How does trade transform our standard of living?

01May07

Tough question!? I was reading Treasure Island: The power of trade, by Russell Roberts. It’s quite enlightening. And again I found this thanks to CafeHayek =) so great!

“The lesson is that the best use of your time in a world of trade depends on the skills of others. Our differences create the potential for specialization and the creation of wealth.”

The simple story of the Palmers and the Fishers captures many of the essential lessons of trade:

  • Trade creates wealth. Self-sufficiency is the road to poverty.
  • The specialization we see in the world around us is the result of trade. We would do very different tasks and be much poorer if we limited either foreign or domestic trade
  • The truly scarce resource in our lives is time and trade allows us to leverage our time and productivity in extraordinary ways by cooperating with others
  • Not everything we do well as individuals or as a nation is worth doing
  • Whether what we do well is worth doing, depends on the skills and desires of those around us. What is wise and productive in one time and place may not be wise and productive in another.
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