Our previous page provides a fuller, more contextualized discussion of the concept known as "parity for agriculture" and its importance to the national income, with selected sources listed at the end.
The page you are on now provides an abbreviated discussion of farm parity, why it is important to the national income and how it can be protected in every country - rich and poor alike - via what we are calling "Equitable" trade.
First up is a short slide Presentation entitled Parity and the National Income with some embedded links
Next is a double-sided flyer prepared for the 14th Annual conference of the American Monetary Institute.
Last is a VERY short slide presentation on Equitable Trade.
THEN, to add some additional context to the above, you might want to review the terms "Comparative Advantage" and its counterpart "Competitive Advantage" using sample excerpts below. With the concept of "Equitable Trade" as described above in mind, consider the following excerpts particularly as they relate to how a nation's own domestic workers, producers and resources may be affected.
Comparative advantage is when a company can produce goods at a lower opportunity cost than its competitors. Opportunity cost is the cost that must be endured when selecting one option over the other. Competitive advantage represents any benefits and advantages that a company may have over its competitors. This could include things like having a low cost structure, low cost of labor, better access to raw materials, etc.
Comparative advantage is an economic term that refers to an economy's ability to produce goods and services at a lower opportunity cost than that of trade partners. A comparative advantage gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins. The law of comparative advantage is popularly attributed to English political economist David Ricardo and his book “Principles of Political Economy and Taxation” in 1817, although it is likely that Ricardo's mentor James Mill originated the analysis. . . It is also a foundational principle in the theory of international trade.
Most of the credit for the (Comparative Advantage) theory is attributed to David Ricardo, although it had been mentioned a couple years earlier by Robert Torrens. . . The assumptions are that there are no or low transaction costs, that there are no negative externalities to more production, and that there are some restrictions on the flow of capital. Comparative advantage is a critical concept for free trade proponents. . . Comparative advantage works as long as the above assumptions hold and the entities have different production costs. In other words, if it costs both Countries A and B the same amount of wheat to produce an additional TV, then trade would not benefit them.
According to the online Library of Economics and Liberty, "currents of Adam Smith run through the works published by David Ricardo and Karl Marx in the 19th century and by John Maynard Keynes and Milton Friedman in the 20th." Although Smith was a philosopher and NOT an economist, his book Wealth of Nations "launched a succession of free-trade economists and paved the way for David Ricardo's and John Stuart Mill's theories of Comparative Advantage a generation later."
Investopedia says that Wealth of Nations "marked the birth of modern capitalism as well as economics." Thus Smith is often identified as the father of modern capitalism, but arguably, he could just as accurately be identified as the father of modern "free" trade. As Investopedia says: "Smith's insight into the idea of the invisible hand was one of the most important in the history of economics and remains one of the chief justifications for free market ideologies."
By 1944, when the war was still on-going, discussion at a luxury hotel in in Bretton Woods, NH, was underway to create "a new international monetary order". Out of this came what is known as the Bretton Woods Agreement, described as "the landmark system for monetary and exchange rate management. Two international monetary and financial institutions were created: the International Monetary Fund (or IMF), was meant to stabilize exchange rates between currencies and to serve as a country's lender of last resort, and the International Bank for Reconstruction and Development (or World Bank Group) was created to finance post-war reconstruction.
By October of 1947 the General Agreement on Tariffs and Trade (or GATT) was signed at an international conference in Geneva. At the same conference a draft charter for the International Trade Organization (or ITO) was created and by March of 1948 representatives of 53 countries signed the finished charter. The U.S. Congress refused to approve and so the GATT governed postwar trade relations, until the creation of the WTO in 1995.
Wrap it all up with this short history of how "free" trade and our monetary system can be used to manipulated prices and wages.