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More Principles of International Trade

In my latest column for AIER I continue to lay out some foundational principles of international trade. A slice:

  • 7. The people of the home country benefit from their government following a policy of free trade regardless of the policies pursued by foreign governments.

  • Some protectionists concede that a policy of free trade at home can be beneficial to citizens of the home country. But, these protectionists insist, free trade is advisable only if a policy of free trade is followed also by other governments. If the government of, say, Chile obstructs its citizens’ freedom to trade with Americans, we in America – or so protectionists assert – will be economically damaged if our government doesn’t likewise obstruct our freedom to trade with Chileans.

    An entire book could be written on the salvo of sophistries that incite the belief that free trade is beneficial only if all trading partners follow a policy of free trade. But getting a clear picture of the core flaw in this belief is easy: Ask yourself if you are harmed by your government failing to obstruct your freedom to purchase goods or services from merchants who aren’t your employer. For example, if you don’t work for Target, ask if you’re harmed by your government leaving you free to shop at Target.

    If you answer ‘no,’ then you grasp, if only intuitively, the reason why you and your fellow citizens are not harmed if your government leaves you free to trade with foreigners whose governments prevent them from trading freely with you. Your gain from purchasing whatever products are offered for sale by Target depends in no way on your selling anything to Target.

    This reality remains true even if you applied for a job at Target – that is, even if you offered to export from your household to Target some of your labor services – and were rejected. While you might indeed have been made better off had Target chosen to hire you, you would be made worse off still if your neighbor took it upon himself to obstruct your ability to shop at Target. This fact would not be altered if your neighbor explained sincerely that his wish is to retaliate on your behalf against Target for its refusal to purchase your labor services.