Most conversations about trade begin in the middle. The conversation revolves around international trade, about people in one nation trading with people in another. The conversation revolves around GDP and regulations and tariffs and tribunals and all these things tangentially related to trade, but never about trade itself. The problem with starting the conversation in the middle like this is we miss the all-important fundamentals that are developed in the beginning part of the conversation. For economists, this gloss isn’t a problem; we’ve been trained and trained on trade. But for presidents, politicians, pundits, and prophets, this gloss is problematic. They do not understand the basis upon which trade is built, the logic of the argument because they miss it (I suspect this is a good amount of the reason opinions diverge so strongly between economists and the man-on-the-street on the nature of international trade). Therefore, I offer this blog post as a humble contribution to the conversation.
Let’s begin at the beginning: Why do people act? They act because they must feel, given the information they have at the time, that their action serves some desired end/purpose. In other words, that action is purposeful. Given purposeful action, why do people trade? What causes Smith and Jones to exchange their goods with one another? The answer is obvious (by which I mean its literal interpretation (derived from observation) as opposed to its more colloquial use of “trivial”): Both Smith and Jones benefit from this trade. If either party did not benefit, then no trade would happen. It is from this first principle that we must build the conversation around trade, but it is this first principle that much of the political conversation ignores.
In the coming days, I will be posting a series of blog posts exploring trade from the first principle that trade is mutually beneficial. The outline is as follows: