[Dat Mon]

Im big on capitalism myself, except Im having a hard time understanding it these days.

Help me out if you can. Im going to post these questions on these types of threads and see if someone can get me some answers.

Lets consider the following countries....

US
China
India
Israel
Ireland
Poland

Now, using the Smith / Ricardo paradigms of Free Trade and Comparative Advantage, in what areas of trade do each of those countries have a Comparative Advantage relative to the others, as of today.

Do you see that changing in five years?

[thoughtomator]

Comparative advantage is an obsolete concept in a world where the factors of production can move across national borders.

[mr_hammer]

"Now, using the Smith / Ricardo paradigms of Free Trade and Comparative Advantage, in what areas of trade do each of those countries have a Comparative Advantage relative to the others, as of today."

None, capital and technology is mobile today! It is absolute advantage that business's seek!

[TopQuark]

I do not claim to have sufficient data to answer these questions well. I do have a couple of comments, however. Recall that comparative advantage is an equilibrium concept: if you have such and such advantage, then here is what you should do. But how did that advantage come about, and why should one expect it to be permanent.

In reality, therefore, all countries, communities and individuals constantly seek and create the advantages on which to capitalize. As a consequence, none of them is permanent: in the very least, I can eventually mimic whatever you do if you are successful.

My personal view is that the main differential advantage we had and still have to a considerable extent is our... values and culture. It is the values we shared that led to the adoption of this particular Constitution and other laws. It is the values that allow us, unlike other countries to change presidents peacefully, without intervention by generals. And it is our values that allow each of us to maintain his or her identity and reach full individual potential. This all translates, in particular, into high productivity of labor and high stability of financial markets: the stability of our culture and institutions makes the country safe heaven for investments. If so, there is no more cost to multi-culturalsm than this: by loosing pride in and focus on our core, traditional values, we are also losing our competitive advantage.

Think about this: values is the only thing China, Ireland or Russia cannot duplicate. And we are loosing them rapidly. As for China, their competitive advantage is highly motivated and productive labor. The problem for us in not that labor is cheap, as some people erroneously think, but that it is slightly cheaper than ours.

How to combat this disadvantage? Well, back to values: Americans should start seeing once again the value of speaking and writing well, of knowing a foreign language and basic mathematics. A course in a community college costs only a few hundred dollars, but most prefer to spend thousands on TV sets and video games. That is fine. But then they should not whine that a Chineser an Indian is willing to do what it takes and becomes more productive.

Poland is rather similar in that its people are invigorated by the recently acquired freedom. I do not know enough specifics to have an opinion on how this will play out within the EU: it well may be that the Poles have thrown out one yoke for another.

I have no faith whatever in the long-term viability of EU as either economic power or a single polity. Its deterioration is delayed primarily because we, Americans, pay for the defense and innovation.

That's my one-and-a-half cents.