4 ms·
There is no need of a complete unilateral agreement. CountryA benefits from free trade with CountryB even if the later imposes tariffs to some products of indus
by rnnr 11y ago
There is no need of a complete unilateral agreement. CountryA benefits from free trade with CountryB even if the later imposes tariffs to some products of industries they want to 'protect'. It's CountryB which will not have as an optimized economy as it could.
- bko 11y agoThis point seems to be counter-intuitive but I believe it to be true. David Ricardo had deep insights into this very idea in the 1800s. I remember his arguments as being very persuasive. https://en.wikipedia.org/wiki/David_Ricardo https://en.wikipedia.org/wiki/David_Ricardo
- ashark 11y agoRicardo assumed immobile capital. https://en.wikipedia.org/wiki/Comparative_advantage#Free_mobility_of_capital_in_a_globalized_world https://en.wikipedia.org/wiki/Comparative_advantage#Free_mob...
- iamcurious 11y agoVery interesting, can you explain further?
- rnnr 11y agoWhy would be good idea essentially imposing a tax to the citizens of your country(tariffs) for the benefit of a single subgroup? You should keep your workforce directed to the industries market proves you competitive. Everyone as a person does the same, we use our major source of income(dayjob = profession we have the best skills relative to everyone else) to trade it with the labor of others, we dont try to make everything by ourselves even if we have the technical capacity. (Comparative advantage)
- iamcurious 11y agoI see. To answer your question, it isn't about economy but politics and power. Having a more diversified economy makes you less dependent on the whims of others, albeit it can be at the cost of overall efficiency. I guess everybody does the same as well, we insist in having some understanding of other skills so that we aren't at the mercy of others.