STREET DOGS: Comparative advantage is important
Comparative advantage is an important idea that can be difficult to grasp
From Robert Kurzban at Edge.org: Comparative advantage is an important idea, but can be difficult to grasp. To try to illustrate the point, consider the economist’s device of simplifying matters to see the underlying point. You and I are on a desert island, harvesting coconuts and catching fish to survive. You need one hour to harvest one coconut and two hours to catch one fish. I am less efficient than you at both activities; I require two hours per coconut and six hours per fish. It might seem that you need not trade with me; after all, you’re better than I am at both fishing and harvesting coconuts. But the economist David Ricardo famously showed this isn’t so. Consider two cases. In the first, we don’t trade. You produce, say, four coconuts and two fish during an eight-hour workday. I produce just one of each. For the second case, suppose we specialise and trade and you agree to give me a fish in exchange for 2.5 coconuts. Now you produce one extra fish and give it to me in trad...
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