5 ms·
> Also, how much of this effect is basically the rest of the world playing catch up in terms of economic production? If the rest of the world becoming more pro
by deogeo 7y ago
> Also, how much of this effect is basically the rest of the world playing catch up in terms of economic production?
If the rest of the world becoming more productive results in US workers being worse off, then something is severely wrong with US trade policy. For one, it contradicts the dogma that more trade is strictly beneficial.
- bilbo0s 7y agoI think that dogma though was meant to address the situation in a global context. ie - More trade is strictly beneficial for the global population in aggregate. But yeah, it's still trade, so there will be lows and highs, and ebbs and flows.
- asark 7y ago> For one, it contradicts the dogma that more trade is strictly beneficial. Ricardo's original idea was applicable with a narrow set of assumptions/conditions and didn't have much to say about who'd end up with the greater net wealth. I'm not sure how/why it was turned into a magical improve-any-economy law of nature.
- astazangasta 7y agoRicardo's mistake is not thinking about development; comparative advantage is optimal now, but a society that just makes coffee beans is going to lose in the end to the one that makes microchips because of the difference in how the economy and society develop over time.
- 0815test 7y agoThis may have been a mistake by Ricardo, but not one that points towards less trade as optimal. Indeed, export-led development (implying more trade openness) is the one reliable way we know about of going from the "coffee beans" to the "microchips" stage of development.
- astazangasta 7y agoFalse, I recommend Ha-Joon Chang's writing on this subject. The US did not develop in a climate of trade openness, it used tariffs to protect its development. In fact no developed economy developed this way, all of them protected their industry until it was mature and ready to compete, had their governments invest in research and infrastructure and so on. If you have an example of a country that successfully developed through export led development and trade openness I would love to hear it.
- cycrutchfield 7y ago>For one, it contradicts the dogma that more trade is strictly beneficial. It is strictly beneficial, in aggregate. But in any situation, there are winners and there are losers. There are no decisions you can make where everybody wins. If you live in a first world country and your skill set is worse than somebody in the developing world, you’re going to have a bad time.
- deogeo 7y ago> But in any situation, there are winners and there are losers. The usually trotted-out theory of comparative advantage claims there are only winners.
- cycrutchfield 7y agoI don’t think you fully understand comparative advantage then.
- ACow_Adonis 7y agoagain, only in the aggregate/ entity of measurement level. I would argue anyone who says otherwise is either being disingenuous or doesn't actually understand economics. That is not to say that is not trotted out frequently. Also, to be fair, during my economics education they had this whole focus on modeling policies and finding optimizations where no one is worse off. Of course, in the real world, that practically never happens... and there is an argument that the focus on efficient/competitive markets/ equilibria/rational agents is also a bit "wouldn't it be nice if the world was actually like this...", whereas in the real world only the most trivial goods/markets can vaguely be described as such...
- FooHentai 7y ago>If you live in a first world country and your skill set is worse than somebody in the developing world, you’re going to have a bad time. Even if your skill set is greater, your cost of living is higher. So you'd have to be more than marginally better. Also, the logical conclusion of where this seems to be headed is that if you're a low-skill person living in a first-world county, voting for protectionist, isolationist policies/politicians is a rational choice.