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The Theory That’s Killing America’s Economy– and Why It’s Wrong

04.08.11

The Theory That’s Killing America’s Economy — and Why It’s Wrong

I wrote in a previous article how America’s disastrous embrace of free trade is ultimately based on a false theory of how the global economy works: the so-called Theory of Comparative Advantage. This is what economists, from the government on down, believe in. This matters.

But I didn’t explain why the theory is wrong — which it is. Understanding its flaws is the price of admission to serious criticism of free trade, so it’s well worth getting a grasp on them. Economic theory can be a tough chew, but it’s worth the effort, if only to gain the intellectual confidence not to be intimidated by the so-called experts. So… let’s take a look at some of that machinery behind the wizard’s curtain, shall we?

The theory’s flaws, which are fairly well known to economists but mostly ignored, consist of a number of dubious assumptions upon which the theory depends. To wit: ……

(click on link below to read the rest of this important article)

http://www.huffingtonpost.com/ian-fletcher/the-theory-thats-killing-_b_846452.html

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