Monday, October 12, 2009

Treasure Island

I have actually been to Treasure Island it was in the Wisconsin Dells, I don’t think it was the same place that the author was referring to but maybe. What an interesting reading, except I couldn’t get the movie Castaway out of my head during that whole island scenario story. I mean he and Spalding survived on an island without some fancy trading system.

Comparative advantage is all around us every day. When you stop and think about it is pretty amazing. Even people like Josh with absolute advantage in potty stories don’t necessarily have a comparative advantage, giving hope to the rest of us. Our economy like Adam Smith says allows people to seek their comparative advantage. Isn’t that why we are taking the courses and pursuing the things we do? Because we consider ourselves better at certain things than others, but not to say that we don’t have a comparative advantage in the things we are not good at.

I also like the line “Amazingly, everyone always has a comparative advantage at something.” I worked at a grocery store in high school and I am pretty sure I have worked with a few people that hold very few comparative advantages. In fact them not helping me and getting in my way would be their comparative advantages. But to be fair they were really good at things like complaining and making sure you knew what “they had just done” like it was a novel concept that you actually work while you were at work.

Know I know that those people who I have worked with actually do hold a comparative advantage just maybe not in the grocery industry, maybe in something like the lazy boy tester industry would suite them best.

2 comments:

  1. “Amazingly, everyone always has a comparative advantage at something.”

    I don't think so Nate. When you and your buddy are equally bad at something then you don't have a comparative advantage. Think about the example in the article about the two different couples stranded on the island. The first couple both sucked at catching fish, and they both sucked at getting water. You only found about about a comparative advantage when the labor pool increased.

    That's why I hate the internet. That's right you heard me. In the small farming community where I grew up, I was the most talented person around. My jokes were the funniest, my guitar playing was the most beautiful, and my poo stories were the most hilariously epic. I was quite literally amazing.

    Then some deuce-bag in the mid-nineties had to go out and invent the internet. Thanks a million Albert! With the increase in social networking and the larger pool of talent it brought, I was reduced from A-Plus Number One, to middle of the road not so special anymore.

    Comparative advantage and the economic power it unleashes, in my opinion can be a race to the bottom.

    Consider manufacturing: It's not that the Chinese are better at making quality products, or they are somehow more intrinsically efficient or resourceful, it is just that the labor pool is so large it's easier to find people who will work harder for less. That's not really an advantage for the person doing it.

    Let me just hint at another example. Adult entertainment. Sometimes comparative advantage can really suck. (No pun intended.)

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  2. "The first couple both sucked at catching fish, and they both sucked at getting water. You only found about about a comparative advantage when the labor pool increased."

    It was Adam Smith who first noticed that the division of labor is limited by the extent of the market. In the third chapter of Wealth... he wrote that there were certain types of industry that could only be carried out in a large town because a smaller market like in a village just wouldn't be able to support it. Larger markets typically allow greater opportunities for people to specialize according to their comparative advantage.

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