Comparative Advantage, continued

Comparative Advantage is one of those concepts that’s far from intuitive, at least for most people.

Don Boudreaux looks at one case I’d been wondering about, whether it’s possible for one side of a trading partnership to have an advantage in everything.

You ask what you are to make of your roommate’s “fear that China will end up with comparative advantage to produce everything.”

You are to make nothing of this fear other than the fact that it reflects your roommate’s misunderstanding of comparative advantage. It’s impossible for any person, entity, region, country, planet, or galaxy to have a comparative advantage – that is, an advantage compared to potential trading partners – at producing everything. To have a comparative advantage at producing X implies a comparative disadvantage at producing Y.

This reality is best seen with an example involving only two people (Ann and Bob) and two goods (fish and bananas). Suppose that the resources necessary for Ann to use to produce one banana are such that, were she instead to use these resources to catch fish, she’d catch two fish. Ann’s cost of producing one banana is, thus, two fish – which implies that Ann’s cost of catching one fish is one-half of a banana.

As for Bob, suppose that the resources necessary for him to produce one banana are such that, were he instead to use these resources to catch fish, he’d catch one fish. Bob’s cost of producing one banana is, thus, one fish – which implies that Bob’s cost of catching one fish is one banana.

Bob has a comparative advantage over Ann at producing bananas and Ann has a comparative advantage over Bob at catching fish. If Ann and Bob both want to consume fish and bananas, they can both gain if Ann specializes in catching fish and Bob specializes in producing bananas, and then trading with each other.

Suppose now that Ann decides that she wants to have a comparative advantage also at producing bananas. She must then lower her cost of producing bananas to less than Bob’s cost of producing bananas – that is, to less than one fish per banana. But if Ann achieves this goal, she loses her comparative advantage at fishing.

If, for example, Ann becomes so good at producing bananas that each banana that she produces now costs her only one-quarter of a fish, Ann’s cost of catching fish rises from its previous level of one-half of a banana per fish to four whole bananas per fish. Because Bob’s cost of catching fish remains at one banana per fish, if Ann succeeds in gaining a comparative advantage over Bob at gathering bananas she necessarily creates for herself a comparative disadvantage at catching fish – meaning that Ann thereby causes the comparative advantage at catching fish to switch from herself to Bob.

People have many baseless fears about free trade. None is more wrongheaded than is the fear that any one subgroup of people – say, the people of one country – can have a comparative advantage at producing everything.

Someday I may want to sit down with this and see if it’s possible to generate “strange loops” where A>B, B>C, and C>A.

The Real History of Anita Hill

The kind of dirty trick being pulled in the Kavanaugh nomination began with Anita Hill. People are posting memes on social media claiming to believe Anita Hill, but it should be remembered, Anita Hill wasn’t that believable back in her day. From PowerLine:

THE FIRST TIME WAS FARCE, TOO

The Democrats’ current attack on Judge Brett Kavanaugh obviously recalls their failed assault on Clarence Thomas, who has gone on to a distinguished career as an intellectual leader of the Supreme Court. Memories fade, and I had forgotten some of what Hans Bader details at Liberty Unyielding. I remember this much: the Thomas hearing was televised and gripped the nation. At the time, most Americans concluded that Anita Hill, who accused Thomas of making inappropriate sexual references while she worked for him, was lying, and Thomas was confirmed by a Democrat-majority Senate. Over time, the Democrats kept hammering away, and now their press adjunct pretends that Hill somehow carried the day.

 

Read A Pile Of Top Nazis Talking About How They Love Leftist Marxism

Source: Read A Pile Of Top Nazis Talking About How They Love Leftist Marxism

The Nazis were leftists. This statement is blasphemy to the academic-media complex, since everyone knows the Nazis were degenerate right-wingers fueled by toxic capitalism and racism. But evidence Adolf Hitler’s gang were men of the left, while debatable, is compelling.

[snip]

“The Road to Serfdom,” by F. A. Hayek, is one such tract. Published in 1944, it remains a classic for young people on the political right discovering their intellectual roots. A sort of academic “1984,” it warns of socialism’s tendency toward planned states and totalitarianism.

One aspect of the book can shock the conscience. Hayek describes Nazism as a “genuine socialist movement” and thus left-wing by modern American standards. Indeed, the Austrian-born Hayek wrote the book from his essay, “Nazi-Socialism,” which countered prevailing opinion at the London School of Economics, where he taught. British elites regarded Nazism as a virulent capitalist reaction against enlightened socialism—a view that persists today.

[snip]

The left believes the opposite. They distrust the excesses and inequality capitalism produces. They give primacy to group rights and identity. They believe factors like race, ethnicity, and sex compose the primary political unit. They don’t believe in strong property rights.

They believe it is the government’s responsibility to solve social problems. They call for public intervention to “equalize” disparities and render our social fabric more inclusive (as they define it). They believe the free market has failed to solve issues like campaign finance, income inequality, minimum wage, access to health care, and righting past injustices. These people talk about “democracy”—the method of collective decisions.

By these definitions, the Nazis were firmly on the left. National Socialism was a collectivist authoritarian movement run by “social justice warriors.” This brand of “justice” benefited only some based on immutable characteristics, which perfectly aligns with the modern brand. The Nazi ideal embraced identity politics based on the primacy of the people, or volk, and invoked state-based solutions for every possible problem. It was nation-based socialism—the nation being especially important to those who bled in the Great War.

As Hayek stated in 1933, the year the Nazis took power: “[I]t is more than probable that the real meaning of the German revolution is that the long dreaded expansion of communism into the heart of Europe has taken place but is not recognized because the fundamental similarity of methods and ideas is hidden by the difference in phraseology and the privileged groups.”

[snip]

Yet the evidence the Nazis were leftists goes well beyond the views of this one scholar. Philosophically, Nazi doctrine fit well with the other strains of socialism ripping through Europe at the time. Hitler’s first “National Workers’ Party” meeting while he was still an Army corporal featured the speech “How and by What Means is Capitalism to be Eliminated?”

The Nazi charter published a year later and coauthored by Hitler is socialist in almost every aspect. It calls for “equality of rights for the German people”; the subjugation of the individual to the state; breaking of “rent slavery”; “confiscation of war profits”; the nationalization of industry; profit-sharing in heavy industry; large-scale social security; the “communalization of the great warehouses and their being leased at low costs to small firms”; the “free expropriation of land for the purpose of public utility”; the abolition of “materialistic” Roman Law; nationalizing education; nationalizing the army; state regulation of the press; and strong central power in the Reich. It was also racist and anti-immigrant.

[snip]

It wasn’t only theoretical. Hitler repeatedly praised Marx privately, stating he had “learned a great deal from Marxism.” The trouble with the Weimar Republic, he said, was that its politicians “had never even read Marx.” He also stated his differences with communists were that they were intellectual types passing out pamphlets, whereas “I have put into practice what these peddlers and pen pushers have timidly begun.”

It wasn’t just privately that Hitler’s fealty for Marx surfaced. In “Mein Kampf,” he states that without his racial insights National Socialism “would really do nothing more than compete with Marxism on its own ground.” Nor did Hitler eschew this sentiment once reaching power. As late as 1941, with the war in bloom, he stated “basically National Socialism and Marxism are the same” in a speech published by the Royal Institute of International Affairs.

Nazi propaganda minister and resident intellectual Joseph Goebbels wrote in his diary that the Nazis would install “real socialism” after Russia’s defeat in the East. And Hitler favorite Albert Speer, the Nazi armaments minister whose memoir became an international bestseller, wrote that Hitler viewed Joseph Stalin as a kindred spirit, ensuring his prisoner of war son received good treatment, and even talked of keeping Stalin in power in a puppet government after Germany’s eventual triumph. His views on Great Britain’s Winston Churchill and the United States’s Franklin Delano Roosevelt were decidedly less kind.

Lots more at the link.

Bias-tinted Glasses

Dennis Prager loves acronyms. In fact, you might even say he’s biased in favor of acronyms. Some years ago, he came up with “NARWIPDE” which stands for (an adverb I don’t remember) Assuming Racism Where It Probably Doesn’t Exist.

Now Time Magazine says colleges are teaching NABWIPDE; B = “Bias”. Or more precisely, NABWIRDE; R = “Really”.

 

Source: How Colleges Teach Students to See Bias When There Is None | Time

….
The key feature of academic diversity ideology is the assertion that to be a member of an ever-growing number of favored victim groups at a college today is to be the target of pervasive bigotry on campus — despite, well, being favored. Taught by a metastasizing campus-diversity bureaucracy to believe that they are subject to an existential threat from circumambient bias, students equate nonconforming ideas with “hate speech,” and “hate speech” with conduct that should be punished, censored and repelled with force if necessary. This victimology fuels the efforts to shut down speech that challenges campus orthodoxies. Dozens of times in the past several years alone, classrooms have been invaded; professors, accosted and even assaulted; and outside speakers, silenced.

While these tactics have famously been directed at conservatives, that is not exclusively the case, as senior fellow at the Public Policy Center Stanley Kurtz has documented for National Review Online. It has happened year after year, recently.

In October 2017, protesters at Columbia University temporarily occupied a class and accused a professor who is an LGBTQ rights advocate and one of the school’s premier proponents of the idea that campuses are pervaded by rape culture of creating a “dangerous environment for students, including queer students.”

That same month, shouting activists prevented University of Oregon President Michael Schill from delivering his State of the University Speech. Schill’s merely pro forma support for free speech was enabling “fascism and white supremacy,” according to the student protesters.

[snip]

The belief that college campuses today pose an existential threat to females and students of color is just as lunatic as the belief that Judge Brett Kavanaugh is a murderer or that an Establishment lawyer was signaling her white supremacy affiliation on live TV. American universities are among the most tolerant environments in history towards humanity’s traditionally oppressed groups. Far from discriminating against what admissions officers call “underrepresented minorities,” or “URMs,” every selective college today employs large racial admissions preferences to engineer what they call a “diverse” student body — and they twist themselves into knots to hire qualified minority staff members who haven’t already been snapped up by better-endowed schools. Professors want all their students to succeed, particularly females and “underrepresented minorities.”

But the resulting campus culture often coaches students to see bias where none exists. That delusion continues once they leave school. The result is a growing society-wide intolerance for speakers and ideas that fail to conform to an increasingly exacting code of political correctness, on the ground that such non-conforming speech harms favored victim groups.

The right has its shrill manias— whether the unseemly obsession with Hillary Clinton and her emails, the corrosive Trump-fueled calumny that federal law enforcement agencies have been corrupted by political bias, and the dangerous Trump-induced crusade to turn those agencies into instruments of political revenge. But until now, the notion that silencing non-conforming speech is a legitimate response to disagreement has come overwhelmingly from campuses and other progressive institutions — from Google to the New Yorker. Were Trump to seize the same weapons, arrogating to himself the power to define and punish “hate speech,” the danger of such precedents might become clearer to all.

The new censorship is an outgrowth of the twin ideas that race and gender are the most important features of a human being, and that American society is one long assault on various identity groups defined by race and gender. Until these key tenets of academic identity politics are rebutted, we can expect to see more of the hysteria that characterized the Kavanaugh hearings — and less ability to talk across ideological divides.

Originalism

From National Review:

There is only one proper way to faithfully interpret the Constitution. And that is to ascertain the actual meaning of the words of the text, taken in their proper social and linguistic context.

That meaning must be the objective meaning — not the reader’s subjective understanding or preferred reading. And that meaning must be the original meaning — that is, the meaning the Constitution’s words and phrases would have had to reasonably informed readers of the English language at the time they were used, in context, and accounting for any specialized usages or term-of-art phrases. Any other reading is pure anachronism, a misuse of language.

This single correct method of constitutional interpretation travels under many names. I call it “original-public-meaning textualism,” emphasizing the text and the requirement that it be taken in its known, original sense. A convenient (if imprecise) shorthand term is simply “Originalism.” It contrasts, sharply, with any of a variety of progressive theories under which the Constitution’s meaning shifts, morphs, evolves, or otherwise transmogrifies to suit the needs or circumstances of the moment — and, typically, to serve the interpreter’s desired political agenda.

There are many good arguments in favor of Originalism: It is less subject to manipulation, produces greater clarity and consistency, better preserves democratic decision-making, and frequently yields better results than any other method. All of these points are true and important.

[snip]

Populism is Dangerous: Taco Bell Voted Best Mexican Restaurant in the Country

Source: Populism is Dangerous: Taco Bell Voted Best Mexican Restaurant in the Country

 

How does Taco Bell come out on top when there are so many restaurants that are a lot better? Taco Bell is known nationwide. The really good Mexican restaurants are likely to be single establishments, or very small chains. If, say, 100,000 people in Southern California consider, say, El Coyote the best Mexican restaurant ever, well…

There are some 3000 counties in the US. If 100 people in each county answer “Taco Bell” in a survey, that’s 300,000 votes.

After Trump was elected, there was an entire movement to abolish the Electoral College for no other reason than Trump won and Hillary did not, popular vote, yada yada yada. Thank the good Lord we are not a pure democracy.

The Electoral College was designed to protect the country from populist uprisings and democratic mob rule. Simply because historically, democracies tend to disintegrate into chaos before destroying themselves.

There are many reasons why the Electoral College is amazing, wonderful, and should never be abolished on a political whim. Think pieces, original intent exposes…they all make important points, but none so enlightening as this — the same people that vote for president also voted Taco Bell the best Mexican restaurant in the country.

So, if ever you wondered, THIS, THIS IS WHY WE HAVE THE ELECTORAL COLLEGE.

More Welfare for Workers

 

Bernie Sanders billionaire welfare taxation defies all economic logic
Bernie Sanders has officially introduced legislation in Congress aimed at forcing large companies to reimburse the government for providing public benefits to their employees. Targeting Amazon in particular, the Vermont senator recently tweeted, “All over this country, many Amazon employees, who work for the wealthiest person on Earth, are paid wages so low they can’t make ends meet. The American taxpayer should not be subsidizing Jeff Bezos so he can underpay his employees.”

Not only is this proposal unworkable and likely to harm the small number of people it targets, but it also mischaracterizes companies like Amazon and Walmart as reaping the benefits of lower wages, while the government picks up the tab. This argument fails on basic economic principles and ignores investments that many of these companies make in their entry level workers. Rather than “taxing” major companies for giving jobs to low skilled workers, Congress should find ways to make it easier for them to educate and train their entry level workers.

One of the major problems with the proposed legislation is that it assumes that wages are set by the whims of company executives. But in a competitive labor market, wages are set by the supply and demand for labor, not some arbitrary decision making by executives. As economist Arindrajit Dube argued, research shows that benefit programs like food stamps and housing assistance actually reduce labor supply because they make work less attractive, which drives wages up instead of not down. He writes, “The key point is that it is difficult to imagine how food stamps would lower wages. If they don’t lower wages, they can’t be thought of as subsidies to low wage employers.” For the argument that safety net programs “subsidize” employers to ring true, wages would be higher in their absence, something I doubt proponents believe.

[snip]

 

Shylock the Dog

Andrew Klavan commented on the sex scandal in the Catholic Church. In his ongoing courtship with the third rail, he points out that it’s also a homosexuality scandal — the majority of victims were males under the age of majority.

There’s another point he raises, about bigotry.

Myself, I believe that bigotry creates the problem in the first place. When people are excluded from society, they are excluded from its moral structures and tend to become estranged from them. They say to themselves, “Well, if you hate me, your rules don’t apply to me.” This is likely to transform some members of the despised class into the very image of the cliche the haters hate. Shakespeare’s villainous Jew Shylock addresses the effects of anti-semitism when he snarls: “Thou call’dst me dog before thou hadst a cause; But, since I am a dog, beware my fangs.” In the excluded gay community, being sexually “wicked” or “evil” was often perceived as a positive thing. Why not, when the “good” people despise you?

This in no way lets the doers of evil off the hook. Rather the opposite. It means that when mores change and bigotry passes, excluded people should not only be welcomed into the majority community, they should also be held responsible to its values. It is no good to say, “Yes, we were bigoted against black people, so now we will not only welcome them in, we’ll ignore the high crime in their neighborhoods to show how un-bigoted we’ve become.” No. You have to say: “We were wrong. You’re part of our community now. Act like it.” Then you have to listen to CNN and the Twitter mob call you a racist. Then you have to say what you said again. And again.

So with gays. Instead of hiding this problem, the media should name it and address it. And instead of persecuting a cake baker who has the full and perfect right to disapprove of them, gay activists should work to purge their community of those who abuse the young. Instead of re-opening scars and feeding anger, this would begin the unification of gay culture with the majority straight culture.

And in addition, Thomas Sowell points out the cultural ills that are associated with “black ghetto” culture trace back to the redneck culture of the American south. Blacks in the north were very aware that they needed to be on their good behavior, and that any transgressions on the part of any black would reflect on all blacks.

Nowadays, we see more of an antinomian fallacy – blacks and other minority groups declare themselves to be not bound by the laws of the majority culture. They then complain when they are seen as lawbreakers.

There’s another aspect of bigotry to beware of. Shylock says, “beware my fangs”. When the majority is slapped with the labels of Sexist, Intolerant, Xenophobic, Homophobic, Islamophobic, Racist, and Bigoted, they will eventually tire of being called dogs. It’s one thing when a minority bares its fangs, it’s another thing entirely when the majority does so.