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Posts Tagged ‘David Ricardo’

David Ricardo Français : David Ricardo Deutsch...Ralph E. Gomory, former head of research at IBM and President Emeritus of the Alfred P. Sloan Foundation, appeared on Electric Politics with George Kenney on April 20, 2012 and seems to have independently discovered what Paul Craig Roberts had publicly presented in 2004, which is that David Ricardo’s theory of comparative advantage no longer applies because it was based on capital not being more mobile than traded goods (starting 26 minutes in).

I discovered Roberts’ findings in 2011 and reported them in my article, Paul Craig Roberts points out a theoretical breakdown of modern-day free trade, which I think could prove to be one of the biggest findings I’ve ever reported on my site, and could end up being Paul Craig Roberts’ greatest contribution to economics once enough economists evaluate the evidence solely based on critical analysis and not their funding.

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Paul Craig Roberts

I came across a 2004 appearance made by Paul Craig Roberts on C-SPAN (around 12:00), where he had realized an actual flaw with the academic framework that underpins the rampant rush toward more and more so-called free trade.

Namely, that David Ricardo’s theory of comparative advantage rests on a premise that no longer applies in our current situation — that the factors of production (labor and capital) are as mobile as traded goods.

Since the end of the Cold War, with the vast freed-up labor pool in China and India, the rise of the internet and mobile technologies, as well as the vastly deregulated transportation, financial and communications sectors, labor and capital are now even more mobile than traded goods (and even services).

Therefore, we not only have an intuitive basis for rejecting these so-called free trade deals, but an academic one, and the timing is all the more important with the pending free trade deals with South Korea, Panama and Colombia set to be ratified.

As for the solution, I think that Ian Fletcher has it. A flat tariff on all imported goods and services, with the only question being the rate (he suggests 30%).

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