Free trade is essentially the freedom for individuals to buy and sell, import and export goods with individuals in other countries. It is the unstifled flow of economic activity across borders, at the international level, in the global market. It is based upon English political economist David Ricardo’s early 18th-century theory of comparative advantage, which expresses that each nation is better and has an advantage at producing certain goods than other nations. Thus, it is beneficial to allow these nations to specialize in what they are good at producing and to trade with other countries who can more efficiently produce the other goods each other needs.
Despite all the advances in economic knowledge since Ricardo’s time and despite all the progress that has been made due to economic freedom and free trade, political populists from both the left and right of the political spectrum continue to hate on free trade and spread economic fallacies. Here is why you should support free trade.
It has liberated the global poor from extreme poverty. In 1820, 94% of the global population lived on $2 or less per day. Today that figure is down to 9% and free trade has been the main force driving this massive progress.
It is a strong deterrent against war and conflict. Empirical research shows that the more freely a country trades, the less likely it is to invade, be invaded, or engage in war, and the more protectionist a country is, the more likely it is to be hostile and engage in conflict. As the19th-century French economic philosopher Frederic Bastiat famously said, “if goods don’t cross borders, soldiers will.”
It drives enormous innovation, technological advancement, and economic efficiency. With the free flow of goods and human labor across borders comes the spread of knowledge, copying of good ideas, economic efficiency as well as the alignment of comparative advantage. The massive rise in quality of life and technology over the last 200 years owes itself to free trade.
It breaks up domestic monopolies and increases consumer choice. When you subject your economy to widespread and intense global competition, consumers are given many more choices and freedom, which in turn liberates them from only being able to buy from their expensive domestic monopolies. It also holds domestic businesses more accountable, by pushing them towards lower prices and better service. The opposite happens with protectionism.
Free trade is an incredibly powerful force, one that leads to global peace and prosperity. Pointing out the economic falsehoods and correcting the economic illiteracies of the populists, both left wing and right wing, who wish to close our borders and shut ourselves out from trade, migration, and international commerce is vital if we wish to avoid war and create further prosperity.