"If goods don't cross borders, soldiers will." -- Frederic Bastiat, 19th Century economist.
"This isn't personal. It's strictly business." -- Michael Corleone.
When business traders enlist political allies to push for competitive advantage through tariffs or currency manipulation, they try to persuade the general public that the issue is highly personal, because jobs are at stake and that foreign competitors are out to take away freedom and reduce workers to beggary.
To executives and politicians, it's strictly business. But to succeed, they make international trade disputes personal.
Trade, however, whether local or international, is not a game of one side wins and the other loses. When one side wins everything and the other winds up with nothing, very soon both lose, because the initial winner has no one to do business with. The losing country has no resources, its people are hungry and resentful, and violence is almost inevitable.
It's an international game of winner take all, and like children's games, the winner goes home alone and stays there because no one will play with him anymore.
So it was with Spain in the 16th Century. The conquistadores (conquerors) took home all the gold from the New World, drained their colonies of resources, and soon hyperinflation emptied the purses of those in the home country.
So it was also with mercantilist England in the 18th Century, until Adam Smith pointed out the mutual gains of comparative advantage.
So it is today, as conservative politicians warn that other countries are stealing American jobs and manufacturing capacity, "and we wind up with nothing."
That's an oversimplification at best, since it's hard to break a $16 trillion economy. These simplistic candidates fail to consider that in their preferred situation, where U.S. companies win everything and other countries lose all they have, these same U.S. companies will no longer have any customers. But they don't care. Their goal is to win, everything, always. In the long run, however, they also lose. Meanwhile, those in other countries who have lost everything and are reduced to beggary, soon resort to drastic measures to support their families. The danger is clear: When people on one side of a border go hungry while their neighbors feast, desperation breeds violence.
As Frederic Bastiat pointed out, "If goods don't cross borders, soldiers will."
That's what international trade agreements are designed to prevent.
More than 200 years ago, the United States of America -- all of them -- agreed to drop taxes on goods moving from one state to another. Result: Prosperity for both sides.
In the United Kingdom of Great Britain, which comprises Scotland, England, Wales and Northern Ireland, the four interdependent nation-states have all prospered through free and easy movement of goods, services and people from one region to another.
That's what the European Union was designed to facilitate. That's what the North American Free Trade Agreement (NAFTA) attempted to do, at least making it easier for imports and exports of goods to be shipped throughout the region. And that's the aim of the Trans Pacific Partnership (TPP) also, although NAFTA and TPP deal primarily with international trade, not with free movement of workers from one nation to another, as is the case in the European Union.
This free movement, however, may be the root of the potential breakup of the EU, as regional and national prejudices against Those People incites workers in one country to side with opportunistic politicians and business executives to drop out of the union.
Similar tactics in America are used to gain support for the nativist cause.
In the end, who gains and who suffers?
Economics 101 teaches that both sides benefit from mutually agreeable trading. The customer fills a need and the seller enjoys a profit. When both are satisfied, the customer returns and the seller has a steady business.
And this is true not only at the corner grocery store, but across international borders as well.
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