The theory of comparative advantage shows how voluntary exchange benefits both parties and encourages specialization. You don't need to possess an absolute advantage in any particular productive activity to enjoy a comparative advantage. Your comparative advantage is whatever you can do relatively cheaply compared to everything else and everyone else. For instance, Haiti still trades … Continue reading Do You Really Understand Comparative Advantage?
Month: March 2015
What “Buy Local” Campaigns Get Wrong
The economic thinking behind "buy local" campaigns is typically terrible. One such example is the claim that a dollar "circulates more" when you spend it locally. The rate of circulation of a dollar doesn't create any wealth. Try it out: circulate a dollar among a group of friends and feel your standard of living stay … Continue reading What “Buy Local” Campaigns Get Wrong
Mill on Paternalism
I have a "nutshell" summary and critique of John Stuart Mill's On Liberty now up at e3ne.org. Excerpt: Mill thus defends freedom of conscience, speech, and lifestyle on completely “practical” grounds, but he leaves some significant loose ends in On Liberty. For instance, there are lots of examples of “harms” that the government shouldn’t regulate, … Continue reading Mill on Paternalism
FDI & Civil Conflict
How does globalisation, especially foreign direct investment, influence the risk of intrastate conflict? While several prominent studies have found that globalisation reduces the probability of civil war, we use new data and methods to approach the question. In particular, we test for the possibility that foreign investment is endogenous to conflict risk and appropriately use … Continue reading FDI & Civil Conflict
A Right to Do Wrong?
The latest in my series of blog posts based on discussions with Ethics & Economics Challenge students is up at e3ne.org. It's on whether it's possible for us to have a right to do wrong in some cases, i.e., for there to be some moral obligations that it is not morally permissible to enforce. A … Continue reading A Right to Do Wrong?