Lost in today’s noisy trade debates is a simple but powerful truth: There are only four ways to get what you want.
You can receive a gift, steal it, make it, or trade for it. That’s it. Manna from heaven worked for the ancient Israelites, but in our vale of tears, scarcity implies we must be content with one of these four, more mundane means of satisfying our ends.
Each of these four methods has systemic properties. To see them, try to conceive of a society built around just one of these. Imagine, in other words, a society where one of these four systems was at least the dominant, if not the exclusive means by which people came to possess useful items.
Gifts? Sweet, but absurd at scale. We’ve all received gifts we secretly abhor, and while Grandma’s sweater may warm the heart, good luck building an economy on unsolicited cardigans. Will Ford rely on donated steel? Will Apple rely on engineers designing smartphones purely out of the goodness of their hearts? Will those same engineers have acquired their skills from highly knowledgeable professors who likewise donated their time? Universalized gift-giving works in small tribal contexts. But the absurdities mount rather quickly when we extend the logic to an industrialized society with high living standards.
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Theft? It’s an immoral, negative-sum game that impoverishes. A society of thieves cannot persist for long. Whether theft entails porch-pirating or political redistribution, raiding as a way of life doesn’t scale. True, it might be good while it lasts, but it won’t last long. For a while, the spoils go to the strong. But eventually, the rest of us stop producing. Who’d willingly toil only to have one’s output seized by those with bigger muscles, more cunning, fewer scruples, or some combination thereof?
Self-sufficiency? One of the fastest ways to die. Good luck growing your own wheat, spinning your own cloth, and performing life-saving surgery on yourself. Autarky, economists’ fancy word for this situation, is little more than a high-falutin’ word for “poverty.”
One reason that the fictional Robinson Crusoe is such a standby for economists is that he’s useful for illustrating the dire predicament of self-sufficiency. Crusoe isn’t merely “poor” by American standards. Moment by moment, it’s practically miraculous that he stays alive. And little more than a routine scratch could be his undoing. Of course, as with gift giving, there’s obviously nothing wrong with isolated instances of self-sufficient production. Carpentry as a hobby is perfectly unobjectionable, but then, even most carpenters I know didn’t fashion their tools from the virgin earth.
That brings us to trade — the one moral, scalable, and mutually beneficial means of getting what you want. In the words of Adam Smith, it’s the only path from “the lowest barbarism to the highest degree of opulence.”
Why?
Specialization vastly increases each of our productive capabilities. In his day, Smith famously estimated that dividing tasks in a pin factory delivered gains on the order of several thousand percent on a per capita basis. When we specialize, we make for others, rather than for ourselves. When I specialize in economics lectures, it’s not because I love hearing the sound of my own voice. It’s to convey knowledge to my students. When Brazilian coffee growers specialize in coffee beans, they are quite literally working on behalf of coffee-guzzling Americans.
If prosperity is the goal, this is the recipe. First, specialize. Next, trade some of your output for money. Finally, use that money in a voluntary exchange to get what you want.
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We can argue on the margins about tweaks to trade policy to enhance (say) national defense. But protectionism as a universalized way of life? It moves us closer to Robinson Crusoe’s world. Under protectionism, we can still trade with one another internally — and 340 million Americans is nothing to sneeze at — but why limit our gains by cutting off 95% of possible trading partners?
Until someone makes a serious case for charity-based industrial policy, kleptocracy, or subsistence living, I’ll stick with the prosperity recipe that works: trade — the freer, the better.
Caleb Fuller is a professor of Economics at Grove City College