Jesse’s Cafe Americain uses absolute advantage:
One of the theories in favor of free trade is the idea of comparative advantage, that is, that one country might have a natural advantage which they can exploit for their own benefit and the general benefit of the world. I am sure we all learned this in business school. I myself was quite a fan of Michael Porter in my day.
This theory is a universalisation of the idea that the naturally gifted pottery maker, for example, has an inherent talent that can be exploited, and can create and exchange pots for food, let’s say, from a farmer who has the advantage of owning suitable farm land and has the talent and tools to exploit it.
Makes common sense does it? Everyone does what they do best, and through the free exchange of products the aggregate good is increased. A nice simplistic maxim that underpins a broad economic and social philosophy, such as ‘from each according to their abilities and to each according to their needs.’
as an argument against comparative advantage and the most egregious example of managed trade in the world today:
So for example, a nation such as China can devalue its currency substantially in the 1990’s against the world’s reserve currency, and thereby set up a set of artificial import barriers and export subsidies, simply by manipulating their currency.
By the way, this is basic math. There are plenty of people who were denying it, and most of them stood to benefit from this charade. But it is true. Anyone who travels internationally and changes money understands it.
The underlying basis of the currency wars is the ability to artificially manipulate one’s currency, or even establish a pseudo-monopoly, for the advantage of one to the disadvantage of the others.
There are other methods to accomplish this and they are usually lumped under the title of industrial policy or mercantilism. A country has a set of laws and regulations that foster a certain stance towards issues such as worker’s rights, environmentalism, savings and consumption, wealth distribution and even human rights.
The more trade becomes independent of public policy and regulation, the greater the movement of all countries to the least common denominator of the broader policy stances of the mercantilist nations.
as an argument against free trade complaining all the while about unscientific know-nothings:
The fallacy that is repeated over and over by the non-scientific thinker (like too many economists and politicians for example) who use these simple examples and sayings is that one can extend things that might make sense anecdotally into general, almost universal principles writ large on the face real world, or more properly OVER the face of the real world, that at the end have little real fundamental connection with reality and the expected outcomes.
as an argument against free trade. Apparently, he didn’t learn as much in business school as he thought. You can put a potted plant into a college classroom where it can “listen” to lectures of the highest caliber all day long and even hang a piece of paper around the pot certifying its attendance and it still won’t have mastered the material.
I think there are good, practical reasons that “free trade” doesn’t work as efficiently as it should chief among them that free trade is anything but free. As Chesterton said in a different context it is not a case of having been tried and found wanting but of having been found difficult and not tried. That’s not an indictment of free trade but of international politics.
The effectiveness of trade in increasing wealth is so well documented it is hardly necessary to argue in its favor. Try googling “empirical evidence benefits of trade”. That should get you started. Let me give one simple, close to home example: the United States of America. The U. S. is a large free trade zone. Commerce among the states is vibrant and a great producer of wealth.
