Changes

You then 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 then 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" (buying and selling goods and services with others) 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 spend time buying it.  You make your purchase because it increases your overall wealth.  The store is making money from the milk, or it would not bother trying to sell it.  So the store also 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.

Based on the above example, most economists view "trade" (buying and selling goods and services with others) 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 spend time buying it.  You make your purchase because it helps you.  The store is making money from the milk, or it would not bother trying to sell it.  So the store also 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 between two different countries, as in trade between China and the United States.  Trade with a foreign government makes it wealthier.  We may also become wealthier from the transaction, but our gain is probably not as much as the foreign nation's benefit.  We may actually end up spending more money defending against the foreign government that we trade with, and our military defense costs may be more than our benefit from the trade.  Or our money may be used by the foreign government to enslave its people, which we do not want.  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 popular, 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.

The term "free trade" refers to transactions between two different countries, as in trade between China and the United States.  Trade with a foreign government makes it wealthier.  We may also become wealthier from the transaction, but our gain is probably not as much as the foreign nation's benefit.  We may actually end up spending more money defending against the foreign government that we trade with, and our military defense costs may be more than our benefit from the trade.  Or our money may be used by the foreign government to enslave its people, which we do not want.  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 popular, 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.