My recent column on the need to theorize carefully about comparative advantage provoked several people to share with me, by email, their objections to my case for a policy of unilateral free trade. Some of these objections miss their mark because they reflect a failure to distinguish real-world facts that are relevant to the point being made from facts that are irrelevant. To increase the clarity of one of my arguments about trade I used automobiles as a hypothetical example. I explained that, because the word “automobiles” refers to many different kinds of vehicles, producers in one country can have a comparative advantage at producing one kind of automobile (say, small sedans) while producers in another country can have a comparative advantage at producing a different kind of automobile (say, large SUVs). Therefore, each country can be both an exporter and an importer of “automobiles” without there being any doubt that this trade pattern is determined by comparative advantage. Neither the correctness nor the relevance of this point is affected by the fact that real-world governments each mandate different degrees of automobile quality, and tax automobile manufacturers at different rates.
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