Realist, not conformist analysis of the latest financial, business and political news

Schipol Is A Flower Centre Because Of Tulipmania

It is entirely true, as Don Boudreaux quotes, that Antwerp is not a diamond center because of its diamond mines. The background here being that it’s not resource endowment that leads to gains from trade:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]The benefits of trade do not depend only on the contingent circumstances of the different countries (in particular, having divergent availability of natural resources), and the people of the world can greatly benefit from more trade even if there were exactly the same natural resources everywhere. The benefits of specialization, economies of scale, and skill formation create and expand opportunities for trade and exchange. To the the benefits of specialization in some field, a country does not have to be, [Adam] Smith’s reasoning indicated, blessed with a preexisting resource base giving it a natural advantage: specialization creates its own resource base, through skill formation and learning, as well as economies of large scale.[/perfectpullquote]

That’s Amartya Sen again being quoted by Boudreaux.

Another example to add to Antwerp though. Which we might think was at least boosted by Belgium’s colonial adventures in the Congo even if the centre of excellence predates that by centuries. Europe’s cut flower trade (for the US it’s Miami, for different reasons) largely operates from a couple of sheds near Schipol Airport, outside Amsterdam.

Why? Tulipmania. That may or may not have been some vast and disastrous speculative bubble, opinions on either side can be supported there. But it is true that the happenstance led to that current location of that market. Path dependence it’s often enough called but happenstance is perhaps better.

Quite why all the bright and getting rich coders of our generation are clustered around SF Bay is arguable. That they are is obvious enough. It’s really, well, just one of those things. As with international finance in London, autos in Detroit and so on. We can backcast all sorts of reasonings as to why these centres developed but the real answer is that once they started they continued. Specialisation of labour once it’s started to divide just leads to these things – that very thing being one of the benefits of trade.

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Tim Almond
Tim Almond
5 years ago

“Quite why all the bright and getting rich coders of our generation are clustered around SF Bay is arguable” I had a feeling it was something to do with Stamford, but there’s an interesting little fact from Wikipedia: “In 1956 Shockley moved from New Jersey to Mountain View, California to start Shockley Semiconductor Laboratory to live closer to his ailing and elderly mother in Palo Alto, California” That’s pretty much the root, I think. People left Shockley to form Fairchild, which led to other chip companies. Chip companies became computer companies like Apple. Chips lead to computers, leads to PCs,… Read more »

5 years ago

Amusing that the article is headlined with an image of downtown Holland, Michigan, located some 5,000 miles from the ‘veilings’ that the article refers to.



5 years ago
Reply to  llamas

Indeed and quite deliberately chosen too. Use that image a lot.

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