tim333 8 days ago

>Do you really believe in the comparative advantage argument though? Surely it’s only true if comparative advantage is fixed over time.

It's mostly not that complicated. Ecuador is better at bananas, the US is better at software so they trade. And similar stuff.

1
rainsford 7 days ago

It's even simpler than that. Ecuador doesn't even need to be better than the US at growing bananas, they just need to be better at growing bananas than the US is at developing software relative to their banana growing abilities.

My favorite example is from an economics class quite a few years ago now. Michael Jordon is super efficient at making money playing basketball (told you it was a while ago). But he's also pretty good at mowing his lawn, since he's tall and athletic. But since he's way better at playing basketball, it makes sense for him to focus on basketball and paying some kid to mow his lawn, even though the kid is way less efficient at mowing lawns.

The US is way more advanced than Ecuador, and could presumably develop some hyper efficient banana greenhouse using genetic engineering and AI or whatever. But Ecuador is still pretty good at growing bananas and the US is much better at developing software, so buying bananas from Ecuador and putting the AI greenhouse resources into developing software instead makes way more sense.