@TuringEquivalent,
TuringEquivalent wrote:
So, do you think unrestricted free trade is good, or bad?
Some restrictions on trade may help countries develop. If that is the case, then totally unrestricted trade will prevent them from developing. I guess whether you see that as "good" or "bad" depends on your point of view and the kind of world you want.
(Note: when I talk about restrictions on trade, I don't necessarily mean tariffs or import quotas. For example, some countries in the past insisted on "local employment" quotas, which meant that foreign firms operating on the countries' soil had to employ a certain number of local personnel in managerial roles. That helped the developing country mature, because it provided locals with training on how to run manufacturing businesses. I believe there are WTO rules that forbid laws like that.)
Now as far the WTO's merits as an institution are concerned, I am agnostic. I simply do not know enough about them to give them a straight thumbs up or thumbs down. I think it's good to have some kind large organisation keeping us all from engaging in protectionist trade wars. But some demands that the WTO places on developing countries go too far.
Quote: You said Ricardo's theory is to simplistic. Well, what is a better theory? In fact, I am pretty good with math. What is the latest mathematical model for the pro, and con of unrestricted free trade.
I don't know what the latest and best theories are, since I've only taken undergrad courses in Economics. However, one good book that I liked for an introduction to the "pro" theories was Feenstra and Taylor's
International Economics. It's a nice book, because it attempts to test the various pro-trade theories empirically, which turns out to be a very challenging job.
The major problem with the "con" side is that they
don't rely on math. It may simply be the case that their arguments are so complicated that they defy neat mathematical description.
Anyway, Ricardo's theory isn't wrong. Just think about what it basically says:
on the whole, we produce more when each of us does what he/she is best at. Obviously that's true. However, just because Einstein's skills made him a very productive patent office clerk in 1903, it doesn't mean the world as whole would have been better off if he had continued focusing all his energies on the patent office. I figure it's the same with countries.