Business schools, which focus naturally on the fortunes of the individual firm, teach that “competitiveness” is all. They believe it follows that government, not price signals from the world economy, should choose winners. The economists in the business schools have had hard time persuading their colleagues that the pattern of trade and specialization is determined, on the contrary, by “comparative advantage,” which has nothing to do with absolute advantage, and which professors of management and of history regularly mistake it for. Pakistan exports clothing to the United States, the economists preach (without much effect on editorial boards and politicians), not because it is better per hour at making socks and sweaters but because it is comparatively better at them than at making jet airplanes and farm tractors.
Deirdre McCloskey, Bourgeois Equality, 2016.
