At 14:03 27/09/2011, you wrote:
Keith:
(KH) The practice of comparative advantage is carried out more
widely and more precisely than ever before. Most finished goods are
products of several different material sources and/or operations.
Most international trade these days consists of resources and
part-goods cris-crossing the world before final assembly.
Me:
(EW) I think that in today's world we need a more up-to-date
understanding of "comparative advantage", one which incorporates the
question of advantage to whom. I have a little book on my shelves
entitled "The True Cost of Low Prices: The Violence of
Globalization" by Vincent Gallagher, who was a researcher for
various international agencies. It doesn't deny that countries that
produce goods for Walmart or components for Microsoft have a
comparative advantage, but points out that many of the people who do
the work in those countries are often close to being slave labour
and are sometimes slave labour in fact. We tend to see low wage
costs as being advantageous, but tend to omit the thought that they
may be advantegeous to us but not necessarily to the workers who
make things for us.
You're quite right. What's comparative advantage to the overall
producer of a product with headquarters (or a tax point) in one
country is not necessarily advantageous to other countries and other
workers which may be part of the supply chain. But from the
producer's angle, when all the little comparative advantages are
added up they amount to an overall profit.
Keith
Ed
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/09/
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