4 ms·
Funny thing about this comparative advantage thing. The example Ricardo gives is 2 countries and 2 products. What do we find when we consider n countries and
by lucas_membrane 9y ago
Funny thing about this comparative advantage thing. The example Ricardo gives is 2 countries and 2 products. What do we find when we consider n countries and m products? Does every country have a productive place in a competitive world?
Of course, if we can apply comparative advantage to n countries and m products, we can also apply it to n people and m products. Does each person have a productive place when n is 7 billion? If we cannot show that, then the 2 country example is not relevant to our world either.
- jvm 9y agoEvery country has a production frontier. Trade can only improve that frontier. There's a completely different question you are raising of whether there are zero marginal product workers. One could ask if people are made ZMP by trade. Of course, there have always been ZMP workers (an extreme example might be someone who is quadripelegic and has mental health issues), but trade could still be a factor in increasing their number. I would say with a cursory empirical look, in the cases where one could make the argument (e.g., high unemployment countries in Europe), it looks a lot more like this is caused by poor local policies rather than by trade. In general, the model is focused on production not full employment (which there are different models for), and it's not clear to me why we would optimize on a single KPI here.