More deception

NWO - EU use a false argument regarding Comparative Advantage. In a previous article we explained one shortcoming. We mentioned three possibilities; 1) Computer Market in A - Refrigerators Market in B > Increase due to Specialization in A 2) Computer Market in A - Refrigerators Market in B < Increase due to Specialization in A 3) Computer Market in A - Refrigerators Market in B = Increase due to Specialization in A.

In the first case Country A loses, in the second it benefits and in the third it is indifferent. Lets assume that with a magical way, the first shortcoming disappears. There are at least three more faults. The assumptions were that in country A, refrigerators were more productive compared to computers and in Country B, computers were more productive than refrigerators.

RPA > CPA and CPB > RPB where

PRA is Refrigerator sector Productivity in A     CPA is Computer sector productivity in A   

CPB is Computer sector Productivity in B     PRB is Refrigerator sector Productivity in B

What is the relation between a) RPA and RPB b) CPA and CPB? RPA must be greater than RPB and CPB greater than CPA, or RPA > RPB and CPB > CPA. Otherwise A's refrigerators will not be more competitive than B's refrigerators and B's computers will not be more competitive than A'a computers. In other words A must have an absolute advantage in refrigerators and B in computers.

So it must be 1) RPA > CPA and CPB > RPB 2) RPA > RPB and CPB > CPA as in RPA > CPB > RPB > CPA.

There are specific conditions for Comparative Advantage to work and be a win - win situation. In addition, if the benefit for a certain country is small, it is not worth all the effort. Because there are disadvantages as well from specialization and trade. Economic autarky decreases. That can be a problem when relations with trading partners deteriorate for various reasons.

The usual case in EU is CPB > CPA and RPB > RPA. Country B is a higher income Western European country that has higher productivity in all sectors. In this scenario which is the most common, A's refrigerators will not be able to compete with B's refrigerators. So A will lose not only computers' domestic market but also refrigerators' domestic market. A large percentage or all of those will be supplied by B's production. In addition, A will not be able to get B's refrigerator market.

We tried not to make things too complicated and left out price level effect on competitiveness. The same reasoning applies when we include it. The relationship among productivities will have to be such that A's refrigerators are more competitive than B's and B's computers are more competitive than A's. Otherwise protectionism is needed for sectors which is contrary to EU's faulty model.

And still it is not over. Both Advantage Theories have a weak point. They have a static view of productivity, not a dynamic one. Productivity is something that can get improved. In the long run, the only advantages countries have are related to climate, geological morphology, ground, underground. In the long run, both theories are valid only concerning these types of advantages.

Nevertheless, this does not mean that countries should have these as main sectors. It is possible that sectors related to these types of advantages do not have high productivity. So countries will need other sectors with high productivity as their main sectors. Otherwise they will be doomed to low per capita income level because of low productivity.

There is a forth shortcoming. In many cases, Comparative Advantage Theory was not even used correctly in EU. Let's see at EU disaster Greece. According to EU policies, EU disaster (Greece) specializes in tourism and agriculture. These are low productivity sectors. There were sectors with higher productivity in manufacturing that disapeared. So, NWO - EU, changed Comparative Advantage Theory according to their goals and needs.

Some readers may be puzzled with all these economics. So we will help them. There is one conclusion from all these. NWO - EU either have no clue whatsoever about economics or they understand very well and have been deceiving everybody for decades. May be some of them are in the first category and others in the second. They are both very bad.

They have created a global chaos, a big mess all around the world, either because they do not know what they are doing or because they are devious and vicious. The worse mess is in EU, which is supposed to be the model for the three other continental Unions, American, Asian, African. What is needed urgently is Anti - NWO to take charge of matters and fix the mess they created and the problems they were not able to solve.

Eastern European countries need to form a separate group because EU is a big mess. They should let Western Europeans clean up their mess because EU is a Western European creation. Eastern European countries should be only concerned about reaching Western Europe's per capita income. This could happen even as soon as in 10 - 15 years. A secondary concern should be convergence in the group, if they choose to do so.

In the economic plan there is provision for benefits from specialization and trade, in ways that are truly a win situation for all and not win - lose, as it is with NWO - EU. Other countries should form the groups in Anti - NWO's compromise solution and look more carefully at Eastern Europe's organization model and economic plan because they are much much better than EU's mess, which will become Western European Group's mess.