Wednesday, March 30, 2016

The Virtues of Free Trade

Richard Ebelin emails:

Dear Bob,

I participated in the March 29, 2016 “Libertarian Angle,” webinar sponsored by the Future of Freedom Foundation, with the Foundation’s president, Jacob G. Hornberger, on the topic: “The Virtues of Free Trade.”

In a presidential election year, many of the worst economic fallacies seem to rise to the surface, and this year is no different. Some candidates have come out forcefully against free trade and for forms of protectionism; others have given lip service to free trade, but insisted that it must be “fair” trade.

The focus of this week’s webinar, therefore, was the ethical and economic case for unrestricted freedom of trade. Surely, if individual liberty is valued and considered morally desirable, then one component should be the right of people to peacefully and voluntarily enter into exchanges with anyone they choose for mutual benefits, whether a potential trading partner is across the street or half way around the world.

And from a more “consequentialist” perspective, since the time of Adam Smith economists have pointed out and emphasized the material and cultural benefits from international division of labor and specialization so all may benefit from what others somewhere may be able to supply less expensively or in a better quality than making it at home.

And in addition, economists have explained the notion of “comparative advantage,” which captures the insight that even those who are generally more productive and efficient than others will still gain by focusing on what they are most better at in terms of productivity and the market value of their specialized ability, and allow those less efficient do things that free up one’s time and resources for their most highly valued use in the marketplace.

Also discussed were many of the common arguments against free trade, including the “balance of trade” fallacy, the misconception that foreign competition permanently destroys jobs in one’s own country, and the error in thinking that any benefits from international trade comes from the sale of exports rather than the importing of goods from other lands.

The webinar runs for about 30 minutes.

Best,
Richard

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