The zombies still walk
| AN OUTSIDERS VIEW |
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| Ken Fuller |
Last week, this column looked at how, in The Predator State, James K. Galbraith demonstrates that the theory of “comparative advantage” (“comp-ad” in our shorthand) is completely divorced from the realities of the modern trading world and is, anyway, just plain wrong.
When David Ricardo came up with comp-ad, Britain was the rising capitalist pioneer, with a considerable colonial empire. Free trade, which comp-ad was designed to support, was in Britain’s interest as, being the most developed player, it could only benefit by gaining access to foreign markets. More, the comp-ad theory could be deployed to convince its colonies that their future lay in producing primary products, while Britain’s lay in its manufactures, thus ensuring there was no competition with the imperial “motherland.”
But are people still under the spell of the comp-ad mantra? I ran a simple test, typing in the words “comparative advantage” to the search engines of a number of newspaper sites. The number of results were as follows. Manila Times: 1; inquirer.net: 224; Malaya: 6; BusinessWorld: 50; Philippine Star: 55; Manila Standard Today: 17. An archive search of Business Mirror yielded eight results. The search engine of the Daily Tribune was not working. We must therefore concede that comp-ad, although dead as a guide to the real world, still walks abroad at night. And there are some illuminating pieces among my search results..... MORE
Source: The Daily Tribune
URL: http://www.tribuneonline.org/commentary/20110524com4.html
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