By Nik Venkatasubramanian, George Washington University ’18
Debating Economics and Finance I: Trade and Specialization
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Introduction
Debate about Economics sounds scary. You scroll through the news every morning and you see scary graphs and big words on the Wall Street Journal. The sharp parts of those graphs look like tiny cliffs that seem dangerous and risky, so you set your phone down and back away slowly.
The good news is for those of you that fear these two-dimensional portraits of death, the majority of finance and economics debate on APDA is not debate that encapsulates the entire round. The majority of economics debate in APDA happens in rounds that might be about IR, or social justice, or any number of different topic areas. In these cases, it’s helpful to know a few econ concepts to be able to supplement your other arguments that are more on-topic.
However, there are other debates in which concepts of economics and finance will span the entire round. And this year more than any other (Greek financial collapse hint hint), this secondary category of econ debates is far more likely to happen. For these kinds of rounds, it IS going to help to have a pretty well-set understanding of basic economic concepts.
This article is not going to teach you everything you need to know about debating economics and finance in the league. Like every other topic, the best way to get better at this topic is going to be watching and being in rounds that pertain to the subject, instead of just reading about it. Regardless, this article will be the first in a series that try to breakdown basic economic concepts and how they might apply to APDA.
II. What is Economics on APDA
Economics is not the study of white guys in bow ties pointing out how good or bad the economy is or will be. Well sometime it is. But most of the time, Econ in the real world and in APDA is about people, scarcity and choices. That’s why APDA and its format is an interesting way explore economics and finance. When we can’t use evidence and quantitative data during a debate, it forces us to hash it out in some other way→ and that’s truly one of the best ways to learn about economics. You may not have a solid foundation in economics now, but that doesn’t mean you should shy away from trying to think about writing econ cases or econ debates, every one of those opportunities is something that will bring you one step closer to being able to debate econ well.
III. Economics Concept #1: Specialization and Trade
One of the most helpful concepts to understand in approaching economics debates in APDA and the real world is the concept of specialization. That is, the division of labor or focus in certain industries from a macroeconomic point of view is what makes some countries wealthier than others, at least in theory (this is what Adam Smith–one of the earliest and well known economists suggests is the origin of patterns of wealth distribution among countries and society).
So when you think of specialization in the onset, the easiest way to think about it is in the form of a pizza restaurant. For those of you that have taken econ in a classroom setting, I’m sorry for using the most repeated example in the history of the discipline. At a pizza place, different workers might have specific jobs. One might put the pepperonis on, another might add the sauce, etc….you get it. This division of labor makes each of these workers more productive because they can each do what they are best at, and they don’t have to waste time switching between tasks and learning how to do a completely different skill. Such specialization of labor in a factory line image is a good way to think about how specialization increases productivity. The better Drew gets at slicing the pizza, the less time he spends slicing the pizza on the hundreds of thousands of pizzas he slices in his sad, overworked 26 hour day.
So let’s put this in context. An interesting area of debate, and something that I’ve come across a few times over the last year on APDA is the prospects of Japanese remilitarization in the wake of military aggression in the South China Sea//Senkaku Island dispute. A pretty cool specialization argument can start to play out here. One might argue that the Japanese economy would benefit from a military industrial complex by starting to build up their defense capabilities. A debater might even argue that this would be good for the Japanese economy in terms of diversification (we’ll touch on this in a future article). However, you know better. You can call these debaters out with the wonderful economics knowledge that you have now gained and you might even have a fancy term for it. That is, Japan has specialized in other areas of its economy already. They’re really good at tech, for example. So it makes no sense in the global economic playing field for Japan to start specializing in its defense systems and building its own weapons systems. other countries like the United States and Russia have already specialized in those things. Interestingly, the United States and Russia have established economies of scale in their specializations in the military industry. Economics of scale is an important concept to understand in microeconomics that can be utilized really well in a of econ debates in apda, especially the japanese militarization scenario above. Generally, this principle dictates that there is a significant cost advantage when an entity (pizza maker or Russia/United States) specializes in a certain industry (putting on pizza sauce or the military industry). Since Russia and the United States have invested so much capital in bettering and improving their military industry, they are able to produced hundreds of planes. tankers, etc. At the same time, it is much easier and less costly for these countries to produce every addition plane, tanker, or weapon. For Japan to create their own versions of these products, they would have to start at scratch…which isn’t very feasible.
Adam Smith also said that trade is what makes people better off. If Japan is good at tech, then they should specialize in making tech, and engage in trade to get their military products from Russia or the United States. This is the general idea of specialization and economies of scale, and it’s something that can be used in a vast majority of rounds whenever the construct is “Country X should do Thing Y”. The idea that countries should produce the products that they are better suited for is huge.
III. Conclusion
As I pointed out above, this article is going to be the first in a series that help hash out and simplify basic economic theories and how they might apply to APDA. If you ever have any requests, or want more materials, feel free to swing by in GA or drop me a message on facebook. If you’d rather fax me, that’s fine too. Econ shouldn’t be scary; you’re going to be great at it.
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