Return to Solipsism
In my “Solipsist’s Guide to Comparative Advantage,” I showed how, for all practical purposes, trade actually raises worker productivity. Notice, though, that my example shows the productivity effects of trade if you and I have different absolute advantages: you’re a better farmer, I’m a better steel-worker. What about the case where you’re better at both jobs? Such as:
Wheat
Steel
You
10
5
Me
1
2
For convenience, assume again that the wheat:steel price ratio is 1:1.
Then on the solipsistic assumption that I’m merely your tool, trade revises your productivity as follows:
Wheat
Steel
You
10
10
On the opposite assumption that you’re merely my tool, trade revises my productivity thusly:
Wheat
Steel
Me
2
2
Putting both perspectives together:
Without Trade
With Trade
Wheat
Steel
Wheat
Steel
You
10
5
10
10
Me
1
2
2
2
Thanks to comparative advantage, trade allows you to effectively double your steel-making productivity, and allows me to effectively double my wheat-growing productivity. And this is true despite the fact that I have absolutely nothing to teach you.
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