Re: Comparative Advantage: Comparative Exploitation

[Warren Mosler <mosler@xxxxxxxxxxxxxx>]

The 'neoclassic' model/arguments of the benefits of
trade do to comparative advantage assume full
employment.  Without full employment the nc models
show a race to the bottom of real wages.

w

--- g kohler <kohlerg@xxxxxxxx> wrote:
> This article takes a textbook example of comparative
> advantage and stands it
> on its head. Full text online at:
>
http://www.atimes.com/atimes/Global_Economy/EA29Dj02.html
>
> The article shows that, due to the global wage-price
> differential (levels
> 0.5 and 1.0 in the example), the payoffs of free
> trade do not conform to the
> promises of comparative advantage at all. On the
> contrary, Table 3
> illustrates that: 1. for the low-wage country, trade
> may be worse than no
> trade; 2. only one side may gain from trade, while
> the other side is
> exploited; 3. free trade and international
> specialization of production may
> lead to comparative disadvantage for one side. 4.
> The claim of comparative
> advantage is false and is a mask of unequal
> exchange, if the wage-price
> levels of the trading partners are significantly
> different.
>
> Gernot Köhler
>
>


=====
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