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Season 4 - Episode 3
The importance of defending free trade

Daniel Ikenson is director of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies. He has written for The Wall Street Journal, the Los Angeles Times, USA Today, the Chicago Tribune, the Washington Times, Forbes, and many other publications. He is co-author, with Brink Lindsey, of Antidumping Exposed: The Devilish Details of Unfair Trade Law, published in 2003.

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The purpose of production, says Daniel Ikenson in this illuminating interview, is consumption. The purpose of trade is to allow for specialization, which vastly increases what each of us can produce, and therefore what each of us can consume. Crucially, this is no less true when we trade with people on the other side of the world. “Exports are a means to an end, and the end is imports. The end is consumption,” he reminds us. “And at the individual level, I think we understand that.”

When we add up all the individual transactions at the national level, however, we seem to forget that the point is to get more value for ourselves. Instead, we make use of sports metaphors that obscure the benefits of trade. We see exports as points for us, and imports as points for the other team, and we imagine that the team with the trade surplus is winning. In fact, this kind of mercantilist thinking will make us poorer, Ikenson points out.

Globalization has been interrupted in the past, most notably by World War One and the further rise of protectionism during the Great Depression. Indeed, some think that the 70 years of relatively open trade the world has enjoyed since the end of World War Two may also be coming to an end.

But Daniel Ikenson sees two important reasons for optimism: global trade rules that have reduced trade frictions, and cross-border investment and transnational supply chains. “I’m rather confident that if some of the protectionist rhetoric that we’ve heard from this administration and its officials goes into effect, we will see massive amounts of opposition,” he says, “and I think that that will be sufficient to prevent us from descending into the abyss.”

Links of interest
Daniel Ikenson | Antidumping Exposed: The Devilish Details of Unfair Trade Law

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