Monday, February 06, 2017

Trade achieves peace and cooperation better than formal diplomacy could ever dream.

One of my favorite videos to show to my students is Episode 1 of Milton Friedman's Free to Choose where he visits Hong Kong, Scotland, and his local farmer's market. Trade unites the nations and languages in a particular way that often goes unappreciated, as illustrated by this two minute clip. This is Friedman's adaptation of Leonard Read's essay "I, Pencil."

Note the concluding quote:
"Literally thousands of people co-operated to make this pencil. People who don’t speak the same language, who practice different religions, who might hate one another if they ever met! When you go down to the store and buy this pencil, you are in effect trading a few minutes of your time for a few seconds of the time of all those thousands of people. What brought them together and induced them to cooperate to make this pencil? There was no commissar sending out orders from some central office. It was the magic of the price system: the impersonal operation of prices that brought them together and got them to cooperate, to make this pencil, so you could have it for a trifling sum.

That is why the operation of the free market is so essential. Not only to promote productive efficiency, but even more to foster harmony and peace among the peoples of the world."

This is why I'm glad so many of the Trump "Make America Great Again" hats are made in China. This is why the US is a charter member of the World Trade Organization. This is why both the State Department and US Trade Representative work for trade deals-- they benefit all countries involved. This is why the Clinton Global Initiative does work to help entrepreneurs in developing countries develop products for export. This is why Hillary Clinton privately dreamed of a hemispheric common market even while bashing trade publicly. This is why people in the USSR have higher standards of living than before the Iron Curtain fell. This is why the EU banished tariffs between member countries. I could go on.

The people who had lived through World Wars I and II understood we needed more trade to grow and be peaceful, not less. They built institutions and wrote policies to facilitate that and ensure it for their grandchildren. When we neglect trade or threaten to restrict it we dishonor their memories, their knowledge, and we jeopardize peace.

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