RICARDOS DIFFICULT IDEA The title of this paper is a play on that of an admirable recent book by the philosopher Daniel Dennett, Darwwin's Dangerous Idea: Evolution and the Meanings of Life(1995). Dennett's book is an examination of the reasons why so many intellectuals remain hostile to the idea of evolution through natural selection--an idea that seems simple and compelling to those who understand it, but about which intelligent people somehow manage to get confused time and time again The idea of comparative advantage - with its implication that trade between two nations normally raises the real incomes of both --is, like evolution via natural selection, a concept that seems simple and compelling to those who understand it. Yet anyone who becomes involved in discussions of international trade beyond the narrow circle of academic economists quickly realizes that it must be in some sense, a very difficult concept indeed I am not talking here about the problem of communicating the case for free trade to crudely anti-intellectual opponents, people who simply dislike the idea of ideas. The persistence of that sort of opposition, like the persistence of creationism is a different sort of question, and requires a different sort of discussion. What I am concerned with here are the views of intellectuals, people who do value ideas, but somehow find this particular idea impossible to grasp My objective in this essay is to try to explain why intellectuals who are interested in economic issues so consistently balk at the concept of comparative advantage. Why do journalists who have a reputation as deep thinkers about world affairs begin squirming in their seats if you try to explain how trade can lead to mutually beneficial specialization? Why is it virtually impossible to get discussion of comparative advantage, not only onto newspaper op-ed pages, but even into magazines that cheerfully publish long discussions of the work of Jacques Derrida? Why do policy wonks who will happily watch hundreds of hours of talking heads droning on about the global economy refuse to sit still for the ten minutes or so it takes to explain ricardo? In this essay, I will try to offer answers to these questions. The first thing I need to do is to make clear how few people really do understand Ricardo's difficult idea-- since the response of many intellectuals, challenged on this point, is to insist that of course they understand the concept, but they regard it as oversimplified or invalid in the modern world. Once this point has been established, I will ry to defend the following hypothesis (i At the shallowest level, some intellectuals reject comparative advantage simply out of a desire to be intellectually fashionable. Free trade, they are aware, has some sort of iconic status among economists;so, in a culture that al ways prizes the avant-garde attacking that icon is seen as a way to seem daring and unconventional i At a deeper level, comparative advantage is a harder concept than it seems, because like any scientific concept it is actually part of a dense web of linked ideas. a trained economist looks at the simple Ricardian model and sees a story that can be told in a few minutes but in fact to tell that story so quickly one must presume that one's audience understands a number of other stories involving how competitive markets work, what determines wages, how the balance of payments adds up, and so on (ii) At the deepest level, opposition to comparative advantage -- like opposition to the theory of evolution--reflects the aversion of many intellectuals to an essentially mathematical way of
RICARDO'S DIFFICULT IDEA The title of this paper is a play on that of an admirable recent book by the philosopher Daniel Dennett, Darwin's Dangerous Idea: Evolution and the Meanings of Life (1995). Dennett's book is an examination of the reasons why so many intellectuals remain hostile to the idea of evolution through natural selection -- an idea that seems simple and compelling to those who understand it, but about which intelligent people somehow manage to get confused time and time again. The idea of comparative advantage -- with its implication that trade between two nations normally raises the real incomes of both -- is, like evolution via natural selection, a concept that seems simple and compelling to those who understand it. Yet anyone who becomes involved in discussions of international trade beyond the narrow circle of academic economists quickly realizes that it must be, in some sense, a very difficult concept indeed. I am not talking here about the problem of communicating the case for free trade to crudely anti-intellectual opponents, people who simply dislike the idea of ideas. The persistence of that sort of opposition, like the persistence of creationism, is a different sort of question, and requires a different sort of discussion. What I am concerned with here are the views of intellectuals, people who do value ideas, but somehow find this particular idea impossible to grasp. My objective in this essay is to try to explain why intellectuals who are interested in economic issues so consistently balk at the concept of comparative advantage. Why do journalists who have a reputation as deep thinkers about world affairs begin squirming in their seats if you try to explain how trade can lead to mutually beneficial specialization? Why is it virtually impossible to get a discussion of comparative advantage, not only onto newspaper op-ed pages, but even into magazines that cheerfully publish long discussions of the work of Jacques Derrida? Why do policy wonks who will happily watch hundreds of hours of talking heads droning on about the global economy refuse to sit still for the ten minutes or so it takes to explain Ricardo? In this essay, I will try to offer answers to these questions. The first thing I need to do is to make clear how few people really do understand Ricardo's difficult idea -- since the response of many intellectuals, challenged on this point, is to insist that of course they understand the concept, but they regard it as oversimplified or invalid in the modern world. Once this point has been established, I will try to defend the following hypothesis: (i) At the shallowest level, some intellectuals reject comparative advantage simply out of a desire to be intellectually fashionable. Free trade, they are aware, has some sort of iconic status among economists; so, in a culture that always prizes the avant-garde, attacking that icon is seen as a way to seem daring and unconventional. (ii) At a deeper level, comparative advantage is a harder concept than it seems, because like any scientific concept it is actually part of a dense web of linked ideas. A trained economist looks at the simple Ricardian model and sees a story that can be told in a few minutes; but in fact to tell that story so quickly one must presume that one's audience understands a number of other stories involving how competitive markets work, what determines wages, how the balance of payments adds up, and so on. (iii) At the deepest level, opposition to comparative advantage -- like opposition to the theory of evolution -- reflects the aversion of many intellectuals to an essentially mathematical way of
understanding the world. Both comparative advantage and natural selection are ideas grounded, at base, in mathematical models--simple models that can be stated without actually writing down any equations, but mathematical models all the same. The hostility that both evolutionary theorists and economists encounter from humanists arises from the fact that both fields lie on the front line of the war between C P Snows two cultures: territory that humanists feel is rightfully theirs, but which has been invaded by aliens armed with equations and computers 1. You just don ' t understand In scholarly discourse, it is a normal courtesy to give one's debating opponents the benefit of the doubt. If they say something that seems confused, one tries to find a charitable interpretation although it may seem that they are saying X, which is patently wrong, perhaps they are merely badly expressing their belief in Y, which could be right in principle(although it is inconsistent with the data) Many economists--myself included --have tried to extend this same courtesy to people who seem on a casual reading, not to understand comparative advantage. Surely, we have argued, the problem is one of different dialects or jargon, not sheer lack of comprehension. What these critics must be trying to do is draw attention to the ways in which comparative advantage may fail to work out in practice After all, economists are familiar with a number of reasons why the gains from free trade may not work out quite as easily as in the simplest ricardian model. External economies may mean underinvestment in import-competing sectors; imperfect competition may lead to a strategic competition over industry rents; because of distortions in domestic labor markets, imports may reduce wages or cause unemployment; and so on. And even if national income rises as a result of trade, the distribution of income within a country may shift in a way that hurts large groups. In short, there are a number of sophisticated extensions to and qualifications of the model introduced in the first few chapters of the undergraduate textbook(typically covered later in the book--for example, in Chapters 10-12 of Krugman and Obstfeld (1994) British economist of the early nineteenth century. He believed in two interrelated concep r age And so one is prepared to be sympathetic after reading a passage like the following, on the first of Sir James Goldsmith's The Trap: " The principal theoretician of free trade was David Ricardo, a specialization and comparative advantage. According to Ricardo, each nation should specialize in those activities in which it excels, so that it can have the greatest advantage relative to other countries. Thus, a nation should narrow its focus of activity, abandoning certain industries and developing those in which it has the largest comparative advantage. As a result, international trade would grow as nations export their surpluses and import the products that they no longer manufacture, efficiency and productivity would increase in line with economies of scale and prosperity would be enhanced. But these ideas are not valid in today s world. ( Goldsmith 1994: 1) On close reading, the passage seems a bit garbled; but maybe he is just a careless writer(or the translation from the original French is imperfect). One expects him to follow with a discussion of some of the valid reasons why one might want to qualify ricardo,s idea--for example, by referring to the importance of external economies in a high-technology world But this expectation is utterly disappointed. What is different, according to Goldsmith, is that there are all these countries out there that pay wages that are much lower than those in the West-and that he claims, makes Ricardo's idea invalid. That's all there is to his argument; there is no hint of any more subtle content. In short, he offers us no more than the classic"pauper labor"fallacy, the fallacy
understanding the world. Both comparative advantage and natural selection are ideas grounded, at base, in mathematical models -- simple models that can be stated without actually writing down any equations, but mathematical models all the same. The hostility that both evolutionary theorists and economists encounter from humanists arises from the fact that both fields lie on the front line of the war between C.P. Snow's two cultures: territory that humanists feel is rightfully theirs, but which has been invaded by aliens armed with equations and computers. 1. You just don't understand In scholarly discourse, it is a normal courtesy to give one's debating opponents the benefit of the doubt. If they say something that seems confused, one tries to find a charitable interpretation -- although it may seem that they are saying X, which is patently wrong, perhaps they are merely badly expressing their belief in Y, which could be right in principle (although it is inconsistent with the data). Many economists -- myself included -- have tried to extend this same courtesy to people who seem, on a casual reading, not to understand comparative advantage. Surely, we have argued, the problem is one of different dialects or jargon, not sheer lack of comprehension. What these critics must be trying to do is draw attention to the ways in which comparative advantage may fail to work out in practice. After all, economists are familiar with a number of reasons why the gains from free trade may not work out quite as easily as in the simplest Ricardian model. External economies may mean underinvestment in import-competing sectors; imperfect competition may lead to a strategic competition over industry rents; because of distortions in domestic labor markets, imports may reduce wages or cause unemployment; and so on. And even if national income rises as a result of trade, the distribution of income within a country may shift in a way that hurts large groups. In short, there are a number of sophisticated extensions to and qualifications of the model introduced in the first few chapters of the undergraduate textbook (typically covered later in the book -- for example, in Chapters 10-12 of Krugman and Obstfeld (1994)). And so one is prepared to be sympathetic after reading a passage like the following, on the first page of Sir James Goldsmith's The Trap: "The principal theoretician of free trade was David Ricardo, a British economist of the early nineteenth century. He believed in two interrelated concepts: specialization and comparative advantage. According to Ricardo, each nation should specialize in those activities in which it excels, so that it can have the greatest advantage relative to other countries. Thus, a nation should narrow its focus of activity, abandoning certain industries and developing those in which it has the largest comparative advantage. As a result, international trade would grow as nations export their surpluses and import the products that they no longer manufacture, efficiency and productivity would increase in line with economies of scale and prosperity would be enhanced. But these ideas are not valid in today's world." (Goldsmith 1994:1). On close reading, the passage seems a bit garbled; but maybe he is just a careless writer (or the translation from the original French is imperfect). One expects him to follow with a discussion of some of the valid reasons why one might want to qualify Ricardo's idea -- for example, by referring to the importance of external economies in a high-technology world. But this expectation is utterly disappointed. What is different, according to Goldsmith, is that there are all these countries out there that pay wages that are much lower than those in the West -- and that, he claims, makes Ricardo's idea invalid. That's all there is to his argument; there is no hint of any more subtle content. In short, he offers us no more than the classic "pauper labor" fallacy, the fallacy
that ricardo dealt with when he first stated the idea, and which is a staple of even first-year courses in economics. In fact, one never teaches the Ricardian model without emphasizing precisely the way that model refutes the claim that competition from low-wage countries is necessarily a bad thing, that it shows how trade can be mutually beneficial regardless of differences in wage rates. The point is not that low-wage competition never poses a problem. Rather, what is significant is that despite ostentatiously citing Ricardo, Goldsmith completely misses one of the essential lessons of his argument One might argue that Goldsmith is a straw man, that he is an intellectual lightweight whom nobody would take seriously as a commentator on these issues. But The Trap is structured as a discussion with Yves Messarovitch, the economics editor of Le Figaro, Mr. Messarovitch certainly took Sir James seriously(never raising any objections to his version of international trade theory), and the book became a best-seller in France. In the United States, Goldsmith did not sell as many books, but his views were featured in intellectual magazines like New Perspectives quarterly, he was invited to speak to the US Congress; and the Clinton Administration took his views seriously enough to send its chief economist, Laura Tyson, to debate him on television. In short, while goldsmith's failure to understand the basic idea of comparative advantage may seem stunningly obvious to any trained economist, other intellectuals -- including editors and journalists who specialize on economic matters regarded his views as, at the very least, a valuable addition to the debate Or consider the recent anti-free-trade writings of James Fallows the Washington editor of The Atlantic Monthly and one of America's most prominent intellectuals. In his book looking at the sun (1994), Fallows argues that Asian success proves the effectiveness of protectionist policies in promoting economic growth. One might have expected him to offer some intellectually cutting-edge explanation of why this might be so, of why comparative advantage is invalid in the modern world economy. But instead he claims that economists have gone astray by ignoring the nineteenth-century ideas of Friedrich List! One must assume that Fallows actually read List; in which case his praise for List shows clearly that he does not understand Ricardo. For List's old book, like Goldsmith's new one, is the work of a man who, right from the beginning, just didnt get it; who could not get straight in his mind how trade between two countries could raise incomes in both (A sample List argument he points out that agricultural land near cities is more valuable than that far away, and concludes that riffs on manufactured goods will help farmers as well as industrialists) While the ideas of both Fallows and Goldsmith have been well received in intellectual circles, they have not by any means persuaded everyone. What is striking, however, is that virtually none of the reviews of their books have pointed out that they appear not to understand comparative advantage (Indeed, reviews of Fallows's book tended to praise his economic sophistication and question his political and cultural analysis). The explanation, of course, is that the reviewers don't understand it r, in some cases, that editors who didn, t understand the concept refused to allow it to be mentioned in the reviews. (I speak from personal experience). I believe that much of the effectiveness of economists in public debate comes from their false supposition that intelligent people who read and even write about world trade must grasp the idea of comparative advantage With very few exceptions, they don,'t--and they don' t even want to hear about it. Why 2. The cult of the new One of America's new intellectual stars is a young writer named Michael Lind, whose contrarian essays on politics have given him a reputation as a brilliant enfant terrible. In 1994 Lind published an
that Ricardo dealt with when he first stated the idea, and which is a staple of even first-year courses in economics. In fact, one never teaches the Ricardian model without emphasizing precisely the way that model refutes the claim that competition from low-wage countries is necessarily a bad thing, that it shows how trade can be mutually beneficial regardless of differences in wage rates. The point is not that low-wage competition never poses a problem. Rather, what is significant is that despite ostentatiously citing Ricardo, Goldsmith completely misses one of the essential lessons of his argument. One might argue that Goldsmith is a straw man, that he is an intellectual lightweight whom nobody would take seriously as a commentator on these issues. But The Trap is structured as a discussion with Yves Messarovitch, the economics editor of Le Figaro; Mr. Messarovitch certainly took Sir James seriously (never raising any objections to his version of international trade theory), and the book became a best-seller in France. In the United States, Goldsmith did not sell as many books, but his views were featured in intellectual magazines like New Perspectives Quarterly; he was invited to speak to the US Congress; and the Clinton Administration took his views seriously enough to send its chief economist, Laura Tyson, to debate him on television. In short, while Goldsmith's failure to understand the basic idea of comparative advantage may seem stunningly obvious to any trained economist, other intellectuals -- including editors and journalists who specialize on economic matters -- regarded his views as, at the very least, a valuable addition to the debate. Or consider the recent anti-free-trade writings of James Fallows, the Washington editor of The Atlantic Monthly and one of America's most prominent intellectuals. In his book Looking at the Sun (1994), Fallows argues that Asian success proves the effectiveness of protectionist policies in promoting economic growth. One might have expected him to offer some intellectually cutting-edge explanation of why this might be so, of why comparative advantage is invalid in the modern world economy. But instead he claims that economists have gone astray by ignoring the nineteenth-century ideas of Friedrich List! One must assume that Fallows actually read List; in which case his praise for List shows clearly that he does not understand Ricardo. For List's old book, like Goldsmith's new one, is the work of a man who, right from the beginning, just didn't get it; who could not get straight in his mind how trade between two countries could raise incomes in both. (A sample List argument: he points out that agricultural land near cities is more valuable than that far away, and concludes that tariffs on manufactured goods will help farmers as well as industrialists). While the ideas of both Fallows and Goldsmith have been well received in intellectual circles, they have not by any means persuaded everyone. What is striking, however, is that virtually none of the reviews of their books have pointed out that they appear not to understand comparative advantage. (Indeed, reviews of Fallows's book tended to praise his economic sophistication and question his political and cultural analysis). The explanation, of course, is that the reviewers don't understand it either -- or, in some cases, that editors who didn't understand the concept refused to allow it to be mentioned in the reviews. (I speak from personal experience). I believe that much of the ineffectiveness of economists in public debate comes from their false supposition that intelligent people who read and even write about world trade must grasp the idea of comparative advantage. With very few exceptions, they don't -- and they don't even want to hear about it. Why? 2. The cult of the new One of America's new intellectual stars is a young writer named Michael Lind, whose contrarian essays on politics have given him a reputation as a brilliant enfant terrible. In 1994 Lind published an
article in Harper's about international trade, which contained the following remarkable passage Many advocates of free trade claim that higher productivity growth in the United States will offset pressure on wages caused by the global sweatshop economy, but the appealing theory falls victim to an unpleasant fact Productivity has been going up, without resulting wage gains for American workers. Between 1977 and 1992, the average productivity of American workers increased by more than 30 percent, while the average real wage fell by 13 percent. The logic is inescapable. No matter how much productivity increases, wages will fall if there is an abundance of workers competing for a scarcity of jobs -- an abundance of the sort created by the globalization of the labor pool for US based corporations. (Lind 1994 What is so remarkable about this passage? It is certainly a very abrupt, confident rejection of the case for free trade; it is also noticeable that the passage could almost have come out of a campaign speech this area, is that when lind writes about how the beautiful theory of free trade is refuted by an tvith by Patrick Buchanan. But the really striking thing, if you are an economist with any familiarity unpleasant fact, the fact he cites is completely untrue More specifically the 30 percent productivity increase he cites was achieved only in the manufacturing sector; in the business sector as a whole the increase was only 13 percent. The 13 percent decline in real wages was true only for production workers, and ignores the increase in their benefits: total compensation of the average worker actually rose 2 percent. And even that remaining gap turns out to be a statistical quirk: it is entirely due to a difference in the price indexes used to deflate business output and consumption(probably reflecting overstatement of both productivity growth and consumer price inflation). When the same price index is used, the increases in productivity and compensation have been almost exactly equal. But then how could it be otherwise? Any difference in the rates of growth of productivity and compensation would necessarily show up a fall in labor's share of national income --and as everyone who is even slightly familiar with the numbers knows, the share of compensation in U.S. national income has been quite stable in recent decades, and actually rose slightly over the period Lind describes The question here is not why Lind got these numbers wrong. It takes considerable experience to know where to look and what to worry about in economic statistics, and one should not expect someone who does not work in the field to be able to get it right without some guidance. The question is, instead, why Mr. Lind felt that it was a good idea to make sweeping pronouncements about this subject, when he clearly was unwilling to invest time and energy in actually understanding it. The short answer in this case is surely that Mr. Lind, who is al ways looking for ways to enhance his enfant terrible status, saw this as a perfect opportunity. Free trade is a sacred cow of economists who are well-known to be boring, stuffy types, what could be a better way to reinforce one's credentials as a radical, innovative thinker than to skewer their most beloved doctrine? (t seems not to have occurred to him that there might be a reason other than ideological rigidity that the striking fact he thought he knew has not been noticed by economists) This is a fairly extreme case, but by no means unique Modern intellectuals are supposed to be daring innovators, not respecters of tradition. As any publisher will tell you, books about startling new scientific discoveries al ways sell better than books about known areas of science, even though the things science already knows are in many ways stranger than any of the speculations in the latest cosmological best-seller. Old ideas are viewed as boring, even if few people have heard of them;new ideas, even if they are probably wrong and not terribly important, are far more attractive. And books
article in Harper's about international trade, which contained the following remarkable passage: "Many advocates of free trade claim that higher productivity growth in the United States will offset pressure on wages caused by the global sweatshop economy, but the appealing theory falls victim to an unpleasant fact. Productivity has been going up, without resulting wage gains for American workers. Between 1977 and 1992, the average productivity of American workers increased by more than 30 percent, while the average real wage fell by 13 percent. The logic is inescapable. No matter how much productivity increases, wages will fall if there is an abundance of workers competing for a scarcity of jobs -- an abundance of the sort created by the globalization of the labor pool for USbased corporations." (Lind 1994: ) What is so remarkable about this passage? It is certainly a very abrupt, confident rejection of the case for free trade; it is also noticeable that the passage could almost have come out of a campaign speech by Patrick Buchanan. But the really striking thing, if you are an economist with any familiarity with this area, is that when Lind writes about how the beautiful theory of free trade is refuted by an unpleasant fact, the fact he cites is completely untrue. More specifically: the 30 percent productivity increase he cites was achieved only in the manufacturing sector; in the business sector as a whole the increase was only 13 percent. The 13 percent decline in real wages was true only for production workers, and ignores the increase in their benefits: total compensation of the average worker actually rose 2 percent. And even that remaining gap turns out to be a statistical quirk: it is entirely due to a difference in the price indexes used to deflate business output and consumption (probably reflecting overstatement of both productivity growth and consumer price inflation). When the same price index is used, the increases in productivity and compensation have been almost exactly equal. But then how could it be otherwise? Any difference in the rates of growth of productivity and compensation would necessarily show up as a fall in labor's share of national income -- and as everyone who is even slightly familiar with the numbers knows, the share of compensation in U.S. national income has been quite stable in recent decades, and actually rose slightly over the period Lind describes. The question here is not why Lind got these numbers wrong. It takes considerable experience to know where to look and what to worry about in economic statistics, and one should not expect someone who does not work in the field to be able to get it right without some guidance. The question is, instead, why Mr. Lind felt that it was a good idea to make sweeping pronouncements about this subject, when he clearly was unwilling to invest time and energy in actually understanding it. The short answer in this case is surely that Mr. Lind, who is always looking for ways to enhance his enfant terrible status, saw this as a perfect opportunity. Free trade is a sacred cow of economists, who are well-known to be boring, stuffy types; what could be a better way to reinforce one's credentials as a radical, innovative thinker than to skewer their most beloved doctrine? (It seems not to have occurred to him that there might be a reason other than ideological rigidity that the striking fact he thought he knew has not been noticed by economists). This is a fairly extreme case, but by no means unique. Modern intellectuals are supposed to be daring innovators, not respecters of tradition. As any publisher will tell you, books about startling new scientific discoveries always sell better than books about known areas of science, even though the things science already knows are in many ways stranger than any of the speculations in the latest cosmological best-seller. Old ideas are viewed as boring, even if few people have heard of them; new ideas, even if they are probably wrong and not terribly important, are far more attractive. And books
that say(or seem to say)that the experts have all been wrong are far more likely to attract a wide audience than books that explain why the experts are probably right. Stephen Jay Goulds Wonderful L ife( Gould 1989)which to many readers seemed to say that recent discoveries refute Darwinian orthodoxy, attracted far more attention than Richard Dawkins' equally well-written The blind atchmaker (Dawkins 1986), which explained the astonishing implications of that orthodoxy. (See Dennett for an eye-opening discussion of Gould ) Roger Penrose's The Emperor's New Mind, which rejects the possibility of explaining intelligence in terms of computational processes, attracted far more attention than any of the exciting discoveries of cognitive scientists who are actually trying to understand the nature of intelligence The same principle applies to international economics. Comparative advantage is an old idea intellectuals who want to read about international trade want to hear radical new ideas. not boring old doctrines, even if they are quite blurry about what those doctrines actually say. Robert Reich, now Secretary of Labor, understood this point perfectly when he wrote an essay for Foreign Affairs entitled"Beyond free trade".(Reich 1983 ) The article received wide attention, even though it was fairly unclear exactly how Reich proposed to go beyond free trade( there is a certain similarity between Reich and Gould in this respect: they make a great show of offering new ideas, but it is quite hard to pin down just what those new ideas really are). The great selling point was, clearly, the article's title free trade is old hat, it is something we must go beyond. In this sort of intellectual environment, it is quite hard to get anyone other than an economics student to sit still for an explanation of the concept of comparative advantage. Just imagine trying to tell an ambitious, energetic, forward-looking intellectual who is interested in economics --William Jefferson Clinton comes to mind --that before he can start talking knowledgeably about globalization and the information economy he must wrap his mind around a difficult concept that was devised by a frock- coated banker 180 years ago 3. A harder concept than it seems To a trained economist, the basic Ricardian model seems almost trivial. Two goods, two countries one productive factor, perfect competition: what could be simpler? Indeed, one of the fierce joys of being an international trade economist is that so many seemingly sophisticated tracts can be revealed as nonsense, so many self-important men unmasked as poseurs, using such a minimalist framework And yet if one tries to explain the basic model to a non-economist, it soon becomes clear that it really isn't that simple after all. Teaching the model, to docile students, is one thing they get the model in the course of a broader study of economics, and in any case they are obliged to pay attention and learn it the way you teach it if they want to pass the exam. But try to explain the model to an adult, especially one who already has opinions about the subject, and you continually find yourself obliged this paper was written, I was trying to explain to an editorial writer for a major U.S. newspaper wy a to backtrack, realizing that yet another proposition you thought was obvious actually isn't Just bef international trade is probably not the main cause of the country's ills. After a confused interlude, it became clear what one of the blocks was: he just didn,' t understand, even after being told the numbers, why a situation in which productivity increases were not being shared with workers would that share in practice is a crucial piece of evidence. Eventrz ome -- and therefore why the stability of necessarily be reflected in a decline in the labor share of in I was reduced nearly to baby-talk ("suppose the factory produces 10 tons of cheese, and pays out wages equal in value to 6 tons;now suppose that the workers become more productive and turn out 12 tons of cheese, but that wages haven't changed. ) This was not a successful conversation: he wanted to talk about global trends
that say (or seem to say) that the experts have all been wrong are far more likely to attract a wide audience than books that explain why the experts are probably right. Stephen Jay Gould's Wonderful Life (Gould 1989) which to many readers seemed to say that recent discoveries refute Darwinian orthodoxy, attracted far more attention than Richard Dawkins' equally well-written The Blind Watchmaker (Dawkins 1986), which explained the astonishing implications of that orthodoxy. (See Dennett for an eye-opening discussion of Gould). Roger Penrose's The Emperor's New Mind, which rejects the possibility of explaining intelligence in terms of computational processes, attracted far more attention than any of the exciting discoveries of cognitive scientists who are actually trying to understand the nature of intelligence. The same principle applies to international economics. Comparative advantage is an old idea; intellectuals who want to read about international trade want to hear radical new ideas, not boring old doctrines, even if they are quite blurry about what those doctrines actually say. Robert Reich, now Secretary of Labor, understood this point perfectly when he wrote an essay for Foreign Affairs entitled "Beyond free trade". (Reich 1983). The article received wide attention, even though it was fairly unclear exactly how Reich proposed to go beyond free trade (there is a certain similarity between Reich and Gould in this respect: they make a great show of offering new ideas, but it is quite hard to pin down just what those new ideas really are). The great selling point was, clearly, the article's title: free trade is old hat, it is something we must go beyond. In this sort of intellectual environment, it is quite hard to get anyone other than an economics student to sit still for an explanation of the concept of comparative advantage. Just imagine trying to tell an ambitious, energetic, forward-looking intellectual who is interested in economics -- William Jefferson Clinton comes to mind -- that before he can start talking knowledgeably about globalization and the information economy he must wrap his mind around a difficult concept that was devised by a frockcoated banker 180 years ago! 3. A harder concept than it seems To a trained economist, the basic Ricardian model seems almost trivial. Two goods, two countries, one productive factor, perfect competition: what could be simpler? Indeed, one of the fierce joys of being an international trade economist is that so many seemingly sophisticated tracts can be revealed as nonsense, so many self-important men unmasked as poseurs, using such a minimalist framework. And yet if one tries to explain the basic model to a non-economist, it soon becomes clear that it really isn't that simple after all. Teaching the model, to docile students, is one thing: they get the model in the course of a broader study of economics, and in any case they are obliged to pay attention and learn it the way you teach it if they want to pass the exam. But try to explain the model to an adult, especially one who already has opinions about the subject, and you continually find yourself obliged to backtrack, realizing that yet another proposition you thought was obvious actually isn't. Just before this paper was written, I was trying to explain to an editorial writer for a major U.S. newspaper why international trade is probably not the main cause of the country's ills. After a confused interlude, it became clear what one of the blocks was: he just didn't understand, even after being told the numbers, why a situation in which productivity increases were not being shared with workers would necessarily be reflected in a decline in the labor share of income -- and therefore why the stability of that share in practice is a crucial piece of evidence. Eventually I was reduced nearly to baby-talk ("suppose the factory produces 10 tons of cheese, and pays out wages equal in value to 6 tons; now suppose that the workers become more productive and turn out 12 tons of cheese, but that wages haven't changed ..."). This was not a successful conversation: he wanted to talk about global trends