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OP-ED: Banking on comparative advantage

  • Published at 09:27 pm April 10th, 2021
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Voluntary cooperation between those who want to do a job and those who want a job done makes both better off

One of those heartening tales about our world becoming a better place is the Parents Forum for Differently Able (PFDA). 

Its aim has been to show, since foundation in 2013, that the autistic and others differently abled can indeed train up to be employed and contribute to the economy. 

At one level, this is a mother's fight to carve a place in the world for her son and the result is that it is a better place for us all as the lesson is learned more widely.

It is also possible to approach this from the other end, from the 30,000-feet of economic theory, which brings us to the one odd and non-commonsense part of the whole subject.

A mathematician (there is no Nobel for maths because Nobel's wife ran off with a mathematician) once asked a Nobel winning economist (that is not a real Nobel either but so what) whether there was anything in economics or any social science that was not trivial or obvious. 

These have specific meanings to a mathematician but they are close enough to the colloquial ones in everyday language. 

The answer back from Paul Samuelson to Stanislav Ulam was that yes, there was, Ricardo on comparative advantage. Just to show that clever folks are not perfect, it also took Samuelson 30 years to think of his answer, just like so often happens to us.  

The proof was that of course it is true, but that so many misunderstand it shows that it is not obvious.

We normally think of this as being about what a country should do in terms of trade. The original example was Portugal makes wine, England cloth, and then they trade. This example being what confuses all too many because it is not actually about countries at all. 

The better construction is to consider the individual – as with the autistic lad his mother fought for. We are all differently abled. Not in the modern sense, where some are not much good at anything very much but in the proper sense that we all have very different talents, skills, capabilities and interests. 

We know from Adam Smith that it is the division and specialisation of labour that makes us all richer. We split up production tasks, become better and a small part of the whole process, then trade that resultant increase in production. Very well – but how do we decide who does which bit? That is where comparative advantage comes in, in making that decision.

It is obvious enough that there are some out there better than we are at everything. This is something I find in everything I attempt much to my annoyance. Yet it is still necessary for me to do something with my life so what should that be? Among the things that I could do I should be doing the one that I am least bad at – the comparative part of the advantage is among the things I can do, not in relation to what others can.

That is, if we all do what we are least bad at then production will be as high as it can be and we are all, in aggregate, as rich as we can be.

So, those who are differently abled in that modern sense, what should they be doing? Their abilities might be different, yes, they might even be lesser in every manner than others, but their decision is still just as with everyone else. They should be specialising in what they are least bad at just as the rest of us should be. Different skills and talents, OK, but equally human and facing the same life questions as the rest of us.

We have that 30,000-foot view then but one of the advantages of belonging to a culture, a civilization, is that we do not have to work through every question we face in our lives from first principles. We have that system of transmitting through the generations the lessons our forbears worked out the answers to – that is what a civilisation is. Or, of course, in this era of globalisation we can steal the answers from those who worked it out elsewhere.

This new digital world does provide something that the autistic have been shown to be not so bad at, often, in fact, rather better than us neurologically boring and normal people. This is testing software. This is so much so that there is at least one company, or at least was, (Specilisterne) where being autistic is a precondition for getting a job. Ultranauts is 75% autistic, Microsoft runs a special program to hire autistic people for this very job for this very reason. A love of routine, an extreme attention to detail, both job requirements for software testing and a reasonable, even if slightly unfair, description of many autistic people.

At which point a suggestion for those of you out there who are part of this new digital world. I have been part of it (I used to produce computer games for a time) and I know, as you do, that getting the code properly tested is annoying, tedious and expensive. So, go look for the people with the talents you desire. My suggestion would be to contact Denny Karim (I think it is) at the PFDA. I have no doubt that a polite request to this newspaper will lead to the contact information you need. We all know that we need to divide and specialize the labour here, we should be doing this using the insights of comparative advantage. Pass the job onto those better than we are at it – that is absolute advantage – or to those whose best available job to do is exactly this – comparative advantage.

This does bring us back to the trivial and obvious parts of economics. Voluntary cooperation between those who want to do a job and those who want a job done makes both better off – well, yes, that is obvious enough, trivially so, it is how the world works, is it not?

 

The author is a senior fellow at the Adam Smith Institute in London

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