Comparative advantage is based on an idea that if one country produces something at a surplus which is supposed to be cheaper that it will be cheaper for the other country. While therefore, leaving the purchasing country an opportunity to produce what they are good at. However, as applied to 1st world v 2nd world economics, this idea is a failed theory. It has been shown again and again with imperical data.
"•Rapidly growing imports of computer and electronic parts (including computers, parts, semiconductors, and audio-video equipment) accounted for more than 40% of the $186 billion increase in the U.S. trade deficit with China between 2001 and 2008. The $73 billion deficit in advanced technology products with China in 2008 was responsible for 27% of the total U.S.-China trade deficit. The growth of this deficit contributed to the elimination of 627,700 U.S. jobs in computer and electronic products in this period. Other hard-hit industrial sectors include apparel and accessories (150,200 jobs), miscellaneous manufactured goods (136,900), and fabricated metal products (108,700); several service sectors were also hard hit by indirect job losses, including administrative support services (153,300) and professional, scientific, and technical services (139,000). "
http://www.epi.org/publications/entry/bp260
The free market traders along with their very improper and fallacious calculations when applied to comparative advantage to China do not take a lot into account. First it does not take into account the anti-trust values and balance from fair competition to comparative advantage or absolute advantage and the detriments that it does to market place. The basic idea of the anti-trust laws of the Sherman act were created to compel regulation into the comparative advantage theory when applied to intra country capitalist in the old days of America. As there was many capitalist who were saying that it is cheaper to allow them to use their massive uncompetitive advantages to an absolute advantage and it would be cheaper. However, these economists who speak on comparative advantage or even absolute advantage you find do not touch on the matter of anti-trust or even the effects of unfair competition. As that it what it is.
When applied between two big countries like the US and China truly either country can have a comparative advantage on anything. As both have massive size industrial areas. Both of a big population for labor. Along with that both have high demands for intra consumption. This means that the basic theory that it is cheaper to produce everything in China through the comparative absolute advantage as we have seen it slip from a comparative to an absolute is fallacious.
My hypothesis would be that economists have not done a proper implementation of the comparative advantage as calculated through anti-trust or Shermani style detriments to marketplaces for allowing absolute advantage. Which from an anti-trust doctrine enthusiast would seem the most logical explanation for allowing China to keep using their SOE cartels to the disadvantage of America.
The statistical data has also shown that we have lost more jobs, taxes,and revenue from this unfair competition than we have gained from opportunity costs to produce new industries or to purchase items at a lower cost. This has been offset by the huge amount of Americana's who have lost jobs,(Mexico, Canada, and the US included) can't pay taxes and then become a burden on society because there is no jobs for them to do. As such the calculation for the absolute advantage need to be done again in the light of ant-trust cartel activities, and seen through a loss of jobs, manufacturing capabilities, taxes, political clout, Research and Analysis of new technology and the basic idea of being able to keep ones civilians at work so that civil unrest does not come about.
This is something I would love to sit down and properly apply for. Excuses excuses, time and money is lacking in my inventory.
Rider i
This one is for Detroit and all those who lost their Childrens homes to Communist EW.
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