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How Free Trade Creates Wealth

Daniel J. Ikenson joins us to explain how trade between countries increases wealth all around—and why restricting that trade is harmful to economic growth.

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Daniel J. Ikenson explains the idea of free trade between nations on this week’s show. We discuss how Enlightenment-era economists like Adam Smith and David Ricardo saw trade as a non zero-sum game and what their theories mean for continued economic growth today. We discuss in detail the idea of comparative advantage, and talk about the effects of regulation on trade.

What is a trade surplus? What’s a trade deficit? Is one good and the other bad?

Should we be worried about the loss of manufacturing jobs in America? What about job losses from trade? Will “Buy American” laws fix this?

What are “anti-dumping” laws and how do they work? What’s the distinction between free trade and managed trade? Should advocates of free trade support free trade agreements?

Show Notes and Further Reading

Daniel J. Ikenson, “Did the Profit Motive Spark the Recent Asian Factory Fires?” (Cato @ Liberty blog post)

Jason Dedrick, Kenneth L. Kraemer, Greg Linden, “Who Profits from Innovation in Global Value Chains? A Study of the iPod and notebook PCs” (academic paper)