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Krugman- Ricardo’s Difficult Idea

Krugman- Ricardo’s Difficult Idea -...

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Ricardo’s Difficult Idea Paul Krugman “My objective in this essay is to try to explain why intellectuals who are interested in economic issues so consistently balk at the concept of comparative advantage.” 1 “…I will try to defend the following hypothesis: (i) At the shallowest level, some intellectuals reject comparative advantage simply out of a desire to be intellectually fashionable. Free trade, they are aware, has some sort of iconic status among economists; so in a culture that always prizes the avant-garde, attacking that icon is seen as a way to seem daring and unconventional. (ii) At a deeper level, comparative advantage is a harder concept than it seems, because like any scientific concept, it is actually part of a dense web of linked ideas. A trained economist looks at the simple Ricardian model and sees a story that can be told in a few minutes; but in fact, in order to tell that story so quickly one must presume that one’s audience understands a number of other stories involving how competitive markets work, what determines wages, how balance of payments adds up, and so on.” 1 (iii) “At the deepest level, opposition to comparative advantage-like opposition to the theory of evolution-reflects the aversion of many intellectuals to an essentially mathematical way of understanding the world. Both comparative advantage and natural selection are ideas, grounded at base, in mathematical models-simple models that can be stated without actually writing down any equations, but mathematical models all the same.
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