(01-10-2017, 01:38 PM)SomeGuy Wrote: Mike,
From chapter 7 of On The Principles of Political Economy and Taxation:
Quote:It would undoubtedly be advantageous to the capitalists of England, and to the consumers in both countries, that under such circumstances, the wine and the cloth should both be made in Portugal, and therefore that the capital and labour of England employed in making cloth, should be removed to Portugal for that purpose. In that case, the relative value of these commodities would be regulated by the same principle, as if one were the produce of Yorkshire, and the other of London: and in every other case, if capital freely flowed towards those countries where it could be most profitably employed, there could be no difference in the rate of profit, and no other difference in the real or labour price of commodities, than the additional quantity of labour required to convey them to the various markets where they were to be sold.
7.19
Experience, however, shews, that the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination which every man has to quit the country of his birth and connexions, and intrust himself with all his habits fixed, to a strange government and new laws, check the emigration of capital. These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations.
Clearly, these feelings no longer apply. The telecommunications industry, which made it unnecessary to actually leave the country permanently in order to communicate effectively with far flung holdings, the modern corporation, and the liberal regime (backed up by the US military) instituted after WWII and elaborated since have undermined those considerations, and created the present situation.
There are additional criticism of Ricardian advantage beyond the mobility (or lack thereof) of capital, including externalities, trade in assets and liabilities (whose production costs are effectively zero), factors of production (including laborers and their skills) not being perfectly mobile domestically, etc.
What you quoted was what I thought. Comparative advantage held in Ricardo's day because capitalists were leery of investing abroad for fear their property being confiscated by foreign governments (e.g. investment made in imperial Russia before 1917 or American oversea capital assets that were nationalized by socialist governments after WW II).
What I was asking about was the silly thing to which you referred.