That’s wonderful for him. I wish he had translated that knowledge into the post then! The reader shouldn’t have to come away from a post titled “the point of trade” with simply a list of reasons why trade might be nice when those reasons can actually be brought together in a unifying explanation, one that is already well-explained in Econ 101, no less.
Here he talks about his understanding of the textbook explanation, and you can judge for yourself whether it conveys comparative advantage or not: ”[sometimes people get different amounts of value from things, so they can get more value by trading them] is the horrible explanation that you sometimes see in economics textbooks because nobody knows how to explain anything … All right, suppose that all of us liked exactly the same objects exactly the same amount. This obliterates the poorly-written-textbook’s reason for “trade”.”
He also explains his thesis: “I claim that the reason we have more stuff has something to do with trade. I claim that in an alternate society where everybody likes every object the same amount, they still do lots and lots of trade for this same reason, to increase how much stuff they have.”
Of course, that is comparative advantage adjacent, so we’ll talk about it right? Wrong, the point of trade is to leverage an assortment of the sources of comparative advantage (but we won’t even attempt to link these together in their unifying concept): ”So now let us suppose identical fruit tastes, perfect task-switching, Star Trek transporters, identically cloned genetics, and people can share expertise via Matrix-style downloads which are free. Have we now gotten rid of the point of trade?”
The organizing/umbrella concept (comparative advantage) is still absent at the end of this. Maybe concrete examples like these, delineating specific sources by which comparative advantage can arise, are a useful didactic tool. But I don’t think the point was to illuminate a key concept (indeed, it was never named or really all that gestured at), the point apparently was to generate an exhaustive list of things that enable trade to increase production: ”Note: While contemplating this afterwards, I realized that we hadn’t quite gotten rid of all the points of trade, and there should have been two more rounds of dialogue; there are two more magical powers a society needs, in order to produce a high-tech quantity of stuff with zero trade. The missing sections are left as an exercise for the reader.”
I wish by the end of it that he had fully reinvented comparative advantage. Great that he knew about it all along though...
I’m willing to bet at really good odds that Eliezer knew perfectly well about comparative advantage while writing that post.
That’s wonderful for him. I wish he had translated that knowledge into the post then! The reader shouldn’t have to come away from a post titled “the point of trade” with simply a list of reasons why trade might be nice when those reasons can actually be brought together in a unifying explanation, one that is already well-explained in Econ 101, no less.
Here he talks about his understanding of the textbook explanation, and you can judge for yourself whether it conveys comparative advantage or not:
”[sometimes people get different amounts of value from things, so they can get more value by trading them] is the horrible explanation that you sometimes see in economics textbooks because nobody knows how to explain anything … All right, suppose that all of us liked exactly the same objects exactly the same amount. This obliterates the poorly-written-textbook’s reason for “trade”.”
He also explains his thesis:
“I claim that the reason we have more stuff has something to do with trade. I claim that in an alternate society where everybody likes every object the same amount, they still do lots and lots of trade for this same reason, to increase how much stuff they have.”
Of course, that is comparative advantage adjacent, so we’ll talk about it right? Wrong, the point of trade is to leverage an assortment of the sources of comparative advantage (but we won’t even attempt to link these together in their unifying concept):
”So now let us suppose identical fruit tastes, perfect task-switching, Star Trek transporters, identically cloned genetics, and people can share expertise via Matrix-style downloads which are free. Have we now gotten rid of the point of trade?”
The organizing/umbrella concept (comparative advantage) is still absent at the end of this. Maybe concrete examples like these, delineating specific sources by which comparative advantage can arise, are a useful didactic tool. But I don’t think the point was to illuminate a key concept (indeed, it was never named or really all that gestured at), the point apparently was to generate an exhaustive list of things that enable trade to increase production:
”Note: While contemplating this afterwards, I realized that we hadn’t quite gotten rid of all the points of trade, and there should have been two more rounds of dialogue; there are two more magical powers a society needs, in order to produce a high-tech quantity of stuff with zero trade. The missing sections are left as an exercise for the reader.”
I wish by the end of it that he had fully reinvented comparative advantage. Great that he knew about it all along though...
I mean, you can argue the post is badly written, but I don’t think it counts as a reinvention is my point.