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To: Black_Shark; Kaslin; dennisw; ransacked; NVDave; HiTech RedNeck; familyop; All
... Economics tells us again and again that free trade is the best trade policy due to comparative advantage and us “producing” by exporting (otherwise called the Roundabout way to wealth coined by an economist David Ricardo). ...

Ahh .. good ole Ricard and 'comparative advantage'.

For Ricardo's theory of comparative advantage to work, a country's labor, capital, and technology must not move offshore. offshore. Ricardo himself admits this. International immobility is necessary to prevent a business from seeking an absolute advantage by going abroad. His theory only works for such factors as geography and climates. Ricardo assumes that patriotism will check investment abroad even under absolute advantage.

From: The Works and Correspondence of David Ricardo, Vol. 1 Principles of Political Economy and Taxation [1817], Chapter Vii, On Foreign Trade:
"The same rule which regulates the relative value of commodities in one country, does not regulate the relative value of the commodities exchanged between two or more countries"
...
From Ricardo's discussion of the famous example of Portugal producing wine and England producing wool:
"The difference in this respect, between a single country and many, is easily accounted for, by considering the difficulty with which capital moves from one country to another, to seek a more profitable employment, and the activity with which it invariably passes from one province to another in the same country.

It would undoubtedly be advantageous to the capitalists of England, and to the consumers in both countries, that under such circumstances, the wine and the cloth should both be made in Portugal, and therefore that the capital and labour of England employed in making cloth, should be removed to Portugal for that purpose.

Experience, however, shews, that the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination which every man has to quit the country of his birth and connexions, and intrust himself with all his habits fixed, to a strange government and new laws, check the emigration of capital. These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations."

Ricardo's theory of comparative advantage does not apply to today's world. Just look at our current economic situation.
46 posted on 10/04/2011 6:42:32 AM PDT by algernonpj (He who pays the piper . . .)
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To: algernonpj; Toddsterpatriot; 1rudeboy

Good summary. If the Unites States of America dies and gets a tombstone this is part of what what will be inscribed—

“He believed in the great lofty principle of free trade even as it killed him and made his people jobless and impoverished”


48 posted on 10/04/2011 7:07:45 AM PDT by dennisw (nzt - works better if you're already smart)
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To: algernonpj
For Ricardo's theory of comparative advantage to work, a country's labor, capital, and technology must not move offshore

All the above are very mobile these days. Capital being mobile is always easy. But today We even have illegal immigration which makes labor mobile. 
Technology is easily stolen, spread and diffused. Riccardo is good but these days with our massive international capital flows to the country with the best (hottest) investments, Ricardo is irrelevant these days

All the free trade theories are from a bygone age. The Orientals don't believe this illogical garbage. Go ask Korean, Chinese, Taiwanese, Chinese what they think. They practice mercantilism, not free trade

51 posted on 10/04/2011 7:17:07 AM PDT by dennisw (nzt - works better if you're already smart)
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To: algernonpj

Well written, and thanks.


55 posted on 10/04/2011 4:55:57 PM PDT by familyop ("Don't worry, they'll row for a month before they figure out I'm fakin' it." --Deacon, "Waterworld")
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