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Wednesday, November 1, 2000

How the Theory of Comparative Advantage Saved My Marriage

Economic Theory Has a Down-Home Value

Ted Roberts is a freelance writer in Huntsville, Alabama, who often writes on public-policy issues.

My neighbor is a kindly man with the pink and white complexion of a healthy turnip—and the generosity of a squash plant in dark loam. He has two green thumbs and big hands with long fingers obviously designed to pluck weeds.

Like most southerners, there’s an agricultural limb on his family tree. Even though currently he’s an engineer, every spring he hears the earth calling and he responds with tiller, fertilizer, and eventually seed, resulting in a 300-square-foot reproduction of the Garden of Eden minus the snake and the naked newlyweds. The gentle mist of an automatic sprinkler system substitutes for the Tigris and Euphrates.

I, too, have horticultural ambitions. Or at least I used to. I tried for years to install a garden. But the mineral resources of my backyard were only rusty nails and shingles left by the builder. And my garden skills were minimal. I much preferred puttering around in the kitchen. I’d rather stew a chicken using my secret recipe that features Caffeine-Free Diet Pepsi than pull weeds.

Out of this neighborhood diversity arose my first experience with that anthem of free-trade economists—David Ricardo’s theory of comparative advantage—thereby demonstrating that economic theory has a down-home value to cookers of chicken as well as captains of industry. The comparative advantage theory says that self-sufficiency is a myth. Nations and individuals should specialize in those activities they do best. It’s a good deal for the United States to supply pharmaceutical products to Japan, which sends us TVs that we buy with the yen we receive for our medicines. Likewise with individuals. An accountant doesn’t weave shirts or cobble shoes or raise beef. He spends his accounting wages for those products.

Specialization determined by resources and skills is the watchword. Don’t salinize the Mississippi River so you can grow Nova Scotia Salmon. Have a fried catfish filet instead, and if you still lust for salmon, import it. It’s OK, says the theory, to buy Japanese TVs and sell those big Boeing jets to the Japanese.

My adventure with David Ricardo—the nineteenth-century economist—began one afternoon as I inspected my cement yard—Hell’s Half Acre—after a three-week drought. My jovial neighbor yelled a hearty hello from his suburban Eden—a manicured yard framing a cornucopia of squash, pole beans, and tomatoes that flourished under the mist of his regulated sprinklers.

“Come on over and get ya a couple tomatoes for supper,” he shouted.

And I did, which brought a warm ambience to my home since my wife was a homegrown-tomato addict. She had long complained about my garden shortcomings.

But now, so what if I was a clumsy klutz among the tomato stakes. In some wily way, due to my intra-neighborhood skills, I put fresh sliced tomatoes on the breakfast, lunch, and supper table. Life was good.

One day, while biting into a No. 3 Better Boy, it occurred to me that common decency and the need for a continual flow of tomatoes required some reciprocal generosity on my part. And since my backyard was as barren as Sodom and Gomorrah after the fireworks, and since I couldn’t grow a dandelion in a pile of potting soil, I’d better come up with a creative substitute.

Aha, my famous Stewed Chicken with the secret recipe I would pass on to my children as a rich inheritance and the major part of my estate. The secret is the exotic flavoring of one small turnip. Perfect. I had culinary talent and a freezer full of frozen chicken dating back to the ice age.

So—every week I’d carry a plateful of Spécialité de la Maison to my obliging neighbor and return with my pot full of those scrumptious No. 3 Better Boys. My wife, with an expectant grin (and knife and plate in hand), greeted me at the backdoor with a kiss. Yes, the theory of comparative advantage was everything David Ricardo said it was.

Let me stress that at no time in my pre-tomato days did I ponder my lack of tomatoes and conclude that this nineteenth-century theory was my solution. I was totally innocent of the science of economics. To me, David Ricardo sounded vaguely like a Latin bandleader. Only later, when my son, the University of Chicago-educated economist (and Ideas on Liberty columnist), showed me his recent book on foreign trade did I appreciate my independent discovery. Kids! They think they know everything.

All this time I thought I was swapping stewed chicken for tomatoes, but what was really going on was a classical bubbling of the theory of comparative advantage as described by a nineteenth-century trade theorist.

Hmmm—my neighbor on the other side sure has some nice-looking peaches hanging on his peach trees. Wonder if he likes stewed chicken with a tinge of turnip?