Yesterday's post says that even the poor get richer under free trade. But . . why? How does free trade increase the prosperity of everybody? Does that really work? Unless we can understand why, it can be hard to believe that free trade increases wealth.
Jay Richards explains in this video. His grade school teacher bought a cheap toy for each student in her class. Many, like Jay, did not feel wealthier. He got "Barbie" doll playing cards. The teacher had each child pick a number from one to ten describing how happy they were with their toy; she added up the numbers, and placed the total on the blackboard.
Then she allowed them to trade toys, restricted only to other students in their row of desks. They again picked a number, the numbers were added up, and the total happiness number went up.
Then she allowed them to trade toys freely within the whole room. The happiness number went up again. The children had more "toy-wealth" in spite of the fact that no additional toys had been brought into the classroom.
"Rule of law" applied in the class: no stealing someone else's toy, no cheating, no hitting, all of which would have coerced other kids into a trade, which would have made it un-free.
When both trading parties make their own decisions based on their own needs, not coerced by the government, free trade makes them wealthier. That's how it works.
No comments:
Post a Comment