Monday, April 10, 2017

Trade, Interdependence, and Peace

They gave you life
And in return you gave them hell
As cold as ice
I hope we live to tell the tale
--Tears for Fears

An extension of yesterday's post is that it is trade, not restriction of trade, that fosters peace and security. At first, this may seem counter intuitive. After all, when individuals specialize in production of particular goods, then they become more dependent on their trading partners for other goods that serve to maintain and improve standard of living. Doesn't this leave specialists vulnerable to their trading partners should those partners decide to cut off trade?

Generally speaking, no.

Because both sides of the trade specialize, they are not just dependent. They are interdependent. Should either side pull away from peaceful trade, then their standard of living declines. They are well motivated to maintain trading relationships in order to advance their standard of living as much as possible.

It has long been said that when goods don't cross borders, armies will.

The interdependence fostered by free trade promotes peace. Restrict trade and listen to the war drums beat.

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