We teach “comparative advantage” as if it were a deterministic rule of the universe.

But it isn’t. Human creativity rules the universe, for better and for worse.

So, it’s time to recognize: Comparative advantage should be dropped as a central economic concept. We are all street porters, when you get right down to it.

My piece at the Freeman….

UPDATE:  Very interesting comment from THE FREEMAN website… This is the sort of (relatively) gentle and entirely correct correction I have come to expect from Jacob Levy.  It’s never bad to have a mistake corrected, and I think Dr. Morales is correct here.

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Dear Prof. Munger,

The problem with comparative advantage is that mainstream economics has completely misunderstood what Ricardo actually meant to prove in the original numerical example in the Principles. The differences between Ricardo’s notion and the textbook version of comparative advantage can be appreciated here: https://scholar.google.at/cita…

Ricardo’s version is compatible with the division of labor (http://et.worldeconomicsassoci…. Moreover, his original propositions are as valid today as they were two hundred years ago.

Best,

Jorge Morales