Most of us do not want to become Robinson Crusoes, responsible for making, finding, or growing everything we need, use and consume. When we picture Robinson Crusoe, we picture a solitary character spending most of his time putting together the bare necessities of survival. Not only is Robinson an unwilling model of the do-it-yourselfer, the Robinson Crusoe story demonstrates why, given a choice, most of us would not want to be self-sufficient.
The idea of the self-sufficient man, perhaps oddly, offers a number of valuable lessons about trade. Oddly, because most of what we discuss in economics is not about self-sufficiency. Instead, it is about how to avoid the need to be self-sufficient, whether it is on a personal, a regional, or a national basis. Economics tends to focus on fulfilling wants through exchange and trade that takes place in a social context. Robinson’s plight makes it clear why individuals do better if they trade, but what about regions and nations?
Nations, including the U.S., have a tendency to close off their borders to trade when they produce products that compete with a foreign version of the same good, when they feel threatened by uncontrollable external events such as war, when vital resources such as imported energy become steeply more expensive, and other circumstances. Quotas and tariffs are one response to those perceptions. Economic isolation with respect to some products, or an attempt at self-sufficiency, is another.
Producing a good domestically often makes no more sense, in terms of what is most efficient, than it does for Robinson to voluntarily isolate himself and be forced to be self-sufficient or die. The very idea that we want more than we can gain purely by our own efforts, and that we would rather not perish in the process of trying to survive, drives most of us to exchange even if we would rather be hermits. The reason that exchange makes sense is that exchange increases the value of both parties’ efforts. When nations deliberately cut themselves off from foreign imports, the reasons may be political, as often happens in calls for “energy independence,” or to protect a favored group of producers.
There are many examples in which exchange is the most effective way to obtain a good, even when it is possible to be self-sufficient. Take, for example, the problems of supplying different parts of the United States with potatoes and with oranges.
There are some regions of the country, Maine and Idaho, in particular, that are excellent for growing potatoes. California and Florida, on the other hand, have ideal conditions for citrus production. If Maine decides that it wants to be “citrus independent,” it can do so, but at great expense. Citrus growers in Maine will have to invest in extensive greenhouse construction or other means to protect the citrus trees from Maine’s cold weather. With enough investment, Maine could produce all of its own citrus. Likewise, Floridians can decide to eat only Florida-grown potatoes, but farmers will need to take extra measures to simulate conditions ideal for potato cultivation in the warm climate, and give up lucrative citrus production besides.
Clearly, the Maine and Florida decisions to be independent of one another in citrus and potatoes make little sense. The resources needed would reduce all kinds of other production, and ultimately make both regions poorer in the process. Since each region can produce some products relatively more efficiently than the other, each should produce the items in which they enjoy a comparative advantage. Maine should grow potatoes, not citrus, and Florida should grow citrus, not potatoes. They produce these things so well that they can then trade their excess output for things they cannot produce efficiently at all.
Nations face the same situation in international trade. Each has some product or products that it produces more efficiently than other nations, and can make the most of its trade opportunities by exchanging these goods for products produced more efficiently abroad. This is the reason that trade restrictions do not make nations wealthier overall; they simply reduce the consumption opportunities for their citizens instead.