Benefits of Trade

One of the central insights of economics is the importance of the benefits of trade, of the total amount of goods being produced. This is best understood in relation to the idea of comparative advantage, that trade can make us wealthier even if someone is absolutely worse at everything.

Take a lawyer. A lawyer may be better at typing up grocery lists than the clerk she hires. Plus, she knows the law, so she’s better at all given services. Despite the fact that she can do it all, it’s helpful to align with the clerk to get the greatest amount of total goods.

This insight is neglected in political economy, amongst the right and left, that what’s most important is the amount of goods produced. If you were to have a factory that takes two employees to produce a car through machinery, it’s functionally no different than if instead of a factory you worked with a dock to import a car.

Many respond to this by pointing out the importance of employment and solid strong excellent jobs, and tar NAFTA for sucking up the jobs. As an empirical matter, NAFTA allowed us to free up our labor to work on more effective enterprises. In the same way that we don’t mourn the loss of manually paying our tolls, we shouldn’t mourn the loss of low productivity jobs.

This leads to a situation where it may require more education and training to get employed. So be it. People aren’t entitled to other people’s money or forced association.