Message from @Mr. Nessel
Discord ID: 694161531730001930
Big brain
All the law of comparative advantage states is that countries will increase net supply of goods by producing goods at the lowest relative opportunity cost
Opportunity cost was characterized in terms of time being invested and I brought that up
I must be missing something?
Are you just saying labour time is to limited?
Because you have other factors of production
I'm saying the model by which free trade is justified relied on two flawed assumptions, one being that it implicitly endorse the LTV and secondly that comparative advantages are temporary in manufacturing
Oh yeah
The logic still applies tho
Well yeah in a given moment it demonstrates you can save a bit of money
But it's not how you develop an economy
Deardorff's general law of comparative advantage
Skeptics of comparative advantage have underlined that its theoretical implications hardly hold when applied to individual commodities or pairs of commodities in a world of multiple commodities. Deardorff argues that the insights of comparative advantage remain valid if the theory is restated in terms of averages across all commodities. His models provide multiple insights on the correlations between vectors of trade and vectors with relative-autarky-price measures of comparative advantage. What has become to be known as the "Deardorff's general law of comparative advantage" is a model incorporating multiple goods, and which takes into account tariffs, transportation costs, and other obstacles to trade.
Look ^
Models have been made with other commodities
Labour is just like any other commodity
Earlier you were actually getting at the law of diminishing returns
which is good
because you're correct, simply applying nothing but labour time in the absence of other factors of production would decrease marginal value of labour and be inefficient via Says law
The other part is that there is no inherent difference between nations in how well they can potentially manufacture something
Under free trade conditions they just would've been stuck with the immediate gratification of importing cheaper foreign cars
"The other part is that there is no inherent difference between nations in how well they can potentially manufacture something"
You sure?
I'm sure at least in a geopgraphic sense. I know Africans aren't going to make processors and whatnot
It's different in the primary sector
So what about minimum wage laws? Country A has them at 15Y and country B has the minimum wage at 5Y
Both countries produce cars and jobs making cars are all minimum wage
cetrius paribus which one is better?
I don't like minimum wage laws because they don't actually adress the issue of oversupply of labour
not relevant
"oversupply of labour"
No such thing
People making better wages off of the car industry is better. I'm aware that it'll make cars marginally more expensive
And yes there is oversupply of labour
That's a subjective term your using
not relevant
Though it's a subjective category I think it's fair to say there are too many low wage/low skill workers
so we have established some countries produce goods cheaper than others
so the theory is correct
In the moment