Comparative Advantage

Comparative advantage theory propagate that we have to be specialize which is other words means that we should be dependent for our needs on others. Many famines happened in India due to production of one crop instead of diversification in it. Before this comparative advantage theory applied in India the economy was very much equipped to handle such situations but after it no such measures were taken. In fact Bengal was the richest area in whole world in term of food per person there but when it was conquered by British one third of its population starves to death because they extracted everything from there so ruthlessly. Many such things were taken of the picture to make us believe of false theories.

No economic book talks about trade according to their type that some goods are necessary and some and luxuries and nation should be self-sufficient in terms of its need like food. According to economic theory the value of thing is how much it sells for. If one nation sells food while its people are malnourished, hungry and starving then there is no harm in it according to economic theory. But in actual it is just an idiotic act. Russia experienced to more towards free market economy by doing shock therapy in their economy but as a result of it their production dropped to half, people faced starvation and huge social catastrophe occurred and only some people became very rich at the cost of whole population. If we have correct understanding to economic policies then we can tell that what is going to happen as a result of any specific theory in any special circumstances and who is going to gain/loss from any policy. Understanding the economic is very easy and within our natural capabilities as it is not a rocket science that no ordinary person can understand provided that we don’t brainwashed by Samuelson and Romer etc.