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Comment by smallmancontrov | Hacker News Reader

Ricardo's comparative advantage result is contingent on the assumption that capital is not mobile across borders. This was a good assumption in 1817. Is it a good assumption today?

Furthermore, he's very up front about this in On the Principles, and from this information you can calculate the exact number of people who read the damn thing between the person repeating the talking point and the person originating the talking point.

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It doesn’t really matter what Ricardo said in 1817: every US academic economist surveyed in 2018 by the Kent Clark Center disagreed that US aluminum and steel tariffs would increase the welfare of the American people ([0]), and this is with the benefit of >200 years in advances in economic scholarship and analysis since Ricardo.

[0] https://kentclarkcenter.org/surveys/steel-and-aluminum-tarif...

The fact that the dumbest president in American history is bad at industrial policy does not mean that industrial policy cannot or should not be done.

The fact that he has two and a half years left in office, along with Congress not willing to do anything, means industrial policy cannot be done. We can certainly try again when something changes, whether that’s the required turnover in Congressional representation (maybe midterms, maybe two more years from now) or federal administration regime change (January 2029). “We are at an impasse.” Until then, the country keeps burning down, as voted for by the electorate.

I do not see another path, but perhaps I am mistaken. I am always open to being corrected when wrong.

Good industrial policy is made from positive economic actions. State investment, interest free loans for factory expansion, strong antitrust law, subsidies and tax reforms that promote industry growth instead of shielding it from competition.

Tariffs can be a good way to pay for this but they are always negative for consumers, and most of the time also net negative for domestic industry. Hard quotas and trade bans put up a wall that completely removes buyer choice and turns everything into a corrupt seller's market.

The American tradition is using negative tools because of their anti competitive effects. Car makers really don't want people buying cheaper cars from overseas so they lobbied for the chicken tax. In a country where funding from corporate super PACs is the most reliable way to win elections no president will change policy if it means losing a big sponsor.

If only all those academic economists were as loud about how to keep tech and industrial capacity from withering and moving to China, as they are with their criticism of attempts to prevent that. They don't even complain when China engages in protectionism, dumping, and general "market distorting" subsidies. Listening to them, you'd never learn that none of the advanced economies got that way by following their laissez-faire trade prescriptions [1].

And of course they limit their analysis to "welfare of the people", first-order, ignoring how loss of industry will (and is already) come back to bite us. As if our only interests were those of passive consumers.

[1] " ... none of the world's most successful trading regions, including Japan, Korea, Taiwan, and now mainland China, reached their current status by adopting neoliberal trading rules." - https://en.wikipedia.org/wiki/Comparative_advantage#Criticis...

Many academic economists are loud about those. It is the politicians who pick and chose the ones they prefer and want to promote. Just see how Laffer and his "Laffer curve" have been embraced by the right to cut taxes despite having no evidence at all about the shape of the curve. An idea literally born during a cosy dinner between Laffer, Rumsfeld, Cheney and a WSJ journalist.

Economist here. Yes! Politicians choose to promote certain economists. I’m tired of answering questions about Modern Monetary Theory, which Bernie Sanders chose to promote. The creator is from an economics department ranked 259th. It’s a duuuumb theory.

https://ideas.repec.org/top/top.econdept.html

In 1817, capital did not cross borders. Borders crossed capital.

Arguably studying derivative works, such as a volume on economics, would be sufficiently acceptable as to void your calculation…

I don't know it makes much difference. People could walk from country to country in Europe back then and still can, likewise you could move money and equipment and still can.

The limiting factor on deploying capital abroad was never the ability to move gold or even equipment, it was the ability to have faith that over many years the remote authorities would continue to enforce your remotely held claims on the operation.

But that's been true for your locally held claims as well, and even more so in modern times with tax rates hovering around 50% in many European countries. It's just that they take their cut every single month, instead of doing so at will.

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