Re: More on Outsourcing and Offshoring

["John M. Legge" <jlegge@xxxxxxxxxxxxxx>]

If the law of COMPARATIVE advantage is the most sacrosanct law in economics,
nobody told Michael E. Porter, who replaced it with the law of COMPETITIVE
advantage in 1990, and has even repeated the offence with a new edition
recently.

Ricardian comparative advantage was based on immobile capital (land) and
subsistence level wages. I think that even HOS didn't get far past this, so
to hold the law of comparative advantage 'sacrosanct' in an era of mobile
capital and above-subsistence wages lacks even a properly worked out
neoclassical justification.

BTW, outsourcing refers to services, which simply don't exist in the
neoclassical world - or does the axiom of gross substitution extend that
far, so not only can my chalk turn into cheese, I can subsist on a diet of
Microsoft software if the cheese runs out?

JML

>
> Mason Clark
> Subject: Re: More on Outsourcing and Offshoring
>
>
> >  It effectively makes for a borderless labor market in a
> global experiment
> > with the idea of "comparative advantage".
>
> At what point will economists face up to "averaging down"?  And must
> the Law of Comparative Advantage rule? -- that most sacrosanct of all
> economics (I've been forcefully told by economists)
>
> > Countries like the Philippines, India and China will be
> > able to create jobs that otherwise would not be created.
>
> Without the importation of jobs and export of goods -- isn't
> it just possible
> that developing countries could, should, and would create
> jobs producing for
> their own consumption, including production goods?
>
> Is it an accepted, irrefutable fact that development depends on
> mercantilism, i.e. exporting to earn foreign money?
>
> Admission of bias: I live in the former apricot center of the
> world and am
> eating Turkish apricots. The nearby garlic center of the U.S.
> is beginning
> to cease farming and instead import garlic from China.
>
>            Mason C
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