In Economics, what is specialization & opportunity cost, and why do we try to keep poor countries poor?

These concepts are often made murky by the most well intentioned textbooks. Let’s see if a practical example would suffice:

If I am a lawyer and earn $500 per hour in a courtroom, and can type 60 words per minute, do I hire someone that types 30 words per minute at $50/hour?

Assume that it will take him two hours to do the typing, but it will only take me one hour.

Hell yes I hire him!

By hiring him to do my typing, I lose $50 per hour for 2 hours but make $500 per hour in the courtroom for a total profit of $900.

If I type myself, I miss out on $500 per hour for one hour and hop into the courtroom for the other hour for a total profit of $0.00.

So even if I am better at both lawyering and typing than the person I hire, I should still hire him.

Now pretend instead of me and a typist, we are talking about two entire countries.

Poor countries specialize in cheap labor (“typing”), wealthy countries specialize in design and engineering (“Lawyering”), and both are better off than before the deal was struck to (hopefully, temporarily) create that arrangement.

The First World does things (like offer IMF loans that have strings) in order to keep them poor because it is in the interests of all of the First World to do so. If we created another Japan, we’d have competition. If we keep them around as another metaphorical China, then the wealthy people in the developing country can exploit our middle class for profit and our wealthy people can exploit the poor desperate people in the developing country for profit (via minimizing costs). As long as you aren’t a poor person in a developing country, you win.

Why is it that no one seems to care about poor people in developing countries, and instead the well-intentioned but misinformed First World philanthropists do silly things like give them free corn that destroys the local farmers’ and forces them to grow poppy or marijuana in a desperate attempt to stay afloat by entering the drug trade? When I find the answer to that one, I’ll happily be accepting my Nobel Peace Prize shortly thereafter and credit any suggestions you may have to offer in the comment section.

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In Economics, what is specialization & opportunity cost, and why do we try to keep poor countries poor?

Radioactive Disaster, Marines en route

While I often find myself inclined to agree with a significant reduction in Defense spending in favor of programs that help Americans at home, sometimes I’m kind of glad we’ve got a massive fleet of warships floating all over the place carrying things like cargo helicopters and thousands of physically fit men trained and equipped to walk into radioactive fallout in the aftermath of the 4th largest earthquake in at least the last 300 years or so.

I’m going to assume at this point that the reader has turned on a television or read the news at some point during the last four days and is thus aware of the catastrophe in Japan that has ended no fewer than 20,000 lives, and that the reader is aware that tens of thousands more lives could potentially be lost over the course of the next week or so if certain things are not accomplished. If you have no idea what I am talking about, please check out current events in Japan and then come back.

This is the USS Essex in 2008.

Picture of the USS Essex at sea, with helicopters and aircraft visible on its flight deck.

(Image Credit: Wikipedia)

No doubt, it currently has a similar compliment of cargo helicopters as it nears the Japanese coast. In addition, under that flight deck and similar decks throughout “Amphibious Squadron 11” and the Carrier Battle Group built around the USS Ronald Regan are about 2,200 US Marines and enough food, water, trauma-oriented medical supplies, and Navy personnel that know how to use them for the Marines to engage in sustained combat for 30 days without any additional outside logistical support. They also have 2,200 suits that allow them to enter areas contaminated with nuclear radiation.

As it turns out, the Marines won’t be needing those beans, bullets, and band-aids for themselves – but I’m sure a lot of folks in Japan will soon benefit from their existence.

The assets at work:

31st Marine Expeditionary Unit (31st MEU) – The equipment and logistics personnel. The people, boats, helicopters, trucks, fuel, and spare parts that make the “30 days unsupported” thing possible. 30 days of food and water for 2,200 people performing hard manual labor translates roughly into 5 days for 10,000 people not performing hard manual labor, and the ability to move it by land, sea, and air.

2nd Bn, 5th Marines (2/5) – The “ground combat element” of the 31st MEU. 2/5’s website hasn’t been updated in a while because, well, they’ve been out at sea for the last few months and the ships probably don’t have wifi. These 1600 or so men (yes, all of them are men) form the bulk of the personnel of the 31st MEU and are the ones that have the equipment and training to physically step foot into an area of radiological disaster. These men of iron are also physically fit, well disciplined, and have a demonstrated willingness to risk their lives for others. Their motto is “Retreat Hell”. As in, “Retreat? Hell, we just got here!” said to an officer of the French Army during the First World War.

Marine Medium Helicopter Squadron 265 (HMM-265) – The “aviation combat element” of the 31st MEU. Flying 40 year old CH-46 helicopters that can move 2,000 lbs of stuff around at 150 miles per hour, these pilots and mechanics are certainly going to be earning their pay over the course of the next week or so. There is also a unit of Harriers attached to the 31st MEU, but I don’t anticipate ground attack jets to be particularly useful in this emergency.

Amphibious Squadron 11 – The USS Essex, USS Denver, USS Harper’s Ferry, and USS Tortuga form this.

USS Essex and her sister ships – USS Essex is the largest of the four warships, carrying about half of those Marines. Denver is older and carrying around 1/4 of the 31st MEU, the Tortuga and Harper are together carrying the remaining 1/4.* Essex and Harper were last in the news while conducting humanitarian operations in the aftermath of the 2008 Cyclone Nargis that killed over 130,000 people. Tortuga’s latest humanitarian operation was 2005 Hurricane Katrina, and Denver’s latest was in Taiwan in the aftermath of the 2009 Typhoon Morakot that killed fewer than 1,000 people.

Carrier Task Force 76 – This is the USS Ronald Reagan (CVN 76) nuclear aircraft carrier and its support fleet. This represents an immense amount of logistics capability, but not many pairs of combat boots. CTF 76 represents more military capability than many entire nations have at their disposal. The personnel it has will include technical experts in nuclear power that have done extensive contingency planning and training to answer questions such as “What if our nuclear reactor suffers catastrophic damage and starts leaking?” – The scenarios these guys run are things that civil nuclear power plant workers would never think to consider. Japanese nuclear power plant technicians have probably run scenarios involving earthquakes causing radioactive leakage, but have they conducted that training while deprived of sleep as they currently are? The sailors on the Reagan have.

* Those fractions are ballpark estimates based on the capacity of the four ships, which exceeds the total size of the MEU and thus could be off.

Radioactive Disaster, Marines en route