Pleasing Ricardo

Dec 24, 2009 • Thinking Economically • 104 Views    No Comments

During the 1990s, ignoring the protests of horrified Italian cheesemakers, the US placed a tariff on Pecorino cheese. The reason was bananas. Favoring their former colonies, the EU taxed bananas coming from all other Latin American countries that were grown primarily by US firms like Chiquita and Dole. The Pecorino tax was a retaliatory policy.
Finally the (banana) warring countries have agreed on a solution and all bananas will be treated equally. An article about the banana war is at:
http://uk.news.yahoo.com/18/20091215/tbs-latin-americans-eu-strike-historic-d-5268574.html

David Ricardo, a nineteenth century British economist, was the first to defend free trade through the idea of comparative advantage.
Comparative advantage: When each nation produces goods and services that have a low opportunity cost (less sacrifice) and trade them for what they do not produce, production is more efficient throughout the world.

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