[ajuc]

> England will always be richer if it trades, no mater how good France is at manufacturing. That is the key insight.

Not what happened in real life.

Compare Argentina and USA. Both had been worse than Great Britain at industry, and better at agriculture. Argentina was more wealthy than USA at the start. Argentina have followed the theory (specializing in agriculture), USA acted on the contrary (introducing tariffs and specializing in industry).

At the end - USA is much more wealthy than Argentina.

Comparative advantage is about optimizing for current situation, not about strategic decisions.

[jimmytidey]

Comparative advantage is just a model, as you rightly point out, I'm sure in any real world instance the situation is much more complicated.

However, its important to know that many economists believe its the foundational model on which further elaboration of trade policy should be built. That's why it's worth understanding.

[explanibrag]

Yes, but my original point was that the foundational model isn't convincing at all to the layman. It can't stand on its own feet, and needs additional structure. Any decent model should come with caveats, and should specify the domain in which it's applicable.

Krugman was using the model to argue in favour of free trade. He'd be much better off arguing using historical examples if he wanted to be convincing.