Trade is Not Zero-Sum

On this post on Cafe Hayek, Per Kurowski writes in the comments:

Trade deficits per se do not worry me as much as a wrongly structured trade deficit. If current trade conditions permit other countries better chances to develop 1st class robots and the smartest artificial intelligence than mine, then I do fret for the future of my grandchildren. Let us not forget the “Arsenal of Democracy”

Mr. Kurowski makes a common mistake regarding trade: trade is not zero-sum.  If other countries are developing 1st class robots and smarter artificial intelligence, it does not necessarily follow that the domestic nation is made worse off by such innovations.  Indeed, the domestic nation stands to gain from such innovations.  A wealthier nation has more to offer the world.  More to trade means more trade.  More trade fosters more growth for both parties.  Even if a nation loses an absolute advantage in robotics or AI or something (as Mr. Kurowski postulates), it still becomes wealthier because of the Law of Comparative Advantage.

Mr. Kurowski also seems to insinuate that such gains by trading partners would pose a threat to national security.  I’ve written on the “protectionism for national defense” argument before, but it bears repeating that trade fosters peace, not violence.  There are two main ways to get what one wants: through cooperation or coercion; through trade or violence.  When trade is encouraged, peaceful cooperation takes hold.  Goods and services can cross borders, making all better off.  Since this trade is mutually beneficial, both nations face higher costs of breaking off those ties.  Even if the two nations get wealthier and can afford more expensive military equipment, the costs of war will rise quicker and the benefits of war fall.  With rising costs and falling benefits, the likelihood of conflict drops (we have seen this pattern take hold over the past few decades as trade liberalized).

If Mr. Kurowski is concerned about the future of his grandchildren, then he should welcome deeper trade ties among nations and not be concerned about trade deficits.  This would mean a wealthier and more peaceful world.  A move to protectionism would mean a poorer and more violent world.