Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: Luis Gonzalez
Comparitive Advantage may be easier to understand if the example was taken down to single people.

Assume I am both a better engineer and a better plumber than the guy down the street. If I make $100/ hour as an engineer, but only $65 as a plumber, then it is advantageous for me to hire the guy down the street to do my plumbing while I continue to do engineering. He can only get $80 doing engineering and $50 and hour doing plumbing.

I have a $35 dollar an hour advantage doing engineering over plumbing, while he gets to do plumbing for $50 an hour.

Since people are paid by their output, my output of engineering and plumbing is higher than his, so I get paid more per hour for my services. The total value of output in the world for us is $150 with this arrangement, but only $145 per hour if we reversed our roles.

Now an importatnt point: notice how efficiency plays a key part. If he was at $90 per hour for engineering and still could only get $50/hr as a plumber, the reversing of the roles would produce more for the world.
51 posted on 03/20/2004 8:38:05 AM PST by HighWheeler (RATS hero is an impeached, dis-barred, lying, perjuring, cheating, lazy, cowardly sexual predator)
[ Post Reply | Private Reply | To 1 | View Replies ]


To: HighWheeler
I don't think that you will like the effects of comparative advantage. It is going to destroy the middle class in America. Here's a question that should be posed to all free traders - tell me which technical career I should study for to ensure a good income in the future. You cannot answer that question because there is no technical job that cannot be outsourced.
The Internet has changed the economic equation fundamentally. It used to be very hard to offshore things - that has all changed. I work as a Java/Web programmer for a large American corporation. We cannot hire any developers unless they are in India.
We need to put a tariff on all imported goods and services.
106 posted on 03/20/2004 12:15:09 PM PST by CompProgrammer
[ Post Reply | Private Reply | To 51 | View Replies ]

To: HighWheeler
Comparitive Advantage may be easier to understand if the example was taken down to single people.

----

I have a $35 dollar an hour advantage doing engineering over plumbing, while he gets to do plumbing for $50 an hour.

Oh, he gets to do a $65 an hour job for $50 but your "comparative advantage" theory goes out the window for him when HE (plumber) needs YOU (engineer) but can't afford your exorbitant rate...You both lose.

135 posted on 03/20/2004 11:57:30 PM PST by lewislynn (Free traders know it isn't , they just believe cheap popcorn makers raises their living standards.)
[ Post Reply | Private Reply | To 51 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson