4 ms·
> The basis of the theory of trade, frankly the whole point of trading at all, is that some people can make or get stuff more cheaply than other people, and tha
by camelite 7y ago
> The basis of the theory of trade, frankly the whole point of trading at all, is that some people can make or get stuff more cheaply than other people, and that by "trading" those items with people who need them for stuff we want we all win.
If your base assumptions are wrong you can be very wrong in very consequential ways for a very long time. Economic specialisation as an inherently positive process is in fact a higly dubious propostion[0].
> The more specialised a country is, the higher its welfare will be, and specialisation
via free trade will promote growth in all countries... It is a beautiful story. Unfortunately, disinterested empirical research by data scientists strongly
suggests that it is in fact a fantasy: the wealthiest countries are not the most specialised economies,
but the most diversified.
[0] https://www.researchgate.net/publication/318021429_Trade_and_the_Gains_from_Diversity_Why_Economists_Failed_to_Predict_the_Consequences_of_Brexit https://www.researchgate.net/publication/318021429_Trade_and...
- ajross 7y agoSigh. That's not a refutation of specialization as the basis of trade at all. It's a specific examination of specialized economies within the EU with respect to Brexit (which is to say: absent any specific criticism it's a political screed with a policy angle and not a dispassionate work of science). Again, this is textbook macroeconomics that no one seriously argues with. It's possible to make an argument for a specific externality about a specific product or market (trade in Europe vis a vis UK exit from the EU, or the example above which was, hilariously, home appliances), it's absolutely insane to try to generalize that to "we shouldn't trade for anything we can make ourselves".