Chief of CPA Magazine, introduces the article in the February/March 2018 issue.

Why are David Ricardo’s economic ideas important today? Well, his comparative advantage theory is the prevailing international economic orthodoxy, espoused by policy-makers and businesses alike, and promoted vigorously by international organizations like the IMF and the other institutions of the Washington Consensus. It is the idea behind globalization, free trade and much of the world economy.

 

Ricardo (1772-1823) was an English economist whose “very subtle idea,” according to the Concise Encyclopedia of Economics, is that “a country that trades for products it can get at lower cost from another country is better o than if it had made the products at home.”

 

Of course, not everyone agrees with this. For example, Norwegian economist Erik S. Reinert argues that (and I am simplifying his position here) there is no way that a country that specializes in producing potatoes can be as well o as one that manufactures motor cars. He writes, “Some nations may specialize in being wealthy while others specialize according to their comparative advantage in being poor.”

 

Not all opponents of comparative advantage are necessarily as intellectually astute as Reinert or aware that they are a critic of Ricardo. US President Donald Trump (Reinert will probably be appalled at being put in the same bracket as Trump, but the le and right do meet on this matter) wants to make America great again by bringing manufacturing back to the US. During the election campaign, he focused on Apple: “One of the things that will be a real achievement for me is when I get Apple to build a big plant in the United States, or many big plants in the United States, where instead of going to China, and going to Vietnam ... you’re making your product right here.”

 

Well. Our cover story, “Why It’s Better to Make Cellphones in China,” by writer Mary Teresa Bitti, tells why this may not be such a good idea in either the US or Canada. In an absorbing counterfactual article where she interviews a number of economic and other experts, she reveals what would happen if we “flipped the current reality” and produced everything that goes into a car or cellphone in Canada. According to the experts, jobs — yes, jobs — would be lost, efficiencies lost, and according to some estimates, that iPhone would probably cost double what it costs today.

 

An important announcement:

CPA Canada is changing to provide you with more timely information when and where you want it. Starting in May, CPA Canada will provide members with news both digitally and in print. CPA Magazine will relaunch with a greater focus on leading business trends and information CPAs tell us they want and need. At the same time, we are launching a digital business hub to provide daily news of value to our members. In making this change, we will be reducing the number of print issues from 10 to six. All part of our continuing efforts to serve you better.