What Walt Disney Understood About Comparative Advantage


One of the interesting things to analyze from an aerial view is the difference between how strategies are taught in the classroom and how they are executed in reality by those with real world experience. For instance, in business schools across America, students are taught that it wise for a company to take on debt in a low interest rate environment if it can earn higher returns on capital with that money when adjusted for the interest rate payouts. Of course, old-school operators understood that you cannot go bankrupt if you do not owe anybody anything and tended to eschew debt in good times because it could turn into a noose that drains cash flow in bad times.

An education in “comparative economics” offers a similar divergence between how things work in theory compared to the real world. In textbook economic theory, you are supposed to focus on what you … Read the rest of this article!