By raising the question "Global Financial Crisis or Opportunity?" in the first order requires a proper analysis of what sort of global financial crisis this is in order to discern whether there are any opportunities that can arise from it.

In my consideration, the GFC is fundamentally a result of a crisis in real-estate prices and a disparity between productivity and prices. Whilst some 40% of nominal global wealth was wiped out in the six months between September 2008 and March 2009, the global drop in GDP has only been a handful of percentage points at worst in advanced economies. I can elaborate on this if desired.

The World Bank expectations in December 2008 was that the global economy will enter a recession in 2009 for the first time since 1982 with global GDP growth to decline 0.9% in 2009. Global trade is expected to decline 2.1% in 2009, the first decline since 1982, on reduced global demand and export credits.

Germany contracted by 0.5 percent in the third quarter of 2008, putting it in recession for the first time in five years. Japan's GDP contracted at an annual rate of 0.4 percent from July to September 2008, marking the second consecutive quarter of negative growth. The Eurozone economy. made up of the 15 countries that use the euro contracted by 0.2% in the third quarter of 2008 following a 0.2% fall in GDP in the second quarter. In USA, GDP dropped 0.5% drop in the third quarter of 2008.

The fraud issues (e.g., the Bear Stearns Companies) are interesting, but as you say not the systematic basis of a crisis in estate prices. The main problem there is, of course, a speculative valuation whereby (to use the old language) exchange-value and use-value become disjunct.

The reported statement "US unemployment has reached the highest levels since WWII ... " is incorrect.

Go to http://www.bls.gov/ and select the historical data from unemployment rates. The current annualised rate in the US is 9.4%. However in June 1983 it was 9.5%, and it was higher from May 1982 to that month it was equal to or higher to the current rate, reaching a peak of 10.8% in November and December of 1982.

What I have seen cited a few times is the length of the current recession in the US is the longest since WWII, which probably isn't correct either (I haven't checked the data from the .gov sources for that). However, the following Reuters article includes a pithy historical summary:

"... output has declined for three straight quarters for the first time since 1974-1975 in a contraction that is the deepest since at least the 1950s. Already, the recession is the longest since the Great Depression, although much less severe."
http://www.reuters.com/article/businessNews/idUSN2831774020090529

I am less convinced, from a management perspective, that there is a particular need for "[a] close examination of successful HR managers" anymore than any other department, or that the opportunity cost between keeping people on with the presumption of long-term gains over short-term costs is especially different in this time than at any other time.

Retraining, worker involvement, motivation, retaining professionalism... These are all good components in discussing alternatives to the last resort of retrenchment.

Another alternative which businesses can look at - and will often be seen in a positive light by workers, OH&S people, and perhaps management (and, completely on a tangent, anthropologists) is reducing working hours.

If a business finds itself in a situation where it absolutely must reduce its wages bill by (say) 10%, rather than retrenching 10% of the workforce it should look at reducing the working week of its staff by 10%.

Does this necessarily correlate with a 10% reduction in productivity? Not necessarily. A shorter-working week may increase overall productivity per hour; of course, the administrative overhead however will remain. So a cost-benefit analysis needs to be conducted on that level.

Workers will be generally impressed with such a proposal; working for 90% of the wage is certainly better than working for the dole, and extra few hours a week to spend with family and friends whilst retaining most of one's income helps the life-work balance. Unions would probably be pleased with the sense of solidarity ("we're all in this together, and we're not letting anyone go").

http://blogs.theage.com.au/executive-style/managementline/2009/03/30/sho...

http://www.eetasia.com/ART_8800560784_480200_NT_9751865e.HTM

http://links.org.au/node/1077

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I will have to disagree with your assessment of Ricardo's Law of Comparative Advantage "as if it applied today". Of course it applies today, it applies today as much as it will apply in a hundred years time, or even five years before Ricardo even expressed it in a theoretical form. It's a universal law, as fundamental as the changes in demand relative the supply of a good or service. Indeed, it can be argued that Adam Smith's discussion of the division of labour in the first book of the Wealth of Nations is certainly a form of comparative advantage.

This is not to say, like Newtonian mechanics, that it is perfect. Ricardo himself was quite aware of this and expressed the caveat that comparative advantage only applied strictly with the immobility of capital (which, in the language of classic economists, meant fixed and real assets - money is but an accounting representation of capital, not capital itself). A largely successful elaboration of Ricardo's theory of comparative advantage is the The Heckscer-Ohlin model of trade which accounts for a degree of mobility in capital (see http://www.econ.iastate.edu/classes/econ355/choi/ho.htm).

The basic proposition of a comparative advantage and the division of labour is that people should do what they are a good at relative to the skills of others. Australia as a mine and farm served the country well for a long time because that form of production commanded fairly high prices and we were good at it. Now the price for such goods is not as high (indeed, iirc the relative price has fallen by 50% since the 1970s). Likewise, for a long time Australia has a pretty good manufacturing industry because we had a well-educated and well-organised workforce with good supporting infrastructure.

So the question is asked. What is Australia good at relative to the skills in the rest of the world? Because that will always be the foundation of our tradeable wealth.

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From the point of view of the 'bean counters' and indeed, anyone interested in bettering people's lives either in the short-term or long-term, R&D which does not result in marginal utility is indeed a waste of money. On the other hand, from the point of view of the 'dedicated engineers and scientists', as you say the talent has gone off-shore and CSIRO is testing arm for companies trying to make a short-term profit (and this is, of course, how companies erroneously measure value).

Thus the structural issue seems to me to a need of public investment in science and engineering in public goods with the research and results open-sourced. Enhancing positive externalities and reducing negative externalities is where governments should be directing their economic interventions and it is the right place where those dedicated to pure research should receive maximum support. I don't, however, see much political will in that direction. So much of contemporary political management is the avoidance of short-term costs even when it could result in long-term benefits.

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Well of course the conditions do not apply absolutely because they are idealised states. That hardly means they are not relevant, rather it means that the general theorem must always be elaborated for specific conditions; rather like how a general theory of supply and demand has to be modified for demand and supply elasticity, consumer information, barriers of entry etc etc.

In a practical sense, I find the implementation of the British Corn Laws as an example of denying comparative advantage. Britain was not as good at producing corn than other countries; instead it had greater levels of population and capital more suitable to manufacturing in a comparative sense. The House of Commons established a committee in 1813 to look at such prices.

One one side of the debate was Thomas Malthus, supported by the landowners, who argued that it was risky for Britain to rely on imported corn and seriously suggested that a low price of corn would mean that workers could be further exploited by industrialists. On the other side was Ricardo and industrialists who argued for free trade on the basis of comparative advantage. The British could specialise in manufacturing, and other countries could provide corn.

Perhaps not surprising, given the balance of political power at the day, the House of Commons supported the landowners, who benefited from a high price of imported corn and other agricultural produce. The results were illustrative; a collapse in industry, skyrocketing food prices, famine and eventually the Peterloo Massacre. It was only the crisis induced by the Irish potato famine that eventually led to the repeal of said laws. The results? Britain's corn industry disappeared (as it should have) and become an industrial success, the price of corn plummeted, and wages grew to the extent that the remaining farm workers were the highest paid in the world; and agriculture became industrialised.

As a more contemporary example of the denial of comparative advantage is the two Koreas. Up until the mid-1970s North Korea actually had a fairly equal GDP per capita to South Korea. It was around this time that North Korea decided to replace its official ideology of Marxism-Leninism with Juche, or self-reliance. Rather than adopt a policy of specialising in a few economic activities in which they had comparative advantage, they tried to do everything. A few years later, South Korea decided to go on the opposite direction, adopting a policy of prosperity through trade (albiet initially under rule of the military dictators, Park Chung-Lee and Chun Doo-hwan. The results? South Korea has become a world leader in finance, electronics, and manufacturing. The GDP per capita is $28K USD. In comparison North Korea has a GDP per capita of $2K. Interestingly the Gini co-efficient, a measure of income equality, is roughly the same.

I think it is fairly clear, on both a theoretical and practical level, that comparative advantage applies, just in the same way a division of labour applies on an individual level. Even if (to paraphrase Paul Samuelson's example) one of us was the best engineer and best janitor in a city, it is more productive to concentrate on being the best engineer and to let someone else mop floors.

To bring this back on-topic, a organisation needs to specalise at what they do best in comparison to the activities of other organisations. Organisation A might be best themselves as avionics, but Organisation B is better still. However Organisation A is also relatively competent at aeroelasticity, where as Organisation B has few skills in that area. Under the principle of comparative advantage, it is beneficial for both parties for Organisation A to concentrate on aeroelasticity and for Organisation B to concentrate on avionics.

For the Australian economy, we have a massive services sector (about 70% of our GDP) but highly reliant on voliatile income in agriculture and mining (about 60% of our exports) for trade income and import manufactured goods and especially office equipment. The country is particularly prone to real estate speculation and suffers an appalling current account deficit - all of which is directly explicable from the characteristics of the economy given above. What is Australia comparatively good at apart from agriculture and mining? (China is well aware of our advantage in this area; hence their offer last month to invest $22 billion in mining http://www.nytimes.com/2009/06/03/world/asia/03australia.html?_r=1). Personally, I think with relatively combination of scientists, engineers and a natural resource of high levels of insolation should allow us to become a world leader in the development of solar energy.

I will acknowledge that Ricardo used Portuguese productivity as an example of the theory of comparative advantage. But it was hardly a case of special pleading, as it also provided many other examples as well (Poland, France, America etc, but it certainly was illustrative - Ricardo claimed that Britain should specialise in exporting textiles and importing wine from Portugal.

The relevant chapter from On The Principles of Political Economy and Taxation can be found here which people may read at their leisure:

http://www.econlib.org/library/Ricardo/ricP2a.html#Ch.7,%20On%20Foreign%...

Particular attention is drawn to section 7.11. However, as good as it is in my opinion, his material on rent and the efficiency of different types of taxation is even better!