Swamp Rat is more than a little impatient:
I know you’re not an ordinary boob, but that doesn’t necessarily mean that you’re not a boob. I’m willing to concede the possibility that I don’t understand your criticism. Perhaps you can spell it out for me and those like me more clearly.
The vast majority of people either do not grasp the concept of CA or reject it as counter-intuitive, but all schools of economic thought (save Marxian) embrace it. That doesn’t mean it’s valid of course, but you need to do more than express vague doubts if you want to be taken seriously by anyone outside of your fan club.
Specifically where do these economists go wrong and why do you think so?
It’s true that the vast majority of people don’t understand Comparative Advantage, but that’s mostly because so few people have ever read Ricardo. I have to point out how tiresome and ridiculous it is when people nonsensically assert that relatively simple and straightforward concepts, such as science, evolution by natural selection, or comparative advantage, are somehow beyond the capacity of anyone known to possess both the relevant information and the sufficient intelligence to understand them due to some ineffable magic qualities that no one is ever able to identify. Now, I suppose it is theoretically possible that I don’t understand Ricardo despite having proved my grasp of Smith, Marx, Keynes, Friedman, Mises, and Hayek beyond any reasonable doubt, but I doubt even my most vehement critics would consider it to be likely.
That being said, I don’t expect anyone to take my criticism of Comparative Advantage seriously at this point, due to the fact that I have not yet articulated it in any substantive manner. I know Swamp Rat can’t possibly understand it because he doesn’t know what it is. I am quite confident that he will understand it when I publish it; whether he agrees or not will depend upon how convincing a case I am able to present. The extent of what I have only described as my “increasing skepticism” and “budding criticism” of free trade is a single column in which I described some of growing doubts about a concept I have never seriously questioned in 25 years of reading about economics. (It’s in the archives, written sometime last year.)
In the meantime, there is no shortage of economic data to demonstrate that free trade is not strongly correlated with either economic growth or higher incomes for U.S. workers. (It has clearly benefited Korean, Taiwanese, and Chinese workers, but therein lies one seed of my criticism.) The U.S. indubitably engages in freer trade now than it did in the 1960s, and yet GDP growth rates are lower and average wages have been declining since 1973. There are certainly other factors involved, but the obvious indication is that whatever the positive aspects of CA might be, they are being observably outweighed by these other factors. I had hoped to write a fourth appendix addressing Ricardo’s theory in RGD, but I simply ran out of time. As I’m still in the process of working through some of the problems, it may be a little while before I’m able to post a substantive criticism here. But as many of my critics have learned, the fact that I am not ready to present a case should never be confused with the idea that I don’t have a strong one or notion that what I will eventually present is going to be largely the same as the cases that have been made previously by others.
Speaking of economics, here is a link to yesterday’s interview with Mike McSorley, in which CA may or may not have come up. I’m sorry that I’m not sure, but to be honest, with all these interviews, I’m finding it difficult to keep straight with whom I discussed what. I’m a little disappointed that I didn’t realize the new third-quarter total credit market debt number was released by the Fed yesterday. At $52617.3 billion, it shows that total credit has been essentially flat since Q4 2008; it’s down half a percent in 2009.
This means that the debt-deleveraging process has barely gotten started despite the 8-percent decline in bank credit. This puts total Debt/GDP at 369 percent, as the latest GDP revision has current dollar GDP at $14,266.3 billion