tag:blogger.com,1999:blog-8764541874043694159.post5914900810380723204..comments2024-03-28T12:23:39.665+00:00Comments on Coppola Comment: Value is in the eye of the beholderFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-8764541874043694159.post-41783405376441054912013-11-22T13:48:07.908+00:002013-11-22T13:48:07.908+00:00Comparative advantage is apparent in trade on a da...Comparative advantage is apparent in trade on a daily basis.<br /><br />The first step is when a high productivity country buys something, that they could alternatively make in a shorter amount of time themselves, from a low productivity country.<br /><br />The second step is when the low productivity country buys something, that would take a very long time to make themselves, from the high productivity country.<br /><br /><br />That is the comparative advantage principle realized in trade.<br />Dinerohttps://www.blogger.com/profile/14632385731642361211noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-21178419295409777012013-11-22T02:07:13.163+00:002013-11-22T02:07:13.163+00:00Thank you! :)Thank you! :)Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-84777446436547123052013-11-22T01:50:03.436+00:002013-11-22T01:50:03.436+00:00You have an absolute advantage at brilliance. And ...You have an absolute advantage at brilliance. And a lovely voice!Kelly Brothernoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-85990748847600663382013-11-21T23:45:34.993+00:002013-11-21T23:45:34.993+00:00Thanks Greg. I was surprised by Tim's criticis...Thanks Greg. I was surprised by Tim's criticism - I didn't think my description of comparative advantage was so controversial. Hope you enjoyed the clip, anyway! Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-69590658698405718332013-11-21T16:30:09.233+00:002013-11-21T16:30:09.233+00:00Frances, Can we have some singing to accompany e...Frances, Can we have some singing to accompany each of your posts? I prefer popular bits of Mozart, Bach and Handel (my tastes are limited).<br /><br />BTW that wasn’t Salman Rushdie introducing you was it..:-)<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-37587506114305671492013-11-21T14:25:51.219+00:002013-11-21T14:25:51.219+00:00http://www.social-europe.eu/2013/11/northern-europ...http://www.social-europe.eu/2013/11/northern-europes-drag-world-economy/<br /><br />It then seems reasonable to explore policy matters...Dan Crawford https://www.blogger.com/profile/04177057507788121432noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-75512402342976372622013-11-21T12:50:10.501+00:002013-11-21T12:50:10.501+00:00I've focused on trade surpluses because of peo...I've focused on trade surpluses because of people's tendency to regard them as a good thing. But that doesn't mean I am I favour of trade deficits either. Persistent large trade deficits reduce trade in exactly the same way as persistent large surpluses - not surprisingly, because they are the flip side of the same coin. So countries that persistently run trade deficits also need structural reforms. But it's very difficult for them to undertake the necessary reforms while they have low cost producers elsewhere with large persistent trade surpluses. Therefore reforms are needed in both deficit and surplus countries at the same time.Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-27621080779603192832013-11-21T12:00:25.236+00:002013-11-21T12:00:25.236+00:00Thank you Frances for clear writing. Can you writ...Thank you Frances for clear writing. Can you write about persistent and large trade deficits as well...ie. the current experience of the US. Dan Crawford https://www.blogger.com/profile/04177057507788121432noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-44354696709691854022013-11-21T08:41:22.403+00:002013-11-21T08:41:22.403+00:00Frances, you have nicely illustrated two of the ch...Frances, you have nicely illustrated two of the chief objections to the comparative advantage model: that it is not robust to change of any kind (consumer tastes, competition, input scarcity, technology, etc.), and that it ignores real option value. The latter point is not well appreciated even by economists, I think.<br /><br />In an uncertain world, the _possibility_ of being able to do something else has value. If I am choosing an occupation now, and acquiring skills and assets for it, I need to take account of whether I'm going to be locked in to a single way of making money, or whether I can change. Having the option to do different things has value, even if, as it turns out, I never do them. For an infinitely lived entity such as a country, that goes double.<br /><br />(Oh, and you are right. The theory of comparative advantage DOES imply the existence of monopolies. That is one of the chief objections that economists made to it, and why it was replaced with Hecksher-Ohlin and then the New Trade Theory.)<br /><br />Comparative advantage has got to be the worst-named idea in all of economics. People universally come to discussions of trade with the idea that it is a competition, so using the words "comparative" and "advantage" is just going to lead to permanent confusion. It's almost as though economists don't want to be understood...<br /><br />For economists, such as Mr Worstall, there is only one objective measure of advantage: money--or more technically, the magnitude of the stream of benefits you can receive for your work, suitably time discounted. Not for nothing has the label "the dismal science" stuck for so long.<br /><br />Now I'm going to listen to your YouTube piece, and have my soul enlightened.Greghttps://www.blogger.com/profile/11939046017258198038noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-35579913621642554412013-11-21T08:05:17.352+00:002013-11-21T08:05:17.352+00:00Bravissima! Bravissima! Matt Bird - Investment Bloghttps://www.blogger.com/profile/18164706201439776224noreply@blogger.com