While political leaders vow to lead their nations to international leadership, economists keep pointing to the benefits of trade as the best way to bring prosperity to all citizens.
"The economic well being of billions of people depends on trade," according to a joint statement by the leaders of the International Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO).
Too many existing trade barriers, they reminded political leaders gathered for the G20 meeting in Germany, as well as other policies that "favor chosen industries," coupled with new barriers, cause a chain reaction as other nations retaliate with similar measures, thus lowering overall growth, reducing output and harming workers.
So what else is new? The importance of international trade to benefit people on every side was first outlined by Adam Smith in 1776. Since then, retaliatory tariffs, protective import laws and other strictures have inevitably led to higher prices, lower wages, unemployment and widespread economic recession, most notably in the 1930s.
Now the world is up against it again, as politicians -- often coming from business leadership -- tout a policy of "us first," and try to lock out others.
Such gamesmanship may work in sports, where the goal is to block advancement by the other team and to bring victory to the home team. In business, however, and in the larger context of international trade, there can quickly come a time when you have all the money and the other guy has nothing.
Win, win, win, is the chant. That may work well briefly, but eventually, after you have won everything, the other guys have nothing, and won't deal with you again even if they wanted to.
At least one prominent real estate developer used a similar strategy when dealing with banks and contractors. He disputed many signed contracts, and yes, he won, and became very wealthy, but many banks and contractors refused to do business with him again rather than constantly fight to collect already agreed-upon payments. So what did he do? He went into politics, where he's trying to follow the same strategy for the country.
That business model led to multiple bankruptcies -- after, of course, the developer took out his cut -- and when taken to a political level is likely to lead to bankruptcy of an entire government and the nation.
Meanwhile, the spirit of economic cooperation means that "the global economic recovery is on track, broad based, and expected to continue into next year," according to Christine Lagarde, managing director of the IMF. In a statement, she warned global leaders about complacency and risks that could bring "low productivity and rising inequality."
Meanwhile, the U.S. economy continues to recover. The Federal Reserve Board noted that the pace of growth in recent months has been "slight to moderate." However, the Fed remains cautious about its plan to boost interest rates as a way to forestall runaway growth, which is expected to remain at about 2 percent yearly through 2018.
Separately, the Commerce Department said there has been a steady increase in the amount of money foreign investors are spending to acquire interests in American businesses. Expenditures to acquire, establish or expand U.S. businesses totaled $373.4 billion in 2016. above the annual average of $350 billion for the previous two years.
So what does all this mean to the average citizen? When a worker does a job for a fair wage, the worker is likely to do a better job. When a company sells a product or service at a fair price, both the buyer and seller benefit, there will be further sales. Whether between individuals, between companies, or among nations, fair trade and reasonable treatment means all sides benefit.
Cheating customers and bleeding competitors only brings resentment and anger, and losses on every side. Competition and cooperation are not always mutually exclusive. Without a balance of the two, the result can be hardship, bankruptcy, unemployment, and at worst, global economic depression.
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