In defense of the normie, comparative advantage is pretty underpowered as an answer for both manufacturing collapse and China specifically. China does more manufacturing than the US does in part because US wages are more expensive, but also in part because they literally do manipulate their currency.
The other part of the explanation is that US policy is bad, oftentimes bad on purpose, and bad policy contributes to comparative advantage. If you asked "why does China do so much more manufacturing than the US", one answer could be "China has a comparative advantage in manufacturing". Another answer is "Local permitting challenges and the National Environmental Policy Act make it so that building a factory is really hard and it's hard to make more stuff without more factories". Both answers are true! Permitting challenges & NEPA are a factor in comparative advantage!
But when economists present comparative advantage as an answer it's heavily implied that comparative advantage is a force of nature that we have very little control over. It's unsurprising when the normie doesn't believe the economist's implication, because the implication isn't true. We could repeal NEPA and allow pollution-free factories by right on all agricultural or suburban commercial land. We choose not to, but that's a political choice that american voters can revise at any time and substantially alter the landscape of comparative advantage.
I would rephrase the bit about comparative advantage not being like a force of nature. It's essentially true in that sense—you *have* to give other things up to produce the things we trade with other countries to acquire. But yes, in some particular cases (think a choice about whether to invest in a new factory) the choice would be different if the regulatory environment wasn't as stupid.
To defend the point of the normie for a little more, "some particular cases" includes "everything made in a factory", "everything which uses energy", and "housing". The only thing excluded from "some particular cases" is, like, B2B SaaS. And while I like B2B SaaS, "too much B2B SaaS and not enough everything else" is kind of the root of the frustration here. I think if you explained "there's only so much you can do with your time, and if you scale that up to the whole country, there's so much the whole country can make and X is not a good use of time", people would understand the argument.
The problem is less that normies literally don't understand and more that normies simply don't believe that "there's only so much time and so much stuff we can make" is actually the binding constraint here. Sort of like if I expressed that I was out of time to do stuff in my day, "you spend a zillion hours posting on twitter" would be a persuasive comeback, because indeed my posting addiction is more of a binding constraint on how much stuff I can do than the physical number of hours in the day.
Right, my language was restricting where this matters too much. To try to be more specific, I meant that comparative advantage is binding in an almost law-like sense, but opportunity cost is only one of many costs, and those costs can be influenced by government policy.
Is the intuition perhaps not as simple as: “let’s switch places with them! We’ll make the shoes and the widgets and they can make the movies and superbowls….” We’ll send them the widgets and we get to Watch Shanghai Rice Friers v Beijing Dumpling Stuffers in the 2027 超级鼎 for free!
One could make a collection of intuition pumps and quippy statements like this, then try to pick the best one. Maybe do an RCT on the non-believers to see which one is most convincing.
In defense of the normie, comparative advantage is pretty underpowered as an answer for both manufacturing collapse and China specifically. China does more manufacturing than the US does in part because US wages are more expensive, but also in part because they literally do manipulate their currency.
The other part of the explanation is that US policy is bad, oftentimes bad on purpose, and bad policy contributes to comparative advantage. If you asked "why does China do so much more manufacturing than the US", one answer could be "China has a comparative advantage in manufacturing". Another answer is "Local permitting challenges and the National Environmental Policy Act make it so that building a factory is really hard and it's hard to make more stuff without more factories". Both answers are true! Permitting challenges & NEPA are a factor in comparative advantage!
But when economists present comparative advantage as an answer it's heavily implied that comparative advantage is a force of nature that we have very little control over. It's unsurprising when the normie doesn't believe the economist's implication, because the implication isn't true. We could repeal NEPA and allow pollution-free factories by right on all agricultural or suburban commercial land. We choose not to, but that's a political choice that american voters can revise at any time and substantially alter the landscape of comparative advantage.
I would rephrase the bit about comparative advantage not being like a force of nature. It's essentially true in that sense—you *have* to give other things up to produce the things we trade with other countries to acquire. But yes, in some particular cases (think a choice about whether to invest in a new factory) the choice would be different if the regulatory environment wasn't as stupid.
To defend the point of the normie for a little more, "some particular cases" includes "everything made in a factory", "everything which uses energy", and "housing". The only thing excluded from "some particular cases" is, like, B2B SaaS. And while I like B2B SaaS, "too much B2B SaaS and not enough everything else" is kind of the root of the frustration here. I think if you explained "there's only so much you can do with your time, and if you scale that up to the whole country, there's so much the whole country can make and X is not a good use of time", people would understand the argument.
The problem is less that normies literally don't understand and more that normies simply don't believe that "there's only so much time and so much stuff we can make" is actually the binding constraint here. Sort of like if I expressed that I was out of time to do stuff in my day, "you spend a zillion hours posting on twitter" would be a persuasive comeback, because indeed my posting addiction is more of a binding constraint on how much stuff I can do than the physical number of hours in the day.
Right, my language was restricting where this matters too much. To try to be more specific, I meant that comparative advantage is binding in an almost law-like sense, but opportunity cost is only one of many costs, and those costs can be influenced by government policy.
Is the intuition perhaps not as simple as: “let’s switch places with them! We’ll make the shoes and the widgets and they can make the movies and superbowls….” We’ll send them the widgets and we get to Watch Shanghai Rice Friers v Beijing Dumpling Stuffers in the 2027 超级鼎 for free!
One could make a collection of intuition pumps and quippy statements like this, then try to pick the best one. Maybe do an RCT on the non-believers to see which one is most convincing.