Heard on a bus: “When two people exchange goods and money, one wins and the other loses. Otherwise, there would be no profit.”
This reasoning is more common than we might think, and sometimes justifies the hostility to commerce, or free trade. After all, if capitalist pigs profit, the poor suffer, right?
The other day, I paid two dollars for a bottle of juice. When the clerk said, “Thank you,” I responded, “Thank you.” This is more than just a social oddity. There’s an economics lesson behind this weird double thank-you moment, says journalist John Stossel.
Why does it happen? Because I want the juice more than the bucks, and the store wants the bucks more than the juice. Both of us win.
Two people trade because each wants what the other has more than what he already has — remember trading hockey cards? If one gained and the other lost, the loser wouldn’t trade.
We experience the double thank-you moment each time we hit the checkout line in a clothing store, or leave a restaurant, says John Stossel, who coined the “double thank-you moment” phrase.
Trade is win-win — even if you’re buying from someone in another country. Exports and imports exist only because of political borders.
But borders are either accidents of history or the results of politicians’ arbitrary decisions. Do you know if Toronto runs a trade deficit with Hamilton? No. Because nobody cares.
There are no imports and exports. There’s only what you make and what everyone else makes. Protectionism – taxing foreign goods – is just a tool for politicians to protect their business buddies by preventing us from trading with someone (a foreigner) who offers us a better deal.
As economist Sheldon Richman points out, in trade matters — as in so much else — two words mislead us: “we” and “them.” We do not trade with them. Canada does not trade with Japan, or Mexico, or any other group. I trade with you. You trade with me. Smith trades with Nguyen. Individuals trade with individuals.
If the economy continues to tank, governments will be sorely tempted to block foreign products by taxing them. That would be a mistake.
When left free, people trade across borders naturally. Buyers and sellers both benefit, tells Stossel.
David Descôteaux is an Associate Researcher at the Montreal Economic Institute.