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

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 ]

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

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