our comparative advantage

One reason why I like studying Economics (not for exams, just for interest) so much is its relevance to our daily lives. Just as economies can carve out their niches by exploiting their comparative advantages, the concept of producing the same amount of work with less opportunity cost than the next person is relevant to us as well, or in layman's terms, to be able to do something faster and/or better than another.

At the back of our minds, most of us have probably understood this since we were young. In today's society, such beliefs manifest themselves in kiasu parents who sign their kids up for every possible tuition or extra lessons there are, just so that their kids can gain some form of 'comparative advantage' in the future. Certainly, this has worked out for many children in contemporary Singapore as the differences between the have and have-nots begin to emerge. Recent debate on the deficits of a meritocratic society continues to accentuate the parallels between 'money' and 'meritocracy', which further serves to emphasize the perceived importance of conferring an early 'competitive edge' over others to one's child.

And I was just thinking, if that were the case, wouldn't those who receive 'external aid' be definitely better than those who did not? Where would the state of equilibrium be? After all, I have always held the belief that life is a series of check and balances - if you suffer a crisis in life, you would eventually gain from it, be it from a change towards a more positive outlook of life, or perhaps a better appreciation of what you have.

As such, I thought of how comparative advantage could essentially be broken down into two daughter concepts: static comparative advantage versus dynamic comparative advantage. Static comparative advantages refer to talents and abilitites that could be 'bought with cash'. I say this not with derision, but with the intention of driving in the point of the availability of such a comparative advantage. These advantages could be better understanding of topics through tuitions, the honing of musical talents through musical lessons or the development of athletic prowess through training in a favoured sport. These are tangible abilities, the kind of skills that parents believe will benefit their children in the future, and the kind of skills that can be improved on exponentially with external aid.

On the other hand, there is dynamic comparative advantage. Such a comparative advantage refers to a more intangible concept that lies in the domain of perception and attitude. It is not something that can be easily influenced by external factors i.e. lessons as it is essentially an internal process. People with dynamic comparative advantages (and make use of them actively) are like Bill Gates, who was not impeded by his drop-out whilst at Harvard, and went on to become one of the world's richest men through his invention of Windows. People with dynamic advantages accept failures and, more importantly, accept who they are. They are comfortable and knowledgeable about their own innate abilities (not talking about the ability to score in tests and examinations here), and understand how it is, and can be, employed to enjoy greater success (and happiness) in life. How then do we develop dynamic comparative advantage? The only three ideas I can think of right now are to 1) read and read A LOT, 2) reflect (diary or blog perhaps) and 3) question (the importance of curiosity can't be overstated enough).

Reading the correct literature enable you to better understand the complexitites that are characteristic of our lives; things often look simpler than they actually are. Reflecting allows us to know ourselves better and learn to develop both our internal and external talents; you have to first know yourself before you can understand what you are capable of. Questioning helps you to learn and build up a healthy curiosity; you never know if your ideas are practical or overly-realistic so why not let others be your barometer of judgement? Because dynamic comparative advantage is such a loose and vague concept, it essentially is a personal process. What may work for someone else may not work for you.

And the asymmetrical relationship between static and dynamic comparative advantage? Think crowding out. Think over-saturation. Think symbiotic. And that would be the answer I found to my question regarding the disequilibrium mentioned earlier.

Everyone has a set of unique comparative advantages that comprises both static and dynamic. It is the combination of both these tangible and the intangible that produces diverse ends and configurations of skills and abilities. Fortunately for us, the permutations and combinations are almost infinite. Unfortunately for us, many people don't seem to see past the 'tried-and-tested' road to perceived success.