Trade is a Technology

Don Boudreaux is one of the authors of Cafe Hayek, a fantastic, long-running newsletter on economics. If you aren't reading it, you should. Below is his short and marvelous analogy, "Trade is a Technology." I have reproduced it below.

"You ask: “What is the shortest best way to prove the case for trade freedom?”

I’m afraid that no such proof is possible. Ultimately the decision to support or oppose free trade rests on a value judgment. That free trade is the best, or even an acceptable, policy cannot be established in the same way that we can establish the truth of the Pythagorean theorem. There are, however, arguments to be made that reveal surprising, attractive powers of free trade – arguments that, when presented amicably, are effective in opening people’s eyes to important and beautiful aspects of trade. I encourage you to read carefully Frédéric Bastiat’s Economic Sophisms; in it you’ll find unmatched brilliance at exposing fallacies that infect the case for protectionism. Read also Russell Roberts’s The Choice, Doug Irwin’s Free Trade Under Fire, Dan Griswold’s Mad About Trade, and Pierre Lemieux’s What’s Wrong With Protectionism?

But let me offer one argument for trade that satisfies at least your criterion for ‘short.’ It’s this: trade is a technology that enables human beings to transform almost anything into almost anything else. You produce whatever you choose to produce and then exchange that output for whatever it is you wish to acquire. You can today produce outputs different from those that you produced yesterday and still acquire today the same things that you acquired yesterday. Or you can produce today the same things that you produced yesterday, yet transform those outputs today into things different from those that you acquired yesterday.

Trade truly is a marvelous technology! If trade were an actual, physical machine it would be hailed as one of the greatest inventions of all time. And so when government restricts your ability to transform what you produce into outputs produced by foreigners, government artificially restricts the operation of this technology. Protectionism is akin to sabotaging a machine. (In fact, at work here are real machines: cargo ships, which are effectively sabotaged by protectionism.) We recognize that such sabotage is destructive when done to the likes of factories, tractors, trucks, and computers. We should recognize also that it’s destructive when done to trade."

Sincerely,
Donald J. Boudreaux
Professor of Economics