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Buy one RI, get one free: high-IQ individual doesn't understand comparative advantage or the heterogeneous effects of colonialism
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DownrightExogenous is in Rhode Island
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Let's start with this lovely comment here:

fucking lol dude what does a shit country have to offer and how could it possibly improve an already good country

youre just outright lying with zero basis lol

Eloquent. Ignoring the obviously racist characterization of certain countries as "shit countries," this comment fundamentally misunderstands comparative advantage. I'll illustrate with a simple example, first abstracting away from countries to ensure the interpretation of the lesson isn't tainted by prejudice toward developing countries.

Suppose LeBron James, who needless to say is a great basketball player, can also mow his lawn faster than anyone else in the world. Should he mow his lawn? Imagine that LeBron can mow his lawn in 2 hours, while the neighborhood gardener can mow LeBron's lawn in 4 hours. LeBron has an absolute advantage in mowing his lawn, clearly, since 2 < 4.

Because LeBron is also an excellent basketball player, however, in the same 2 hours that he could mow his lawn, he could lead a basketball clinic for a bunch of wealthy kids in his neighborhood, sign autographs, do some other type of productive activity which earns him $10,000—this is his opportunity cost to him for mowing the lawn. The local gardener's next best alternative to mowing a lawn is becoming a hipster barista, which would earn him $8 an hour. For him, the opportunity cost to mowing LeBron's lawn is $32 (since it would take him 4 hours to do it).

As shown, LeBron has an absolute advantage in mowing his lawn, but the local gardener has a comparative advantage because he has a much lower opportunity cost. Instead of mowing his lawn, LeBron should engage in his other productive activities and hire the local gardener to mow his lawn for him. As long as LeBron pays the gardener more than $32 and less than $10,000, both of them are better off. The gains from trade are enormous!

Like people, countries also have comparative advantage and gain from specialization and trade. Consider a simple example in this context, between the U.S. and a developing country. A worker in the U.S. can produce 50 computers or 200 pairs of shoes, per month. A worker in the developing country can produce 5 computers or 175 pairs of shoes, per month. The U.S. has an absolute advantage in both computer and shoe production, so why would these two countries trade? Put another way, "what does a shit country have to offer and how could it possible improve an already good country?"

Let's consider differences in opportunity cost. Where is it relatively cheaper to produce computers? In the U.S. it costs 4 shoes, in the developing country it costs 35 shoes. Where is it relatively cheaper to produce shoes? In the U.S. it costs 1/4 of a computer, while in the developing country it costs 3/100 of a computer. Thus, just like LeBron James and the local gardener, the U.S. should specialize in computers, the developing country should specialize in shoes, both should trade and both will be better off.

An analogous, though not identical, argument holds for immigration, and empirical assessments corroborate the theory, although obviously specific outcomes will depend on several other parameters, and global equilibrium outcomes are hard to pin down. For a review, see Hanson (2009).


As a bonus, here's a second RI of this other comment.:

colonialism was a boon in the long run to every country that experienced it

you think haiti sucks because they got enslaved and genocided? please

Which is just obviously wrong at face value, but there's plenty of empirical evidence to support this assertion, including three consecutive (by year) Acemoglu, Johnson, and Robinson papers, though this evidence is really just the tip of the iceberg. While it is difficult to assess the average impact of colonialism, its clear that colonialism had very heterogeneous effects such that it wasn’t a boon in the long-run for all countries affected by it.

  • Of course, there's Acemoglu, Johnson, and Robinson (2001), which shows that in places where European colonists faced high mortality rates, they could not settle and thus were more likely to set up extractive institutions, which persist to the present and negatively affect long-run development.

  • Acemoglu, Johnson, and Robinson (2002) also present findings that among countries colonized by European powers during the past 500 years, those that were relatively rich in 1500 are now relatively poor and that this reversal reflects changes in the institutions resulting from European colonialism.

  • Even for positive cases such as Bostwana, for example, its success is not because of colonialism but rather despite it, as Acemoglu, Johnson and Robinson (2003) demonstrate. Leith (2005) and Parsons and Robinson (2006) confirm this assessment.

  • Banerjee and Iyer (2005) study colonial land revenue institutions set up by the British in India, and show that differences in historical property rights institutions lead to sustained differences in economic outcomes, so there's even heterogeneity within colonizers.

  • Engerman and Sokolof (1997, 2000, 2002) look at Brazil and show that because of its suitability for sugar growth, which demanded slave labor, the country ended up with a much larger slave population, leading to a much more hierarchical society, and causing institutions that led to lower rates of economic growth.

  • Heldring and Robinson (2012) find that colonialism probably had a uniformly negative effect on development in Africa.

  • Nunn (2008) finds a negative relationship between the number of slaves exported from a country and current economic performance. Nunn and Wantchekon (2011)'s results demonstrate that individuals whose ancestors were heavily raided during the slave trade today exhibit less trust in neighbors, relatives, and their local government today.

Acemoglu, Gallego, and Robinson (2014) provide a review in economics, while van de Walle (2008) does so in political science. Admittedly, these reviews are slightly tangential to the main question at hand, but they all point to dozens more articles that show the heterogeneous effects of colonialism on various types of outcomes.


Will this get me a 12-month permit?

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