These two conditions no longer hold.
Another factor (see Herman Daly) is that Ricardo was an economist in an "empty" world, we are now in a "full" one. In an empty world the costs of raw materials and pollution are disregarded. If an area is despoiled one can move. In a full world these costs are passed on to society as a whole. So while firms still operate on comparative advantage, this is no longer a valid model. The costs they are ignoring get borne by others.
A good example is today's article on Chinese Coal: http://www.eurotrib.com/?op=displaystory;sid=2006/6/12/8448/61749
One of the points that Jerome skipped was that sulfur and soot from Chinese coal burning are showing up in California. In a full world, everything connects.
Oh, to be young again and know all the answers... Policies not Politics ---- Daily Landscape
I'll break my vow and reply.
I must make quite an impression if you feel the need to vow not to reply to me (and then break it). Frankly, I'm not sure as too whether I should laugh or send a "Thank You" card.
The problem with his theory is that it was formulated at a period when money was based upon gold.
No. It was formulated during a period in which Saudi Arabia was an oil-rich desert while America was not. That's a period that continues today. My basic point -- the one that apparently makes me "thick" (thank you, Metatone) -- was that comparative advantage is a theory dealing primarily with natural differences between nations/places.
You seem to be under the impression that I'm disputing the notion of costs being borne by others in the case of your example, pollution. Why you believe this, I don't know.
Oh, to be young again and know all the answers...
Yes. Now, if I could only demonstrate what a classy fellow I am by tallking down to younger members of the site, life would truly be complete. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
I see I have two "dogs" in this fight; so I have to plug for both and hope neither is injured in the process.
"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge
