7. Free Trade and Comparative Advantage
Art Carden is an assistant professor of economics and business at Rhodes College.
How does trading make people better off? Economics professor Art Carden explains in this quick lesson on one of the most important concepts in economics: trade creates wealth. Part 1 of 3.
Parts 2 and 3 are below.
|"Trade Is Made of Win," Part 2: Cooperation: Prof. Carden examines how trade creates wealth by allowing people working together to produce more than they could individually. Using a simple two-person example, he shows another example of how cooperation during production benefits everyone.|
|"Trade Is Made of Win," Part 3: Conservation: Prof. Carden explains how trade not only creates wealth, but also conserves both wealth and resources. When people have access to trade, they can produce the things they make efficiently and trade for the things they can't produce as efficiently. This means they are able to meet their needs while consuming fewer resources.|
- A Petition [Article]: First published in 1845, Frédéric Bastiat brilliantly demonstrates the absurdity of protectionist arguments.
- Free Trade [Article]: Daniel Griswold explains how the benefits derived from the division of labor and comparative advantage extend beyond politically determined boundaries (found on pp. 26-34).
- Free Trade and the Steel Industry [Video]:Milton Friedman makes the case for free trade at a 1978 lecture at Utah State University.
- The Iowa Car Crop [Article]: Steven E. Landsburg makes a compelling case for free trade with a simple thought experiment.
- Globalization and Trade Deficits [Audio]: A discussion between Don Boudreaux and EconTalk host Russ Roberts covering comparative advantage, winners and losers from trade, trade deficits, and inequality.
- Zions International Trade and Business Conference [Video] featuring Russell Roberts brilliantly demonstrates the inescapable poverty of self sufficiency and the massive potential for wealth creation generated by trade.
Use these questions to enhance your understanding of the topic. We recommend watching the featured video first; the suggested resources will also help.