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Trade Is Simply – Whenever Used – A Lowest-Cost Method of Production

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This letter is to a new correspondent:

Mr. Mel Glenn

Mr. Glenn:

Thanks for your e-mail.

You accuse me of being “too rigid & dogmatic & inflexible” in my support of free trade.

Here’s a question for you.  Suppose that you want to make a new sofa for your family.  If you use work-method A, it will take you 500 hours to produce a sofa.  If you use work-method B, it will take you 50 hours to produce an identical sofa.  Which method will you choose, A or B?  The answer is obvious: method B.  And if I ask this question ten or ten-thousand times, the answer, I trust, will not change.  Would you, therefore, be “too rigid & dogmatic & inflexible” in your support of work-method B?  If you answer “no,” then you’re well on your way to understanding why I am in fact not too “rigid & dogmatic & inflexible” in supporting free trade.

Trade, you see, is simply a method of production.  You can produce a sofa directly, constructing it with your own hands.  But if you aren’t a specialized furniture producer, the number of hours that it will take you to construct a good sofa will be enormous.  Fortunately, you have available an attractive alternative method – a roundabout method – for constructing a good sofa: you can work at whatever it is you specialize in and then transform through trade some of your income into a sofa that you buy from a furniture maker.  The amount of time that it will take you to earn the income necessary to buy a sofa from the furniture maker is much less than the amount of time that you need to construct a sofa with your own hands.

Do you believe that anyone has a right to force you to make your own sofa directly, and at greater cost, in opposition to your wish to make your sofa indirectly by working at your specialty and then transforming through trade some of your income into a sofa?  And would you accuse someone who consistently defends your right to always choose whatever peaceful method of production is, for you, the least costly of being “too rigid & dogmatic & inflexible” in offering this defense?

If you again answer ‘no,’ then all you now need to understand is that when consumers buy imports, they are simply choosing to make things for themselves and their families using the lowest-cost methods of production available to them: they ‘make’ their consumer goods using the roundabout method of working at their specialties and then transforming through trade some of their incomes into these goods.  Sometimes consumers trade with fellow citizens; other times they trade with foreigners.  But in all cases the trades are the lowest-cost methods of production available to consumers for provisioning themselves and their families with the goods and services that they desire.

Why should the making of such choices ever be blocked?

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

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