Gas Prices are Why Comparative Advantage is a Dumbass Concept to Applaud

[Kent088]

1. Comparative Advantage (Skip if you know what it is)

In Economics, Comparative Advantage is the description of a state where a producer can experience decreased opportunity cost for the production of a good or service relative to others. The classic example is guns and butter.

Japan produces in one day 5 units of butter, and 3 units of guns.
America produces in one day 6 units of butter, and 4 units of guns.

America has an "absolute advantage" - In one day it can produce more of either.

Japan gives up 3 units of guns for 5 units of butter, so each unit of butter costs ~0.6 units of guns.
It also gives up 5 units of butter for 3 units of guns, so each unit of guns costs ~1.7 units of butter.

America gives up 4 units of guns for 6 units of butter, so each unit of butter costs ~0.7 units of guns.
It also gives up 6 units of butter for 4 units of guns, so each unit of guns costs ~1.5 units of butter.

In this example, Japan relatively gives up less units of guns for each unit of butter. America relatively gives up less units of butter for each unit of guns. Japan has a comparative advantage in production of butter, and America in the production of guns. Japan should produce butter, and America, guns, and the two should trade. There is a total increase in the production of both goods in the same amount of time.

2. This is Situationally Horse Shit

What Ricardo did not factor into this equation is a myriad of other real world factors that change the values of these units of production immensely. What is the environmental effect from gun industry pollution, or monocultural cattle farming for butter? What is the geopolitical reality and cultural divide between two peoples? What is the general economic stability of the world? What is the elasticity of these goods? What is the effect of shock economic events or natural disasters? What is the marginal return on additional units produced in this trade? What is the real utility of these goods?

Well we see that with gas prices, or the War in Ukraine, when the world creates plantations out of countries rather than encouraging Autarky and diversification, there is a ton of chaos that ensues. We are seeing that right now with goods shortages, electronics industry collapsing, supply chain disruption that is still ongoing, and some non-monetary shock inflation(there is monetary inflation too).

Our economic woes today are because we have sacrificed stability and moderate, acceptable standards of living for exuberant over-production. Now this little conflict between two historical rivals, and a historically, relatively un-deadly virus is causing huge economic chaos in our supply chain. Comparative Advantage and Global Free Trade are farces that are enriching financiers and we are paying the price for it.

Ironically in my comparative advantage example, I used Japan. Well Japan doesn't like this model, which is why it uses what surpluses it can acquire for the subsidy of home industry *cough* Automotives *cough*. The broader West on the other hand loves this model, and here we see once immense industrial powers reeling for baby formula in the New World, and sitting on the verge of continent wide blackouts in the Old World. Another country that didn't get to play with this model? Russia, which was actually really smart in that it basically trades gas and oil for Gucci and Audi. Do you think they care if they have to give up those luxury goods? No, they'll just forego them entirely if it gets nasty. And they'll watch and laugh as Western Europe reels from its energy crisis. Or let's talk about China, which produces all the antibiotics and brought countries to their knees when they threatened to cut off trade of them during the pandemic.

This system is a scam, countries should be encouraging self-sufficiency and diversity in all essential goods fields. It's sickening that this is where we have come.

[Gestopft]

Even before gas, COVID was showing us the dangers of the prevailing 'wisdom' on trade. Not to mention "better at producing" often just means "can make for cheaper," and all of the implications of that....

[Mihalik]

1. Autarky is a fucking retarded concept. It's functioning literally requires accepting X amount of suffering. Whether that comes in low wages, rationing or loose environmental standards.

2. The problem with Free Trade isn't Free Trade. The problem with Free Trade is that we neither practice Free Trade nor do we engage in a model that maximizes strategic diversity and consumer well-being.

What we call "Free Trade" today is Corpotocracy. An economic and commercial model designed to maximize profits and protect the interests of existing capital.

That's why a key component of "Free Trade" is Trust busting combined with a strong welfare state. We stopped having both a while ago.

You are both misidentifying the problem and misunderstanding the solution.

Furthermore whenever I hear someone advocating for autarky my authoritarian/fascist spidey senses start tingling.

[Kent088]

Autkary is not "retarded". Autarky is only seen in a bad light because it was popularized by Wartime N*zis who wanted to reduce dependence on the West as a strategic reason. They literally wanted to produce EVERYTHING they needed, which is unrealistic. Other countries have used it to great success for specific sectors of the economy such as the Soviet Union, China, Burkina Faso, even if there was other baggage those states brought or bring with them.

"Litrally requires x amount of suffering" I'm not even going to legitimize that as a real argument. Global free trade literally depends on all of those negatives you mentioned BEFORE Autarkic inspired economic policies do; And in fact, Autarkic systems increase wages in the long run. Like Japan, Russia, or China, in those specific industries. Thats literally a critique of it, that labor costs go up.

You are redefining free trade rather than using a common, agreed economic understanding. Corporatocracy is a political term, and not really used in academic economics. A strong welfare state is not characteristic of free trade policies, but trust busting is, I do agree.

Go on and call me a fascist, it's very surprising coming from some Bakunin or Proudhon idolizer or potential larping liberal (based on that p4p)...lol. Fascists are Fascists, Capitalists are Fascists, Communists are Fascists!!! Everyone is a fascist!!!

[Mayhem]

Autkary is not "retarded". Autarky is only seen in a bad light because it was popularized by Wartime N*zis who wanted to reduce dependence on the West as a strategic reason. They literally wanted to produce EVERYTHING they needed, which is unrealistic. Other countries have used it to great success for specific sectors of the economy such as the Soviet Union, China, Burkina Faso, even if there was other baggage those states brought or bring with them.

"Litrally requires x amount of suffering" I'm not even going to legitimize that as a real argument. Global free trade literally depends on all of those negatives you mentioned BEFORE Autarkic inspired economic policies do; And in fact, Autarkic systems increase wages in the long run. Like Japan, Russia, or China, in those specific industries. Thats literally a critique of it, that labor costs go up.

You are redefining free trade rather than using a common, agreed economic understanding. Corporatocracy is a political term, and not really used in academic economics. A strong welfare state is not characteristic of free trade policies, but trust busting is, I do agree.

Go on and call me a fascist, it's very surprising coming from some Bakunin or Proudhon idolizer or potential larping liberal (based on that p4p)...lol. Fascists are Fascists, Capitalists are Fascists, Communists are Fascists!!! Everyone is a fascist!!!

Redefining the term autarky to fit your narrative while bitching about words that aren't used in academic economics, classic.

[unfilteredJW]

Youtube comment section understanding of economics on display.

[Mihalik]

word salad.

Ah yes. Russia, China and Burkina Faso. Those shining examples of prosperity, self reliance, human development, well-being and freedom.

Are you a tankie or are you a fascist? Cuz it's one of the two. Problem is there's so much overlap it's almost impossible to tell you bunch apart.

Let me clue you into something.

Your arguments literally (and I mean literally) contradict the point you are trying to make.

Note, you also conveniently skip one of the shining examples of an autarky, perhaps the only existing example of an autarky, as none of the other economies you mentioned remotely qualify....North Korea.

Yes, that North Korea...the one that lends out it's population as slave labor in Siberia to aquire foreign currency that it uses to buy the trillion things it can't produce and China doesn't generously donate.

Even then, one bad crop is enough to send the population into full starvation.

Like common dude.

[MCMLXXXII]

Haha this is hilarious bad take on everything regarding economics.

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Ah yes. Russia, China and Burkina Faso. Those shining examples of prosperity, self reliance, human development, well-being and freedom.

Are you a tankie or are you a fascist? Cuz it's one of the two. Problem is there's so much overlap it's almost impossible to tell you bunch apart.

Let me clue you into something.

Your arguments literally (and I mean literally) contradict the point you are trying to make.

Note, you also conveniently skip one of the shining examples of an autarky, perhaps the only existing example of an autarky, as none of the other economies you mentioned remotely qualify....North Korea.

Yes, that North Korea...the one that lends out it's population as slave labor in Siberia to aquire foreign currency that it uses to buy the trillion things it can't produce and China doesn't generously donate.

Even then, one bad crop is enough to send the population into full starvation.

Like common dude.

All tankies are fascists.

[Endus]

Go on and call me a fascist, it's very surprising coming from some Bakunin or Proudhon idolizer or potential larping liberal (based on that p4p)...lol. Fascists are Fascists, Capitalists are Fascists, Communists are Fascists!!! Everyone is a fascist!!!

Man, did you just take whatever credibility you hoped to come off as having and just actively shit all over it right in the middle of the street with that kind of comment.

[Kent088]

Redefining the term autarky to fit your narrative while bitching about words that aren't used in academic economics, classic.

Which is what * you * are doing. You can employ anything from a simple dictionary definition to a long economic paper's one, and you will find Autarky is defined generally as anything between full isolation to a country that employs situational autarky, such as if France decided to ban the export of steel for the purpose of creating a home steel industry while otherwise employing unrestricted free trade.

Literal Word Salad

I specifically said these countries carried baggage to show I wasn't making claims about their overall attraction as a place to live. You are distracting from an normative economics discussion. These countries found success in employing Autarky RELATIVE to their previous development levels and neighboring countries in a few sectors: Education, Medical Drugs, Capital Equipment to name a few. This is not in any way a defense of the Tianamen Square Massacre; Get a grip.

You tell me that I "ignored" North Korea but skipped to more successful examples. Yes, I did, because my post was about employing Autarky as a realistic principle for specific goods, not shutting off the economy to all foreigners and employing total isolation. I prefer to deal with reality, and North Korea's model is built wholly on ideology. It shouldn't go without saying why bringing them up is a strawman, especially when I distanced from their closest system: Wartime N*zi Germany.

Just saying my arguments are contradictory does not make them so.

Man, did you just take whatever credibility you hoped to come off as having and just actively shit all over it right in the middle of the street with that kind of comment.

Not really, no. It should go without saying why Twitter Champagne Socialists are incredibly annoying.

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Haha this is hilarious bad take on everything regarding economics.


All tankies are fascists.

Really, this is the rabbit hole, irrelevant, waste of time kind of discussion you want to start?

At least provide some kind of real response.

[Endus]

Not really, no. It should go without saying why Twitter Champagne Socialists are incredibly annoying.

This just comes off as you not having any defensible arguments against the very, very relevant criticisms they have of capitalist theory. Which, y'know, just take a look at current events if you want specific examples.

You decided to fire off a completely unwarranted and ideologically vapid character attack against an imaginary enemy. That's something extremists do; taking potshots at the boogeyman.

[Kent088]

This just comes off as you not having any defensible arguments against the very, very relevant criticisms they have of capitalist theory. Which, y'know, just take a look at current events if you want specific examples.

You decided to fire off a completely unwarranted and ideologically vapid character attack against an imaginary enemy. That's something extremists do; taking potshots at the boogeyman.

I don't see why the focus is on me, the dude is running around with the fascist word knowing the social implications of being labeled that way. On top of the fact that I'm not one, do I really need to explain why I am pissed off and had suspicion about the motivations of that poster?

[Endus]

I don't see why the focus is on me

Because you went off on a completely ridiculous and misinformed rant.

the dude is running around with the fascist word knowing the social implications of being labeled that way.

And? If the shoe fits, and all that. Are you angry he used the word, or are you angry because it's unjustified? Because you came off as the former.

As a for-instance, here's what I find the most useful descriptive definition of Fascism, as an ideology, separated out into 14 most-common features; https://www.openculture.com/2016/11/...f-fascism.html
You don't need all of them to qualify as "fascist", either.

Autarky has, traditionally and historically speaking, been a primary economic goal of fascists; https://en.wikipedia.org/wiki/Econom...20unemployment. It suits the internal populism and the hostility towards "others" that fascism makes use of. While it wouldn't be accurate to claim autarkies are always fascist, fascists are almost always pushing for autarky. And given Mihalik just said it was tripping his "spidey senses", it sure seems like there's plenty of good, justifiable, historical reason for that to be the case.

On top of the fact that I'm not one, do I really need to explain why I am pissed off and had suspicion about the motivations of that poster?

You didn't attack just that poster. You attacked him, and anyone and everyone who might respect thinkers like Bakunin or Proudhon (or plenty of other socialist thinkers, I imagine). Or that he's a "liberal", for which you'd have to provide more explanation so I can even tell what group you're attacking.

Nor did you attack his motivations at all. You just went off about people being called "fascists". It's like when racists say that "racism" doesn't mean anything any more, because you can't even be casually racist without being called racist these days.

"Fascist" isn't a swear word, and even if it were, this forum allows swears. Fearmongering about "the fascist word" is fuckin' ridiculous.

[Verdugo]

Guy plays one too many 4x games and suddenly he is an expert on economy.

[Belize]

... the dude is running around with the fascist word knowing the social implications of being labeled that way.

Bro, you're on a gaming forum under a pseudonym. There's no social implication beyond what you associate to yourself. The fact you feel strongly called out is a reflection of the accuracy of the labels.

[D3thray]

The mere fact that what should have been a more benign discussion about economic theory so quickly devolves into back and forth drivel about fascism is really telling. Some pretty big hate boners waggling about in here.

On topic, the idea that some amount of economic self-sufficiency in certain sectors is prudent should hardly be controversial. It’s akin to keeping some amount of your assets liquid in investing. Sure you might theoretically see greater returns with more invested, but you’d be left with your pants down if you had any sort of immediate need for cash. Autarky is economic insurance, you pay for the amount you think you need and no more. And if you can spend 15 minutes to save 15% on your insurance, that’s probably smart, in other words don’t overpay.

[Poopymonster]

Guy plays one too many 4x games and suddenly he is an expert on economy.

Why can't we just nerve staple the citizens?

[Verdugo]

Why can't we just nerve staple the citizens?

Just turn them into Horatio so they can also be perfect. If genocide was evil, then why are people born so ugly.

[Howel]

Had a small hiccup in global trade, better abandon a functional 200 year old system, that ensured that many of us live in luxury experienced by none of our ancestors.

Did OP not get his hands on a PS5? Because newsflash, Autarky won't net you one either.

[Mihalik]

On topic, the idea that some amount of economic self-sufficiency in certain sectors is prudent should hardly be controversial. It’s akin to keeping some amount of your assets liquid in investing. Sure you might theoretically see greater returns with more invested, but you’d be left with your pants down if you had any sort of immediate need for cash. Autarky is economic insurance, you pay for the amount you think you need and no more. And if you can spend 15 minutes to save 15% on your insurance, that’s probably smart, in other words don’t overpay.

Again. You're doing the same thing as OP. You're changing the definitions to suit your point.

Absolutely nobody would ever argue that self sufficiency in certain areas isn't literally a strategic necessity.

That's why the concept of "strategic industries and infrastructure" exists.

Autarky is an entirely different concept with much broader economic and political implications.

Note, fascists often latch onto autarky because it aligns with their nationalist agendas. But said agendas are actually universally counter productive. Lefties and environmentalists have been begging and screaming for decades about diversifying away from fossil fuels and begging for regulation of fossil fuel producers. Things that would have come very handy in a situation like the one we are experiencing, where the global fossil fuel supply has been distrupted by the fallout of a 2 year global pandemic combined with a major land war in Europe launched by Russia.

But no, the nationalist crowd has spent decades deregulating energy markets to increase profitability and right wingers have and continue to oppose any sensible investment that would reduce our fossil fuel dependance.

One more time. You don't understand what autarky is. You misunderstand the problems with global trade and you misidentify the solutions to the problem.

On the contrary for ideological reasons every "solution" you guys come up with just deepens the problem.