http://www.google.com/moderator/#16/e=42f84

Understanding the theory, even in its most basic form, is not trivial. The theory meets a threshold once given to me for something that deserves to be taught in university…that it is important, non-obvious, and true.

The Wikipedia article on the topic is probably a good place to start, and a description of the difficulties around the theory in an op-ed piece from someone I don’t always agree with, Paul Krugman. (see below)

Application of the theory to the Irish sugar case would be difficult since the markets are all so messed up with subsidies, but essentially the Finns don’t have to be absolutely better at making sugar beet than us. They just have to be comparatively better. (i have no idea if they are) Read up on it…it’s worth it. You’ll be better off than most politicians and journalists once you’ve understood it.

http://web.mit.edu/krugman/www/ricardo.htm

Oh, please do not take anything here as me being patronising in any way. There are many areas where I am vastly ignorant and comparative advantage is not an area where my knowledge is more than superficial. It’s just one of those areas where I’ve often seen misunderstanding of the topic lead to abortive conversations…..and understanding it often leads to a majors “Aaaah, that’s what they mean” moment.

Ireland has its wits which have wilted badly in the last three years. Hopefully in the next few years we will all come tour senses and Ireland will once again become a nation worthy of respect.

“Can I ask if you understand the theory of comparative advantage? From reading your posts I’m inclined to suspect not.”

I am not an economist and possibly wouldn’t know the theory of comparative advantage if it hit me on the head.

But coming from the land, albeit a long number of years ago, I don’t understand how the Finns could grow beet any cheaper than we could. After that, it would be down to processing cost. And given the lack of moisture in Greece, I doubt they could grow beet any cheaper than we do either.

In addition, I would like to know in economic terms what is the cost from the point of view of the State finances of employing a person right now. I believe that it is possibly close to zero, if that person is unemployed. So our comparative advantage, as I understand that term in English, should be further improved.

Why then, according to the other Alan (the Cork farmer) have Finland and Greece managed to retain their sugar beet production.?

And before I am encouraged to buy a one way ticket out of here, what does Ireland have a comparative advantage in, if not industry based on agricultural raw materials?

“It is simply not credible to suggest that the Irish industry could have survived in this new environment.”

We need to define what we mean by Irish Industry.
I have just listened to another Alan, a Cork farmer whose father set up the Carlow sugar factory and worked in the Mallow sugar factory.
He says that the EU is now importing 20% of Sugar needs. Also no consideration was given to production of ethanol or other enegry by products from sugar or the fact that we need to focus on agricultural based industry, where we should have a competitive edge in the production of raw materials.
It may not be liberal economics but unless we understand the old Arthur Griffith statement we are going to be wiped off the face of the earth.
“If we do not support the Irish workshop, we must support the Irish workhouse”.
Let me put this another way.
From the point of view of the State finances, what is the current cost of employing one person???
I really would like to see that calculated. Personally I believe that at low wage levels, it is close to zero.
It should be a simple process to improve employment starting with a zero labour cost.

Glass bottle site, same agenda same players someone needed the “site” to flog to DDA and fools now all glass has to be driven north and the jobs are gone! Losses on the site? Of course, NAMA paid 38 million that represented an 87% write down. And what about Irish and what about all that valuable land down the docklands?

“During the mad summer of 2007, at the very fag end of the Celtic Tiger, Rothwell’s takeover bid was gatecrashed by not one but two rivals. The Moonduster Consortium — consisting of Philip Lynch’s One51 and the Doyle Shipping Group — amassed a 21 per cent stake, while property developer Liam Carroll accumulated a 29 per cent shareholding.” From http://www.irishseashipping.com/news/2009/05_2009/05_2009.htm

Despite the short term spike in sugar prices - presumably driven by the ethanol fuel fiasco - EU prices are still above world prices (see chart 3 in the report).

Milk prices are up by 40+ % y-o-y but from a near 20 year low; volume is up because of the atrocious weather in 2009 (Ireland under quota by 11%).

Which leads to the point that Ireland’s milk production is capped by quotas (til at least 2015). The capital cost to new entrants into dairying is huge. And the simple fact of the matter is that the numbers of dairy farmers Europe wide consistently falls each year would suggest that even without quotas increases in dairy production will be very slow and not 50% by 2020.

Sugar beet cannot be grown in Ireland for €26 a ton, full stop. Fodder beet (with lower inputs) is at break even at €30

I would tend to agree with Alan Matthews. In general, artificial supports for non-viable industries are a bad thing.

Does this include the banking industry?

As for milk prices; farmers are getting paid as much for their milk now as they were in the early 1990’s—in nominal terms. Given your attitude towards free-market thinking in relation to sugar beet, I expect you’d support the dairy and meat industries in this country going the same way. Just keep in mind that agriculture is one of the few domestic industries in this country that produces actual tangible goods for export.

While I am no farmer, I assume that land used for growing sugar beet could equally well be used for dairying. Had the land previously used for growing sugar beet been simply transferred to dairying (maybe it was? - I simply don’t know), the farmers who owned the land would now be enjoying a huge boom. The most recent figures show (a) milk output prices up almost 50pc y-o-y in August (b) volume of milk output up 18pc y-o-y in September (c) volume of output in the dairy manufacturing sector up 31pc y-o-y in September.

Now if only they had tried to retrain the farmers and convert the land to market gardening to provide vegetables… (one of the few agricultural products that are unsubisidised by the EU)

The lack of redundancy in global trade is a weakness that is not being priced into the market - monetory distortions are now much bigger then any fiscal generosity - my point is that the market is fake but also its effects are unseen as the costs do not affect Goverment debt directly.

I just need to walk outside my door to see the effects of monetory subsidy everywhere - the efficient market does not exist today - fiscal triage may be the only mechanism left to stop the bleeding in capital creation given the CBs willingness to spend to infinity to subsidise non industrial transactional masturbation.

Your support for them means that you enshrine an artificial support for land value.

Why? That was at the CORE (oops!) of the GREEN jersey debacle, from which you are obviously still reeling.

Farmers have had their day and now land prices must plummet. Good! Find a crop in which we can grow interferon or other high price pharmaceuticals. Grow market crops so Ireland need not import them? WE have no shortage of labour ……

“Free” credit policies are at the heart of the market disruptions you lament! These are gone for three decades or so, plenty of time even for the lazy Irish to found a bio industry based on plentiful rain and cheap land. Malinvestments! They make vital matters such as food and land policy infra dignitatem as people race around “making money”!

Now where did all of that getcha?

Would you like the job of Minister for Subsidies? You’d be very popular setting all the market woes to rights!

Of course it could.

All it required was political will.

Now we have no sugar industry.

Germany subsidises its solar energy industry.

The Fed is creating a dollar mountain.

We can do better then just growing turnips.

Economists need to understand that we live in a political economy and always have - the only difference now is that our units of account is not money.
The whole global monetory system is in turmoil, how can you attribute value ?
In a imperfect monetory system the only mechanism to counter imbalances in a distorted market is goverment funding.
The fact of the matter is beet growing is a more productive use of land then growing grass so therefore that is a primary good.

If you follow the lodgic of your argument we stop the IDA as it distorts the market , stop all pretence of goverment , lets stop all discourse and allow the “market” rip on bank credit coupons - oh yes we did that didn’t we and look where we are now - up to our eyeballs in debt created by our debt overlords.

We do not live in a perfect market - never will as all markets eventually concentrate power and enslave its workforce - the governance in a republic is to restrain these forces from reaching a critical mass of absolute power.
But I guess we are past the point of a self governing republic and perhaps never were - onwards and upwards to a better word of infinite subsidy of banks and their debt.

This attack on all industry has to stop - the banks want to reduce capital outlay until we are all rummaging in the dirt digging for turnips with our bare hands.