Roll Over, Ricardo
By Arnold Kling
That was the title I wanted for this essay on comparative advantage, which pulls together several ideas that I first trotted out on this blog. The essay is lengthy. Here is a short excerpt:
To see why trade balance is an equilibrium condition, imagine a barter economy. In a barter situation, in order to pay for Indian software programmers, we would have to provide goods or services to India in exchange.
For Discussion. Does moving from a barter economy to an economy where money is a medium of exchange alter the status of balanced trade as an equilibrium condition?