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I'm surprised this essay doesn't mention what I would be expect to be a big reason people don't get comparative advantage: Because it sounds similar to somethin
by Sniffnoy 11y ago
I'm surprised this essay doesn't mention what I would be expect to be a big reason people don't get comparative advantage: Because it sounds similar to something simpler that people already know, so they conflate the two ideas.
Because if you don't know what the law of comparative advantage actually says, it sounds kind of like, "If I am better at A than you are, and you are better than B I am, then we can benefit from trading which each other." Which is true, but also basically obvious; the law of comparative advantage is more general than that. There's a reason it's the law of comparative advantage and not absolute advantage!
So I would expect that a lot of people are getting what it says mixed up, because it sounds like something they already know.
- deleted 11y ago[deleted]
- meric 11y agoLaw of comparative advantage: "If my ability in A compared to my ability in B as a ratio is different to your ability in A compared to your ability to B as a ratio, then we can benefit from trading which each other."