On Fri, Aug 21, 2009 at 15:48, Stuart Jansen<[email protected]> wrote: > On Fri, 2009-08-21 at 14:13 -0600, Alex Esplin wrote: >> Even in a straight across trade, from my point of view I have to be >> better off than the person I'm trading with, or there is no incentive >> to trade. Granted, this example is entirely dependent on >> point-of-view, but much of the economy is. > > Whoa, whoa, whoa. This is very much not true and will lead to some > pretty poor decision making if you attempt to apply your theory. I > suspect that such fundamental misunderstanding of the advantage of trade > is at the heart of many people's desire to enact stupid protectionist > laws. > > The law of Comparative Advantage shows that when two people trade, both > can benefit even if one is much more productive than the other.
Allow me to rephrase and clarify. In saying I have to feel like I'm better off than the person I'm trading with I'm not saying I have to be (or feel like I am) ripping the other guy off. I'm saying that in order to enter into a trade, I have to come out ahead _from my point of view_. If I come out of a trade feeling like I got ripped off then I didn't gain from the trade. Comparative Advantage is entirely dependent on gain (for both parties) from trade, and I won't trade unless I can gain from it. In which case, no matter which party is more productive, each party from their own point of view got the better end of the deal. -- Alex Esplin /* PLUG: http://plug.org, #utah on irc.freenode.net Unsubscribe: http://plug.org/mailman/options/plug Don't fear the penguin. */
