“Trade Is Made of Win,” Part 1: Wealth Creation

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 101: trade creates wealth. Part 1 of 3.

19 Comments

  1. Matt Wavle

    So often the lie I hear is:  If someone wins, someone else obviously lost.

    I use the example of 2 people exchanging a car for cash.  Both prefer the item that they don’t have, hence the exchange takes place, and they are both better off.
  2. Brian Phillips

    This is exactly right.  Far too often these days our government and media try to spin the narrative of a victim, which in turn leads to bad outcomes in terms of both policy and perception.

  3. Nick Picini

    That good old opportunity cost. The spontaneity of specialization is the most fascinating part; it doesn’t require outside force to occur. 

  4. Scott Blinkhorn

    People seem to conflate the reality that trade almost always benefits one party more than another with the idea that there is a winner and a loser in every trade. In a game like say Settlers of Catan where there can only be one winner, and a trade that does not equally help both parties is in reality a loss as it puts an opponent closer to victory. However in real life this is very rarely the case and trade benefits everyone even if one party seems to have gotten more out of the deal. 

  5. Luke Garcia

    I do have one question, so in this case both parties have "won" or have achieved greater wealth, but in business doesn’t someone have to "lose" or not make as much profit as the other? Or does that also have to consider quantity and quality when to competitors offer similar products? Basically I am wondering if we could or can ever achieve a market where both people win and no one loses.

  6. A.j. Olding

    Why does someone have to lose? I don’t get why you think that?

    Unless someone has misjudged the value of the trade, both parties should always win.

  7. Becky Brown

    I’m teaching economics at a classical Christian academy this fall- these videos will likely be assigned for homework. Glad to hear any more suggestions for material. 

  8. thomaspbogle

    Let me see if I understand correctly… You’re not saying that the person buying and selling lose anything, but that the competing businesses that miss out on this exchange are the loser in this scenario. Is that right?

    In other words, not trading makes you a loser…

  9. Mike Hines

    How about doing a version-2 of this video that includes the effect of price floors and price ceilings. It would be great to show how these can stifle trade and curtail wealth creation.

  10. Joshua Wheat

    Trade is usually good for economic growth, but not when you’re caught in a trade deficit like the US is.

  11. tsotne chikobava

    Basically trade without money is a barter. but in this case it’s all about comparative advantage of international trade.

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