As the country recovers from the COVID-19 recession, many questions arise about the future course of the economy. One of them concerns international trade. As international trade has been embraced in recent decades, questions are being asked about its relative benefits and costs. It may be time to have a new debate on trade with other countries.
In general, economists strongly support all forms of commerce. Indeed, trade is a key element – some may say “the” key – of the economy. Trade is based on the idea of specialization. Individuals have different talents and skills. If individuals specialize in what they do best and then trade with others with different skills, then trading can make everyone better off.
When I was teaching introductory economics to undergraduate students, here is the example I used. Suppose Darius is an excellent cook, but knows nothing about vehicle repair. Darius’ neighbor, Leslie, has a father who is a mechanic, so she knows about vehicle repair, but she’s never found cooking fun.
One day, Darius discovers that his car won’t start. He could try to find the problem himself, but that would probably be a waste of time. Darius remembers Leslie’s skill with engines. He asks Leslie if she would mind looking at his car, and in exchange, he will cook her a fabulous meal. Leslie happily accepts. She quickly discovers that the problem with Darius’ car is simply a loose connection. After making the repair, she sits down to a homemade meal of grilled chicken, twice-cooked potatoes, and salad slathered in Darius’ secret dressing.