Reddit Reddit reviews International Economics: Theory and Policy, 9th Edition

We found 3 Reddit comments about International Economics: Theory and Policy, 9th Edition. Here are the top ones, ranked by their Reddit score.

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International Economics
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International Economics: Theory and Policy, 9th Edition
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3 Reddit comments about International Economics: Theory and Policy, 9th Edition:

u/papermarioguy02 · 6 pointsr/neoliberal

/u/papermarioguy02's reading list outline:

Several people have asked me about what things to read to get initiated in the stuff I'm interested in. I don't really think that I'm the best teaching resource, but I can at least list off the pieces of media that have influenced my thoughts to a certain extent. This is just an outline, and you should probably use /u/integralds' list as a more authoritative resource, he's not 14, but this is how I got where I am (I also don't 100% agree with all of the arguments presented on the reading list, but they have influenced me).


In Praise of Cheap Labor - Paul Krugman

The Obama Doctrine - Jeffery Goldberg

The Case for Reparations - Ta-Nehisi Coates

How Politics Makes us Stupid - Ezra Klein

What the Fox Knows - Nate Silver


Principles of Economics - Greg Mankiw

Thinking, Fast and Slow - Daniel Kahneman

International Economics: Theory and Policy - Paul Krugman and Maurice Obstfeld (READING STILL IN PROGRESS, and reading Princples of Economics or some other 101 textbook is probably a prerequisite here)

Capitalism and Freedom - Milton Friedman (READING IN PROGRESS, and again, you should probably read the 101 textbook before this one)

Non Print Stuff

Any of the Crash Course series hosted by John Green. They aren't anywhere near perfect, but they do a good job of introducing you to subjects, and giving some insight on how to think about some topics.

Any of Khan Academy's math stuff. All very good explanations of many different ideas

Grant Sanderson's Essence of Calculus series, a way of getting a good visual intuition for how some really important math works.


Again, this is just one 14 year old's list. I do not pretend to be authoritative or that anything here is perfect, but they are things that have influenced the way I've thought about things. This is still an outline, so I might add things here in the future.

/u/Devjorcra, /u/Shawshank_Fanatic

u/SWSconnie · 1 pointr/wisconsin

1) How would dumping low-skilled labor into the US labor pool not displace or devalue US low-skilled labor?

I think the problem that a lot of people who look at it this way have is that they don't account for entrepreneurial expansion or the fluidity of human capital. I'm going to use farmers as my example for consistency but there are factory jobs, construction jobs, and other jobs in the food service sector that low/wage immigrant workers tend to take.

If a farmer sees a reduced cost of wages due to increased competition between domestic and international laborers on his/her farm, s/he has two possible ways to react: lower costs to the consumer (unlikely) or reinvest the excess money into the operation. This, in turn, increases demand in other areas of the economy in different ways and creates openings in other low-wage/low skill areas like factories, chemical plants, etc. Though these low-wage workers may not be able to work at a farm anymore, there's always the low-wage canning factory, farming supply store, repair shop, or other jobs that will grow as a result of an expansion at the farm.

What if these jobs don't exist in their area? Then the people may have to move to an area where the jobs do exist. The reason why the US economy is able to meet the demands of the world market so well is because most Americans are willing to move to get to the job that gives them the life they want. If immigrants come to Baraboo and push a bunch of farmer laborers out, they can always move to Stevens Point and work for Del Monte.

This reaction also ignores the fact that a person can, at any time, improve their skill-sets or education. Right now, we're having a discussion about people with very low skill-sets: lacking a high school diploma or GED, generally in the agricultural sector. The US has many opportunities for these people to advance to the next level of education or training if/when jobs become scarce. This is why Congress passed a bill that expanded tech colleges immediately after the Great Recession in 2008 to meet the expected demand of new students.

In all reality, though, the data is inconclusive as to whether or not a displacement or devaluation of domestic low-skilled labor occurs. When we talked about this in one of my econ classes, the only group of people affected by more immigration were the immigrants already in the US, legal or otherwise. I would actually like to see some research that demonstrates the sort of effect you're talking about here because I haven't seen any, yet.

2) What explains the flood of high risk-taking by immigrant labor?

This is widely believed but, I think, widely misunderstood. Most people who ILLEGALLY immigrate to the US are not taking excessive risks because only one incident with the police will demonstrate that they don't have legal documentation and send them to jail or to be deported. Here's an article by NPR (I know, biased but I'm doing this on the fly) that talks about it. From personal experience working with Latino immigrants to the US, I can say that the majority's biggest fear is that the police will have any reason to stop them because it would mean that they have to be sent home. A kid I worked with at a restaurant was pulled over for not having his car fully registered and he never showed up to work again.

I agree though, the places where most of these people are coming from are also some of the poorest states in their country. Nowadays, what we're seeing an increase of is immigrants from further south: Honduras, Nicaragua, Guatemala, etc. and an overall decrease of Mexican immigration.

3) Though I'm aware of many border factories, didn't our subsequent deal with China wipe out the full promise of NAFTA?

Short answer: no. Long answer: Our investment in Mexico allowed Mexico to gain a competitive advantage in a lot of the manufacturing jobs that were displaced there. Though many of the factories that we initially relocated to Mexico have subsequently moved to China (and now to Vietnam, Bangladesh, and Indonesia) the Mexican domestic demand for many of these products remained and so the factories did, too. It's also easier to do business with Mexico because of our more similar cultural expectations, free trade agreement, and trust between nations. Mexico is a natural partner for the US and Canada.

4) I see you've referenced the Hamilton Project of the Brookings Institution; do you have non-political-thinktank sources to support your point?

Sorry, no, I looked hard, but the subject hasn't had a truly "independent" look yet. I can say that the book I read that initially discussed all of this was pretty balanced in its approach, but Paul Krugman and the professor teaching the class are both considered "liberal" economists.

4) Stuff on the bottom of your point

Yes, Mexico's inequality does remain very high and will continue to do so until they fix their institutions. The influx of wealth from the North did not fix their problem, it only helped alleviate ours a little. It's sort of like a teacher putting a kid's homework into their backpack every night. The kid still has to do the homework, but at least it's there for him to do.

And it will and should. I'm a free trade guy, so my take on this is that Mexico didn't have the infrastructure to effectively and efficiently produce corn that could fully compete with US corn. I whole-heatedly agree that agricultural subsidies should be reexamined, but I haven't studied it much so this opinion is based solely on the fact that I see it as spending the US government can't afford. I don't know the benefits of the system very well.

u/underpopular · 1 pointr/underpopular

>Content Warning: Math (I mean it’s just high school algebra but if you really have a phobia of numbers, I can’t really help you)
>Economist Paul Samuelson once said that comparative advantage is the most important principle in the social sciences that is both true and non-trivial (i.e. it isn’t immediately obvious). This probably means it’s pretty fucking important to learn about. I mentioned it as one of the principles of this post. But that was a fairly basic overview. This won’t be as long as some of the more broad posts I’ve made here but it’s also very important. Comparative advantage is at the heart of most of what this sub suggests in terms of trade policy. It’s the thing that when I learned it, I suddenly had an interest in economics, it’s pretty hard to deny it once you realize how it works and knowing about it makes free trade much more appealing.
>#Absolute Advantage
>Before we get into comparative advantage, it’s useful to talk about absolute advantage. This is what people would usually think drives which goods a country would manufacture or import. Absolute advantage simply means you can make more of something at a lower cost. The US has an absolute advantage over other countries in most things for instance. American workers have the technology and resources to be able to make most things better than almost everyone else, so why don’t they? The easy answer is that it’s cheaper to make in other countries, but that doesn’t make a whole lot of sense, wouldn’t the extra productivity of American workers be worth the wage premium. Clearly something is at play that’s more substantial than absolute advantage, but what. Here’s where we get into:
>#Comparative Advantage
>Here’s the thing about costs in economics, you can’t just look at the monetary cost of a thing, you need to look at opportunity costs. If you benefit from something but could better spend your time doing something else, that thing could still have a net cost. What determines what countries will actually import or make for themselves relies not only on their productivity in that thing, but their productivity in that thing relative to other things. If the US can make flowers just as if not more productively as, say Ecuador, it might still make sense for Ecuador to to make them if the US could also make other things, say hammers, even more efficiently compared to absolute advantage in flowers than Ecuador could make them. Then Ecuador could make the flowers and the US would be free to make more hammers and everyone would be better off for it.^1 I love this so much, it makes perfect sense once you explain it, but if you didn’t already know about it you would be pretty hard pressed to come up with an independent explanation for why countries with an absolute advantage is almost all things have a reason to trade. That being said this only says what can happen and not what will, but before you start telling me we need central planning to maximize gains from trade I’m going to try to prove here that the profit motive is enough to maximize gains from trade, and I can even tell you what my model is.
>#The Ricardian Model of Trade
>The Ricardian model of trade is probably the most famous/significant economic model other than like, the supply and demand graph. In the 1817 book On the Principles of Political Economy and Taxation^2 Classical economist David Ricardo lays out Comparative Advantage using the Ricardian model. This model has a few simple characteristics, there’s only one factor of production, labor, there are only two nations to trade between and two goods that can be produced.^3 Let’s just focus on one country, we’ll call it Freedomland and see what their local economy looks like without trade. They have a total labor supply L and can use this labor supply to make some amount of two goods, say tea and coffee. We can measure productivity from here by using the unit labor requirement, pretty much just a fancy way of saying the amount of man hours needed to produce another unit of a thing. As such this means this equation holds where Q is the quantity of the good made, g is the good and A is the unit labor requirement. From here we can draw out the production possibilities frontier a graph of the combination of goods that can be made with one good on the x axis and one on the y axis. Let’s give our economy 500 man hours to work with, give a kilogram of coffee a unit labor requirement of 1 and a kilogram of tea a unit labor requirement of 2. This production possibilities frontier can be drawn out so the economy can produce 500 kilos of coffee, 250 kilos of tea, or something in between.^4 The nice thing about the production possibilities graph is that its rise/run slope is the negative opportunity cost (in terms of what’s on the y axis) of producing another kilo of whatever’s on the x axis. In our example the slope and as a result the opportunity cost is constant of making another kilo of tea or coffee. The reasoning for this is that there’s only one factor of production (labor) that can be moved freely between sectors with ease. But all of this is still about what can be produced, we want to see what a free market actually will produce.
>Firstly in this example, we have a completely frictionless and competitive economy, so workers make whatever the selling price of the thing they’re making is and there are no economic profits. So the economy will just make whatever good has the better selling price per hour of work. If the relative price of wine is the price of tea divided by the price of coffee and the relative unit labor requirement is the same thing with the unit labor requirement, whether coffee will be more profitable is dependent on whether its relative price is greater than its relative unit labor requirement (0.5 in our example). The relative unit labor requirement also happens to be the opportunity cost of making that thing, as such in a free market economy, the more profitable good will be the one that has the best return compared to its opportunity cost, and the economy will want to specialize in that good. The issue is that people still want to consume both goods, the only way that would be possible is if their relative price equals their relative unit labor requirement so the economy doesn’t specialize.^5 If we add another country into the mix though…
>Let’s say we have another country existing in this world called Crumpetland. They also have 500 man hours to work with but their opportunity cost of making a kilo of tea is only 0.5. Their production possibilities frontier ends at 250 kilos of tea and 125 kilos of coffee. Thus despite Crumpetland not having an absolute advantage in anything they have a comparative advantage in tea making. We can formalize this by saying that a comparative advantage is had when your relative unit labor requirement of making a good is greater than other country’s’.^6 Now once we allow free trade between these two countries the price of the goods will equalize between Freedomland and Crumpetland because if the price was different between countries people would engage in arbitrage until supply and demand make prices equalize (arbitrage just means making a thing where it’s cheaper and selling it where it’s more expensive). The particulars of where this price will settle are important but for the sake of this Reddit post all you need know is that if the relative price of a good is above the opportunity cost of making said good in a country, the country will specialize in it.^7 If the relative price is below the opportunity cost, the country will specialize in the other good. You can set some prices with the powers of the free market with relative supply and demand and you can see that the magical situation where both countries get more stuff simply by trading becomes true, that’s pretty great. Now Freedomland can specialize in coffee making and Crumpetland in tea making, they can trade, and everyone is better off, that’s the power of the free market with Comparative Advantage in the Ricardian Model.^8
>Obviously this isn’t quite how the world works but the conclusion of it has been tested and we can see comparative advantage in action in real life (the post war UK and US are a particularly good example, and why I named the countries the way I did). The Ricardian model is a relatively simple explanation for a phenomenon that doesn’t make a whole lot of intuitive sense. The basic idea for this obviously comes from David Ricardo. But some of the presentation here comes from Paul Krugman and Maurice Obstfeld’s International Economics textbook. Though their examples were longer, more in depth and heavy on the math for a Reddit post, so this is a much thinner version of their explanation with different examples. Anyway, I hope you gained some appreciation for why this sub loves free trade. I’m also only some teenager on the internet with some Economics textbooks and too much time on his hands, so I very well have made a mistake here or there, so if you want to correct my mistake, make a joke about my age, tell me that I’m paid off by George Soros or just want to meme, please give feedback below.
>1. I should be clear that I just pulled this example out of my ass, there’s nothing special about flowers or hammers that lend them to this situation, you can substitute most any two goods in here.