'Comparative Advantage' Explained

David Friedman explains Comparative Advantage

Gentle Reader may recall that the notoriously dishonest 'Vox Day' likes to assert that 'comparative advantage' is a false theory (*), and that ergo 'free trade' is disadvantageous to one partner in the trade, namely the wealthier one (i.e. *us*), and that ergo, 'free trade' makes us less wealthy as a nation and as individuals, and that ergo protectionism -- that is, using the threat of government force and violence to compel most of us to subsidize a few of us (**) -- will make us wealthier as a nation and as individuals.

One of the things I wish Gentle Reader to notice about the above "logic" is the conflation, in tried-and-true leftist fashion, between the individual and the collective. This deliberate conflation is why I say that 'Vox Day' is a leftist, for all his claiming that his so-called "alt-right" is the *real* right. Given the direction of appeal to your passions, he is more a fascist than a communist; but fascism is just as much socialism and just as much "of the left" as communism is.

As I have explained before --

* If I buy a bottle of wine from my neighbor across the street, the conducted trade is between two actual individual human beings; surely even those who have never given such matters any thought can see that;

* If, however, I buy a bottle of wine from a producer in California, does the true situation change? Is the trade still between two actual individual human beings (albeit with some number of middle-men in between us for marketing and transport and so forth)? Or, has the trade somehow been elevated to some collective level, such that the trade is now actually between the State of Ohio and the State of California? Surely even those who have never given such matters any thought can see that nothing fundamental has changed about the trade itself, it is *still* one individual trading his money for another individual's goods; the difference is that now two (or more) government entities have become aware of the trade between the two individuals and consequently desire to tax it;

* But, suppose I decide instead to buy a bottle of wine from a producer in France. Has the true situation changed? Is the trade still between two actual individual human beings (albeit with some number of middle-men in between us for marketing and transport and so forth)? Or, has the trade somehow been elevated to some collective level, such that the trade is now actually between the United States of America and the Republic of France? Surely even those who have never given such matters any thought can see that nothing fundamental has changed about the trade itself, it is *still* one individual trading his money for another individual's goods; the difference is that now two (or more) government entities have become aware of the trade between the two individuals and consequently desire to tax it;

* ERGO: 'free trade' between nation-states is no more disadvantageous to anyone with a legitimate interest in the matter than 'free trade' between you and the guy across the street is. Whom 'free trade' is disadvantageous to are those individuals who are unwilling to offer to you some good or service you desire to buy at a price that you would freely choose to pay had you less expensive alternatives available. Thus, *those* individuals tend to demand 'protectionism'; that is, they demand that the state use the thread of force and violence-unto-death to prevent you from freely trading with the fellow who *is* unwilling to offer to you the good or service you desire to buy at a price that you would freely choose to pay given the available alternatives.

'Protectionism' is not about protecting *you*, and it will never "Make America Great Again". 'Protectionism' is about protecting the income-stream of the organized and politically connected few at the expense of the unorganized many. And *you* are in "the many", always.



(*) He asserts that 'comparative advantage' has been logically and empirically shown to be contrary-to-reality ... apparently, some guy somewhere waved his arms, and Presto! So, Gentle Reader, if you are unsure of what the concept 'comparative advantage' signifies, please do read Mr Friedman's discussion and illustrations of it.

(**) How did that very same reasoning work out for "green energy" and "ObamaCare"?

=========
On a related side note --

Given (as shown above) that governments do not engage in trade, but rather that individuals do, the "trade deficit" is a boogeyman.

If Americans collectively buy more goods and services from Frenchmen than Frenchmen buy from Americans, that fact itself does not harm the United States of America. If this state of affairs persists for a hundred years, it still does not harm the United States of America. If, after the one hundred years, certain Americans are so indebted to certain Frenchmen that they can no longer find lenders willing to lend them even more money to continue in the lifestyle to which they have grown accustomed, that still does not harm the United States of America.

What *will* harm the United States of America is if the living-beyond-their-means of some individual Americans -- no matter if those persons *never* buy foreign goods -- is subsidized by the government of the United States of America taking on debt so as to give them the money to continue to live beyond their means.

And that is the situation in which we find ourselves.

=========
On a second and very related side note --

Another conflation that the notoriously dishonest 'Vox Day' likes to assert in his quest to convince you to agree to economically hobble yourself ... and to do it to me via threat of government violence-unto death ... is between an actual human being and the labor of that human being. This is what he is doing when he joins (some) libertarians and "liberals" (i.e. the "progressive" dupes of the leftists) in asserting that the logic of 'free trade' entails a commitment to 'open borders' ... and thus to the destruction of one's very nation via demographic and cultural replacement.

Let us consider this:

If I buy a bottle of wine, I am not buying *only* fermented grape juice. Hell! I could ferment some grape juice, but it would not be wine (*), and I would not risk my health to consume it. No, if I buy a bottle of wine, I am also (and I would say *primarily*) buying the knowledge and labor of the producer.

So, whether I buy that bottle of wine from a Californian or from a Frenchman, I am also buying the knowledge and labor of that person; but I am not buying the person himself.

What the notoriously dishonest 'Vox Day' is asserting with his dishonest conflation of the labor for the laborer is that IF you allow me to import the labor of a Frenchman, THEN you must also allow me to import the Frenchman himself.

That, as the saying goes, does not follow. ERGO, the conflation if 'free trade' with 'open borders' is a lie.


(*) My parents used to buy and can produce, including grapes. Now and again, a jar didn't seal properly, and we'd end up with a jar of fermented grapes.