Remembering trade

By Anthony Batty | 15 April 2005

At times people forget trade is the cause of growth, prosperity and high standards of living. The opponents of free trade even go so far to as to claim the developing world would be better off with tariffs to reduce imports. Measures like this simply artificially increase the cost of imports, forgetting about the benefits imports bring.

If countries were better off not importing surely the richest would be those who did not trade at all? Taking the argument further, surely the most prosperous towns would be those who levy high taxes against anything coming in from the outside world, even better those who wall themselves off and prevent any trade whatsoever. This principle applies down to the level of individuals; either trade is good... or it isn't - if it isn't the richest individuals would be those who didn't trade at all, and were totally self-sufficient.

Looking at the world today we can see this is far from the case, the richest countries are those who trade the most, this is no accident. Countries like Japan, Hong Kong and Singapore thrive despite having no or few natural resources; those who wall themselves off suffer for it, even if they are blessed by nature.