In Ricardo's Difficult Idea, the author illustrates 5 points that why the idea of "comparative advantages" can be so misleading and confusing in today's time. He points out that, besides those stumbling blocks of cultural difference and modeling problems, the ignorance and arrogant attitudes of the authors of economics are the main reason why this very simple concept becomes confusing to non-economists. In the end he gives some opinion on what we can do to solve the misconception of the public to the concept of "comparative advantages". The whole reading is related to his lecture of "comparative advantages".
In Praise of Cheap Labor, the author tells us about that the importance of cheap labor market resulted by the multinational companies from the first world companies to the third world countries. Although it seems that it's unreasonable and unfair to have someone from the third world countries to work at a very low wages with no good working environment for the benefits of the people from the first world countries, these jobs are essential to promote the economic growth and the growth of infrastructure at the third world countries because these jobs incentivize people. Though it looks bad, it is still better than no jobs for these people and make then suffer at the third world countries. This passage has the idea that relates to "incentives" and "comparative advantages".
In A Raspberry for Free Trade, the author illustrates that free trade should be given among the countries even if the countries have much lower wages by using the raspberry as example. He compares raspberry that can lead to health issue with a product that is produced by a person paid with a very low wage, and concludes that these are different and therefore free trade should be allowed. People should not have a double standard on the economics and the market because competition is what makes the market efficient and subsequently improves the society and welfare of its people. It relates to the idea of "free trade and trade deficit".
Some rhetoric questions that happen to my mind:
1. Recently China has some really bad examples on how the entrepreneurs do some bad shitty business like putting some carcinogenic product into the milk product, extract cooking oil from the sewage collector and so on in order to earn more profits. Since lower wages to the workers might also mean that they are putting less effort in quality control, why we can't banned products from these countries because we also have legit reason to say that these products might cause health problems as well?
2. If most of the new idea are "cult" why do we have the reason to accept the idea of "comparative advantages" at the first place when it is first introduced against merchantilism?
3. Is it a sham reasoning to say that the globalization and the investment of foreign multinational countries are the reason that the quality of life go up for third world countries?
I think all these three paragraphs are well written and is interrelated with each other. By understanding that comparative advantages is as legit as the theory of evolution, simple yet complicated, we can picture easily on the situation illustrated in "praise of Cheap Labor" in relation to the comparative advantages in the third world countries. Third world countries have the comparative advantages in really cheap labor, by that the young entrepreneurs are incentivizes to produce. With such action to their own benefits they unintendedly improves the standard of living there. However, people still have the misconception that free trade from these third world countries are putting more disadvantages on them. The third passage "In a Raspberry for Free Trade" clears all the doubt for them and make a great conclusion by saying that "free trade between countries that produce stuffs based on their own comparatives advantages creates wealth for both countries."
No comments:
Post a Comment