What is Comparative Advantage?

Had a good exchange in the comments section (and on Twitter) yesterday about David Ricardo’s Law of Comparative Advantage. My point in writing “Eat. Pray. Lovin’ It.” was to illustrate that people have always liked to pick up quickly prepared food. Workers willingly trade their money to save the expense (time and money and hassle) of food preparation. We trade what we are best at, and the act of trading in turn saves both time.

Matt Ridley‘s simple explanation is what I understand Comparative Advantage to be:

WTO Poised for Biggest Success in Years

 

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Dr. Whatsforlunch or How I Learned to Stop Worrying and Love Chemicals

[youtube=http://www.youtube.com/watch?v=rpEWwIb0Xxg&w=420&h=315]

Some rationally optimistic thoughts from Matt Ridley are in this video.

Consider this: when we compare the farm yields of the 1960s to the yields at the end of the 1990s, we find that conventional (aka intensive) farming has, in effect, saved 44% of earth’s land from going under the plow.

 

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