Ricardo's Difficult Idea by Paul Krugman (1996)

He said intellectuals (as in public intellectuals, particularly on the left but not always so), implicitly those outside mainstream economics. He's certainly rejecting the "dissenting economists", but he's mainly taking about politicians and other public figures (the first figure he savages is Goldsmith, who was somewhat influential in the UK and France but not at all an economist.

[0] https://news.ycombinator.com/item?id=11574215

While obviously in most cases less barriers to trade means growth for everybody, there are cases where completely opening to trade is bad - it might mean total dependence on foreign products - simply thanks to economies of scale and entrenchment. For example in Poland homegrown producents of buses/trams/trains were finally given precedence and within few years they managed to produce cheaper (massively so) and just as good if not better products, jobs and know-how that will last and be a boon as opposed to being hooked on foreign maintenance contracts.

So right now we are all for free trade, since those products are actually massively competitive :3

I'm not sure about the statistics of HN readers, however the arguments are more complicated now than when Krugman wrote the article in 1996. See Samuelson's 2004 criticism of free trade, revisiting his early positive results.

Samuelson, Paul A. (2004): Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Against Globalization, in: Journal of Economic Perspectives, Volume 18, Number 3, pp. 161-180

cited in : http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000...

Samuelson's paper was a big deal when it came out, even in the mainstream press.

The paper itself: https://www.wilsoncenter.org/sites/default/files/SamuelsonJE...

So is Donald Trump. So are the leaders of the world's second largest economy, China.

(I guess mentioning Trump is cause for a mass downvote. 10 posts in one go. WTG, GG)

"Free Trade" as proposed by pointy heads like Krugman is absolutely terrible for most people, and his argument is baseless because it rests on so many false assumptions.

The first false assumption always put forth by the "free traders" is that a rising economy raises all boats. This is something any of the 37% of Americans without a job or the 80% of Americans who are one missed paycheck away from homelessness or severe crisis can tell you is nonsense.

The second false assumption is that the metrics used to measure productivity are at all related to useful and beneficial economic activity. GDP has always been a particularly useless metric, and has been even more worthless since incorporating the book-cooking activity on Wall Street as "productivity", especially when that shell game represents some 55% of US GDP.

The third false assumption that Krugman's nonsense rests on is that so-called "free trade" deals like the TPP have any relation to theoretical free trade theories like the one put forth by Ricardo. The oppressive and innovation killing patent laws, copyright laws, and global DMCA contained in deals like the TPP are literally the opposite of theoretical "free trade". These treaties do nothing but strengthen the strangehold of large entrenched interests, globally.

Finally, all of these "free trade" theories are based on the supposition that there is a free market. An economy where central banks control interest rates and print trillions of dollars to buy stocks and bonds to prop up markets (among many, many other things) is literally the opposite of what a free market is.

"If my ability in A compared to my ability in B as a ratio is different to your ability in A compared to your ability to B as a ratio, then we can benefit from trading which each other."

It depends on the difference in value for both industries, compared to the difference in productivity for both countries. That's why it's called comparative advantage. If a product is massively more valuable than the other one, then it could make sense to specialize on it, even if the other country is much less productive. The classic example is, a professor can type faster than their secretary, but it still makes sense for them to specialize on their field and let the secretary do the typing.

In short, yes. But that's merely an extreme case, not an counterexample to the principle.

Starting with the no-trade situation, Portugal producing 1M units of cloth and 1M units of wine, England producing only 10 units each. Note that "the world" is already flush with Portuguese products.

If they start trading and want to keep the same total production of cloth, then England would produce only cloth (20 and odd units), and Portugal would produce a little less cloth (1M - England's production) and bit more wine.

Imagine there were two countries in the world, say France and England, and France was better at making every kind of product. Most people would conclude that England would need to protect itself from France by limiting trade. Comparative advantage tells this is not true - England will always be richer if it trades, no mater how good France is at manufacturing. That is the key insight.

Yes - England could train its weavers, or entice weavers from France, or develop wine growing regions, or focus on services. But no matter what it does, it will always benefit from trade. Comparative advantage isn't telling you about training, labour mobility, or the difference between goods and services. It's telling you about trade in general.

Of course it's a model, but many economists find it compelling.

That's true in an efficient-economic-agent sort of way, but do you really think it's true in the real world? Do you think actors (nations, companies, individuals) don't make errors of judgement?

I don' think he was arguing that that theory is the be all and end all of trade policy. The theory is a abstract model of the world - it is a useful guide like all abstract models but does not capture the world in all its complexity.

Both theoretically and practically, over the last 30 years, there is increasing evidence that Free Trade effects - like everything - depends on context and policies.

Krugman himself writes alot about this on his blog. Can't search for everything right now - but here is an example from a few weeks ago:

http://krugman.blogs.nytimes.com/2016/04/20/101-boosterism/

He has also been consistently lukewarm on the TPP trade deal exactly because of these issues:

http://krugman.blogs.nytimes.com/2015/04/26/this-is-not-a-tr...

"One thing that should be totally obvious, however, is that it’s off-point and insulting to offer an off-the-shelf lecture on how trade is good because of comparative advantage, and protectionists are dumb."

1b) Crowding out - On conventional wisdom (if such a thing exists) this is not valid, the economy should automatically target production to whatever is most effective through the profit motive. However, some think that doesn't always work: this is the idea of 'lock-in' or 'path dependency'. As you say, maybe it's hard for a developing country to switch from the garment industry to more sophisticated manufacturing, and they get stuck on a particular course. You'd have to explain why that didn't happen in the West.

2) Comparative advantage says nothing about how many people will be employed. All it's saying is that the sum total of the value of goods will be greater. However, in theory, even if the US had very low employment rates, the few remaining high earners could redistribute that wealth and make everyone richer. Politics may come into play here!