Tuesday, October 13, 2009
Although a simple concept, trade--augmented by comparative advantage--shows us how our interactions with others can lead to a net benefit for all parties involved. However, when we consider the benefits of trade on the level of nations, we must consider more than the benefits of mere material gain. It is undeniably true that open and free trade allows nations to develop or at least increase their prosperity. It is also true, however, that each nation may not benefit to the same degree. A rising tide lifts all boats, but not equally. As nations develop through trade their relations (especially their power relations) change. Superpowers fade, new dragons rise. With this in mind, it is important to remember that while trade increases every nation's material well being, it does not preserve each nation's place. Thus, we are forced to weigh the benefits of relative position vs. absolute gains. It may be that in terms of security and the ability to project power to achieve national objectives, it is better to forgo an absolute increase in living standards, for the sake of maintaining a relative advantage over other nations. By trading with another nation we may, in effect, be advancing our own demise. While we will be better off materially, we may suffer in terms of prestige and relative power. These elements are not considered by Mr. Ricardo (to my knowledge), nor are they addressed in Mr. Roberts's tale; but it is important to remember that the complexities of human life (and its benefits and dangers) extend beyond the solely material world. The obvious benefits of free trade are real, but a nation must consider more than those benefits, it must also consider the associated costs; which although not necessarily economic, are essential to the lives and status of any people.
Posted by GI Blogger at 10:06 PM