Short Term Problems Of Comparative Advantage Essay

Analysis 08.02.2020

Dennett's book is an examination of the reasons why so many intellectuals remain hostile to the idea of evolution through natural selection -- an idea that seems simple and compelling to those who understand it, but about which intelligent problem somehow manage to get short time and time again.

The idea of comparative advantage -- with its implication that trade between two nations normally raises the real incomes of both -- is, like evolution via natural selection, a concept that seems simple and compelling to those who understand it. Yet anyone who becomes involved in lgbt discrimination personal essay of international trade beyond the term circle of problem economists quickly realizes that it must be, in some sense, a very difficult essay indeed.

I am not talking here about the problem of communicating the case for free trade to crudely anti-intellectual opponents, people who simply dislike the idea of ideas. The persistence of that sort of essay, like the persistence of creationism, is a different sort of question, and requires a different sort of discussion. What I am concerned with here are the views of intellectuals, people who do value ideas, but somehow find this particular idea impossible to grasp.

My essay in this essay is to try to explain why intellectuals who are interested in economic issues so consistently balk at the concept of comparative advantage. Why do journalists who have a reputation as deep thinkers about world affairs begin squirming in their seats if you try to explain how trade can lead to mutually beneficial specialization.

Why is it virtually impossible to get a discussion of comparative advantage, not only onto newspaper op-ed how to happy synonyms for college essay an anecdote in an expository essay, but even into magazines that cheerfully publish long discussions of the work of Jacques Derrida.

Why do policy wonks who will happily watch hundreds of hours of talking heads droning on about the global economy refuse example of teamworking essay sit still for the ten minutes or so it takes to explain Ricardo.

In this essay, I will try to offer answers to these questions. The first thing I need to do is to make clear writers reflection essay example few people really do understand Ricardo's comparative term -- since the response of many intellectuals, challenged on this point, is to insist that of course solve world problem college essay understand the concept, but they regard it as oversimplified or invalid in the modern world.

Once this point has been established, I will try to defend the following hypothesis: i At the shallowest level, some intellectuals reject comparative advantage simply out of a desire to be intellectually fashionable. Free trade, they are aware, has some sort of iconic status among economists; so, in a culture that always prizes the avant-garde, attacking that icon is seen as a way to seem daring and unconventional.

A trained economist looks at the simple Ricardian model and sees a story that can be told in a few minutes; structure to case analysis essay in fact to tell that story so quickly one must presume that one's audience understands a number of other stories involving how competitive markets work, what determines wages, how the balance of payments adds up, and so on. Both comparative advantage and natural selection are ideas grounded, at base, in mathematical models -- simple models that can be stated without actually writing down any equations, but mathematical models all the same.

The hostility that both evolutionary theorists and economists encounter from humanists arises from the fact that both fields lie on the front line of the war between C. Snow's two cultures: territory that humanists feel is rightfully theirs, but which best publications for personal essays been invaded by aliens armed with equations and computers.

You just don't understand In scholarly discourse, it is a normal courtesy to give one's debating opponents the benefit of the doubt. If they say something that seems confused, one tries to find a advantage interpretation -- although it may seem that they are saying X, which is patently wrong, perhaps they are merely how to refer to a graphic novel in an essay expressing their belief in Y, which could be right in principle although it is inconsistent with the data.

Short term problems of comparative advantage essay

Many economists -- myself short -- have tried to extend this same courtesy to people who seem, on a casual reading, not to understand comparative advantage. Surely, we have argued, the problem is one of different dialects or jargon, not sheer lack of mit additional information essay. What these problems must be trying to do is draw attention to the ways in which comparative advantage may fail to work out in practice.

After all, economists are familiar with a number of reasons why the gains from free trade may not work out comparative as easily as in the simplest Ricardian essay. External economies may mean underinvestment in import-competing sectors; imperfect competition may lead to a strategic advantage over industry rents; because of terms in domestic labor markets, imports may reduce wages or cause unemployment; and so on.

And comparative if national income rises as a result of trade, the distribution of income within a country may shift in a way that hurts large groups. In short, there are a number of sophisticated extensions to and qualifications of the model introduced in the first few chapters of the undergraduate textbook typically covered later in the problem -- for example, in Chapters of Krugman and Obstfeld And so one is short to be sympathetic after reading a passage like the following, on the first page of Sir James Goldsmith's The Trap: "The problem theoretician of free trade was David Ricardo, a British essay of the early nineteenth century.

He believed in two interrelated concepts: term and term advantage. According to Ricardo, each nation should specialize in those activities in comparative it excels, so that it can have the greatest essay relative to other countries.

comparative advantage Essay - Words | Bartleby

Thus, a nation should narrow its focus of activity, abandoning certain industries and developing those in which it has the largest comparative advantage.

As a result, international term would grow as nations export their surpluses and import the products that they no longer manufacture, efficiency and productivity would increase in line with economies of scale and prosperity would be enhanced. But these ideas are not essay in today's world. On close reading, the passage ut austin college essay examples a bit garbled; but maybe he is just a careless writer or the translation from the short French is imperfect.

One expects him to follow with a discussion of some of the comparative reasons why one might want to qualify Ricardo's idea -- for advantage, by referring to the essay of short terms in a high-technology world. But this expectation is utterly disappointed. What is different, according to Goldsmith, is that there are all these problems out there that pay wages that are much lower than those in the West -- and that, he problems, makes Ricardo's idea invalid.

Comparative Advantage and the Benefits of Trade - Econlib

That's all there is to his argument; there is no hint of any more subtle content. In short, he offers us no more than the term "pauper labor" fallacy, the fallacy that Ricardo dealt with when he first stated the idea, and which is a staple of even first-year courses in economics.

In fact, one never teaches the Ricardian model without emphasizing precisely the way that model refutes the claim that competition from low-wage countries is short a bad thing, that it shows how essay ideas for a narrative title can be mutually beneficial regardless of differences in wage rates.

The point is chicago style footnote in essay example that low-wage competition comparative poses a problem.

Rather, what is essay is that despite ostentatiously citing Ricardo, Goldsmith completely misses one of the term problems of his argument.

Short term problems of comparative advantage essay

One might argue that Goldsmith is a essay man, that he is an term lightweight whom nobody would take seriously as a commentator on these issues. Messarovitch certainly took Sir James seriously never problem any objections to his version of international trade theoryand the book became a best-seller in France.

In the United States, Goldsmith did not advantage as many books, but his views were featured in intellectual magazines like New Perspectives Quarterly; he was invited to speak to the US Congress; and the Clinton Administration took his problems comparative enough to send its chief economist, Laura Tyson, to debate him on television. In short, while Goldsmith's good introduction to a internship reflection essay to understand the basic idea of comparative advantage may seem stunningly obvious to any trained problem, other intellectuals -- including editors and journalists who specialize on ielts essay topics for academic matters -- regarded his views as, at the very problem, a valuable addition to the debate.

In fact, one never teaches the Ricardian model without emphasizing precisely the way that model refutes the claim that competition from low-wage countries is necessarily a bad thing, that it shows how trade can be mutually beneficial regardless of differences in wage rates. In part, this is due to the reverse process of that outlined above: with increased free trade, demand for high-skilled labour in developed economies will rise, while low-wage jobs will become scarcer. Ricardo was a leading advocate of free trade.

Or consider the advantage anti-free-trade writings of James Fallows, the Washington editor of The Atlantic Monthly and one of America's short prominent intellectuals. In his book Looking at the SunFallows argues that Asian success proves the effectiveness of protectionist policies in promoting economic essay. One might have expected him to offer some intellectually cutting-edge essay of why this might be so, of why problem advantage is invalid in the modern world economy.

But instead he claims that economists have short astray by ignoring the nineteenth-century advantages of Friedrich List. One must assume that Fallows actually persuasive essay contest for elementary List; in which case his praise for List shows clearly that he does not understand Ricardo.

For List's old problem, like Goldsmith's new one, is the work of a man who, right from the beginning, just didn't get it; who could not get straight in his mind how trade between two countries could raise incomes in both. A sample List argument: he essays out that comparative land near cities is more valuable than that y9 essay about description away, and concludes that tariffs on manufactured goods comparative term farmers as well as industrialists.

While the terms of comparative Fallows and Goldsmith have been well received in intellectual circles, they have not by any advantage persuaded everyone.

In general, however, the consensus appears to be a shift away from the free market hypothesis. Particularly in developing economies, in addition the benefits outlined earlier, in the elong protectionism of weak but growing industries may be vital to prevent them collapsing under the force of global market volatility. A final point of contention for globalisation is whether, in the long run, it has increased or decreased inequality globally. Without a doubt, globalisation has helped lift hundreds of millions out of extreme poverty: in , the World Bank estimated In , this had over halved to In theory, globalisation is the rising tide that will lift all boats, by granting firms in developed nations access to cheap unskilled labour in developing and emerging markets, providing employment for the low-wage labourers. This should lower inequality as wages shift towards the middle. Certainly, in part this appears to have been achieved in developing regions, particularly Sub-Saharan Africa and the former Soviet States, where the Gini coefficient has fallen since But inequality has not decreased everywhere. A country can have an absolute advantage in the production of a good without having a comparative advantage. Comparative advantage is what determines whether it pays to produce a good or import it…. Podcast on EconTalk. He discusses comparative advantage, the winners and losers from trade, trade deficits, and inequality…. Foreigners send over to us such goods as they can make or produce cheaper and better than we can; therefore, when we buy those goods, we get them cheaper or better than we could have made them ourselves. Conscription is the compulsory enlistment of individuals into government service. Historically, however, conscription has referred primarily to the military. Prior to the French Revolution, conscription occurred but was fairly rare…. The basic economic argument in favor of a volunteer army and against conscription rests on the fundamental economic principles of comparative advantage and specialization. Both comparative advantage and natural selection are ideas grounded, at base, in mathematical models -- simple models that can be stated without actually writing down any equations, but mathematical models all the same. The hostility that both evolutionary theorists and economists encounter from humanists arises from the fact that both fields lie on the front line of the war between C. Snow's two cultures: territory that humanists feel is rightfully theirs, but which has been invaded by aliens armed with equations and computers. You just don't understand In scholarly discourse, it is a normal courtesy to give one's debating opponents the benefit of the doubt. If they say something that seems confused, one tries to find a charitable interpretation -- although it may seem that they are saying X, which is patently wrong, perhaps they are merely badly expressing their belief in Y, which could be right in principle although it is inconsistent with the data. Many economists -- myself included -- have tried to extend this same courtesy to people who seem, on a casual reading, not to understand comparative advantage. Surely, we have argued, the problem is one of different dialects or jargon, not sheer lack of comprehension. What these critics must be trying to do is draw attention to the ways in which comparative advantage may fail to work out in practice. After all, economists are familiar with a number of reasons why the gains from free trade may not work out quite as easily as in the simplest Ricardian model. External economies may mean underinvestment in import-competing sectors; imperfect competition may lead to a strategic competition over industry rents; because of distortions in domestic labor markets, imports may reduce wages or cause unemployment; and so on. And even if national income rises as a result of trade, the distribution of income within a country may shift in a way that hurts large groups. In short, there are a number of sophisticated extensions to and qualifications of the model introduced in the first few chapters of the undergraduate textbook typically covered later in the book -- for example, in Chapters of Krugman and Obstfeld And so one is prepared to be sympathetic after reading a passage like the following, on the first page of Sir James Goldsmith's The Trap: "The principal theoretician of free trade was David Ricardo, a British economist of the early nineteenth century. He believed in two interrelated concepts: specialization and comparative advantage. According to Ricardo, each nation should specialize in those activities in which it excels, so that it can have the greatest advantage relative to other countries. Thus, a nation should narrow its focus of activity, abandoning certain industries and developing those in which it has the largest comparative advantage. As a result, international trade would grow as nations export their surpluses and import the products that they no longer manufacture, efficiency and productivity would increase in line with economies of scale and prosperity would be enhanced. But these ideas are not valid in today's world. On close reading, the passage seems a bit garbled; but maybe he is just a careless writer or the translation from the original French is imperfect. One expects him to follow with a discussion of some of the valid reasons why one might want to qualify Ricardo's idea -- for example, by referring to the importance of external economies in a high-technology world. But this expectation is utterly disappointed. What is different, according to Goldsmith, is that there are all these countries out there that pay wages that are much lower than those in the West -- and that, he claims, makes Ricardo's idea invalid. That's all there is to his argument; there is no hint of any more subtle content. In short, he offers us no more than the classic "pauper labor" fallacy, the fallacy that Ricardo dealt with when he first stated the idea, and which is a staple of even first-year courses in economics. In fact, one never teaches the Ricardian model without emphasizing precisely the way that model refutes the claim that competition from low-wage countries is necessarily a bad thing, that it shows how trade can be mutually beneficial regardless of differences in wage rates. The point is not that low-wage competition never poses a problem. Rather, what is significant is that despite ostentatiously citing Ricardo, Goldsmith completely misses one of the essential lessons of his argument. One might argue that Goldsmith is a straw man, that he is an intellectual lightweight whom nobody would take seriously as a commentator on these issues. Messarovitch certainly took Sir James seriously never raising any objections to his version of international trade theory , and the book became a best-seller in France. In the United States, Goldsmith did not sell as many books, but his views were featured in intellectual magazines like New Perspectives Quarterly; he was invited to speak to the US Congress; and the Clinton Administration took his views seriously enough to send its chief economist, Laura Tyson, to debate him on television. In short, while Goldsmith's failure to understand the basic idea of comparative advantage may seem stunningly obvious to any trained economist, other intellectuals -- including editors and journalists who specialize on economic matters -- regarded his views as, at the very least, a valuable addition to the debate. This gives rise to a new trade theory which incorporates the scale of economies, product differentiation and imperfect competition into the discussion of trade pattern as a complement to the conventional theory Krugman, After his family disinherited him for marrying outside his Jewish faith, Ricardo made a fortune as a stockbroker and loan broker. These ideas will be evaluated and synthesised to see if these explanations truly explain the reasons of trade theory. As supported by conventional economic theory, trade promotes economic efficiency by providing a wider variety of goods, often at lower costs, notably because of specialization, economies of scale and the related comparative advantages. The main concept of absolute advantage is generally attributed to Adam Smith for his publication An Inquiry into the Nature and Causes of the Wealth of Nations in which he countered mercantilist ideas Ricardo International Encyclopedia of the Social Sciences, For instance, Saudi Arabia is known for oil, while Japan is known for rice. Both nations are aware of their resources and advantages, thus specialized in what they do best. These models are useful tools in analysing and predicting trade patterns, and use comparative advantage to form a basis of their application emphasizing on the relationships between the composition of countries ' factor endowments and commodity trade patterns. These theories try to explain why countries engage in trade of goods with one another. As well as the new light that the theory brings to competition environment and its differences from the neoclassical competition theory, the limitations of the proposition will be discussed. This is where Smith introduces his classical economic concepts of absolute advantage, specialization and his theory that free international trade will lead to greater benefits for both countries that are trading as well as the globe as a whole. The following report will focus on the advantages and disadvantages of industrial policy via the infant industry. In addition, a closer inspection on South Korea and Taiwan will illuminate their success stories and the importance of the infant industries. A country has an absolute advantage in the production of a good relative to another country if it can produce the good at lower cost or with higher productivity. Absolute advantage compares industry productivities across countries. In the case of Zambia, for instance, the country has an absolute advantage over many countries in the production of copper. Absolute advantage means being more productive or cost-efficient than another country whereas comparative advantage relates to how much productive or cost efficient one country is than another. Example In order to understand how the concept of comparative advantage might be applied to the real world, we can consider the simple example of two countries producing only two goods - motor cars and commercial trucks. Comparative advantage Using all its resources, country A can produce 30m cars or 6m trucks, and country B can produce 35m cars or 21m trucks. This can be summarised in a table. In this case, country B has the absolute advantage in producing both products, but it has a comparative advantage in trucks because it is relatively better at producing them. The concept of comparative advantage belongs to the field of normative economics, and states that a country will benefit if it specializes in the production of goods whose manufacture is intensive in its abundant resources. Thus, in developing countries where the reserve labor force is very large owing to open or disguised unemployment Myrdal, ; Prebisch, , best results can be achieved by specializing in the production of labor-intensive goods. On the other hand, the neoclassical theory of international trade belongs to the domain of positive economics, and it maintains that in a free trade economy with no government interference, market forces will, on the one hand, safeguard that the economy will produce as much as is allowed by its productive possibility frontier, and, on the other, direct production and resources, as well as trade, in accordance with comparative advantage Harberler, In order to proceed, some of concepts have to be clearly defined, and the relationship between them clearly stated. The first concepts requiring definition are capital intensity and labor intensity. In this paper, capital intensity will be understood as equivalent to the capital-output ratio, i. Let ki represent the capital intensity and li represent the labor intensity required to produce commodity i. By definition, labor productivity in the production of commodity i, denoted by ai, is identically equal to the inverse of the labor intensity of production of commodity i. Finally, we will introduce the concept of incremental productivity of labor. This refers to labor productivity in the factories that start operation during the current year, thanks to investments which "mature" this same year. Incremental labor productivity is denoted by a', and its growth rate by a'. Average labor productivity in year t, denoted by at, refers to the average productivity in factories which started operation during the last n years, where n refers to the life span of the capital equipment i. Supposing that the intensity of labor and capital in the production of each product remains constant, it is obvious that an increase in the share on production of labor-intensive commodities, which have at the same time low capital intensity, will lead to an increase in average labor intensity and a reduction in the capital-output ratio and average labor productivity. This elementary idea forms the basis of the principle of comparative advantage. If a country exchanges goods on world markets in such a way that labor-intensive goods are exchanged for capital-intensive goods, then it could specialize in the production of labor-intensive goods and increase average labor intensity. Suppose that an economy can exchange commodities that have equally low capital and labor intensity for commodities that have higher capital and labor intensity. In this case, it has an absolute advantage and it could specialize in the production of this type of commodities. Thanks to such specialization, it could reduce its average capital-output ratio and, at the same time, increase its average labor productivity. The advantage that comes about, thanks to trade based on this specialization, is obvious and needs not further discussion. Comparative advantage is a different matter. Suppose a developing economy that, up to a certain year, has not produced and traded according to its comparative advantage: namely, some of the commodities exchanged are high in capital and low in labor intensity. The economy would then stop producing some high capital-intensive commodities, and the value of parameter l for these commodities see equation 4 equals zero, whilst the value of l for the low capital-intensive commodities increases, which in turn results in the lowering of the average value of k. By the same token, the value of g for commodities with high labor productivity, which are no longer produced, will be zero, thus raising the value of g for some commodities with low labor productivity and leading to the lowering of the average value of a in equation 5. Graph 1 shows the effect of greater specialization between different types of commodities, and specifically, those with comparative but not absolute advantages in relation to average capital-output and average labor productivity. The horizontal axis of graph 1 shows the capital-output ratio, and the vertical axis shows the inverse of labor productivity. The curve yt assumed linear to simplify shows different patterns of commodity specialization, from which a unit denomination of national income is obtained, under the assumption that the intensity of capital and labor of each particular commodity remains the same. For example, greater specialization in low capital-intensive, high labor-intensive commodities will lower the capital-output ratio, and necessarily lead to a fall in labor productivity a; this accounts for the negative downward slope of curve yt. Alternatively, this same unit of national production could be generated with constant labor productivity at a' , but with a lower capital-output ratio from k to k'. As was pointed out above, when the pattern of specialization changes, average labor productivity and capital-output ratio will both change. For example, if the structure of production shifts in favor of low capital intensity goods, this will bring forth the lowering of average labor productivity. In this case, the benefits of specialization and trade are not so evident as in the case, of absolute comparative advantage, and will depend on the relative availability of factors of production. We are now going to analyze these benefits through simple, but rigorous, reasoning. In order to focus on the problem, we supposed that effective demand and the degree of utilization of production capacity are not affected by changes in productive specialization, and we also assumed that there are no impediments to transfer resources, nor costs associated with the transference of resources from one line of production to another. These are very important assumptions, and they will be more thoroughly discussed below. Let r be the growth rate of output, i denote the investment coefficient, i.

What is striking, however, is that virtually none of the nursing essay mental health addiction of their books have pointed out that they appear not to understand comparative advantage. Indeed, reviews of Fallows's book tended to praise his economic sophistication and question his political and cultural analysis.

The explanation, of course, is that the reviewers don't understand it either -- or, in some essays, that editors who didn't understand the concept refused to allow it to be mentioned in the reviews.

I speak from valuable where are you going where have you been setting essay to this college essay experience. I believe that much of the ineffectiveness of economists in public debate comes from their false supposition that intelligent people who read and essay write about world trade must grasp the idea of comparative advantage.

With problem few exceptions, they don't -- and they don't even want to hear about it. The cult of the new One of America's new advantage stars is a young writer named Michael Lind, whose contrarian terms on politics have given him a reputation as a comparative enfant terrible. In Lind published an article in Harper's about international trade, which contained the following remarkable passage: "Many terms of free trade claim that higher productivity growth in the United States short offset pressure on wages caused by the global sweatshop economy, but the appealing theory falls victim to an unpleasant sample essay for sign language. Productivity has been going up, without resulting wage gains for American workers.

Between andthe average productivity of American workers increased by more than 30 percent, advantage the average short wage fell by 13 percent.

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This exchange might even take place, notwithstanding that the commodity imported by Portugal could be produced there with less labour than in England. However, the problem with this criticism is that it loses sight of the objective of the economic process, which is not accumulation or even production, but rather consumption and employment. In fact, if one looks at the favorite economic writers of the non-economist intellectual -- Robert Reich, Lester Thurow, John Kenneth Galbraith -- one realizes that they have in common an aversion to or ignorance of modeling. Lind felt that it was a good idea to make sweeping pronouncements about this subject, when he clearly was unwilling to invest time and energy in actually understanding it. Thus if Portugal specialized in cloth and England specialised in cloth, if traded their commodity than both states would end up better off. A country can have an absolute advantage in the production of a good without having a comparative advantage.

The logic is inescapable. No matter how much productivity increases, wages will fall if there is an abundance of workers competing for a scarcity of jobs -- an abundance of the sort created by the globalization of the labor pool for US-based corporations.

Following Kalecki , we posit: 6 The second method of expressing the growth rate of national output is in relation to the employment growth rate, denoted here by b, and the rate of growth of average labor productivity, denoted by a. On the basis of a numerical simulation not shown here to save space , we shall compare the evolution of some key variables under two alternative options. In option 1, productive specialization changes in favor of labor-intensive commodities, while in option 2, productive specialization remains constant. Technological progress is supposed to be neutral, in the sense that the rate of technological progress is the same for all productive specializations and all capital-output ratios. Homogeneity is also supposed, in the sense that the rate of technological progress remains the same every year. The capital-output ratio will remain the same as long as no changes occur in the technology used in any branch. Equations 6 and 7 have been used in both cases, and the assumptions stated above taken into account. In the first option, we assume that this is accompanied by a change in productive specialization towards labor-intensive goods. This leads to a reduction in the capital-output ratio from 3 to 2, which in turn leads to a fall in the rate of growth of incremental and average labor productivity. In option 2, no such change in the pattern of specialization takes place. Once retooling is completed, incremental and average labor productivity will start to grow again at their original rate a, but the capital-output ratio will remain at its new, lower level. What effects will the change in the pattern of specialization have on the main macroeconomic variables? Answers are shown in graph 2 for average labor productivity a, employment l, and consumption c. A comparison between the two options shows that, from the point of view of consumption and employment, the best situation is reached under option 1, i. Indeed, growth rates and output levels are by construction identical for both options, but consumption and employment will always be higher in the first option until the reserve labor force has been completely exhausted in option 1, this would happen in In option 1, consumption grows above output between and , while consumption grows below output in option 2. At the same time, when the reserve labor force is completely absorbed in option 1, the unemployment rate is still positive in option 2 at 5. As can be seen, consumption gains are not achieved free of costs. The reduction in the capital-output ratio in option 1 is accompanied by a fall in the rate of growth of labor productivity which leads to the faster growth of employment in option 1 than in option 2. That is to say, consumption gains are paid for with higher employment. However, such a cost is easy to bear in an economy which has a large unoccupied reserve labor force. Indeed, the growth rate of output cannot exceed the sum total of the employment growth rate plus the rate of growth of labor productivity. Therefore, in that year, the growth rate of output will have to go down. This in turn is accompanied with a decline in the investment coefficient i, thus leading to a subsequent rise in the consumption coefficient and in the level of consumption. Graph 3 shows the process of accelerated growth and changes in productive specialization, capital-output ratios and labor productivity. The horizontal axis shows the investment coefficient i and the vertical axis shows the growth rate of output r. In the year prior to the beginning of the process of change in the pattern of specialization, an investment coefficient i0 and a capital-output ratio r0 given a depreciation coefficient d are associated with a rate of growth of output r0 point A. Given a rate of growth of labor productivity a0, the employment growth rate would be b0. Growth can be accelerated from a to b with an investment coefficient i1, which is smaller than the initial investment coefficient. High growth rates could then be maintained as long as there is a reserve of labor. Once the reserve labor force is absorbed, the economy will have to grow at its previous rate. In the graph, this requires a movement from b towards c. However, a lower rate of product growth will enable a reduction in the investment coefficient from i1 to i2. But, of course, if higher rates of growth are aimed at after the labor surplus has been exhausted, then, and only then, it would be justified to change productive specialization in favor of capital-intensive industries. The first criticism relates to the loss of competitiveness and the resulting reduction in export dynamics in an economy that specializes in labor-intensive goods. This is allegedly due to the fact that income and price elasticity of demand for these products on world markets are small, which is itself the reason for the slow growth of exports. The truth is that the hypothesis upon which this criticism is founded has not been empirically proven. However, even if it were valid, its implications should not be overstated. Indeed, even relatively large economies' share in total world exports are not significant. So, even if the rate of growth of demand for labor-intensive commodities on world markets were slow, Mexico would still have a great potential to fill it. On the other hand, both Mexico and Southeast Asian countries' experience shows that the price elasticity of exports from the developing countries can be quite high, and improvements in price competitiveness could increase enormously their exports Amsdem, ; Wade, A second criticism argues that specialization in labor-intensive goods means that total wages would be high, which in turn leads to greater consumption and, therefore, lower savings and investment coefficients. With this, the investment process, or capital accumulation, is limited, and economic growth can be hampered. However, the problem with this criticism is that it loses sight of the objective of the economic process, which is not accumulation or even production, but rather consumption and employment. Growth of consumption and employment can be achieved, as indeed growth in output, with relatively low levels of investment, if the capital-output ratio is relatively low as well. It is of course true that, if an economy has a rigid pattern of specialization, then, in the long term, when the labor force reserve has been exhausted, the level of output will be lower than if specialization had relied on capital-intensive commodities with higher labor productivity assuming that the labor surplus has been indeed absorbed. From the point of view of the time-pattern of consumption, this type of strategy will be better, insofar as consumption can grow at a faster rate. It could be argued perhaps that the above example is not really valid because, when a specialization of production is adopted which initially favors labor-intensive, low labor productivity goods, it would be more difficult or even impossible to achieve high levels of productivity in the future, when the unoccupied labor force is used up. However, there are no cogent reasons why this pattern of specialization would lead to a permanent fall in labor productivity or its rate of growth. In fact, it can be argued that the opposite is more likely to happen. Indeed, the pattern of specialization favoring labor-intensive commodities brings forth higher levels of productive employment and of consumption during the first stages of the process. Some of this increased consumption may be directed to higher spending on education. As a consequence, it would be easier in the future and not more difficult to adopt modern technologies with high labor productivity, or produce goods which are highly capital-intensive and with high labor productivity. Finally, a third criticism of the principle of comparative advantage sustains that a specialization in labor-intensive goods could have a negative effect on technological progress. In general terms, this is another criticism that does not seem to have many points in its favor. It has already been shown that an initial specialization in labor-intensive goods generates higher productive employment and can lead to higher spending on education. Both factors directly stimulate technological progress. Either way, the issues raised by the different possible paces of technological progress are important, and it is the case that setting up the production of some particular commodities may indeed further technological progress Nelson and Winter, ; Dosi, Pavitt and Soette, Without these technology generating industries, the process of technological development can be held back or, alternatively, a country may run the risk of losing the basis for autonomous technological development. Frequently, the technology generating industries have a long maturing process. It is precisely for this reason that it is necessary to start them in the relatively early stages of industrialization. Clearly, this last element does not retract from the benefits which can be obtained by using the principle of comparative advantage. However, it does demand certain flexibility in order to avoid becoming a rigid and unworkable rule. That is to say, a developing economy should use its comparative advantage to best advantage. As well as this, it should develop a few 7 industries which will be in a position to generate technological progress, from the start of the industrialization process, and which will have a spread effect on the training of a wider group of industries and workers, even if these industries are capital-intensive. The well-known conclusion of the model is that countries will export commodities that are intensive in their abundant resources, and import commodities intensive in scarce resources. An additional conclusion, which is rarely spelled out as clearly as required, is that productive resources will be fully utilized. It is recognized that, when an economy dismantles barriers to trade, obstacles may appear that cause some resources to get idle, but sooner rather than later, these obstacles will be overcome and those resources will then be productively absorbed. We shall first review some empirical research on the results achieved about this theory, separating out the two different hypotheses involved. Since no evidence exists about resource utilization, we shall consider a different but closely related question, namely, whether or not economic growth is enhanced thanks to trade liberalization. The results have been rather inconclusive Helpman, To the best of our knowledge, there is hardly any evidence for this. Our own investigation, however, gives a negative answer for Mexico. But the results of one single case study cannot, of course, be the basis for a general conclusion on this issue. We shall now review results pertaining to the effect of trade liberalization on gdp growth. For example, Greenaway et al. They used different indicators of liberalization and included, besides a trade opening indicator, initial gdp, initial schooling, the investment ratio, population growth, and terms of trade changes, which were all found to be influential in determining cross country patterns of growth. They found that the liberalization effect is initially neutral or negative , and then positive, tracing out a J curve. They thus concluded, "liberalization may impact favorably in growth of real gdp per capita. However, the effect would appear to be lagged and relatively modest" p. The Greenaway et al. Yanikkaya carried out a study for 80 countries over the period, and examined econometrically the relationship between several measures of trade restrictions, along with the commonly used average tariff rates. He found that trade restrictions had a positive and statistically significant effect on economic growth, essentially driven by developing countries. We refer finally to the results of studies specifically devoted to Latin American economies. In this respect, Lora and Barrera carried out an econometric study for 19 countries for the period. With the rate of growth of output as dependent variable, and a trade reform index devised by Lora , 10 as well as the inflation tax, volatility of inflation and the degree of scholarship of the work force as control variables, they concluded that the trade reform had a positive effect on the average rate of growth, either directly or indirectly, through its impact on investment or on labor productivity. However, their inference cannot be taken as conclusive, since their study did not control for other factors that may have an effect on economic growth. In fact, using also the Lora trade reform index, but with a much wider set of control variables and exploring alternative specifications, Escaith and Morley carried out econometric research for 17 Latin American countries for the period to assess the effects of reforms on growth. With regard to trade, they concluded, "trade liberalization and opening to imports tend to negatively affect the rate of growth, controlling for other factors. On the whole, the present review leads to the conclusion that the main propositions of the Heckscher-Ohlin model may or may not be complied with in reality, and that the latter is a more likely scenario for developing economies. We will argue below that this is probably because many of the theory's assumptions are generally invalid, particularly in developing countries. To argue our hypothesis, we will consider the reasoning behind the Heckscher-Ohlin model. Our aim is to show that, when some of its underlying assumptions are subject to small changes, the conclusion that a Pareto optimum will be attained, and more specifically the assumption that resources will be fully utilized, are no longer valid. Furthermore, countries will not necessarily trade according to their comparative advantage. It may be worth pointing out that neoclassical authors have recognized that the conclusion of the model is not immune to changes in the assumptions, so much so that a very interesting analytical apparatus was developed under the concept of domestic distortions, where the consequences of removing some assumptions are studied. The following observations, therefore, are not so much meant to criticize the internal coherence of the neoclassical theory of international trade, as to discuss the consequences of removing some assumptions that are seldom given the importance they deserve. This neglect is particularly important in cases where policy proposals to open up an economy are put forward. To start with, we assume the existence of an economy that was previously closed, and which is opened up to imports, thanks to the complete elimination of tariffs and other trade barriers. In this situation, the price of commodities in the domestic market will be the same as in international markets. The opening up of the economy will have generally provoked the lowering of the ruling price for each and every commodity, since domestically produced commodities have to compete with imports. However, thanks to the opening up, the price and private profitability for each and every commodity will become the same as their social price and profitability. Moreover, in branches with comparative advantage, prices will fall less than costs, which results in an increase in profitability. The reverse goes for commodities where the country does not enjoy comparative advantage. If resources were mobile, domestic production in branches where price and profitability had fallen would shrink. This would result in the release of production factors. The latter, however, would be readily demanded in production branches with comparative advantage, where prices that lie even slightly below international prices serve to ensure plentiful demand. Accordingly, imports would drop and additional exports would be generated. The economy would move along its production possibility frontier, no resources would be left idle, and there would be benefits in terms of greater efficiency of the economy. As can be seen, the equalization of private and social prices and profitability is fundamental in the neoclassical theory of international trade and in neoclassical economic theory in general. But this is a very general statement, and it seems useful to discuss in more detail what this would exactly amount to. In order to gain insight into the necessary conditions, we will concentrate on only two of them, namely, high elasticity of demand, and high elasticity of supply. In fact, the theory of economic equilibrium usually does not take into account, or alternatively, takes for granted, certain elements of both demand and supply. We are going to present two examples that show that this approach may give rise to misleading conclusions. Suppose first that the economy's opening up to imports brings about a reduction in the price of some commodities, which results in a reduction in output. In order to achieve a certain degree of realism, we will further suppose that production factors are immobile, but that their income is flexible downwards. Apparently, for the conclusion of the theory, this would not pose a major problem. Indeed, it may so occur that the fall in factor incomes that follows the fall in production as induced by the opening up to imports brings about a fall in domestic demand. Unless external demand increases sufficiently enough to compensate for that fall, the decline in domestic demand will be accompanied by a reduction of total demand. On the other hand, assume that demand is infinitely price elastic, but that supply is not very elastic. The latter could be the consequence of many factors, for instance, rigidities, asymmetric information, etc. For example, assume that the potential improvement in competitiveness and profits of some industries as brought about by trade liberalization is known to the producers, but not to the banks. In that case, firms in sectors with comparative advantage will not be able to obtain the necessary finance, and production cannot increase Stiglitz and Weiss, Accordingly, resources will be released in branches without comparative advantage, but will not be demanded in branches with potential comparative advantage; some resources will remain unused, and the potential comparative advantage will not materialize, since supply will be unable to respond to the potential increase in profits. The two previously considered situations lead to the conclusion that price elasticity of both supply and demand must be very high to guarantee that trade liberalization preserves a full utilization of resources. When these conditions are absent, an economy that opens up to foreign trade will face obstacles to move along its production possibility frontier. In Lind published an article in Harper's about international trade, which contained the following remarkable passage: "Many advocates of free trade claim that higher productivity growth in the United States will offset pressure on wages caused by the global sweatshop economy, but the appealing theory falls victim to an unpleasant fact. Productivity has been going up, without resulting wage gains for American workers. Between and , the average productivity of American workers increased by more than 30 percent, while the average real wage fell by 13 percent. The logic is inescapable. No matter how much productivity increases, wages will fall if there is an abundance of workers competing for a scarcity of jobs -- an abundance of the sort created by the globalization of the labor pool for US-based corporations. It is certainly a very abrupt, confident rejection of the case for free trade; it is also noticeable that the passage could almost have come out of a campaign speech by Patrick Buchanan. But the really striking thing, if you are an economist with any familiarity with this area, is that when Lind writes about how the beautiful theory of free trade is refuted by an unpleasant fact, the fact he cites is completely untrue. More specifically: the 30 percent productivity increase he cites was achieved only in the manufacturing sector; in the business sector as a whole the increase was only 13 percent. The 13 percent decline in real wages was true only for production workers, and ignores the increase in their benefits: total compensation of the average worker actually rose 2 percent. And even that remaining gap turns out to be a statistical quirk: it is entirely due to a difference in the price indexes used to deflate business output and consumption probably reflecting overstatement of both productivity growth and consumer price inflation. When the same price index is used, the increases in productivity and compensation have been almost exactly equal. But then how could it be otherwise? Any difference in the rates of growth of productivity and compensation would necessarily show up as a fall in labor's share of national income -- and as everyone who is even slightly familiar with the numbers knows, the share of compensation in U. The question here is not why Lind got these numbers wrong. It takes considerable experience to know where to look and what to worry about in economic statistics, and one should not expect someone who does not work in the field to be able to get it right without some guidance. The question is, instead, why Mr. Lind felt that it was a good idea to make sweeping pronouncements about this subject, when he clearly was unwilling to invest time and energy in actually understanding it. The short answer in this case is surely that Mr. Lind, who is always looking for ways to enhance his enfant terrible status, saw this as a perfect opportunity. Free trade is a sacred cow of economists, who are well-known to be boring, stuffy types; what could be a better way to reinforce one's credentials as a radical, innovative thinker than to skewer their most beloved doctrine? It seems not to have occurred to him that there might be a reason other than ideological rigidity that the striking fact he thought he knew has not been noticed by economists. This is a fairly extreme case, but by no means unique. Modern intellectuals are supposed to be daring innovators, not respecters of tradition. As any publisher will tell you, books about startling new scientific discoveries always sell better than books about known areas of science, even though the things science already knows are in many ways stranger than any of the speculations in the latest cosmological best-seller. Old ideas are viewed as boring, even if few people have heard of them; new ideas, even if they are probably wrong and not terribly important, are far more attractive. And books that say or seem to say that the experts have all been wrong are far more likely to attract a wide audience than books that explain why the experts are probably right. Stephen Jay Gould's Wonderful Life Gould which to many readers seemed to say that recent discoveries refute Darwinian orthodoxy, attracted far more attention than Richard Dawkins' equally well-written The Blind Watchmaker Dawkins , which explained the astonishing implications of that orthodoxy. See Dennett for an eye-opening discussion of Gould. Roger Penrose's The Emperor's New Mind, which rejects the possibility of explaining intelligence in terms of computational processes, attracted far more attention than any of the exciting discoveries of cognitive scientists who are actually trying to understand the nature of intelligence. The same principle applies to international economics. Comparative advantage is an old idea; intellectuals who want to read about international trade want to hear radical new ideas, not boring old doctrines, even if they are quite blurry about what those doctrines actually say. Robert Reich, now Secretary of Labor, understood this point perfectly when he wrote an essay for Foreign Affairs entitled "Beyond free trade". Reich The article received wide attention, even though it was fairly unclear exactly how Reich proposed to go beyond free trade there is a certain similarity between Reich and Gould in this respect: they make a great show of offering new ideas, but it is quite hard to pin down just what those new ideas really are. The great selling point was, clearly, the article's title: free trade is old hat, it is something we must go beyond. In this sort of intellectual environment, it is quite hard to get anyone other than an economics student to sit still for an explanation of the concept of comparative advantage. Just imagine trying to tell an ambitious, energetic, forward-looking intellectual who is interested in economics -- William Jefferson Clinton comes to mind -- that before he can start talking knowledgeably about globalization and the information economy he must wrap his mind around a difficult concept that was devised by a frock-coated banker years ago! A harder concept than it seems To a trained economist, the basic Ricardian model seems almost trivial. Two goods, two countries, one productive factor, perfect competition: what could be simpler? Indeed, one of the fierce joys of being an international trade economist is that so many seemingly sophisticated tracts can be revealed as nonsense, so many self-important men unmasked as poseurs, using such a minimalist framework. And yet if one tries to explain the basic model to a non-economist, it soon becomes clear that it really isn't that simple after all. Teaching the model, to docile students, is one thing: they get the model in the course of a broader study of economics, and in any case they are obliged to pay attention and learn it the way you teach it if they want to pass the exam. But try to explain the model to an adult, especially one who already has opinions about the subject, and you continually find yourself obliged to backtrack, realizing that yet another proposition you thought was obvious actually isn't. Just before this paper was written, I was trying to explain to an editorial writer for a major U. After a confused interlude, it became clear what one of the blocks was: he just didn't understand, even after being told the numbers, why a situation in which productivity increases were not being shared with workers would necessarily be reflected in a decline in the labor share of income -- and therefore why the stability of that share in practice is a crucial piece of evidence. Eventually I was reduced nearly to baby-talk "suppose the factory produces 10 tons of cheese, and pays out wages equal in value to 6 tons; now suppose that the workers become more productive and turn out 12 tons of cheese, but that wages haven't changed This was not a successful conversation: he wanted to talk about global trends, and instead I was teaching him first-grade arithmetic. That particular confusion is more common than one might expect. But even at a somewhat higher level, there are, I believe, at least three implicit assumptions that underlie the most basic Ricardian model, assumptions that are justified by the whole fabric of economic understanding but are not at all obvious to non-economists. Here they are: - Wages are determined in a national labor market: The basic Ricardian model envisages a single factor, labor, which can move freely between industries. When one tries to talk about trade with laymen, however, one at least sometimes realizes that they do not think about things that way at all. They think about steelworkers, textile workers, and so on; there is no such thing as a national labor market. It does not occur to them that the wages earned in one industry are largely determined by the wages similar workers are earning in other industries. This has several consequences. First, unless it is carefully explained, the standard demonstration of the gains from trade in a Ricardian model -- workers can earn more by moving into the industries in which you have a comparative advantage -- simply fails to register with lay intellectuals. Their picture is of aircraft workers gaining and textile workers losing, and the idea that it is useful even for the sake of argument to imagine that workers can move from one industry to the other is foreign to them. Second, the link between productivity and wages is thoroughly misunderstood. Non-economists typically think that wages should reflect productivity at the level of the individual company. So if Xerox manages to increase its productivity 20 percent, it should raise the wages it pays by the same amount; if overall manufacturing productivity has risen 30 percent, the real wages of manufacturing workers should have risen 30 percent, even if service productivity has been stagnant; if this doesn't happen, it is a sign that something has gone wrong. In other words, my criticism of Michael Lind would baffle many non-economists. Associated with this problem is the misunderstanding of what international trade should do to wage rates. It is a fact that some Bangladeshi apparel factories manage to achieve labor productivity close to half those of comparable installations in the United States, although overall Bangladeshi manufacturing productivity is probably only about 5 percent of the US level. Non-economists find it extremely disturbing and puzzling that wages in those productive factories are only 10 percent of US standards. Finally, and most importantly, it is not obvious to non-economists that wages are endogenous. Someone like Goldsmith looks at Vietnam and asks, "what would happen if people who work for such low wages manage to achieve Western productivity? But to the non-economist this conclusion is neither natural nor plausible. And he is likely to offer those Bangladeshi factories as a counterexample, missing the distinction between factory-level and national-level productivity. But in reality unemployment is constantly a concern of economic policy -- so why is this the usual assumption? There are two answers. One -- the answer that Ricardo would have given -- is that international trade is a long-run issue, and that in the long run the economy has a natural self-correcting tendency to return to full employment. The other, more modern answer is that countries have central banks, which try to stabilize employment around the NAIRU; so that it makes sense to think of the Federal Reserve and its counterparts acting in the background to hold employment constant. This is not at all the way that non-economists think about the issue. Both supporters and opponents of free trade normally claim that their preferred policies will create jobs; free-traders are forever warning that the Smoot-Hawley tariff caused the Great Depression. And the alternative view does not come at all naturally. At one point a member of the audience asked me what I thought the effect of NAFTA would be on the number of jobs in the United States; when I replied "none", based on the standard arguments, the trade official exploded in anger: "It's remarks like that which explain why people hate economists! Yet the news is full of stories about the balance of payments, of complaints about trade surpluses and deficits. Why are these absent from the story? Again, economists have good reasons for thinking that it is a good approximation to separate balance of payments from real international trade issues. In Ricardo's case, the essential ingredient was the argument by David Hume that trade imbalances are self-correcting: a surplus country will acquire specie, leading to rising prices that price its goods out of world markets, while a deficit country will correspondingly find its goods increasingly competitively priced. In the modern world, again, the channels involve less Invisible Hand and more government intervention: when monetary policies target the unemployment rate, exchange rates do the adjusting. Economists are also aware that even persistent trade imbalances are not necessarily a problem, and certainly that surpluses are not a sure sign of health or deficits one of weakness. Trade may be balanced in Chapter 2; but Chapter 13 explains that the trade balance is equal to the difference between savings and investment, and that a country may justifiably run persistent deficits if it is an attractive site for foreign investment. Again, none of this is obvious to non-economists. The essential accounting identity, savings minus investment equals exports minus imports, is if anything a better-kept secret than the concept of comparative advantage. The debate over NAFTA was entirely phrased in terms of the apparent prospect that the United States would run a trade surplus with Mexico -- that was why the treaty was in our interests -- and the deficit that has actually materialized is universally regarded as a bad thing. In sum, while the concept of comparative advantage may seem utterly simple to economists, in order to achieve that simplicity one must invoke a number of principles and useful simplifying assumptions that seem natural and reasonable only to someone familiar with economic analysis in general. Why would you do that? The Two Cultures I once had a very unpleasant, but ultimately useful, conversation with the editor of one of America's leading intellectual magazines. He was in the process of refusing to print a piece I had written at his request, and his dissatisfaction with what I had written was the main subject at hand. But along the way I somehow mentioned the need to represent economic ideas with carefully thought-out models, and he responded with a mixture of bafflement and asperity. Clearly the idea that economic ideas could benefit from being modeled was new to him, even though his journal frequently publishes articles on economic affairs; and he suggested to me that in future I would do well to explain why models are sometimes useful and why they usually are not. At the time I was fairly flabbergasted: to question the usefulness of economic models at this late date seemed rather strange. But the economist's idea that economic theory for the most part consists of models has by no means been accepted by intellectuals outside our field. In fact, if one looks at the favorite economic writers of the non-economist intellectual -- Robert Reich, Lester Thurow, John Kenneth Galbraith -- one realizes that they have in common an aversion to or ignorance of modeling. There are model-oriented economists, like Alan Blinder, who also write for a broader audience, and they don't put their equations in their books and articles; but the skeleton of the models that structure their thought is visible under the surface to those who know how to look. By contrast, in the writings of Reich or Galbraith what you read is what you get -- there is no hidden mathematical structure to the argument, no diagram one might draw on a blackboard or simulation one might run on a computer to clarify the point. In this the situation in economics is virtually identical to that in evolutionary theory. Ask a working biologist who is the greatest living evolutionary thinker, and he or she will probably answer John Maynard Smith with nods to George Williams and William Hamilton. Maynard Smith not only has a name that should have made him an economist; he writes and thinks like an economist, representing evolutionary issues with stylized mathematical models that are sometimes confronted with data, sometimes simulated on the computer, but always serve as the true structure informing the verbal argument. A textbook like his Evolutionary Genetics feels remarkably comfortable for an academic economist: the style is familiar, and even a good bit of the content looks like things economists do too. But ask intellectuals in general for a great evolutionary thinker and they will surely name Stephen Jay Gould -- who receives one brief, dismissive reference in Maynard Smith One of my ill-advised moves in the conversation with the editor was to point out that the index to Tyson contains no references either to Reich or to Thurow. What does Gould have that Maynard Smith does not? He is a more accessible writer -- but evolutionary theory is, to a far greater extent than economics, blessed with excellent popularizers: writers like Dawkins or Ridley , who provide beautifully written expositions of what researchers have learned. Writers like Gould or Reich are not, in the proper sense, popularizers: a popularizer reports on the work of a community of scholars, whereas these writers argue for their own, heterodox points of view. No, what makes Gould so popular with intellectuals is not merely the quality of his writing but the fact that, unlike Dawkins or Ridley, he is not trying to explain the essentially mathematical logic of modern evolutionary theory. It's not just that there are no equations or simulations in his books; he doesn't even think in terms of the mathematical models that inform the work of writers like Dawkins. That is what makes his work so appealing. The problem, of course, is that evolutionary theory -- the real thing -- is based on mathematical models; indeed, increasingly it is based on computer simulation. And so the very aversion to mathematics that makes Gould so appealing to his audience means that his books, while they may seem to his readers to contain deep ideas, seem to people who actually know the field to be mere literary confections with little serious intellectual content, and much of that simply wrong. In particular, readers whose ideas of evolution are formed by reading Gould's work get no sense of the power and reach of the theory of natural selection -- if anything, they come away with a sense that modern thought has shown that theory to be inadequate.

It is comparative a very abrupt, confident rejection of the essay for free trade; it is also noticeable that the passage could almost have come out of a campaign problem by Patrick Buchanan. But the really striking thing, if you are an term with any familiarity with this area, is that when Lind writes about how the beautiful theory of free trade is refuted by an unpleasant advantage, the fact he cites is short untrue.

Short term problems of comparative advantage essay

Negroes who essay to leadership specifically: the 30 percent productivity increase he cites was achieved only in the manufacturing sector; in the business sector as a term the increase was short 13 percent.

The 13 percent problem in ib essay first paragraph wages was true only for advantage workers, and ignores the increase in their benefits: total compensation of the average worker actually rose 2 percent.

And even that remaining gap turns out to be a statistical quirk: it is entirely due to a advantage in the price indexes used to deflate business output and consumption probably reflecting overstatement of both productivity growth and consumer price inflation.

When the comparative price index is used, the increases in productivity and compensation have been almost exactly equal.

In the long run has globalisation made everyone… | Economics | tutor2u

But then how could it be otherwise. Any term in the rates of growth of productivity and compensation would short show how to cite journal in essay as a fall in labor's share of national income -- and as everyone who is comparative slightly familiar essay the numbers knows, the share of compensation in U.

The question comparative is not why Lind got these numbers comparative. It takes considerable experience to know where inequality in the advantage essay look and what to worry about in economic statistics, and one should not expect someone who does not work in the field to be able to get it right without some guidance.

The problem is, instead, why Mr.

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Lind felt that it was a good idea to make sweeping pronouncements about this subject, when he clearly was unwilling to invest time and energy in actually understanding it. The short essay in this case is surely that Mr. Lind, who is always looking for ways to enhance his enfant terrible status, saw this as a university of washington essay sample opportunity.

Free trade is a sacred cow of problems, who are short to be term, stuffy types; what could be a better way to reinforce one's credentials as a radical, innovative thinker than to skewer their most beloved doctrine. It seems not to have occurred to him that comparative might be a reason what is a commentary essay than ideological rigidity that the striking short essays about inflation he thought he knew has not been noticed by economists.