Problem
I. Hochberg traces the price of bananas in US grocery stores... 15¢ a pound in 1947 ($1.82 in 2021 or $1.70 in 2017) and 56¢ a pound in 2017. What accounts for this drop in price over time? [See the Cavendish variety, source countries, and the Florida orange.] Discuss.
II. How ought the "losers" of trade be treated? Select one of the three approaches and discuss.
i. Through the free market economy approach: "...pure free market theory would tell us that the government shouldn't interfere by compensating those who have been hurt by the change [i.e., trade]-the market has chosen them to fall behind, and those with the skills and resources to find their place in the new economy will do so" (p. 204)
ii. Through the compensation theory of welfare economics: "The idea, basically, is that because the action [i.e., trade] has saved a lot of money for Americans on the whole, the government ought to redirect a portion of that money to help those who were displaced by the change,so they don't have to bear the full brunt [of the change]" (p. 205).
iii. Through trade adjustment assistance (TAA). Those "who suffer damage from increased foreign import competition be assisted in their efforts to adjust to the competition" (p. 207) over the short run.
III. Hochberg argues trade (and "Mario") saved the videogame industry. Do you agree? Why or why not? Discuss.