"F. George McDuffee" wrote in message
...
On Wed, 12 Mar 2008 13:48:40 -0400, "Ed Huntress"
wrote:

No, by "works" I mean that trade actually is done the way Ricardo's theory
of comparative advantage says it should be done. I've never heard of one,
and I've asked some economists about it over the years. They never gave me
a
convincing answer.

--
Ed Huntress
===========
The main reason is because there are no such examples/answers.

A few of the reasons that the theory doesn't work a

#1 -- countries don't trade, people and companies do. In many
cases the people/companies doing the trading are not "citizens"
of the country, and the "profits" are exported.

#2 -- All the text-book examples involve bilateral trade. As
soon as you have 3 or more trading partners, the problem becomes
indeterminate from a math standpoint, like a 3 body gravitational
problem.

#3 -- all the examples use counter-trade, i.e. goods for goods.
In the real world this is miniscule, and as soon as money is
introduced [as opposed to gold which is another commodity]
exchange rates, etc. come into play, totally obscuring the
dynamics.

#4 -- There are many other considerations besides "trade," from a
"national preservation" perspective, for example having a secure
food supply. The UK came within a hair's breadth of defeat in
both world wars because they ignored this basic requirement.

#5 -- It is increasingly apparent that Ricardo was a propagandist
for the UK during the Napoleonic wars. Because Napoleon was
imposing an early version of the EEC to promote trade and
industry within French Europe [the Continental system], the UK
naturally was all for free trade. If Napoleon had been for free
trade, I am sure Ricardo (or another flak) would have touted
"Imperial Preference" or some such. What is not clear is if
Ricardo actually believed his thesis, and was picked because this
was what the establishment wanted to hear, or if he determined
what the establishment wanted to hear, and wrote accordingly.
(Sound familiar?)
http://en.wikipedia.org/wiki/Continental_System
http://oll.libertyfund.org/?option=c...html&Itemid=27
Note that the country that Ricardo used as an example [Portugal
to export wine and import wool] is specifically mentioned as a
holdout against the Continental system.

#6 -- FWIW Economics and Astrology appear to be very similar.
They have an arcane vocabulary, bewildering mathematics, offer
convoluted explanations for past and future events, and are
worthless as a guide to practical actions. The practitioners are
highly paid and appear to have undue and unjustified influence in
society and government.

That's good, George, and it sounds right on many counts. So the next
question is, why in the hell do trade theorists still talk about it? As far
as I can see, it's a textbook thing that is, as an economist once said, the
one idea in economics that is both simple and profound. But it's meaningless
when they talk to us non-economists.

I think it clouds understanding of real trade issues. But then, I'm assuming
someone could clear them up if it weren't for these clouds. That may be a
delusion on my part.

--
Ed Huntress