Economics

Cuando los economistas nos hablan de amor

Jan 20, 2014 Robert Skidelsky

LONDRES – La novena conferencia ministerial de la Organización Mundial del Comercio, celebrada en diciembre en Bali, nos dejó un modesto paquete de medidas de estímulo al comercio internacional; en un plano más general, quedó demostrado el valor del multilateralismo de la OMC al evitarse un masivo incremento de las barreras comerciales, a diferencia de lo que sucedió en 1929‑1930, cuando el proteccionismo contribuyó a profundizar y extender la Gran Depresión. Pero sigue en pie la gran pregunta: ¿es buena la globalización? Y si lo es, ¿para quiénes?

La esencia de la globalización (el libre comercio) se basa en la teoría de las ventajas comparativas, según la cual el comercio internacional siempre es provechoso, incluso para un país que fuera capaz de producir cada uno de los bienes a menor costo (en términos de mano de obra y recursos) que todos los demás países.

El ejemplo de manual, según lo plantea el premio Nobel Paul Samuelson, es este: hay un pueblo donde el mejor abogado es también el mejor mecanógrafo. Supongamos ahora que es mejor como abogado que como mecanógrafo. Entonces conviene que se dedique exclusivamente al derecho y deje la mecanografía para su secretaria; así, los dos ganarán más dinero.

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Robert Skidelsky

Writing for PS since 2003
199 Commentaries

Robert Skidelsky, a member of the British House of Lords and Professor Emeritus of Political Economy at Warwick University, was a non-executive director of the private Russian oil company PJSC Russneft from 2016 to 2021. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

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Joshua Soffer Jan 22, 2014

"Would you even consider, for a moment, engaging in free trade in your personal life?" Sure , why not? IF you redefine utility as anything that brings creative satisfaction, and then broaden the definition of consumption to include not just products that you pay others for, but also products of your own creative thought that you then consume(that includes writing poetry for your own enjoyment , repairing a motorcycle or consuming the affections of your partner). By understanding utility and consumption in these terms, it becomes clear that money is but one means of acquiring products to consume. One can then see that John and Sylvia are correct to outsource the aspect of the motorcycle experience that does not afford them the means to achieve what for them, given their talents and creative limitations, is the most rewarding aspect of the motorcycle experience. To use Skidelsy's example to make my point about consumption as creativity, I would gladly pay someone to fold my socks, not in order to maximize my future earnings, but in order to free up my time to concentrate on my comparative advantage, the consumption of poetry that I create for my own enjoyment.
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Matt Stillerman Jan 22, 2014

In my opinion, free trade is simply stupid. And, you don't need any fancy economic arguments--- it's just obvious. Would you even consider, for a moment, engaging in free trade in your personal life? Of course not, Prof Skidelsky's economist-examples not withstanding. So, why would you think that this is a good idea for a nation?

I think that the point is made, most poignantly in Zen and the Art of Motorcycle Maintenance: An Inquiry Into Values, by Robert Persig. In that book, John and Sylvia are, in essence, pure consumers of the "motorcycle" experience. They have completely outsourced the other aspect of motorcycling, the "maintenance" that symbolizes doing things for yourself, and getting your hands dirty. The inadequacy and poverty of this mode of "motorcycling" is obvious in the narrative. In contrast, the protagonist, Phaedrus, revels in both romantic and practical aspects of motorcycling and his experience is more satisfactory.

"The Tao that can be told is not the eternal Tao." (Laozi, as translated by Livia Kohn) I *insist* that if you govern your life or your nation via a utility function, whether denominated in dollars or otherwise, then you have lost your way. If you can capture it in a utility function then "it" is not the way.

Of course, John and Sylvia are economically better off, but, would you rather be them than Phaedrus? Really?
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hari naidu Jan 21, 2014

I will leave the costly love business to the younger generation to compare in terms of cost/benefit analysis.

However free trade, after Bali (WTO), is still stuck in the mud with non-tariff barriers to trade (see Lamy’s recent article printed here).

Globalization, by definition, has forced national sovereignty (UN Charter) to be compromised and national boarders exposed to trade infringement, sought or unsought. Even the protection of rural population and its limited productive capacity, with official subsidy, is considered illegal (Doha Round) under WTO.

So what in the world do you mean or understand by *free trade*? Free trade for whom? The producer or the consumer? Or the global banking system that provides the capital and credit to move goods and services at unprecedented scales across national frontiers?

This week WEF(Davos) will be dealing with the subject of *economic and social inequality* since inception of WTO and its globalization ethos. IMHO, as a trade and development professional, we sort of overlooked the global (human) impact of what we’re negotiating under GATT Uruguay Round. Trade efficiencies are all very good and human capital, in final analysis, is what enforced globalization. And now we’re confronted with graphic illustration of how inequality has disrupted the welfare of most OECD countries, in particular.
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Jose araujo Jan 21, 2014

Also very interesting, and the main tell that the free trade theories were developed to gain access to new markets, and were not focused on the maximization of utility, is that defenders of the free trade are usually also in favor of controlling immigration, especially in times of stagnation and economic problems.

Labor specialization works at the individual level, but doesn’t work at higher level. Even companies will have trouble if they don’t keep an eye on the market, nurture technology development and innovation because they will end stuck themselves making the same product over time, and being replaced.
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Jose araujo Jan 21, 2014

The main critic to the comparative advantage theory implies the specialization of the less developed countries in low tech technologies. Considering economics is a continuum of growth be committing yourself to lower paying jobs instead of developing skills isn’t a good strategy, nor are you maximizing your future earnings.

So like the secretary for the lawyer, that instead of devoting to typing should study law and try to have a better living, a country shouldn’t forget to develop its competitive advantages in higher level economic activities.

The traditional argument for Ricardo’s comparative advantages was illustrated with Portugal and England (based on the Methuen treaty) were Portugal should devote to the production of wine and England to textiles. This led to Portugal being stuck with a rural society and economic tissue, making it harder to transition to an industrial economy and lowering its utility in the long run.
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Joshua Soffer Jan 21, 2014

"To be rational is to seek to maximize one’s utility – defined in terms of consumption, with money the way to maximize it". The flaw in this argument is that if consumption is the means by which to maximize one's utlity, then the meaning of consumption needs to be broadened to include not just products received from others , but products generated by one's own experience. The novel writer can be entertained not just by paying for a book, but by writing one. Via this definition of consumption, money is only one means, and not the most efficient one, of maximizing one's utility. Put differently, money can't buy me love.
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Procyon Mukherjee Jan 21, 2014

Stolper-Samuelson theorem, proved that removing trade barriers would have different effects in different countries. If a country has lots of skilled labor, its exports will tend to be intensive in skilled labor, and skilled workers will gain from more trade. But if unskilled labor is more abundant, its exports will be intensive in unskilled labor, so workers with skills will lose.
But there is more to it when we try to introduce incentives and taxes, which could deliberately incentivize or punish specific segments at the cost of others. Capital on the other hand and its formation could be at the cost of labor and here more efficiency could mean higher capital formation, not necessarily better wage.
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