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Comments on: Pulling out the comparative advantage card http://www.tvhe.co.nz/2013/02/05/pulling-out-the-comparative-advantage-card/ The Visible Hand in Economics Wed, 06 Feb 2013 19:03:00 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Matt Nolan http://www.tvhe.co.nz/2013/02/05/pulling-out-the-comparative-advantage-card/#comment-40409 Wed, 06 Feb 2013 19:03:00 +0000 http://www.tvhe.co.nz/?p=8132#comment-40409 In reply to boristhefrog.

Indeed.

Funny fact, Mana and to a lesser extent the Greens want to support manufacturing and introduce a financial transactions tax. A financial transactions tax will tax products with a “longer supply chain” more – as the type of tax that has been mentioned is a GST without rebates. As a result, they want to tax manufacturing more than other industries and then support it somehow.

]]> By: boristhefrog http://www.tvhe.co.nz/2013/02/05/pulling-out-the-comparative-advantage-card/#comment-40407 Tue, 05 Feb 2013 04:51:00 +0000 http://www.tvhe.co.nz/?p=8132#comment-40407 Its a complex business this manufacturing gig… have a look at this website – sourcemap.com which focuses on location of components for various final products – for an iPhone the countries involved are… USA, Costa Rica, Congo, Malta, Italy, France, India, Singapore, Malaysia, Japan, South Korea, Taiwan, Vietnam, Philippines and of course China, where the final assembly is done…. so components from 14 countries….

Now if your the Greens/NZ First/Labour/Mana it probably hasn’t occurred to you that comparative advantage is real and that the production of manufactured exports necessarily includes the purchase of a lot of imported components…

Thinks of a can of infant formula – sure the milk powder comes from NZ, but that is only about 40% of the final product, excluding the can… wonder where the rest comes from? How much is imported? Might that not be important?

]]> By: Matt Nolan http://www.tvhe.co.nz/2013/02/05/pulling-out-the-comparative-advantage-card/#comment-40405 Tue, 05 Feb 2013 02:49:00 +0000 http://www.tvhe.co.nz/?p=8132#comment-40405 In reply to Eric Crampton.

Was close to putting that in – but figured I’d need to add a relatively large section discussing how much of the slowdown was to do with cyclical factors, both globally and domestically. From there, I became concerned that if I covered that I would end up crowding out my point – so I purposefully didn’t.

However, when it comes to looking at what is going on right now it is a good point.

]]> By: Eric Crampton http://www.tvhe.co.nz/2013/02/05/pulling-out-the-comparative-advantage-card/#comment-40404 Tue, 05 Feb 2013 02:42:00 +0000 http://www.tvhe.co.nz/?p=8132#comment-40404 And note too that RBNZ piece by Gael showing that much of the drop in manufacturing is explained by reduced demand in the domestic construction industry. Again, building consents and local councils….

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