It is entirely true that David Ricardo illustrated comparative advantage using nations and national economies. England making cloth and Portugal making wine. But to think that the idea really refers to nations or national economies to to misunderstand, to get the idea entirely wrong in fact.
But varied protectionists still manage to do so:
If you want to stump a free trader economist, ask him or her what exactly a big, continental-sized economy like the USA’s ought to specialize in.
There are a number of answers to this, one obvious one being that what to specialise in is emergent from economic activity, not an input into the system.
But the far more important one is that there is no such thing as “a big, continental sized economy like the USA’s”. That is a reificiation and an incorrect one. The correct understanding is that there are a number of economic actors – some 360 million actually – who partake of varied economic activities within the continent sized borders of the United States. Many of them also, obviously enough, partaking in economic activity which crosses said borders.
The question what should the reification specialise in is a nonsense for the reification is not an economic actor. What we want to know is what should the economic actors specialise in?
This being logical for specialisation is an economic action and thus something that must be done by economic actors.
We can even explain this without reference to Ricardo or comparative advantage at all. Pure Adam Smith – increased wealth comes from the division and specialisation of labour and trade in the resultant greater production. OK. Now we’ve agreed that we should specialise and trade. That is, we people, we economic actors. Great – the relevance of the geographic location of those we specialise and trade with is what? Quite so, absent the usual calculations of transport costs their location is an irrelevance.
Or, to put it as simply as is possible, the economic argument in favour of trade is that “we all do the things we’re least bad at and swap the results”. Note that there’s nothing about geography or nations in that at all.