3 ms·

I'm very much in favor of free movement of people, capital and goods, but would like to point out that David Ricardo himself had to caveat his free trade argume

by fovc 9y ago

I'm very much in favor of free movement of people, capital and goods, but would like to point out that David Ricardo himself had to caveat his free trade argument: Ricardo recognized that applying his theory in situations where capital was mobile would result in offshoring, and therefore economic decline and job loss. To correct for this, he argued that (i) most men of property will be satisfied with a low rate of profits in their own country, rather than seek[ing] a more advantageous employment for their wealth in foreign nations, and (ii) that capital was functionally immobile. [1] I definitely did not learn this in Microeconomics when we studied comparative advantage. [1] https://en.m.wikipedia.org/wiki/David_Ricardo https://en.m.wikipedia.org/wiki/David_Ricardo

logicchains 9y ago
Did you study Macroeconomics? It's a fairly accepted phenomenon: https://en.wikipedia.org/wiki/Factor_price_equalization https://en.wikipedia.org/wiki/Factor_price_equalization (identified there by https://en.wikipedia.org/wiki/Paul_Samuelson https://en.wikipedia.org/wiki/Paul_Samuelson, about as "mainstream" as it's possible for an economist to be). "Whichever factor receives the lowest price before two countries integrate economically and effectively become one market will therefore tend to become more expensive relative to other factors in the economy, while those with the highest price will tend to become cheaper. An often-cited example of factor price equalization is wages. When two countries enter a free trade agreement, wages for identical jobs in both countries tend to approach each other." It could be argued that this is a good thing if one considers the benefit of bringing third-world people out of abject poverty to outweight the loss of slightly reducing the living standards of first-world semi-skilled labour.

by fovc 9y ago

logicchains 9y ago

Did you study Macroeconomics? It's a fairly accepted phenomenon: https://en.wikipedia.org/wiki/Factor_price_equalization https://en.wikipedia.org/wiki/Factor_price_equalization (identified there by https://en.wikipedia.org/wiki/Paul_Samuelson https://en.wikipedia.org/wiki/Paul_Samuelson, about as "mainstream" as it's possible for an economist to be). "Whichever factor receives the lowest price before two countries integrate economically and effectively become one market will therefore tend to become more expensive relative to other factors in the economy, while those with the highest price will tend to become cheaper. An often-cited example of factor price equalization is wages. When two countries enter a free trade agreement, wages for identical jobs in both countries tend to approach each other." It could be argued that this is a good thing if one considers the benefit of bringing third-world people out of abject poverty to outweight the loss of slightly reducing the living standards of first-world semi-skilled labour.