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> I have listened to plenty of pro-globalist/pro-free-traders talk about how America and other first world countries are just going to have to get used to the i

> I have listened to plenty of pro-globalist/pro-free-traders talk about how America and other first world countries are just going to have to get used to the idea that their wealth is going to decrease as it equalizes out globally Anyone who says this doesn’t understand free trade, even if they advocate it. And US/Western anti-communist policies of supporting friendly dictators has nothing to do with allowing citizens freedom to trade. Again the same politicians often can support two different policies, one invaluable and one abhorrent, with no physical requirement that they are linked. And US manufacturing post NAFTA has been stronger than ever, so stop repeating that old saw. If you thought NAFTA would create gumdrops rain showers and candy coated roads in Mexico, you are mistaken. NAFTA brought many better jobs to Mexico, but it can’t solve the war on drugs, bring back circular migration, eliminate governmental corruption, or reduce the stifling influence of the Catholic Church. And while Smedleys book is a classic, free trade isn’t responsible for mercantilism, they are literally polar opposite philosophies. Mercantilism is the use of government resources and restrictions to support a small set of favored businesses, while free trade dictates a level playing field for all participants. And wake me up when you can think of a coherent criticism of the law of comparative advantage. It’s been a bedrock of economics for over two hundred years because it’s critics have never been able to disprove it and it’s massive benefits.

arminiusreturns 6y ago
> And wake me up when you can think of a coherent criticism of the law of comparative advantage. In exchange I would like you to tell me exactly how in the world you can claim "US manufacturing post NAFTA has been stronger than ever". I've heard about the benifits to consumer prices sure, and that a certain amount of manufacturing has returned due to robotization, but even if that is factored in I'm a bit confused as to how this claim is even close to reality. 1. CA assumes particpating consumers and businesses have knowledge of location of lowest cost, which isn't always true. 2. CA ignores transport costs which can easily offset the raw CA numbers. 3. CA fails to factor in lack of or monopoly on economies of scale. 4. CA also fails to factor in rates of inflation, subsidies, lack of or high import controls etc. 5. It fails to take into account non-price factors such as brand loyalty, item quality, etc. 6. Exchange rates can undermine raw CA numbers. 7. CA ignores IP legal issues mostly surrounding R&D investment. 8. CA still fails to take into account second and third teir effects needed to institute CA. So as I referenced before, Guatemala as an example, had to have a coup performed against it first, with massive amounts of suffering and theft from people to pave a way for the "free-trade" state needed for CA to come into effect. That loss of life and wealth as a prereq isn't factored in.
- valuearb 6y ago
  One correction to your previous citizen of the world comment, the US Bill of Rights lists rights for all people, not just US Citizens (outside specific voting rights). Ok, US manufacturing has nearly doubled in actual value since 1990. https://fred.stlouisfed.org/series/OUTMS https://fred.stlouisfed.org/series/OUTMS It doesn’t employ as many people, but that’s progress. Making more stuff with fewer people is the only way to grow wages over the long run. The law of comparative advantage has remained an economic bedrock because none of the criticisms you cribbed from a web page have stood up outside of exceedingly narrow circumstances. 1. Producers always have a very good idea of their costs and where they are lower. Minor Exceptions don’t make a difference, a market doesn’t have to be perfectly efficient to be efficient. 2. Producers know transport costs, that’s a trivial calculation. Clearly CA works better the lower transportation costs are, and it’s harder the higher they are. But if you have free trade in gravel, it doesn’t rebut CA that gravel is frequently too cheap and heavy to transport, so while African gravel can be produced cheaper it’s not going to be shipped to America. 3. Monopolies and economies of scale just drive costs/pricing. Again it’s costs that drive CA, so not rebutting anything. 4. CA takes into account all costs, even such as tariffs. Protectionism is a way of eliminating the magical benefits of CA by increasing the costs of foreign goods and services to local levels or higher. So now the local economy is burdened with all the low value work that could have been cheaply exported, and has fewer resources for the most productive and valuable work. 1-7, really none of are coherent arguments against CA, it’s as if you don’t even understand how it works. An economic participant never needs perfect knowledge of costs, exchange rates, etc to enter into profitable transactions. For one example, interest and exchange rates are easy to hedge for relatively long periods. If you find a significantly cheaper assembler in China, hedging is just one of your costs, and if exchange rates move against you in such a huge amount that Chinese assembly becomes too expensive you simply move assembly when your hedges expire. And 8) is just a rant about Guatemala. Whatever government runs Guatemala, the benefits of CA are available if it allows free trade. If Guatemalan workers can improve their living standards by taking on another countries low value work at a lower cost, both will benefit.

arminiusreturns 6y ago

> And wake me up when you can think of a coherent criticism of the law of comparative advantage. In exchange I would like you to tell me exactly how in the world you can claim "US manufacturing post NAFTA has been stronger than ever". I've heard about the benifits to consumer prices sure, and that a certain amount of manufacturing has returned due to robotization, but even if that is factored in I'm a bit confused as to how this claim is even close to reality. 1. CA assumes particpating consumers and businesses have knowledge of location of lowest cost, which isn't always true. 2. CA ignores transport costs which can easily offset the raw CA numbers. 3. CA fails to factor in lack of or monopoly on economies of scale. 4. CA also fails to factor in rates of inflation, subsidies, lack of or high import controls etc. 5. It fails to take into account non-price factors such as brand loyalty, item quality, etc. 6. Exchange rates can undermine raw CA numbers. 7. CA ignores IP legal issues mostly surrounding R&D investment. 8. CA still fails to take into account second and third teir effects needed to institute CA. So as I referenced before, Guatemala as an example, had to have a coup performed against it first, with massive amounts of suffering and theft from people to pave a way for the "free-trade" state needed for CA to come into effect. That loss of life and wealth as a prereq isn't factored in.

valuearb 6y ago
One correction to your previous citizen of the world comment, the US Bill of Rights lists rights for all people, not just US Citizens (outside specific voting rights). Ok, US manufacturing has nearly doubled in actual value since 1990. https://fred.stlouisfed.org/series/OUTMS https://fred.stlouisfed.org/series/OUTMS It doesn’t employ as many people, but that’s progress. Making more stuff with fewer people is the only way to grow wages over the long run. The law of comparative advantage has remained an economic bedrock because none of the criticisms you cribbed from a web page have stood up outside of exceedingly narrow circumstances. 1. Producers always have a very good idea of their costs and where they are lower. Minor Exceptions don’t make a difference, a market doesn’t have to be perfectly efficient to be efficient. 2. Producers know transport costs, that’s a trivial calculation. Clearly CA works better the lower transportation costs are, and it’s harder the higher they are. But if you have free trade in gravel, it doesn’t rebut CA that gravel is frequently too cheap and heavy to transport, so while African gravel can be produced cheaper it’s not going to be shipped to America. 3. Monopolies and economies of scale just drive costs/pricing. Again it’s costs that drive CA, so not rebutting anything. 4. CA takes into account all costs, even such as tariffs. Protectionism is a way of eliminating the magical benefits of CA by increasing the costs of foreign goods and services to local levels or higher. So now the local economy is burdened with all the low value work that could have been cheaply exported, and has fewer resources for the most productive and valuable work. 1-7, really none of are coherent arguments against CA, it’s as if you don’t even understand how it works. An economic participant never needs perfect knowledge of costs, exchange rates, etc to enter into profitable transactions. For one example, interest and exchange rates are easy to hedge for relatively long periods. If you find a significantly cheaper assembler in China, hedging is just one of your costs, and if exchange rates move against you in such a huge amount that Chinese assembly becomes too expensive you simply move assembly when your hedges expire. And 8) is just a rant about Guatemala. Whatever government runs Guatemala, the benefits of CA are available if it allows free trade. If Guatemalan workers can improve their living standards by taking on another countries low value work at a lower cost, both will benefit.