Icelandic Alþing Elections (with update) | 79 comments (79 topical, editorial, 0 hidden)

Iceland is pretty big and with a small population. There is more wilderness than those 57 square kilometres.

And isn't serving large industrial installations the same as servicing the needs of the population, ie supplying the population with high value-added (= high paying) jobs?

If our big industrial installations didn't get the cheap power they need, that would very likely be characterized as a disservice to the population.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat May 12th, 2007 at 03:00:47 PM EST
[ Parent ]

Re: Uneconomic growth? (none / 1)

The jobs are mainly taken by people from elsewhere in Europe, and Iceland got the aluminium smelters by outpricing the US (leading to loss of work there).

by nanne (zwaerdenmaecker@gmail.com) on Sat May 12th, 2007 at 05:43:45 PM EST
[ Parent ]

Re: Uneconomic growth? (none / 1)

Outpricing the US should not be a concern for Icelandic politicians, as they are to care for the people of Iceland, not the people of the USA. And according to Ricardo and his comparative advantage, everyone is better off if the stuff is made where it is cheapest to make it.

Still, all of this is put on it's head if foreign labor is needed to run the aluminium plants.

Why don't Icelanders want the jobs, and why was all the infrastructure built if just to get import foreign workers to a remote part of Iceland?

Or to put it another way: what's in it for Iceland?

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat May 12th, 2007 at 05:48:28 PM EST
[ Parent ]

Re: Uneconomic growth? (4.00 / 2)

Some tax money, presumably. This may also be a case where the politically powerful push through things that give them personal gains but which bring little public gains. However, it's plausible that they simply misjudged the situation.

Ricardo's ideas about comparative advantage do not factor in destroying things that are not and to a large extent can not be valued in monetary terms. Otherwise, I don't really know about comparative advantage. Aluminium smelters are not the industry of tomorrow and I doubt that Iceland will gain much of it.

by nanne (zwaerdenmaecker@gmail.com) on Sat May 12th, 2007 at 06:04:17 PM EST
[ Parent ]

Re: Uneconomic growth? (4.00 / 3)

Ricardo also didn't take into account cross-border capital flows. In fact, foreign workers did not figure in his analysis either. Free trade is free exchange of goods and services. As soon as you start moving the factors of production across borders, the analysis breaks down.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sat May 12th, 2007 at 06:19:40 PM EST
[ Parent ]

What says Wikipedia on comparative advantage? (none / 0)

Criticisms
Few criticisms exist of the basic insight that rational division of labour depends on comparative and not absolute advantage. Support for free trade is often lacking since commentators simply fail to grasp the concept of comparative advantage and its implications.

Hehe. ;)

Is there any litterature on those things you mention?

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat May 12th, 2007 at 06:27:20 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 4)

You're asking me for literature? This stuff is pretty standard.

The Ricardian Model - Assumptions and Results
The modern version of the Ricardian model and its results are typically presented by constructing and analyzing an economic model of an international economy. In its most simple form, the model assumes two countries producing two goods using labor as the only factor of production. Goods are assumed homogeneous (i.e., identical) across firms and countries. Labor is homogeneous within a country but heterogeneous (non-identical) across countries. Goods can be transported costlessly between countries. Labor can be reallocated costlessly between industries within a country but cannot move between countries. Labor is always fully employed. Production technology differences exist across industries and across countries and are reflected in labor productivity parameters. The labor and goods markets are assumed to be perfectly competitive in both countries. Firms are assumed to maximize profit while consumers (workers) are assumed to maximize utility.

You can relax many of these assumptions, including "labor as the onlu factor of production", but "Labor [the factors of production] can be reallocated ... within a country but cannot move between countries" and "labor [the factors of production] is [are] always fully employed" cannot be relaxed. And, by the way Keynes points out that classical (and marginalistic) economics is basically predicated on the assumption of full employment. The possibility of free movement of capital decapitalising an economy, or leading to massive unemployment, is simply not within the scope of Ricardian comparative advantage. And, in actual fact, the way governments seem today unable to effectively counter the threat of companies taking their capital (e.g., factories), and therefore the jobs they provide, to other countries, indicates that the liberalisation of financial markets has changed the conditions of international trade. I contend that when there is mobility of the factors of production, you have one single economy, not trade between two economies. Ricardo was, in fact, concerned with trade between mostly contained (and therefore meaningful) national economies.

The Wikipedia article on comparative advantage has an example containing this

We need to assume that each of the countries has constant opportunity costs of production between the two products, and that both economies have full employment at all times. Also all factors of production are perfectly mobile within the countries between clothing and food industries, but are immobile between the countries. Finally the price mechanism must be working to provide perfect competition.

The paper How Robust is Comparative Advantage [PDF] considers lots of relaxations of the hypotheses, but at no point does it consider the effect of capital or labour transfers.

By the way, have you searched the ET archives for threads on comparative advantage?

Division of labour and comparative advantage: what linearity hides in economics by Migeru on November 13th, 2005
Probably incredibly unreadable modelling thread by Colman on June 12th, 2006
EuroTrib Trade Discussion Summary by Drew J Jones on August 20th, 2006
Contesting Free Trade Orthodoxy by TGeraghty on March 29th, 2007

And while we're on the topic of Ricardian theory, have a look at Can we resist the Iron Law? by Colman on March 28th, 2006.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sat May 12th, 2007 at 06:59:16 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

Thank you.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 03:22:35 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

I didn't mean literature on the Ricardian model, I do have a standard textbook on that.

I rather meant some literature detailing the limitations of the model (for example the free flow of capital) and how this would make free trade a bad idea.

I haven't yet looked at those Eurotrib discussions, but I will.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 07:08:00 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

I don't know any literature on that, unfortunately. So you can dismiss what I said by argument of authority.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 07:23:05 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 2)

Outside of the academic literature [on which I'm not an expert, you're the Economics major] there is, for instance, this.

Counterpunch: The Politics and Economics of Outsourcing (by Paul Craig Roberts on May 19, 2005)

Comparative advantage has two necessary conditions, neither of which is met today. One condition is that capital is immobile internationally relative to traded goods. The other is that the trading countries have different opportunity costs of producing the traded goods. (The economic concept of opportunity cost is an in-kind measure; for example, the quantity of wine that is not produced in order to make a yard of cloth.)
The condition of capital immobility is required to insure that a country's capital seeks comparative advantage at home instead of absolute advantage abroad. Different internal cost ratios of producing one good in terms of another are necessary if low- and high-cost countries are to experience mutual gains from specializing and trading.
David Ricardo discovered comparative advantage when he investigated the question of why a country that could most cheaply produce all tradable goods would trade with a higher cost country.

Now I just have to sit back and wait for Marek to chastise me for quoting Paul Creig Roberts, and from Counterpunch to boot ;-)

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 07:31:58 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

Migeru: Also, Ricardo did not envisage the ability of capital to move freely in pursuit of absolute advantage. His was a world of trade, not of foreign direct investment and offshore funds.
Colman: The consequence of that is?
Migeru: That free trade is no longer win-win for the countries involved, since the least efficient country is decapitalized and its economy ruined.
Colman: Right. Thanks.

I'd like to know a little bit more about exactly how this would work. So, farther down there is this exchange:

dvx: Perhaps this is slightly OT (and somewhat naive), but has anyone ever actually verified comparative advantage empirically?
As I understood it, comparative advantage was the reason why globalization was going to make us all so much more prosperous (or at least boost employment in those sectors that enjoy the comparative advantage). Given the actual outcome, I can't avoid wondering if this assumption is (still) warranted.
Migeru: That is assuming that what globalization does is encourage us to divest from the sectors where we are at a comparative disadvantage and invest in the sectors where we have a comparative advantage.
What is actually happening is that capital is divested from our entire economy and invested in the other country to produce goods for our consumption. We don't produce jack shit for the Chinese market, and we don't buy the products that China used to produce before. Our capital is using Chinese resources to produce our products, sort of like a virus subverts a host cell for its own purposes. Supposedly Europe has a comparative advantage in high-quality, low-volume goods, made for the Western markets.
So, globalization with outsourcing is not Ricardian comparative advantage, it's something else.
dvx: Thanks for the clarification!
Migeru: Now you need a real economist to answer your question.

And that's exactly what I am looking for. Has any real economist written about these things?

(And I'd like to add that I do not agree with us not exporting anything useful to China, as the current boom in Sweden is partly driven by exports to places like China of pretty advanced industrial products like trucks, mining equipment, pipes, compressors, generators, power line solutions, high quality steels, and also raw materials like iron ore and copper. I even believe we have a trade surplus with China.)

Migeru: We are assuming that what needs to happen is that labour needs to move to where the capital is, and so that mobility of labour is the limiting factor. This is consistent with the (now obsolete) system where capital was tied to its home country.
Ricardian comparative advantage makes sense when goods are more mobile than both capital and labour. When capital is the most mobile (as it is today, and the margin seems only likely to increase with peak oil) you have a different mechanism at play.

What mechanism? Where can I read about it?

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 07:33:16 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 5)

I don't think you can read about this, it's not part of standard economics.

Direct foreign investment is the flip side of domestic divestment. It's one thing to outsource goods and services to a different country and another to move your production to a different country. In the second case, the domestic economy gets divested. The mechanism is the same that, thought capital movements within one country, leads to economic crisis and unemployment in certain regions while others thrive. Free movement of capital leads to divestment and unemployment and forces nemployed people to move in chase of capital. Within a country there is freedom to move and so the "problem" is people's resistance to uproot themselves. The US has a culture of transience in which people will move large distances without much apparent trouble, but look at the massive migrations from the "dust bowl" to California during the Great Depression.

The question here is this: what is the point of national economic policy, and how do transnational corporations interact with national economic policy?

So, I am not opposed to free trade, and I am not opposed to free movement of capital but 1) if there is free movement of capital, goods and services there has to be free movement of people; 2) if you have free movement of capital you need a redistributive policy encompassing the whole scope of the free movement of capital.

Therefore, the European Union needs to strengthen its economic government. We already have a Central Bank for the Eurozone, and we need a supranational redistributive policy. The neoliberal nationalism that is now in charge of it is going to cause a lot of damage.

Furthermore, globalisation is going to lead either to a thirdworldisation of the developed economies (the gutting of the European welfare states is well under way, under pressure from internationally mobile capital), to a world economic government, or to a backlash and a return to protectionism. Protectionism will take the form of tariffs and barriers to economic migration, but it is unlikely to reverse the liberalisation of capital flows [cross-border "capital flight" used to be a high crime, up there with money laundering, in the 1980's].

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 08:17:17 AM EST
[ Parent ]

Typo (4.00 / 2)

thought capital movements

through

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 08:18:17 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

That is, if we cannot maintain absolute advantage in certain sectors where we specialize.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 10:01:24 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

And so keep the high value-added jobs at home.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 10:02:18 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 2)

Ah, so free movement of capital transforms the game from comparative advantage to absolute advantage?

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 10:15:03 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 2)

Yes, isn't that right?

Why invest your money where you get a 5 % return if you can invest it where you get a 10 % return?

And if I have understood all this right, even with free movement of capital we have no problem with free trade when Portugal has an absolute advantage for making wine and England an absolute advantage at making cloth. The problems arrive when Portugal is better at both making wine and cloth, the English capital goes to Portugal but the English labourers can't follow. Still the English get both cheaper wine and cloth than without free trade, but that doesn't help much now that they haven't got any income to pay for it, even if it's cheaper.

The whole elegant counterintiutive boon of the comparative advantage of free trade even when Portugal is better than England at everything, goes away.

Pity.

(Or I might have completely misunderstood what you are saying)

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 10:23:21 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 4)

No, you have understood me fine. Now you're ready to drop out from Economics.

Why invest your money where you get a 5 % return if you can invest it where you get a 10 % return?

You see, the only ones that ultimately benefit are those with offshore capital, and those who have an absolute advantage. But a global race to absolute advantage spells the end of cooperation on many levels. It's a dog-eat-dog world and there is no reason for the many who don't have an absolute advantage to agree with the few who do have absolute advantage in something in order to set up a legal [i.e., consensual] framework that reduces economic activity to the endless chase for absolute advantage. In a Ricardian world all you need is a comparative advantage, and everyone more of less) has a comparative advantage. Pity indeed.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 10:36:40 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

Then we'd better make sure as many as possible get hold of absolute advantages and offshore capital (but isn't all capital pretty much offshore when capital flows freely?).

A vibrant economy and an efficient welfare state, good infastructure etc gets you the absolute advantage and a clever pension system and a capital income tax floor makes sure every labourer is also a capitalist.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 11:08:21 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

makes sure every labourer is also a capitalist.

You've drunk the cool-aid.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 11:14:07 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

Actually, I only got wind of Bush et als 'ownership society' after I figured it was a good idea myself.

Off course, they don't like progressive taxation and small income inequalities as much as I do...

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 11:53:32 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 2)

Then we'd better make sure as many as possible get hold of absolute advantages and offshore capital (but isn't all capital pretty much offshore when capital flows freely?).

Ultimately everyone will be in misery except of a few capitalists with their tax residence in offshore tax havens (in Spain we call them "fiscal paradises" ;-) Or we will get a World Economic Government charged with global redistribution, or Free Trade™ will end.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 11:26:38 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

We call them 'tax paradises', or skatteparadis, and we have allegedly just become one. ;)

And things need not play out like that at all. We tax the rich, maintain reasonable equality, and if they move to tax havens we invade and occupy them. And then we shoot them to send a clear message that not paying your taxes is a crime. Or even worse, as Talleyrand would have said, a blunder.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 12:03:41 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 2)

Good luck taxing the rich, if you're already a tax paradise.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 12:10:39 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

Well, everything is relative. Capital taxes here are still sky-high, compared to notorius capital tax-paradises like France.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 12:18:32 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 2)

Why invest your money where you get a 5 % return if you can invest it where you get a 10 % return?

Because there's more risk associated with the 10% return :).

by Laurent GUERBY on Sun May 13th, 2007 at 11:42:04 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

Now let's make this even more complicated shall we? ;)

I off course meant risk-adjusted return. :)

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 11:55:07 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 2)

Oh, by the way, I have been raking my brain trying to come up with a model of trade with capital movements and unemployment. Trouble is, it's hard to reduce it to nice little 2D diagrams like these

I would need at least 4D, it seems, so I can't visualise the model in my head. And I don't want to write down any equations until I know the answer (in which case I don't need equations since I'd be writing a diary for ET, not a paper for publication).

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 08:27:31 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

I usually try to get around the problem of 4D by doing it in 3D-parts, holding one variable constant. Not as good as being able to visualise 4D, but better then nothing.

For us mathematically inclined: do include the equations anyway, maybe in a addendum or such.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sun May 13th, 2007 at 09:53:25 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

I think ET should spin off a semi-anonymous think tank and put some papers together for formal publication - a kind of Bourbaki, but for economics.

As long as the ideas are outside of the Academic Citadel they won't have much influence on mainstream economic dogma. Crashing those gates can only do some good, and also provides academic air cover in less formal situations when someone needs to quote an anti-establishment talking point.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun May 13th, 2007 at 11:18:03 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 2)

What mechanism? Where can I read about it?

How about this? [a random event harvested from Google]

Danfoss.com Thermostat production moves to Slovakia(27 May 2005)

Tough competition in the refrigeration and freezing appliances market is forcing Danfoss to move its production of refrigerator and freezer thermostats from Nordborg to Danfoss' factory in Slovakia. The relocation, which is expected to be completed by the end of 2005, will affect around 77 employees.
...
Today, Danfoss Appliance Controls is the world's leading manufacturer of thermostats for refrigeration and freezing appliances and has production facilities in Mexico, Brazil, China and Italy, in addition to the factory in Denmark.
...
"We will of course do whatever possible to help people find new jobs, and that is why a job office will be established in cooperation with the personnel function (IS-H). The office will be set up shortly after the summer holiday," says Mr Søholm.

This event cannot be accommodated within Ricardo's theory. Under Ricardo's theory, Danfoss would use its capital and labour in Denmark to produce something else which can be exported to Slovakia, and some Slovak company would export thermostats to Denmark. Instead, what is happening is that Danfoss moves its capital to Slovakia, and its employees have to look for other jobs in Denmark without the benefit of Danfoss' capital also staying in Denmark chasing after labour. I suppose Danfoss' 77 employees could move to Slovakia to work for Danfoss there. I wonder how many of them would relocate to slovakia with a Slovak salary and benefits, if offered the chance. And this is within the European Union. There is no free movement of persons from Europe to China.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 08:46:19 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

Oh. I think I get it now.

Feels a bit like when I saw the graph with stagnating median incomes the first time.

...

So, absolute advantage it is. And the only way to do that while avoiding a race to the bottom (by competing with lower taxes or wages) is to have world class education, world class investment climate, world class regulation, world class infrastructure, world class work ethic and world class dead cheap energy.

So industrial policy it is.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 10:01:29 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 3)

That's the only way if you're a nationalist. If you're a humanist, the way is to raise standards, and redistribute, worldwide.

By the way, you're conceding that with free movement of capital what matters is absolute advantage, not comparative advantage.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 10:17:46 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

Well, the gist of this entire argument is that it's the absolute advantage that counts, due to the free flow of capital. We might have made some crucial error in getting to this conclusion, but I can't find it.

And I don't think striving, as a state, to be the best you can be should be considered nationalist, at least as long nationalist has a negative connotation. I'd rather use a more positive word, like patriotic. Working for your country without kicking the shit out of other countries.

And this quest of absolute advantage, aren't corporations doing that all the time? Didn't they do it even before capital started to flow freely? Isn't globalization just another structural change to which we'll successfully adapt, just as we did all those other times?

And from a humanist point of view, if you would like to call it that, doesn't the people in Slovakia and China deserve those high value-added jobs just as much as we do? And won't their wages constantly rise as their productivity rise, hence reducing their competitivness (that is, absolute advantage) and making it easier for us to oppose lower wages at home?

Af course, this would all happen in a dynamic way and in the long run, and in the long run we are all dead.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 10:40:15 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 2)

Now, within Sweden why do you have a welfare state instead of just letting everyone chase absolute advantage?

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 10:48:39 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

Because we feel solidarity with each other but don't feel like being the social office of the entire planet?

Personally I have no problem with more European social and economic integration, but most Swedes would disagree with me. Especially those on the left.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 11:03:14 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 2)

That's because the Swedish left doesn't want to give up what they perceive as their absolute advantage vis-a-vis the rest of the EU. And the neoliberals don't feel any solidarity with anyone, that's the point of Free Trade™.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 11:16:27 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

No, it's because the Swedish left is full of insular people playing sillybuggers. Or rather, living it.

The neoliberals are pretty much the way you say, though the number of anti-EU libertarians (or libertarians at all) in Sweden can probably be counted on your fingers and toes.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 11:53:20 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (4.00 / 2)

Under absolute advantage that's not good enough, you have to kick the shit out of your competitors because only being first in absolute terms works.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 01:37:20 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

Just like running a company then?

And you don't have to best at everything. Find your niche where you are the best, and keep it. That's what companies do anyway, so maybe this won't be that much of a change.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 03:57:06 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

Anyway, I think this is one of the most interesting discussions I have had at the ET. Thanks for that Migeru.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun May 13th, 2007 at 03:58:54 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

Likewise. Probing questions help me sharpen my ideas.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 05:52:43 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

I'll drink to that!

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun May 13th, 2007 at 06:30:57 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

I'm still no closer to a model of division of labour with unemployment. Maybe I need a drink, too.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Sun May 13th, 2007 at 06:36:36 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 0)

I think the key to this lies in the concept of "Intellectual Property" and the growing role of services based upon it.

"Knowledge-based Value" is at the heart of it.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun May 13th, 2007 at 06:45:56 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

Well, you clearly need a drink, but can you explain what you mean by:

I'm still no closer to a model of division of labour with unemployment.

(Thankyou for this thread BTW, you managed to express very well what I was too incoherent to be able to explain/persuade anyone of in the modeling thread all those months ago.)

by Metatone (metatone [a|t] gmail (dot) com) on Mon May 14th, 2007 at 03:26:40 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

It is very easy to make a (mathematically) neat model of division of labour, which generalises to a model of comparative advantage, if you assume full employment. But a model that incorporates unemployment is a harder nut to crack.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Mon May 14th, 2007 at 05:51:28 PM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

Don't they usually just assume unemployment as a sort of "reserve function" like the setup for gas dynamics in the presence of a liquid?

Molecules (people) are absorbed and released by the reservoir according to the pressure in the chamber and the size of the reservoir (amount of economic activity and number of unemployed) along with an assumed NAIRU?

by Metatone (metatone [a|t] gmail (dot) com) on Tue May 15th, 2007 at 03:33:40 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

I see I am not going to be able to avoid lots of variables and equations.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Tue May 15th, 2007 at 03:39:20 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

I think it is unavoidable, because if you are using division of labour to generalize towards comparative advantage, then you are basically describing interactions between (at least two [wool? wine?] different "employments." In that case at minimum, unemployment is another (third) "employment" kind that needs another variable to represent it.

by Metatone (metatone [a|t] gmail (dot) com) on Tue May 15th, 2007 at 05:50:37 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

Going from 2 to 3 employments actually complicates matters a lot, mathematically.

Bush is a symptom, not the disease.

by Carrie (migeru at eurotrib dot com) on Tue May 15th, 2007 at 06:09:05 AM EST
[ Parent ]

Re: What says Wikipedia on comparative advantage? (none / 1)

Right, but I can't see a way to avoid it and retain any meaningful statements about comparative advantage. If we include only "unemployment" and "employment" as just the 2 kinds, I think we lose the ability to say meaningful things about "advantage."

by Metatone (metatone [a|t] gmail (dot) com) on Tue May 15th, 2007 at 06:20:31 AM EST
[ Parent ]

Re: Uneconomic growth? (none / 1)

Ok, thanks for the info.

But what do you mean with aluminium smelting not being the industry of the future? Considering our future energy situation, aluminium demand should go up as it replaces steel in ever more car parts. For example the 0.3 litres per 10 km Audi A2 is entirely made out of aluminium.

And if you can keep your energy costs down, by for example being located next to a big hydro plant on a remote island, your future should be bright.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sat May 12th, 2007 at 06:21:53 PM EST
[ Parent ]

Icelandic Alþing Elections (with update) | 79 comments (79 topical, 0 editorial, 0 hidden)

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