David Ricardo’s theory of comparative advantage is counterintuitive, and a lot of people struggle with it. Most of us can see why free trade works in the interest of competitive countries. How, though, can it be in the interest of less efficient places? Why wouldn’t all the jobs go to the more productive trading partner?For years, I struggled to convince skeptics of the theory, which relies on a bit of math. Then I stumbled upon a short sketch by the comedian Dave Chappelle. Satirizing President Donald Trump’s obsession with bringing Chinese jobs to the United States, Chappelle asks, “For what, n****r? So iPhones can be $9000? Leave that job in China where it belongs, none of us wanna work that hard!” Warming to his theme, he gives as pithy summary of the case for free trade as you will hear: “I wanna wear Nikes, I don’t wanna make them s***s!”Sneakers are, indeed, a textbook example of Ricardian comparative advantage in action. Making footwear is badly paid work and, in consequence, Americans no longer do it. The stitching jobs went, first to China, then to Vietnam, and now, increasingly, to Indonesia.
They were, as usually happens, replaced by better-paid jobs in the same sector. American shoe companies employ lots of people in design, accounting, software, marketing, logistics, procurement — pretty much everything, in fact, except the actual piecing together of the leather, rubber, and canvas. On any normal reckoning, the U.S. has traded up, exporting low-value jobs that were largely performed by unskilled immigrants and replacing them with more and better-paid jobs higher up the production chain.
