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My objective in this essay is to try to explain why intellectuals who are interested in economic issues so consistently balk at the concept of comparative advan

My objective in this essay is to try to explain why intellectuals who are interested in economic issues so consistently balk at the concept of comparative advantage. This is ridiculous. It was ridiculous then, and it's even more ridiculous now. If there is anything that economists (even Marx!) agreed on, it was the benefits of international free trade. Hayek, Rothbard, Krugman, Mises, Keynes: all international free traders to a man. I would be surprised if one in ten readers of HN thinks international free trade can hurt an economy: it's a nearly universally assumed good amongst the intelligentsia. It has always been the populists and, usually silently while publicly encouraging it for others, the mercantilists who have demurred. I happen to think that the last twenty years have demonstrated that international free trade can be very detrimental to the majority of people in a particular economy, whatever theory might say, but the idea that this is a majority opinion amongst intelligent people (let us set aside the obvious response) is absurd.

gumby 11y ago
He's not talking about economists! He said intellectuals (as in public intellectuals, particularly on the left but not always so), implicitly those outside mainstream economics. He's certainly rejecting the "dissenting economists", but he's mainly taking about politicians and other public figures (the first figure he savages is Goldsmith, who was somewhat influential in the UK and France but not at all an economist.
force_reboot 11y ago
The article spends quite a bit of time citing intellectuals who argue against comparative advantage. As you say, all economists agree on free trade, but Krugman is talking about non-economists. And regarding HN, I would say a majority of comments in a recent article on MarkerBot outsourcing their production to China[0], are implicitly or explicitly against free trade. [0] https://news.ycombinator.com/item?id=11574215 https://news.ycombinator.com/item?id=11574215
SixSigma 11y ago
I'm one of your one in ten. So is Donald Trump. So are the leaders of the world's second largest economy, China. (I guess mentioning Trump is cause for a mass downvote. 10 posts in one go. WTG, GG)
jegoodwin3 11y ago
> I would be surprised if one in ten readers of HN thinks international free trade can hurt an economy: it's a nearly universally assumed good amongst the intelligentsia. I'm not sure about the statistics of HN readers, however the arguments are more complicated now than when Krugman wrote the article in 1996. See Samuelson's 2004 criticism of free trade, revisiting his early positive results. Samuelson, Paul A. (2004): Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Against Globalization, in: Journal of Economic Perspectives, Volume 18, Number 3, pp. 161-180 cited in : http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000180080/Samuelson's+criticism+of+free+trade+theory%3A+unsuited+support+for+globalisation+opponents.pdf http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000... Samuelson's paper was a big deal when it came out, even in the mainstream press. The paper itself: https://www.wilsoncenter.org/sites/default/files/SamuelsonJEP042.pdf https://www.wilsoncenter.org/sites/default/files/SamuelsonJE...
emp_zealoth 11y ago
Quite recent and glaring counterexample - where Greece was pretty much crushed economically by Germany ("open" trade coupled with fixed exchange rates meant enormous trade deficit) While obviously in most cases less barriers to trade means growth for everybody, there are cases where completely opening to trade is bad - it might mean total dependence on foreign products - simply thanks to economies of scale and entrenchment. For example in Poland homegrown producents of buses/trams/trains were finally given precedence and within few years they managed to produce cheaper (massively so) and just as good if not better products, jobs and know-how that will last and be a boon as opposed to being hooked on foreign maintenance contracts. So right now we are all for free trade, since those products are actually massively competitive :3
StanislavPetrov 11y ago
>I happen to think that the last twenty years have demonstrated that international free trade can be very detrimental to the majority of people in a particular economy, whatever theory might say, but the idea that this is a majority opinion amongst intelligent people (let us set aside the obvious response) is absurd. "Free Trade" as proposed by pointy heads like Krugman is absolutely terrible for most people, and his argument is baseless because it rests on so many false assumptions. The first false assumption always put forth by the "free traders" is that a rising economy raises all boats. This is something any of the 37% of Americans without a job or the 80% of Americans who are one missed paycheck away from homelessness or severe crisis can tell you is nonsense. The second false assumption is that the metrics used to measure productivity are at all related to useful and beneficial economic activity. GDP has always been a particularly useless metric, and has been even more worthless since incorporating the book-cooking activity on Wall Street as "productivity", especially when that shell game represents some 55% of US GDP. The third false assumption that Krugman's nonsense rests on is that so-called "free trade" deals like the TPP have any relation to theoretical free trade theories like the one put forth by Ricardo. The oppressive and innovation killing patent laws, copyright laws, and global DMCA contained in deals like the TPP are literally the opposite of theoretical "free trade". These treaties do nothing but strengthen the strangehold of large entrenched interests, globally. Finally, all of these "free trade" theories are based on the supposition that there is a free market. An economy where central banks control interest rates and print trillions of dollars to buy stocks and bonds to prop up markets (among many, many other things) is literally the opposite of what a free market is.
- mattlutze 11y ago
  > This is something any of the 37% of Americans without a job or the 80% of Americans who are one missed paycheck away from homelessness or severe crisis can tell you is nonsense. 80% of Americans are not one missed paycheck away from homelessness, nor is the functional unemployment rate 37%. We can play with "people who have left the job market" numbers all day, but that foggy arena yields the numbers for either side to build its foundation. Further, general quality of life for people who live in countries with mostly open "free" trade agreements and treaties has improved. So it seems that those boats have in fact risen. Developing countries where ^ isn't the case likely don't have very balanced or "free trade" treaties, on the other hand. I think the argument would be to actually determine how to balance those to make them fairer and more "free" for both parties. > [...] especially when that shell game represents some 55% of US GDP. This will need proof, or some sort of actual background. Could you help me find the argument here other than an open accusation against Wall Street? > The third false assumption that Krugman's nonsense rests on is that so-called "free trade" deals like the TPP have any relation to theoretical free trade theories like the one put forth by Ricardo. I'm not finding where Krugman cites free trade deals deals, agreements or treaties as a foundation to his thesis in this article. He mentions NAFTA near suggesting that central banks regularly manipulate market conditions to try and improve employment in their countries. In fact he seems to agree with you that these agreements aren't economy boosters but have net-neutral long run effects on employment, there. It sounds like your argument against Krugman's essay is an assumption that he's arguing against your ideals, rather than a criticism of what he wrote. Is that a fair characterization?

gumby 11y ago

He's not talking about economists! He said intellectuals (as in public intellectuals, particularly on the left but not always so), implicitly those outside mainstream economics. He's certainly rejecting the "dissenting economists", but he's mainly taking about politicians and other public figures (the first figure he savages is Goldsmith, who was somewhat influential in the UK and France but not at all an economist.

force_reboot 11y ago

The article spends quite a bit of time citing intellectuals who argue against comparative advantage. As you say, all economists agree on free trade, but Krugman is talking about non-economists. And regarding HN, I would say a majority of comments in a recent article on MarkerBot outsourcing their production to China[0], are implicitly or explicitly against free trade. [0] https://news.ycombinator.com/item?id=11574215 https://news.ycombinator.com/item?id=11574215

SixSigma 11y ago

I'm one of your one in ten. So is Donald Trump. So are the leaders of the world's second largest economy, China. (I guess mentioning Trump is cause for a mass downvote. 10 posts in one go. WTG, GG)

jegoodwin3 11y ago

> I would be surprised if one in ten readers of HN thinks international free trade can hurt an economy: it's a nearly universally assumed good amongst the intelligentsia. I'm not sure about the statistics of HN readers, however the arguments are more complicated now than when Krugman wrote the article in 1996. See Samuelson's 2004 criticism of free trade, revisiting his early positive results. Samuelson, Paul A. (2004): Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Against Globalization, in: Journal of Economic Perspectives, Volume 18, Number 3, pp. 161-180 cited in : http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000180080/Samuelson's+criticism+of+free+trade+theory%3A+unsuited+support+for+globalisation+opponents.pdf http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000... Samuelson's paper was a big deal when it came out, even in the mainstream press. The paper itself: https://www.wilsoncenter.org/sites/default/files/SamuelsonJEP042.pdf https://www.wilsoncenter.org/sites/default/files/SamuelsonJE...

emp_zealoth 11y ago

Quite recent and glaring counterexample - where Greece was pretty much crushed economically by Germany ("open" trade coupled with fixed exchange rates meant enormous trade deficit) While obviously in most cases less barriers to trade means growth for everybody, there are cases where completely opening to trade is bad - it might mean total dependence on foreign products - simply thanks to economies of scale and entrenchment. For example in Poland homegrown producents of buses/trams/trains were finally given precedence and within few years they managed to produce cheaper (massively so) and just as good if not better products, jobs and know-how that will last and be a boon as opposed to being hooked on foreign maintenance contracts. So right now we are all for free trade, since those products are actually massively competitive :3

StanislavPetrov 11y ago

>I happen to think that the last twenty years have demonstrated that international free trade can be very detrimental to the majority of people in a particular economy, whatever theory might say, but the idea that this is a majority opinion amongst intelligent people (let us set aside the obvious response) is absurd. "Free Trade" as proposed by pointy heads like Krugman is absolutely terrible for most people, and his argument is baseless because it rests on so many false assumptions. The first false assumption always put forth by the "free traders" is that a rising economy raises all boats. This is something any of the 37% of Americans without a job or the 80% of Americans who are one missed paycheck away from homelessness or severe crisis can tell you is nonsense. The second false assumption is that the metrics used to measure productivity are at all related to useful and beneficial economic activity. GDP has always been a particularly useless metric, and has been even more worthless since incorporating the book-cooking activity on Wall Street as "productivity", especially when that shell game represents some 55% of US GDP. The third false assumption that Krugman's nonsense rests on is that so-called "free trade" deals like the TPP have any relation to theoretical free trade theories like the one put forth by Ricardo. The oppressive and innovation killing patent laws, copyright laws, and global DMCA contained in deals like the TPP are literally the opposite of theoretical "free trade". These treaties do nothing but strengthen the strangehold of large entrenched interests, globally. Finally, all of these "free trade" theories are based on the supposition that there is a free market. An economy where central banks control interest rates and print trillions of dollars to buy stocks and bonds to prop up markets (among many, many other things) is literally the opposite of what a free market is.

mattlutze 11y ago
> This is something any of the 37% of Americans without a job or the 80% of Americans who are one missed paycheck away from homelessness or severe crisis can tell you is nonsense. 80% of Americans are not one missed paycheck away from homelessness, nor is the functional unemployment rate 37%. We can play with "people who have left the job market" numbers all day, but that foggy arena yields the numbers for either side to build its foundation. Further, general quality of life for people who live in countries with mostly open "free" trade agreements and treaties has improved. So it seems that those boats have in fact risen. Developing countries where ^ isn't the case likely don't have very balanced or "free trade" treaties, on the other hand. I think the argument would be to actually determine how to balance those to make them fairer and more "free" for both parties. > [...] especially when that shell game represents some 55% of US GDP. This will need proof, or some sort of actual background. Could you help me find the argument here other than an open accusation against Wall Street? > The third false assumption that Krugman's nonsense rests on is that so-called "free trade" deals like the TPP have any relation to theoretical free trade theories like the one put forth by Ricardo. I'm not finding where Krugman cites free trade deals deals, agreements or treaties as a foundation to his thesis in this article. He mentions NAFTA near suggesting that central banks regularly manipulate market conditions to try and improve employment in their countries. In fact he seems to agree with you that these agreements aren't economy boosters but have net-neutral long run effects on employment, there. It sounds like your argument against Krugman's essay is an assumption that he's arguing against your ideals, rather than a criticism of what he wrote. Is that a fair characterization?