Free trade: Guaranteed to make ‘almost everyone’ prosperous

14 January 2019
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There is a very easy way to improve the whole world.

It is guaranteed to make almost everyone on earth more prosperous.

For thousands of years it has proven to be the best path to human wellbeing and success.

It is free trade.

As we put 2018 to bed and begin 2019, the world economy is threatened by ever more restrictions on trade, from the EU and Brexit, from Donald Trump’s belligerent attacks on free trade with the rest of the world and retaliation by other countries, and from “resource nationalism” in developing countries.

The spectre of the Great Depression of the 1930s, caused by trade restrictions, looms ominously over the New Year.

Our species, homo sapiens, evolved about 200 000 years ago in East Africa. For about 150 000 years we led a precarious existence among stronger, faster, fiercer, better adapted animals.

We barely survived. And then something happened, something unique in the history of life on earth.

With blinding speed, we multiplied and became dominant and took over first the continent of Africa and then the world.

You can see no difference in human skulls before and after this - something which was probably just a small genetic change in the brain that affected our behaviour.

But we know exactly what it brought about: trade.

No other animal trades. Animals certainly co-operate in a thousand different ways, within species and between species, but no other animal trades.

At first, one man would make his own stone axe head from beginning to end and his own fish hooks and his own decorations and clothes.

Then, quite suddenly, one man would specialise in axe heads, another in fish hooks, another in clothes, and another in decorations.

They began to trade with each other, swapping the things they were good at making with those others were good at. So began “division of labour” with all the specular advances it brings.

Human brain power increased explosively – not because each brain was any better than before but because of what the author Matt Ridley calls “the collective brain”.

Ridley gives a wonderful illustration. He compares two artefacts of the same shape, both designed to fit into the human hand.

One is a stone axe head made 60 000 years ago, the other a computer mouse of today.

A single man would have understood everything about the making of the axe head.

No single person has a clue about the complete making of the mouse: the oil refinery for making the feedstock for the plastic, the metals in the electronics, the design of the cover and the mechanism and so on.

It is the work of thousands of people, none of whom understands completely the work of the others.

Trade with food, clothes, weapons, materials, tools and other things combined with mankind’s great gift for teamwork to make him supreme on earth. Nations traded with each other to their mutual benefit.

The more trade, the more prosperity, invention, variety and interest. Everybody benefitted.

Well, not everybody.

The key phrase in my first paragraph is “almost everybody”. A small minority of vested interests were threatened by free trade because others offered better goods and services than they did, at lower prices.

They began to use various means to shut down free trade and exclude their more successful competitors. So began the trade wars that started at least five thousand years ago and continue today.

Vested interests persuaded their politicians to adopt customs barriers, tariffs and subsidies to protect themselves against other traders who produced better, cheaper goods.

The punishments for “smuggling” (evading customs) could be severe.

Trade wars often descended into bloodshed. Many traders, seeking only to sell their goods freely, suffered martyrdom.

The EU, pretending to have lofty ideals, spends a fortune, up to 70% of its budget at one time, trying to stop poor, efficient farmers from Africa and elsewhere competing against rich, inefficient farmers in Europe, especially France.

In South Africa, local traders attack and murder more successful foreign traders in the townships. Trade protectionism and xenophobia are inextricably interlinked.

Perhaps the most dishonest economic slogan ever devised is “fair trade not free trade”. Trump repeated it recently.

“Free trade” means that everybody should be free to trade with everybody else without barriers.

“Fair trade” means whatever some vested interest seeking protection wants it to mean. Why should ordinary people be obliged to feel grateful when some politician grants a slight easing of trade restrictions.

“Oh, thank you, Baas, for allowing our people to buy goods from their people!” This is sickening; free trade should be everyone’s right.

Our own continent is as bad as it gets. African governments seem to hate trade with other African countries and put up every barrier they can against it, including banning other African airlines landing in their countries.

Will the people of the world ever rise up and say, “We demand free trade!”

Probably not if history is anything to go by. A great tragedy. A great loss of a better world that could be.

Andrew Kenny is a professional engineer and a freelance journalist
This article was first published in City Press on 9 January 2019

 

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