Message from @AustrianSchoolUbermensch

Discord ID: 694162168685527060


2020-03-30 12:22:41 UTC  

Because you have other factors of production

2020-03-30 12:23:58 UTC  

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

2020-03-30 12:24:06 UTC  

Oh yeah

2020-03-30 12:24:21 UTC  

The logic still applies tho

2020-03-30 12:24:47 UTC  

Well yeah in a given moment it demonstrates you can save a bit of money

2020-03-30 12:24:58 UTC  

But it's not how you develop an economy

2020-03-30 12:25:10 UTC  

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.

2020-03-30 12:25:14 UTC  

Look ^

2020-03-30 12:25:58 UTC  

Models have been made with other commodities

2020-03-30 12:26:10 UTC  

Labour is just like any other commodity

2020-03-30 12:26:31 UTC  

Earlier you were actually getting at the law of diminishing returns

2020-03-30 12:26:34 UTC  

which is good

2020-03-30 12:27:10 UTC  

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

2020-03-30 12:29:41 UTC  

The other part is that there is no inherent difference between nations in how well they can potentially manufacture something

2020-03-30 12:30:06 UTC  

Japan had a comparative disadvantage in car manufacturing prior to insituting tariffs

2020-03-30 12:30:43 UTC  

Under free trade conditions they just would've been stuck with the immediate gratification of importing cheaper foreign cars

2020-03-30 12:31:02 UTC  

"The other part is that there is no inherent difference between nations in how well they can potentially manufacture something"

2020-03-30 12:31:07 UTC  

You sure?

2020-03-30 12:31:45 UTC  

I'm sure at least in a geopgraphic sense. I know Africans aren't going to make processors and whatnot

2020-03-30 12:32:10 UTC  

It's different in the primary sector

2020-03-30 12:32:37 UTC  

So what about minimum wage laws? Country A has them at 15Y and country B has the minimum wage at 5Y

2020-03-30 12:32:59 UTC  

Both countries produce cars and jobs making cars are all minimum wage

2020-03-30 12:33:09 UTC  

cetrius paribus which one is better?

2020-03-30 12:33:16 UTC  

I don't like minimum wage laws because they don't actually adress the issue of oversupply of labour

2020-03-30 12:33:30 UTC  

not relevant

2020-03-30 12:33:40 UTC  

"oversupply of labour"

2020-03-30 12:33:42 UTC  

No such thing

2020-03-30 12:34:25 UTC  

People making better wages off of the car industry is better. I'm aware that it'll make cars marginally more expensive

2020-03-30 12:35:06 UTC  

And yes there is oversupply of labour

2020-03-30 12:35:21 UTC  

That's a subjective term your using

2020-03-30 12:35:32 UTC  

not relevant

2020-03-30 12:35:51 UTC  

Though it's a subjective category I think it's fair to say there are too many low wage/low skill workers

2020-03-30 12:35:51 UTC  

so we have established some countries produce goods cheaper than others

2020-03-30 12:35:58 UTC  

so the theory is correct

2020-03-30 12:36:05 UTC  

In the moment

2020-03-30 12:36:22 UTC  

It doesn't tell you about peotential output

2020-03-30 12:36:48 UTC  

What the fuck does that have to do with anything now

2020-03-30 12:37:13 UTC  

It really isn't complicated

2020-03-30 12:37:40 UTC  

The point is output per input not just output

2020-03-30 12:37:51 UTC  

opportunity cost

2020-03-30 12:37:59 UTC  

It's all opportunity cost