6 ms·

Juche doesn't work. The theory of comparative advantage is not wrong.

by energy123 1y ago

linksnapzz 1y ago
If current trends continue, North Korea will be around longer than South Korea. Ironic, no?
- deleted 1y ago
  [deleted]
- justonceokay 1y ago
  There is no reason to believe trends will continue. Countries populations are stabilizing, not trending toward zero.
- churchill 1y ago
  How did you make the leap from free markets vs. autarkic Juche to birth rates discourse? It's unambiguously true that free markets has made South Korea significantly, mind-bendingly wealthier than the North. And on the subject of fertility, birth rates are so low (1.8) that you have Kim Jong Un crying on national TV, begging women to have more kids. Personally, I have this pet theory (irrational, it may be) that as the boomers die off across the West, newer generations will pick up having more kids and TFR will level off. Like new growth springing up in a forest after a wildfire burns up all the old, dry wood. Something similar to the post-war baby boom.
  - TimorousBestie 1y ago
    [flagged]
    - churchill 1y ago
      Exactly this. I believe it'll free up housing and general consumer demand, reduce social security spending, etc.
imtringued 1y ago
It's unfalsifiable though. How can comparative advantage be distinguished from being created versus being innate? If economic actors can choose what comparative advantages they possess (e.g. by moving the economic factors or through training or investment), the theory becomes meaningless. It turns into a predestination fallacy since it myopically focuses on geographical factors that happen to not matter that much in the modern world.
- energy123 1y ago
  You can falsify it with this experiment. Move into the wilderness and be self sufficient yourself starting tomorrow. Give up all the comparative advantage you currently experience through your trading with other people (labor for money, money for things you can't make). See what happens.
  - js8 1y ago
    No, first you need to make a formulation of the theory that you're trying to falsify. What economic advice would the theory of comparative advantage give to China in the 1960s? If it is "just do the free trade", it would have been wrong. China started to implement its market reforms with dual pricing to protect its own citizens from the foreign markets.
    - AstralStorm 1y ago
      But it appears their secret sauce is not dual pricing, but horizontal and vertical integration in manufacturing, combined with low labor costs. Same thing the USA companies did earlier. Now that is an actual comparative advantage that is actually hard to replicate due to huge entry costs. (To lower the costs of labor further you need to actually give out life basics for free! China gets away with this by having a huge population competing thus far, but it won't hold.)
js8 1y ago
But South Korea wasn't using pure comparative advantage either. Ha Joon-Chang mentions that LG was originally a textile company, but the government forced them to expand into cables. And 50 years later.. had they followed comparative advantage, they would still be a textile company.

Juche doesn't work. The theory of comparative advantage is not wrong.

linksnapzz 1y ago

If current trends continue, North Korea will be around longer than South Korea. Ironic, no?

deleted 1y ago
[deleted]
justonceokay 1y ago
There is no reason to believe trends will continue. Countries populations are stabilizing, not trending toward zero.
churchill 1y ago
How did you make the leap from free markets vs. autarkic Juche to birth rates discourse? It's unambiguously true that free markets has made South Korea significantly, mind-bendingly wealthier than the North. And on the subject of fertility, birth rates are so low (1.8) that you have Kim Jong Un crying on national TV, begging women to have more kids. Personally, I have this pet theory (irrational, it may be) that as the boomers die off across the West, newer generations will pick up having more kids and TFR will level off. Like new growth springing up in a forest after a wildfire burns up all the old, dry wood. Something similar to the post-war baby boom.
- TimorousBestie 1y ago
  [flagged]
  - churchill 1y ago
    Exactly this. I believe it'll free up housing and general consumer demand, reduce social security spending, etc.

imtringued 1y ago

It's unfalsifiable though. How can comparative advantage be distinguished from being created versus being innate? If economic actors can choose what comparative advantages they possess (e.g. by moving the economic factors or through training or investment), the theory becomes meaningless. It turns into a predestination fallacy since it myopically focuses on geographical factors that happen to not matter that much in the modern world.

energy123 1y ago
You can falsify it with this experiment. Move into the wilderness and be self sufficient yourself starting tomorrow. Give up all the comparative advantage you currently experience through your trading with other people (labor for money, money for things you can't make). See what happens.
- js8 1y ago
  No, first you need to make a formulation of the theory that you're trying to falsify. What economic advice would the theory of comparative advantage give to China in the 1960s? If it is "just do the free trade", it would have been wrong. China started to implement its market reforms with dual pricing to protect its own citizens from the foreign markets.
  - AstralStorm 1y ago
    But it appears their secret sauce is not dual pricing, but horizontal and vertical integration in manufacturing, combined with low labor costs. Same thing the USA companies did earlier. Now that is an actual comparative advantage that is actually hard to replicate due to huge entry costs. (To lower the costs of labor further you need to actually give out life basics for free! China gets away with this by having a huge population competing thus far, but it won't hold.)

js8 1y ago

But South Korea wasn't using pure comparative advantage either. Ha Joon-Chang mentions that LG was originally a textile company, but the government forced them to expand into cables. And 50 years later.. had they followed comparative advantage, they would still be a textile company.