Trade


Trade, the exchange of goods and services, makes all people wealthier.  It always has.  And as long as personal liberties are enforced, it always will.

Consider how we normally trade; money for goods.

This weekend my young nephew was in town and the kids wanted to play Wii.  We only had one controller so I needed another.  Out to the store I went.

As luck would have it, the store had controllers in stock.  This hasn’t always been the case, they sell out of those things awfully quick.  And I got to thinking as I was waiting in line to pay for this thing “How much would I pay to have one of these guaranteed in stock”?  Prolly not twice as much, but I think I woulda’ paid about $10.

And THAT got me to thinking how I was really paying for the thing.

See, it cost me $40.  At minimum wage that means I would have to work about 6 hours to get the money I need.  So really, I was trading my labor to someone else for the controller.  But the person selling the controller doesn’t want the output of the work I do for a living.  And I, in turn, don’t have the skills they need/want to exchange for the controller straight up.

So, if it wasn’t for money, I would either have to work at Target long enough to “earn” the controller or….OR I would have to learn how to make my own controller.  And THAT would take, oh, I dunno, months to years.  Maybe never.

And so, I waited in line to be checked out by someone whose labor I don’t want and paid him in money for labor of mine that HE doesn’t want so that I could buy my controller.  And it all works.

I just think that’s cool.

Anyway.  Trade.  Making us all richer.

So, I bought a controller for $40.  Voluntarily.

That means the Wii controller is MORE valuable to me than 40 American.  AND that 40 bucks is more valuable to Target than the Wii controller.  By me swiping my credit card, I got something more valuable than I had AND Target got something more valuable than they had.  As I walked out the door, we were BOTH richer and better off.

Wanna see two example of trade, or lack thereof:

A LONG time ago, the rising seas turned Tasmania into an island. A few thousand inhabitants were cut off from contact with the Australian mainland. Their technology regressed. They forgot how to make bone tools, catch fish and sew skins into clothes. It was not that they grew less intelligent. Their problem was that they no longer had many people to trade with. It took a lot of effort to learn how to carve needles out of bone. So long as there were plenty of people with whom to swap needles for food, it made sense to acquire such skills. But in a tiny, isolated society, there may have been room only for one or two needle-makers. If they both fell off cliffs, the technology died with them. When the first Europeans reached Tasmania, they found natives whose only shields against the winter chill were seal-fat smeared on their skin and wallaby pelts over their shoulders.

Amazing.  With no one to trade with, the nation regressed and became MORE primitive.

Now, the counter example:

America, at its best, is the opposite of ancient Tasmania: a vast open society through which goods, ideas and people flow freely. “The success of human beings depends crucially, but precariously, on numbers and connections,” argues Matt Ridley, author of “The Rational Optimist: How Prosperity Evolves” and a former writer for The Economist. Trade allows specialisation. In narrower and narrower fields, people acquire deeper and deeper skills. Through trade, they share them. The fewer barriers there are to the free movement of goods and people, the more opportunities there are for ideas to meet and “have sex”, as Mr Ridley puts it.

More and more trade only enriches our lives.  It doesn’t threaten us or take our jobs.  Trade, open and free trade, in short, is the single greatest anti-poverty program ever invented by man.

Advertisements
1 comment
  1. rationaloptimist said:

    Those interested in Ridley’s very good book might also wish to know about my own book, THE CASE FOR RATIONAL OPTIMISM (Transaction Books, Rutgers University, 2009), which makes quite similar points and arguments, but develops the case for optimism over a rather broader range of subject areas. See http://www.fsrcoin.com/k.htm

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: