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Ricardo and Morality

by rdf Thu Aug 7th, 2008 at 03:58:42 AM EST

There is a nice Wikipedia article about "comparative advantage". It even cites one of the newest works by Economist Ha-Joon Chang where he argues that this idea worked adversely for developing countries.

I've decided, after seeing a lot of shoddy and self-serving economic research being passed off as science that we need to take a new approach. The era of the MBA and the bottom line has to come to an end.

The golden rule does not state "do unto others...as long as it is cost effective".

Promoted by afew

Trade is based upon a theory that both parties will benefit if certain minimal conditions of fairness are maintained. These conditions are called the "free market". One of the bitterest areas of disagreement is over exactly how "free" this market is. There are three schools of thought on this:

  1. The ideologues (especially the libertarians) who claim everything will work out for the best if government just gets out of the way. This is, of course, a utopian fantasy - the reality of this type of "free" market is anarchy and might makes right. Every human interaction needs rules of conduct and a way to enforce them. Those who make and enforce the rules are called "government". In the best case this government is democratic and reflects the will of the people.

  2. The transnational companies who benefit from trade. Their operation depends upon obtain something below market value and then selling it elsewhere for more. If this wasn't so they wouldn't need to trade at all. Make the shoes in Detroit not China and sell them in Detroit. That's the way it used to be: small settlements had their own bakers, shoemakers, etc. Trade was generally restricted to raw materials that could only be obtained in special places, like spices. Because these traders are cheating one group for their own benefit it is important that they disguise this fact, so they adopt the rhetoric of the first group and claim that trade benefits everyone.

  3. The realists. This group (which has been growing, especially in the developing countries) looks back at the history of trade and sees that they have consistently gotten the short end of the stick. Originally it was by coercion during the colonial and gunboat diplomacy days, but now the buzz word is "soft power". The fact that the old stories aren't been accepted any more is why the latest round of international trade negotiations have stalled.

So what about comparative advantage? If I buy from you and you gain ten cents while I gain a dollar Ricardo said this is to both our benefits, so we should do it. But what it really means is that I'm getting your labor for a price I couldn't get locally. This is where the moral issue comes in. Why should an hour of work in China be worth less than an hour in the US? Excuses about supply and demand or the standard of living or the degree of development are just that, excuses. They are a way to apply cost benefit to the golden rule and are immoral.

Even the most ardent supporter of "fair" trade isn't willing to go so far as to demand that people be treated as being worth the same everywhere. They are willing to allow large disparity as long as local standard of decency are maintained. So the Chinese shoemaker gets paid enough to live on (as long as he consumes mainly rice) and sits in an unheated or unventilated factory, while the corresponding American has a decent minimum wage and government enforced rules about workplace health and safety.

There are even studies which claim to show that paying local workers too much above the prevailing wage disrupts the local economy and makes things worse. Higher wages cause people to leave the land and cause local employers who don't get their income from trade to become uncompetitive. The higher wage earners can also buy more which tends to push up the cost of everything, creating inflation. The cure for this type of dislocation is more restriction on trade, not less.

If firms selling abroad can dislocate the local economy then export tariffs are needed with the income from them used to ameliorate the dislocations being caused by trade. This is the point made by Ha-Joon Chang who cites a number of historical examples where such policies were used by governments to foster overall development.

So what is to be done? We obviously can't make everyone as rich as those in the developed countries, especially over night. I think that the best that can be done over the short-term is to be honest about what is going on. Those who are distorting the benefits they will get from trade need to put in their place. Sunshine, ridicule and shame are the best approaches for this.

Then trade needs to be considered not only comparatively, but absolutely. Forcing growers in Africa to raise flowers for the European market makes them dependent on using money to buy the essentials for their own society from elsewhere, while the shoppers in Europe are getting a luxury in return. This sort of trade should be restricted as long as local economies are not self-sufficient (this is not the same as independent of imports - it means that their internal economic activity is large enough to sustain the society.)

In addition there needs to be an international agreement on the size to which firms can grow, not just their market share. There are too many firms that are now larger than most national governments. How can a small country get a fair deal when the firm it is negotiating with is bigger than it is? This should be a new role for the WTO. Even the idea of transnational firms might be reconsidered. If trade is such a good idea that Exxon USA can trade with Exxon Indonesia, there is no reason they have to be owned by the same entity. Many countries, especially the larger developing ones, like China and Russia put restrictions on foreign ownership. Why not make it a universal prohibition? There are lots of ways to participate in foreign deals without ownership.

When a transnational owns a subsidiary elsewhere whose interests are they pursuing, there own, the home countries, or the foreign state? They weren't called banana republics for nothing - the puppet regimes were run by United Fruit.

How can all this come about? As I frequently state, "might makes right" is the operative rule, especially in international relations. It seems that there may have already arisen enough of a counter force so that untrammeled trade is a thing of the past. The power of OPEC has been recognized for a long time, but the newly independent states in Latin America are flexing their muscles, as are those in China and India. It is time for the rest of the world to make the western powers an "offer they can't refuse". A combination of getting pushed out of existing areas (see BP in Russia and Shell in Iran) and buying assets from companies in distress has already shown the way.

Western governments need to wake up to the fact that they no longer call all the shots and stop being the thug enforcers for the interests of the transnationals. A bit of humility combined with some morality can go a long way.

The modern orthodoxy tells that it is enough for everyone to look for own interests, and the common matters will self-organize themselves. Thinking of possible collective consequences and choices is seen as Marxist, socialist or even fascist - how convenient to dismiss any ideas of social organization!

Taking care of collective fate does not necessarily meads that rigid "engineering" are sought. The approach could be very evolutionary: do not reform or discard something working just because of an ideological ideal; let countries and societies decide they own pririties and methods; realize what choices are available.

I am (still) slowly reading Taleb's "Black Swan". Beside philosophical line, Taleb still shows his political-economic preferences which we could challenge. In his terminology, we are leaving Mediocristan, and the world gets increasingly Extremistan, meaning that a lot of events, fortunes and fates are determined by random fluctuations and self-enforcing advantages. The free and wild capitalism has to be mostly thanked for that. According to Taleb, that is great - if more people can achieve a wealth nirvana, the better.

But what is the real historic perspective of this Extremistan drive? If this is such a new phenomonon, why this glorious fun was not discovered earlier? If people were that smart before... why they need to re-discover the same, why so much convincing is needed to cure "naive" good wishes? We can reckon that this capitalism can make some people prosperous for long time; it evidently can make most people more prosperous for some time (hello, bubbles and pyramid schemes!). But can it really do all the good all the time?!

Does everyone really has to agree that this Extremistan tendency is inherently good? Is it really good that, thanks to the scalable pyramid distribution of wealth and power, a Texan family and, say, a couple of Saudi families could, in principle, run and fool all the world just for their own benefit and joy?

Can't we look around and see, how much variation is there in the scalable Extremistan distributions? How much do those 80/20 statistics differ in Mexico and Norway, for example? How do our choices and discussion manners affect society and world distributions? How much do people really want that Extremistan excitement, how much they could do to find a comfortable balance?

Say, I believe I could be one lucky winner of world's financial, academic or publishing games, but even then, I would prefer less Extremistan rules and customs, at least in every day life and work? What if what scares me is not a personal failure but a global Black Swan calamity, of some trivial environmental supply variety - "unpredictable" but calmly foreseeable, even if masses of "empirical" ideologues deny it full time?

What if I can find other people with the same concerns and preferences, and we can do together something to make the world less crazy... Would our collective determination be very unfair to all private Extremistan lovers?

by das monde on Thu Jul 24th, 2008 at 02:54:07 AM EST
das monde:
The modern orthodoxy tells that it is enough for everyone to look for own interests, and the common matters will self-organize themselves.

You only have to stop and think about that for a minute or two to realise what a bizarre and surreal view of the world it is.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Jul 24th, 2008 at 02:46:37 PM EST
[ Parent ]
Unfortunately this "modern orthodoxy" is alive and well in the US (libertarianism based upon Ayn Rand and others).

I've been arguing that it doesn't really exist in Europe except for a pocket in the UK. Am I mistaken?

I also have been arguing that it continues to exist in the US because the think tanks that put forth this type of selfish propaganda exist only due to the continual funding they get from a core group of super wealthy plutocrats. Since there aren't the same types of people in Europe the think tanks don't get the life support needed to keep up this barrage.

Is this also a mistake on my part? Are there really places that parallel Cato Institute, Hoover Institution, Heritage Foundation, Manhattan Institute, U of Chicago and George Mason U in Europe (among others)?

If you are interested in the US specific funding details go to MediaTransparency.org and put in any of those place in the search field. The core list of funders will be revealed as the same names keep coming up with each institution.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Thu Jul 24th, 2008 at 03:32:25 PM EST
[ Parent ]
It exists as an outreach/missionary program of the business community, but it's not endemic and institutionalised in the way that it is in the US. But it's becoming increasingly influential outside of the UK, and there really is a rightward trend towards the kind of 'reform' that these noobs are so obsessed with.

The funded think tank angle has been mentioned here before. I don't have a problem with accepting that it has been a major driver of the rightward shift in the US. Not everyone agrees, but the evidence looks convincing to me.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Jul 24th, 2008 at 06:48:27 PM EST
[ Parent ]
In the UK there is certainly very strong support for free market orthodox views - "modern orthodocy."

In matters of political-economy, where the US leads, the UK tends to follow.

And there are influential conservative thinktanks in the UK as well:

Adam Smith Institute
Policy Exchange

Policy Exchange is a more recent one, used by Cameron a lot, I believe.

I am not sure if they are at all on the same scale as in the US, but they exist. I do believe they also serve as a kind of employment insurance for politicians, as they do in the US.

In the UK some thinktanks have charitable status, which is weird considering charities are supposed to be apolitical.

Here's a link to a list of thinktanks:


by BenDisraeli on Thu Jul 24th, 2008 at 08:39:34 PM EST
[ Parent ]
In Lithuania there is a Free Market Institute (LFMI) doing quite a consistent job of imposing Milton Friedman's orthodoxy. Other Eastern European countries probably have similar institutions.

It all goes pretty classic in Lithuania. After a credit and real estate boom, harder times are pressing. Inflation is geared in double digits since the last autumn - and free marketers, of course, are blaming rising wages. The wages are still pretty low by European standards: the 1000 euro level is a prevalent wish but seldom a reality. Even so, the LFMI pundits speak of "enormous inflationary pressure" due to rising wages. But why would rising wages, which is actually just an adjustment of the profits vs wages ratio rather than a monetary influx, should cause inflation, while the recent credit novelties did not raise inflation noticeably at all? The monetary mass comes from that concentrated "capital" that can't find a purpose in the modern climate. The real estate in Vilnius dropped some 10% in price (and 30% in volume) last year, rather modest loss so far if your forget inflation.

The global conditions are laughably ignored in LFMI comments: the difficulties are all because of hapless government, that dares to keep requirements of night shift minimal wages, and never allows a "truly" free market. Never mind that the "social-democratic" ("former-communist") governments favored substantial business interests over workers' weight better than any other "liberal" party in the country.

Wage rises are also bad because they harm "competitiveness" of Lithuanian enterprises - you may think, capitalism is not viable without cheapest labour. According to LFMI, wages may rise only with rising "productivity" - which probably means that all work and services must be directed to the rich class, as only they can offer a "productive" price, while just helping each other cheaply is so unproductive. But workers have the (still exceptionally popular) option of emigrating - and who is to blame then for entrepreneurs' headaches of little labor choice?

If LFMI latest predictions or higher unemployment come true (because entrepreneurs "have to cut"), the fun of foreclosures and credit defaults will start in full. We won't be surprised as well.

by das monde on Thu Jul 24th, 2008 at 09:08:28 PM EST
[ Parent ]
Actually, it's worse: The modern orthodoxy tells that it is enough for everyone to look for own interests, and the common matters will self-organize themselves in pretty much the optimal possible way for everyone.

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Thu Aug 7th, 2008 at 05:57:02 AM EST
[ Parent ]
While I don't agree at all with your opinions or ypur analysis on this issue - the more and the freer trade the better in my opinion - we should look very closely at comparative advantage. Even question if it is relevant or even exists in a world of free capital flows.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Jul 24th, 2008 at 09:49:39 AM EST
I was going to say, wait until the "B" sample results come back before passing judgement on the morality of his actions ...

... but if its Ricardo, the answers are, yes, the argument has massive relevance, and, no, it does not exist in a world of free flows of financial wealth ... or, in other words, in a world of unfettered accumulation of financial obligations across international boundaries.

The difference between Ricardo's argument and the neoclassical revision of Ricardo's argument that the traditional marginalism now relies on is that the neoclassical revision of the argument is only very loosely anchored to reality. Not only are the core assumptions of the argument not observed in the real world ... we are still waiting for a credible case that they could be established in the real world.

Ricardo's argument is, on the other hand, far more robust.

Obviously anyone who applies the theory of comparative advantage to the policy of unfettered financial flows currently pursued by transnational corporations and their bought and paid for political henchmen is a bullshit artist. Ricardo's argument is restricted to balanced trade in finished goods between two nations capable of self-sufficiency. Thus the kind of "trade" deals being pursued under Doha, or in the US under the NAFTA-model of corporate wealth agreement, have no right to appeal to the model of comparative advantage. They are simply efforts to increase the economic leverage of transnational corporations by eliminating regulation of their exercise of economic power.

However, if Ricardo's argument is taken seriously, it provides a set of goals for the operation of the establishment of new trade institutions that could offer mutually beneficial trade, in particular between low-income and high-income nations, that is not available under current trade institutions.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Fri Jul 25th, 2008 at 12:13:24 PM EST
[ Parent ]
Migeru earlier commented that he knew of no "real" econonists who had written about comparative advantage being irrelevant to the current trade realities.

Apparently, there is one.

The economist Paul Craig Roberts notes that the comparative advantage principles developed by David Ricardo do not hold where the factors of production are internationally mobile.
He is ironically known as the "father of Reaganomics" and is a 9/11-crank.

He wrote this on Thursday, Aug. 7, 2003

[...] Economists assume that the substitution of foreign labor for U.S. labor is the benevolent workings of free trade. But what is being traded when U.S. employers move jobs out of the country? Many of our imports are products made for American markets by U.S. firms.

Economists mistake the free movement of factors of production for free trade. Raised on the theory of comparative advantage, economists know that free trade is mutually beneficial. They dismiss without thought any concerns that seem to call free trade into question. The case for free trade has been unassailable for so long that economists have overlooked that today's circumstances do not comply with the assumptions of the theory.

The gains from trade flow from each country focusing on what it can do best and trading for other goods. The idea that there are comparative advantages in production is based on countries having different endowments of immobile factors of production. When the theory was developed, agricultural output was an important component of Gross Domestic Product, and a country's advantages resided in its climate and geography.

David Ricardo discovered the principle of comparative advantage in the early 19th century. Ricardo recognized that the principle did not hold if all factors of production are internationally mobile. Mobile factors of production would migrate to countries that had the greatest absolute advantages. Those countries would gain, and all others would lose.

Climate and geography cannot migrate, but capital and technology can. Today, absolute advantage resides in an abundant supply of cheap and willing labor. Now that Asia is safe for capitalism, capital and technology flow to countries where labor costs are lowest.

The global mobility of factors of production is a new development. Until recent years, it was not safe for capital and technology to migrate outside North America, Western Europe and Japan. No first-world country had an absolute advantage in labor cost.

The collapse of world socialism changed circumstances overnight. U.S. labor now faces direct competition in global labor markets. The excess supply of labor in these markets will drive down wages, salaries and employment in the United States. As the dollar is likely to lose value under pressure from our growing trade deficit, the decline in wages will not be compensated by a decline in prices, and U.S. living standards will fall.[...]

Although his criticisms of Bush often seem to align him with the political left, Roberts continues to praise Ronald Reagan and to endorse many of Reagan's policies, arguing that "true conservatives" were the "first victims" of the neoconized Bush administration.[2] He has said that many supporters of George W. Bush "are brownshirts with the same low intelligence and morals as Hitler's enthusiastic supporters."


Roberts is seriously dismayed by what he considers the disregard of the Republican party for the US constitution. He has even voiced his regret that he ever worked for it, avowing that, had he known what it would become, he would never have contributed to the Reagan Revolution

Weird guy.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Jul 25th, 2008 at 12:55:08 PM EST
[ Parent ]
Opponents of free trade often point out that the comparative advantage argument for free trade has lost its legitimacy in a globally integrated world--in which capital is free to move internationally. Herman Daly, a leading voice in the discipline of ecological economics, emphasizes that although Ricardo's theory of comparative advantage is one of the most elegant theories in economics, its application to the present day is illogical: "Free capital mobility totally undercuts Ricardo's comparative advantage argument for free trade in goods, because that argument is explicitly and essentially premised on capital (and other factors) being immobile between nations. Under the new globalization regime, capital tends simply to flow to wherever costs are lowest--that is, to pursue absolute advantage."

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Jul 25th, 2008 at 01:03:48 PM EST
[ Parent ]
"If you've eaten poison, you must get rid of the substances that are making you ill. Let us then, apply the stomach pump to the doctrines of economic growth that we have been force-fed for decades." [1]

"We cannot have too many people alive simultaneously lest we destroy carrying capacity and thereby reduce the number of lives possible in all subsequent time periods."[citation needed]

"Environmental degradation is an iatrogenic disease induced by economic physicians who treat the basic malady of unlimited wants by prescribing unlimited growth.... Yet one certainly does not cure a treatment-induced disease by increasing the treatment dosage." Daly, H. (2004). The Steady-State Economy. In Eds. S.M. Wheeler and T. Beatley pp.47-52. "The Sustainable Urban Development Reader". Routledge Urban Reader Series. isbn 041531187X

"Current economic growth has uncoupled itself from the world and has become irrelevant. Worse, it has become a blind guide."

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Jul 25th, 2008 at 01:05:34 PM EST
[ Parent ]
Actually, he's not that different from a lot of the libertarian right, which you can read on sites like Antiwar and American Conservative. I actually find myself agreeing with them more than with the mainstream press, until you get to a passage that makes you wonder whether they live on the same planet as you...
by gk (gk (gk quattro due due sette @gmail.com)) on Fri Jul 25th, 2008 at 04:50:32 PM EST
[ Parent ]
By coincidence I am slowly reading Gomory and Baumol's Global trade and conflicting national interests (Cambridge, Mass. c2000), and at least cursorily Chang's Bad Samaritans ([London, 2007] New York, 2008). Both are pertinent and make worthwhile reading. Chang makes the point that current trade and developmental policies are fundamentally flawed, and that this is, in principle, well known. He writes convincingly and engagingly, drawing on his personal experiences as a Korean whose life parallels the rise of the Korean economy, as well as on a wealth of historical sources, sometimes quite funny ones. He makes it quite clear, nevertheless, that we, the rich countries, are not acting in good faith towards the developing world, a fact that needs to be more widely propagated. – Highly recommended.

Gomory/Baumol show that Ricardo's argument is predicated on conditions of decreasing marginal productivity and a small capital base that prevailed in agrarian societies and thus fails for modern economies. In lieu of one global equilibrium, that cannot be improved, there are as many equilibria as there are (historically contingent) distributions of industries among countries. Thus the Invisible Hand lost its bearing. QED

In addition they show that international trade may leave a country worse off than no trade at all (!), and that while a degree of development is clearly beneficial to all, there is a rivalry between the  more developed countries, a zone of conflict, where the maximum total output (income) requires mutual consideration and restraint.
[But beware, I'm only at p.40.]

Now, with Ricardo debunked, perhaps one could reframe the Free Trade issue?

  • Is the whole universe necessarily the optimal size of an economic area?

  • Is the current incongruence between political and economic organisation a good idea?

  • Is there a limit to the inhomogeneity that the politico-economic order can accommodate?

by Humbug (mailklammeraffeschultedivisstrackepunktde) on Thu Jul 24th, 2008 at 12:27:58 PM EST
Wasn't Ricardo showing that trade could benefit both parties, not that is necessarily would?
by Colman (colman at eurotrib.com) on Thu Jul 24th, 2008 at 12:33:53 PM EST
[ Parent ]
He showed that the equilibrium is a global optimum (and will be attained by the Invisible Hand).

Trade is beneficial to both parties under very general conditions (or else it would not happen). This is very often used as an argument in favour of trade liberalisation etc.

However – and because of this fault this is not really an economical argument – this does not take into account the opportunity costs. Say, if a school boy works as a shoe shine he is better off than if he does not work; but only insofar as this does not interfere (negatively) with his schooling, playing piano or football etc.

by Humbug (mailklammeraffeschultedivisstrackepunktde) on Thu Jul 24th, 2008 at 01:29:10 PM EST
[ Parent ]
He showed that the equilibrium is an optimum if you use incredibly simple minded examples which are a large number of galaxy-widths away from any kind of political or economic reality.

The Invisible Handers took his argument and turned it into a crusade against the heathen savages who were - and are - badly in need of education, uplift and taming.

I'm not sure Ricardo was ever really about trade - possibly upon a time, perhaps, but certainly not for a long while.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Jul 24th, 2008 at 02:52:16 PM EST
[ Parent ]
I've been wanting to write a diary for a while about some of the different ideas that are used to support why trade is a good thing.  So I'll take a swing at it here.

First, modern economics assumes that utility is independent.  This means that the value to me of a given quantity of utility is the same regardless of how much other people have.  So anything that makes everyone better off in terms of absolute utility is beneficial for all.  This is Pareto optimality.

Suppose that you and I both wish to purchase a pizza.  If we purchase them separately we will both spend 10 euros on a pizza.  Now suppose that there's a buy one get one free deal.  So if we cooperate and buy together, we get two pizzas for 10 euros , so that each pizza costs 5 euros.  Now to most people, it only seems fair that in this case the gains generated by cooperation by distributed equally, so that each person pays 5 euros.

But if the the measure of fairness that we adopt is that cooperation is economically beneficial so long as each party makes an absolute gain, then I can put in 2 euros for my pizza, and you 8 euros, and we are both still better off than we would have been had we purchased separately. Because you still saved 2 euros by cooperation.  But does that make sense?  If you go out into the real world do people really agree that economic transactions where both parties benefit in absolute terms, but the relative distribution of gain is unequal that a fair deal has taken place?  

And far from being an academic discussion, this is the way that societies like the US and the UK have developed such gross income inequality. It isn't that the wealthy took some existing quantity of wages from the poor.  It's that the cumulative effect of economic growth where the relative distribution of gains was unequal was to redistribute income in a society to increase the share of income going to the wealthy.

And if that wasn't bad enough, neo-liberal economists point to deadweight losses as a way in which to justify changes in the absolute distribution of wealth so as to benefit the wealthy.  And if you dare to disagree, you're being anti-social. But I'm not going to get into that now.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Fri Jul 25th, 2008 at 01:06:44 AM EST
[ Parent ]
... what advocates claim for an argument and what an argument accomplishes are often two distinct things.

It took the neoclassicals and an egregiously flawed model of human behavior to arrive at a model where there is a global optimum arrived at by the Invisible Hand. Now, of course the true believers in traditional marginalist economics do not have a vocabulary or syntax in which to discuss the egregious flaws of the utility maximizing model of human behavior, and from the basis of their trained incapacities, the HO model appears to just be an "extension" of Ricardo's model.

However, what Ricardo's model established is that it is possible for nations to trade for mutual benefit. And it does not require conditions of pure competition, perfect information, or people in fact valuing all combinations of goods and bads with continuous indifference fields in order to arrive at that conclusion.

The assumptions of the argument arriving at mutual advantage then establishes the scope for types of trade relationships where we know that is possible. For the neoclassical HO theory, that scope is some alternate reality populated by some intelligent life other than human beings. For Ricardo's theory, the scope is more interesting, since it is possible, although far from automatic, to see trade relations that lie within the scope of his argument.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Fri Jul 25th, 2008 at 12:23:27 PM EST
[ Parent ]
European Tribune - Ricardo and Morality
If firms selling abroad can dislocate the local economy then export tariffs are needed with the income from them used to ameliorate the dislocations being caused by trade. This is the point made by Ha-Joon Chang who cites a number of historical examples where such policies were used by governments to foster overall development.

Ha-Joon Chang talking about his book Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism at New America Foundation:

Cynicism is intellectual treason.

by marco on Fri Jul 25th, 2008 at 01:30:59 AM EST
A good speech, too bad the technical presentation is a bit poor.

I strongly recommend his latest book: "Bad Samaritans".

I've been waging an (unsuccessful) campaign to get him to participate online as do so many other economists. He pleads lack of time.

Perhaps a few emails of encouragement from other fans of his work might help. His email is on his faculty bio page, if you want to try...

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Fri Jul 25th, 2008 at 02:33:44 PM EST
[ Parent ]
Some remarks:

That's the way it used to be: small settlements had their own bakers, shoemakers, etc. Trade was generally restricted to raw materials that could only be obtained in special places, like spices.

As far as we know through historical and archaeological research, from very early on (probably long before the Phoenicians), trade was not only about raw materials, but also manufactured goods (like wine, ceramics, fabric, perfumes, jewels...). Being (as I am) in favour of economic subsidiarity doesn't mean we have to rewrite history.

You are also grossly misrepresenting what is fair trade. The fair trade rules imply to pay to the producers (often organised in co-operatives) a price that allows them not only to survive, but also to improve their living standards and to give education to their children. It usually provides also ways to finance investment in new production means.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Thu Aug 7th, 2008 at 10:06:07 AM EST
Can archaeology distinguish between trade and pillage ?

Also, long range trade until the Antiquity was pretty much restricted to luxury goods (now, really, wine is a luxury) ; did trade have an impact on the average joe ?

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Thu Aug 7th, 2008 at 06:27:56 PM EST
[ Parent ]
This is, of course, a utopian fantasy - the reality of this type of "free" market is anarchy and might makes right.

And if that fantasy were to become reality, not only would power come from the muzzle of a gun, so would morality.

by rifek on Sun Aug 10th, 2008 at 02:33:29 PM EST

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