Free Trade Makes You a Better Person [Good Life series]

I am quite the international trader, it turns out.

Earlier today I put on my made-in-Argentina jacket and my new made-in-India shoes and got into my made-in-Japan truck. I stopped for gas at a British petroleum station and chatted with its owner, a guy from Mexico. To help pay for it all, I taught my first class of the day — on a French philosopher, using a text translated into English by a Polish-American and printed in Canada — to a group of students, one-third of whom are from foreign countries.

Then it was mid-morning and I needed a coffee break. Italian roast with Arabica beans from Rwanda, thank you very much.

When economists talk of the benefits of trade they speak of division of labor and comparative advantage. Long ago Adam Smith used the example of a pin factory to show that dividing a complex task into parts is much more efficient than doing everything oneself. David Ricardo used the example of Portuguese wine and English cloth. Because of climate and differences in their workforces’ skills, both nations would be better off if Portugal specialized in making wine and England specialized in making cloth and they then traded wine for cloth.

Contrast this contemporary example — the guy who made a sandwich for himself from scratch — after spending $1,500 and six months’ effort. My sandwich at lunch will cost me $5 and a five-minute wait.

Trade enables us to be more efficient, and the more extensive our trading networks the more people’s talents we can each enjoy, and the more people we can reach with our own talents.

Those economic consequences of trade are important but only part of the overall value story, since built into trading with each other is a set of deeply moral value commitments.

People who trade with each other first have to be productive. That is, they have to create something valuable in order to bring something to the trade. Think of a standard business transaction: I raise chickens and bring eggs to market, and you grow wheat and bring flour. Each of us is committed to taking responsibility for our lives by making our own way in the world.

Next each party had to effect the trade by voluntary means. I choose to offer you some eggs for flour. You are free to accept — or to reject my offer and make a counter-offer. We then both assent to an agreement and make the exchange. Each of us is committed to dealing with the other peacefully.

We then reach a win-win, as both of us enjoy the fruits of the trade. I benefit from the flour you produced and you benefit from the eggs I produced. You worked to add value to my life, and my payment is earned by you. I worked to add value to your life, and I receive payment in return. Embedded in that is a kind of justice: people get what they deserve.

And finally we come to pride and respect. To be a trader is to be someone who works to add value to the world, who deals with others peacefully — and who knows that he or she deserves to enjoy the good stuff as a result, both the material wealth and the sense of accomplishment. That is pride. The trader also treats other traders as self-responsible individuals with something valuable to offer and who are free to go their own way. A win-win trade is a mutually-honoring interaction. That is respect.

Contrast the predator type in the business world — those who steal, defraud, or extort. Predators do not make value — rather they leave production to others and then take it. A predator does not earn his way, and he knows it. Pride is not possible to him. Nor does the predator respect his victims — he necessarily thinks of them as weak, as only their weaknesses make possible his exploitation of them. Predation is a mutually-dehumanizing mode of existence.

What holds for trade between any two individuals holds as we extend trade all the way to international markets.

Think of all the things that set people at each other’s throats — religious and political zealotry, tribalism, sexism, ethnocentrism, and the pig-headedness that humans are capable of for any number of reasons.

Those committed to the ethic of trade are committed to evaluating others in terms of their productive ability — not their skin color or political party. They are committed to respecting others as self-responsible agents — not to seeing them as the weaker sex or idolaters. They are committed to offering their personal best to the world and seeking the best that others have to offer — not to stubbornly ignoring or downplaying the achievements of individuals from other cultures.

Trade is not a cure-all. But it does motivate civilized behavior, and it gives us all an incentive to overlook or unlearn any irrational prejudices we may have.

This was Voltaire’s point when he noted — with some astonishment — that at the London stock exchange people of many different religions traded peacefully and happily with each other. Outside of the exchange, Catholics might persecute Protestants, Protestants might persecute Catholics and other Protestants, and everybody might persecute the Jews — but inside the stock exchange Christians, Jews, and even some Moslems exchanged smiles, handshakes, and stock certificates to the mutual benefit of all.

It’s also why in those places most committed to the open trade of ideas and goods — the historic free ports of Pireaus and Amsterdam, the free trade zones of Hong Kong and Panama, the entrepreneurial hubs like Silicon Valley — that we find the highest rates of cross-political, ethnic, racial, and gender participation.

The point is that free trade is both economically good and embodies a set of principled moral commitments: productiveness and responsibility, voluntary and peaceful interaction, mutual benefit and justice, pride and respect.

And all of this has implications for many of our current debates over economic policy: Should we allow the free flow of ideas, goods, and people across borders — or should we erect barriers of censorship, tariffs, and immigration quotas?

If we make trade more difficult, we not only impose economic costs upon ourselves and others, we impose moral costs by erecting barriers that make it harder for us to evaluate others in terms of their creativity, productivity, and actual achievements. And if we lessen the number of win-win trading relationships across national borders, we will increase the ease with which people fall back upon primitive us-versus-them attitudes.

[This article was originally published in English at EveryJoe.com and in Portuguese at Libertarianismo.org.]

[Related: The full archive of my articles in The Good Life series.]