To: Wyätt Gwyön who wrote (15832 ) 1/11/2004 1:01:51 PM From: kormac Respond to Since the so called "free trade" is not the classical type, based on comparative advantage , in which only finished products were traded, its theoretical foundations need to be questioned. Today many factors of production cross national boundaries. Thus capital moves to countries where there is surplus labor of various skill level, low skilled work to China and services to India and even engineering to Russia. Chemical companies open factories where natural gas is accessible. absolute advantage disappears. This means dropping of the dollar until the pay for workers in these countries rise and US wages drop sufficiently to level on of the factors of production. Natural resources, and in particular energy supply, is a factor which favors Russia and the Persian Gulf. But then other factors in those countries are lacking, such as strong democratic institutions. c-span.org ;
