- Cafe Hayek - https://cafehayek.com -

McCloskey on Krugman (and Me) on Comparative Advantage

Tweet [1]

Here’s the text of an e-mail that I just received from Deirdre McCloskey:

Dear Don,

You keep featuring, and praising in an unhinged if generous manner, Paul Krugman’s little paper of 1996 that claimed, Princeton-style, that there are many tricky mathematical assumptions entailed in the notion of comparative advantage.  He writes, “Ricardo’s idea is truly, madly, deeply difficult.”  No it’s not.  It’s truly, obviously, simple.  Admittedly, Ricardo’s exposition in 1817 was terrible.  The pages he devoted to it give even an economist a headache.  And, admittedly, because people regularly mix it up with absolute advantage the notion of comparative advantage is regularly sneered at by economic innocents.  But what comparative advantage says is that it’s smart to cooperate—in a family, a company, a city, a nation, the world.  Cooperation entails, obviously, assigning Little Johnny to sweeping the garage and letting Dad specialize in organizing his workbench there, or assigning Bangladesh to make knitwear and the US to make airplanes.  Dad is better than Johnny at sweeping, and the US is better at than Bangladesh at knitwear.  But unless Johnny and Bangladesh are merely to sit down, and let the more productive people do all the work, with the result, obviously, of less output in total, all people are to contribute as best they can—that is, cooperate.  I said this in 2017 at a commemoration in London of the 200th anniversary of Ricardo’s book (Reason, May 2018).

I remain uncertain how to send a comment directly to the page, so this will serve.  I know: I evidently do not have a comparative advantage in most contexts,and nothing remotely like an absolute advantage in nay context, in computer work.

Love,
Deirdre

And here’s my reply (with links added):

Dear Deirdre,

Thanks. I confess to having an undue affection for that little piece by Krugman, although I do agree that Krugman does not present it as well you and other’s wiser than he often do.

I think that comparative advantage is counterintuitive to non-economists. My public debates on trade give me this impression. You are correct, though, that an economist – one not at a salt-water school, likely – can reduce it to its intuitive core.

I featured a quotation, or two, at Cafe Hayek from the essay of yours [2] that you mention. The real or apparent conflict of Krugman with your paper I either forgot or carelessly never noticed. I notice it now.

I will post now your e-mail, in full, at Cafe Hayek.

Thanks again.

Don

Comments