Reading analysis of In praise of cheap labor, Ricardo's Difficult Idea, and A Raspberry for Free Trade

Outline: The reading assignment of this week consists 3 parts.

In the first article Ricardo’s Difficult Idea, the author defended the idea of comparative advantage proposed by David Ricardo, and examined why some people, even after so many years after its acceptance as a general concept in economics, still do not understand comparative advantage; he argues, people generally renounce the concept for 3 reasons:

i.                     Some intellectuals reject comparative advantage simply out of a desire to be intellectually fashionable.

ii.                   It’s just so hard for them to understand.

iii.                  The aversion of many intellectuals to an essentially mathematical way of understanding the world.

  In the second article, In praise of cheap labor, the author contradicted the idea that cheap labor is evil with 3 reasons:

i.                     Cheap labor is not new.

ii.                   It allows poor country compete within the international market. (ice breaker)

iii.                  Wages are actually higher than they were

  In the third article, by contradicting the incompatible nature between international trade and import restriction on sanitary standards, the author defended the effective nature of free trade.

Rhetorical questions:

i.                     Every time during a recession, there’re always some people, or sometimes government itself, murmuring simple economic sophisms. Why does the government always forget to make and explain their policies out of basic economic concept?

ii.                   We all know the advantage of cheap labor in developing countries, why there’s still some low skill-needed products still tagged “made in U.S.”

iii.                  In international trade, should we really ignore national defense?

Economic concept: all three articles here focus on international trade, which is drove by the concept of comparative advantage. In general, we need to understand that even in an international level, trade and specialization can make everyone better off.

My opinion: In one word, we always need to remember that the trade between countries is exactly the same thing as the trade between individuals. When we faces some new problem, we should not be affected by the misleading complexity but should find out the core features of the problem.