Changes

You realize that your friend is having a problem with his car, which you can fix.  You offer to fix your friend's car if he fixes your computer.  Now your wealth is the value of your computer minus almost nothing.  The "trade" between you and the homeschooler increased the wealth of both of you.

You realize that your friend is having a problem with his car, which you can fix.  You offer to fix your friend's car if he fixes your computer.  Now your wealth is the value of your computer minus almost nothing.  The "trade" between you and the homeschooler increased the wealth of both of you.

Based on the above example, most economists view trade as as increasing wealth.  Whenever two people enter into a transaction in the free market, each side should be benefiting and increasing their wealth.  When you buy milk at a grocery store, you are paying less than what the milk is really worth to you, or you would not buy it.  That increases your overall wealth.  The store is making money from the milk, or it would increase the price.  So the store becomes wealthier from the transaction.  The overall wealth of society is increased by these transactions.  The more transactions, the greater the wealth.

Based on the above example, most economists view trade as as increasing wealth.  Whenever two people enter into a transaction in the free market, each side should be benefiting and increasing their wealth.  When you buy milk at a grocery store, you are paying less than what the milk is really worth to you, or you would not buy it.  That increases your overall wealth.  The store is making money from the milk, or it would not bother trying to sell it.  So the store becomes wealthier from the transaction.  The overall wealth of society is increased by these transactions.  The more transactions, the greater the wealth.  It seems clear that trade within a country, like the examples just described, are to be encouraged because they increase the wealth of both the buyers and the sellers.

 

The term "free trade" refers to transactions with foreign countries, such as China.  In that case the trade makes the foreign government wealthier, and it may be hostile to our nation and our values.  We may also become wealthier from the transaction, but our gain may not be nearly as much as the hostile nation's gain.  We may actually end up spending more money defending against the foreign government that we trading with, than benefiting from the trade.  Or our money may be used by the foreign government to enslave its people.  We may be losing jobs because of our trade with foreign governments, as factories are built in the foreign nations rather than in our nation.  For most of the history of the United States "free trade" with foreign nations was not supported, but it has been increasingly used in recent years.  Wal-Mart, for example, imports many billions of dollars of low-cost goods directly from China, where they are produced by paying workers very little in wages.

==Tariffs and Quotas==

==Tariffs and Quotas==