The Theory of Comparative Advantage

The International Economics Study Center ^ | Unknown | Steven Suranovic

[neutrino]

We are here, and he is gone!!!

Alas, free trade - a cause he favored - continues to linger, not unlike any foul odor.

By the way, Luis, you're becoming a bit hysterical in your defense of free traitin'. Just calm down. The anger is a normal part of coping with the loss of a failed world concept. You'll come through this; just remember, I'm here to help you.

[Luis Gonzalez]

At the end of 1847, Brussels had hosted a "Free Trade Congress," which was designed to further the general Free Trade campaign English manufacturers were waging. In 1846, the English bourgeoisie repealed England's Corn Laws and were ready to take their cause abroad.

In other words. There's a conference going on promoting free trade, and Karl Marx is there bad mouthing it, and using typical scare tactics in the hopes that free trade ideals would not be embraced by the attending nations.

neutrino and the rest of the protectomorons actually believe that Marx would be there cheer-leading free trade to the attending dignitaries, and warning them that by embracing free trade, their system of government would be overturned, and his embraced.

Hey neutered...if Marx had indeed believed that free trade would turn free nations into communist nations, why the hell would he be at that summit warning those very people he wished to overthrow about it?

Good Lord...but you are dense.

[Luis Gonzalez]

Your problem is that you can't differentiate passion from anger.

[Luis Gonzalez]

"BTW, their trade restrictions are WAY higher than ours."

So, you think we should be more like China too I see.

[Luis Gonzalez]

"The anger is a normal part of coping with the loss of a failed world concept."

Protectionism, mercantilism, nativism, communism...all failed and gone.

The only failed world concept is the one that asks us to believe that government can conduct trade better than traders can.

[Toddsterpatriot]

Thanks for the info.

Over the past 25 years, its real gross domestic product has expanded at an average of 9% a year.

So, at this rate of growth, assuming they can keep it up indefinitely means their GDP doubles every 8 years. Ours is 11.2 trillion.

http://www.bea.doc.gov/bea/dn/gdplev.xls

It would take them 24 years to match our current GDP. Oh yeah, their population is almost 1.3 trillion to our almost 300 million.

So lets say another 16 years to match our current per capita GDP. Where will we be in 40 years? And do you really believe their government provided figures of 9% growth a year?

My point is that in your post # 216 you said One more time - if free traitin' is so good, why are China and India doing so well with trade barriers? China is the sixth biggest economy in the world, you know. Why? Can you tell me?

China and India may be doing better than before, but their GDP per capita is only $1,266 in China and $505 in India. Are they really doing so well?

[Toddsterpatriot]

Rising quite fast.

Sure, from a very low base.

You obviously are not an investor.

Wrong. I've been working in the field of investments my entire adult life.

But do you know what the capita count is? Who dwarfs who?

See neutrinos post #226.

You are not suggesting that we get even with them on both counts do you?

Get even, you mean get revenge? Or do you mean match their number?

[neutrino]

Hey neutered...if Marx had indeed believed that free trade would turn free nations into communist nations, why the hell would he be at that summit warning those very people he wished to overthrow about it?

Because he knew that free traitors, then as now, weren't bright enough to comprehend anything.

By the way, when posters start resorting to distortions of others' screen names, it suggests they know they're losing. Thanks for admitting the essential bankruptcy of your ideas.

[neutrino]

but their GDP per capita is only $1,266 in China and $505 in India. Are they really doing so well?

Sure. Take a look at the numbers again. There's an entry that shows the GDP per capita in terms of buying power.

[ninenot]

Financial buyers are NOT strategic buyers. Buffet is both. Financial buyers simply scarf up underpriced assets which are not related to ongoing businesses.

Most often, strategic buyers are also non-entrepreneurs; they merely scarf up poorly-managed firms which have products/markets which fit neatly into the buyer's arena.

Buffet's buys do not expose him to loss of everything he has; most often, the prudent financial OR strategic buyer sees assets which are re-sellable for close to the strike price--not pure junk.

Yeah--labor expects a paycheck. Something wrong with that? Or are you making the case that there's something wrong with laborers?

[ninenot]

Actually, it's quite a darwinian abomination

Ah, yes. Good insight.

We are PROGRESSING, Willie!!

Get rid of all those labor-type leeches who merely suck the Capital dry!!!

[Toddsterpatriot]

Sure. Take a look at the numbers again. There's an entry that shows the GDP per capita in terms of buying power.

India $2,610 China $4,698. So what's your point? Of course it's cheaper to live in polluted Third World countries.

In 2002 US GDP per capita was $36,300.

http://www.cia.gov/cia/publications/factbook/geos/us.html

Still, 7.7 times China's and 13.9 times India's.

So, can you really say that China and India are doing so well with trade barriers?

Would you trade places with either?

[CobaltBlue]

You still haven't answered the question - "so what?"

[Hermann the Cherusker]

As for the US "always having high tariffs" -- after the demise of Smoot-Hawley, the US became the richest nation on earth, and remains so today.

Actually, not that you'd know, Smoot-Hawley did not raise tarriffs particularly much - it would have been essentially revenue neutral. The tarriff prices were raised by price deflation, since many tarriffs were not percentages, but prices per unit meausre (i.e. 5 cents per pound, or $2 per ton). As prices went down and tarriffs satyed level, the percentage went up.

And the US was richest long before Smoot-Hawley was ever conceived of, thanks to the long period of growth after the Civil War up to WWI.

[CobaltBlue]

With respect to labor, sure, they should get paid for their work, but if there's no work, then they should be fired or laid off. They have no stake in the business, and no loyalty. They'll leave in a heartbeat for more money someplace else.

If you own your own business, you can't be fired. You have to please your customers, but if one prospective customer doesn't like what you have to offer, it's a big world, keep moving.

It's just a completely different mentality. I have you figured for a paycheck kind of guy. Everybody who bitches about jobs being offshored is a paycheck kind of guy, lower level, too. Ya'll suffer from a failure of imagination.

Because upper level types realize that cheaper labor means more money for sales, support, management, r&d. We aren't offshoring r&d, we aren't offshoring management, or sales.

In 1900, almost 40 percent of employed people worked on farms. At the end of this century, less than 2 percent of the employed population works on farms. The agricultural sector contributed around 20 percent of the U.S. gross domestic product in 1900; now that share is only about 1 percent.

I don't think we'd have even that many farmers except for USDA subsidies.

So, all the farmers left the farms and went to work in factories. And now they're going to have to do something else, because the factories are going away, too. And so it goes.

You see that as a bad thing, I see it as a good thing. You would have been one of the Luddites, back in the old days, that wanted to smash the factories because they were taking market share away from home-based manufacturing and shops.

There is a reasonable argument to be made in favor of protectionism to protect new industries that are just getting on their feet, but the US industries which are going offshore are not new industries, they're mature industries that are looking for competetive advantage. If they can't go offshore for labor, they'll go under, and the US will lose not only the blue collar labor, but the white collar labor as well. Foolish.

[Petronski]

Ah, the dismal science. I do love it so.


Petronski, B.A. (Economics); J.D.

[CobaltBlue]

The US wasn't richest in the 19th century, that was Great Britain. But we were quite well off then.

The worst thing about Smoot-Hawley was that it triggered retaliatory tariffs in other countries, aka "beggar-thy-neighbor." Also, raising prices in a depression was a monumentally stupid thing to do, especially when the world was experiencing massive deflation.

Hoover, for reasons nobody has ever been able to explain to my understanding, thought that the way to deal with deflation was to raise prices, or at least not cut them, so his policy was for farmers and factories not to cut prices and labor not to cut wages. Insane.

[CobaltBlue]

I get the distinct impression that they don't really care what the per capita GDP of China and India are, they're xenophobic towards India and scared to death of China, so they think it's safer if these countries remain impoverished.

They think free trade is a zero sum game. If China and India is better off, then the US must, ipso facto, be worse off.

[Hermann the Cherusker]

At a time when international trade accounted for 1% of the GDP, and when the US was self-sufficient in ferro-metals, heavy and rare earth metals and natural resources like oil and timber, it is incredibly difficult to believe that Smoot-Hawley had anything to do with the 33% decline in GDP experienced from 1929 to 1933.

1% was then and is still <<<<< 33%

[Hermann the Cherusker]

The US wasn't richest in the 19th century, that was Great Britain. But we were quite well off then.

I didn't say 19th century. I said that's whe we built up to being richest, which we started to be early in the 1900's. By 1916, GB was finished as a world power after wasting her young manhood on the fields of Flanders and Lorraine.