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The Benefits of Trade

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My GMU Economics colleague (and founder of the indispensable Econ Journal Watch [2]) Dan Klein here explains [3] why economists left, right, and center strongly support free trade.  Here’s part of Dan’s message:

Free international trade increases the extent of the market. International buyers and sellers thicken the market, and make the markets for specialized goods more competitive and reliable.  That’s what makes further specialization justified in the minds of entrepreneurs. They go forward with specialization, and they enhance productivity.  They make things used by people the world over.

That’s why we all gain from increases in the extent of the market.  Large, thick, international markets invite the productivity investments, and the result is better stuff at lower prices for all of us.

Today, the extent of the market is vast.  That’s one reason why humanity is better off than in the past.  People in China are part of a great chain of beings, a chain that works to make stuff for humanity. Humanity would be happier still if the market were free of protective duties and quotas.

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