Chief Rabbi Sacks on Comparative Advantage

by on January 21, 2013 at 7:01 am in Economics, Religion | Permalink

In this short video, Jonathan Sacks, the Chief Rabbi for the British Orthodox synagogues, explains how the “beautiful idea” of comparative advantage promotes peace, cooperation and tolerance among all people. Few religious leaders understand economics and fewer still are able to draw out the spiritual and humane dimensions. Yishar Koach!

Andreas Moser January 21, 2013 at 8:52 am

As a German, I doubt that great trading centers are automatically centers of tolerance as well.

Adrian Ratnapala January 21, 2013 at 3:47 pm

Is it difficult to believe that London and Amsterdam were centres of tolerance compared to the rest of northern Europe. Or that the Italian trading republics and New York have played a similar roles in their own eras?

Rahul January 21, 2013 at 11:22 pm

Yeah, I’d love the wise German to come up with some examples.

Ricardo January 21, 2013 at 11:53 pm

Rahul already has the winning comment on this. I would just add that history is full of examples of trading cities where people from different ethnicities and religions all mix and mingle at least tolerantly and it is also full of examples of such cities being drawn into envy-fueled ethnic conflict.

The Rabbi’s idea that “the single greatest force for peace in the world is trade” is one of those things that would be nice if it were true but is instead obsolete by almost exactly 100 years. This was an extremely common sentiment in the 19th and early 20th centuries and was frequently expressed in English newspapers — right up until August 1914 when it was spectacularly falsified by events in geopolitics. The world’s great trading nations proceeded to butcher each other’s soldiers by the millions on Europe’s battlefields and at sea. Whatever one might think about Niall Ferguson’s politics, he does a great job of refuting this delusion that markets = peace in “The Pity of War” and “The War of the World.”

Richard January 21, 2013 at 9:31 am

“In a market economy, some people can get very rich, and some people can get very poor.”

Dead wrong — very few “get poor” in a true market economy. Rather, a true market economy raises the living standards of all, dramatically. He’s mixing the best of Ricardian economics with the worst (meaning most mistaken) of Marxism.

Alternatively, he’s confusing comparative poverty for absolute poverty. In a non-market economy, everyone is dirt poor. In a market economy, some are uber-rich, and some are only regular rich (for example, in today’s West the “poor” are still rich by historical standards).

The notion that some are “getting poorer” in the West is an optical illusion, like when a fast car passes a slow car on the highway, and it looks to the passengers in the fast car like the slow car is driving backwards.

PLEASUREMAN January 21, 2013 at 3:56 pm

Unfortunately, spergdroid, concentrated wealth tends to immediately seek to undo frictionless market economic conditions. Jesus you people are sadly naive about everything outside your tenured offices. Faggots.

doctorpat January 21, 2013 at 9:18 pm

Hmmm. Pleasureman has used a homophobic insult, so I’m guessing he must be a right winger. Hence rich. Hence he is pushing a meme than benefits the rich against the poor.

bc January 21, 2013 at 10:07 am

Richard, excellent points.

Stuart Williams January 21, 2013 at 4:20 pm

Read some Dickens (or Gissing or Zola or Dostoyevsky or…..). Dear God, you neo-Liberals are ignorant.

Richard January 21, 2013 at 11:55 pm

Yes indeed, the best way to learn about real economic conditions is to read, er, fiction…

Stuart Williams January 22, 2013 at 6:06 am

If you believe only factual works contain truths, try Henry Mayhew: London Labour and the London Poor. It consists of well-researched investigations into the lives of people who are worse off than anyone in Dickens.

Alec Stapp January 21, 2013 at 10:52 am

I could listen to this guy talk all day. Can he be the permanent narrator for all future MRU courses? You and Alex are better at economic theory and he is better at talking. Trade!

anon February 10, 2013 at 9:35 am

+1

BC January 21, 2013 at 6:22 pm

Timely post. There have been several recent discussions on this blog about the impact of robots on our futures. Many of the authors of those pieces have asked the question, “What happens when robots do most or all things better than humans?” with a typical conclusion being that most humans will be driven out of a job by robots, or some variation of that. I haven’t seen any of those authors highlight the benefits of trade, in this case between robot-owning humans and non-robot-owning humans, that arise from comparative advantage even if robots have absolute advantage in everything.

As an aside, I also haven’t seen those authors discuss how diminishing marginal utility might cause whatever products robots produce cheaply and abundantly to become low-value products, while whatever products and services robots can’t produce, but humans with special skills can, might become high-value products, and hence the humans producing those products high-wage-earning humans, precisely because those products can’t be produced by robots. In other words, high-value jobs are not exogenous; robots being able to do certain jobs itself affects which jobs are high-valued, very likely in favor of those jobs which remain for humans.

freethinker January 21, 2013 at 7:56 pm

It occurred tome that the Hindu caste system ( I am a Hindu atheist) violates the principle of comparative advantage. The underlying philosophy of the caste system, as stated in an Hindu scripture is that it is better to do the duty of ones own caste even if if we can do other tasks more competently.

Alex Tabarrok January 21, 2013 at 9:57 pm

Very true and on point.

chrisare January 22, 2013 at 1:33 am

A little bit of a tangent, but I’ve lately wondered why we invest so little in identifying individuals comparative advantage. How far are we from our potential economically and socially because of the unidentified latent talents that leads to a sub optimal allocation of people to occupations?

Master of None January 22, 2013 at 5:17 pm

Possible low-hanging fruit?

But I am not sure I would want to live in a world where I’m not free to choose a path that may lead to less income but more happiness (and in this sense I mean free from social pressure, not just an authoritarian state).

See: “The Giver” by Lois Lowry

Nancy Lebovitz January 22, 2013 at 12:01 pm

Does anyone know whether jubilee years ever actually happened?

Master of None January 22, 2013 at 5:18 pm

That is an excellent question – does anyone have an answer?

Barak January 31, 2013 at 1:56 pm

So there are scripts that reference the temporary halting of the jubilee laws, i.e., they (probably) were in place before.

In Hebrew: http://lib.pshita.cet.ac.il/pages/item.asp?item=16867

jorod February 9, 2013 at 7:36 pm

In olden days, you were measured by your wealth, your mouth or your prowess in battle.

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