In Chapter 5 Peng discusses International Trading. In particular he discussed the Theories of International Trade. Two of these theories spiked my interest, the Absolute Advantage theory and the Comparative Advantage theory. Both of which are very different. The Absolute advantage theory suggests that under free trade, each nation gains by specializing in economic activities in which it is the most efficient process. While Comparative Advantage suggest that a nations gains by specializing in production of one good in which it has comparative advantage.
Two very different and interesting suggestions of what exactly is the most beneficial for to a country in regards to trading. I found an interesting article on the Freemans ideas of liberty where Dwight R. Lee discusses how comparative advantage is overall more beneficial to a nation’s wealth on a global scale. He states that “The most straightforward case for free trade is that countries have different absolute advantages in producing goods (Lee).” With this said Lee goes in to distinguish how it is imperative to have comparative advantage seeing that “A country can have an absolute advantage in the production of a good without having a comparative advantage. Comparative advantage is what determines whether it pays to produce a good or import it (Lee).” What we see here that in essence Lee distinguishes that it is imperative to have a Comparative advantage in order to be the most efficient in production and trade. If we take an example it become more clear how this is evident. While in American let’s say it is very efficient in producing coats and can produce 5 coats in 1 hours. While in China it is not as efficient in producing coats where it China can only produce 3 coats an hour. It would seem that with the absolute advantage it would be more efficient for American to make coats and not import them from China. Although if you take into account that it cost more money to produce a coat in American then it does in China then it would be more efficient for American to import coats from China which thus allows for a cheaper product and a cheaper cost. This example involves both and Absolute Advantage in which American can produce at a quicker rate than the Chinese can, although China has the comparative advantage which is that it can produce coats at a cheaper rate than in American thus driving down the cost of the good.
Even more interesting below Lees article was comments on in particular that caught my eye was the comment made by Ron O where he indicates that while Lee does bring forth some interesting point it is only a hypothetical that he compares international trade to with this car and computer example that is much like my coat example. He states that there are many other factors to account for when discussing Comparative advantage. He attaches the idea that Lee states that Comparative Advantage does not account for lower wages and unemployment. His basis for this argument is that if like in Lee’s hypothetical everyone who was in the computer industry, in American, who lost their job because of the importation of computers, would not get jobs in the car industry just because that is where the works is. Ron argues that these people who were in the computer industry would not necessarily be able to get a job working on cars. Seeing that Lee does not know what the market demand for American cars will be, Lee also does not know if these computer techs if employed by international companies would make the same wages as they did previously. Ron states that “The mistake that comparative advantage makes is that it assumes that there is some kind of ‘invisible hand’ that will create an infinite amount of demand for any product or for the world. Does it even account for the price of oil in all of this or to the limits of economic activity the world can handle? Not everyone can be middle class. As a matter of fact, look at how the middle class is disappearing throughout the world (Ron).” Ron makes a interesting point here which displays the weakness in Lee’s argument as well as in the Comparative Advantage theory. He establishes the idea that no economy can survive without borders.
On a large part I would have to agree with Ron and his arguments against the Comparative advantage as well as Absolute advantage, seeing that there are so many aspect of the economy that are unpredictable and over looked when it comes to applying these theories to real life. As we can see over the last few decades the American economy has become very unstable seeing that we rely highly on other countries for our goods putting us and our futures in the hand of others. It is in my opinion that free trade opens countries up to many unforeseen issues that can arise and as we have seen recently that it exactly what happens. With an ever so connected world much vulnerability occurs. It leaves us the people, the working class at the mercy of something that is uncontrollable and unforeseen. A bargain I don’t feel is in our best interest. 
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