The largest free trade zone in history is the United States. Every day, people are free to carry or ship goods and services from one state to another and one city to another. There are no government officials at the border monitoring or controlling what goods and services cross the borders. There are no customs agents at the borders collecting taxes. States and cities do not wage trade wars against each other. No one paces the floor worrying about the trade deficits between states and cities.
It didn’t have to be that way. If the Framers had vested in the state and local governments the power to control and regulate trade, Americans would be living under the same type of system in which they live internationally. Each state would be imposing protective tariffs to protect inside-the-state businesses. There would be trade wars between the states and cities. Mainstream economic commentators would be sleepless with anxiety over the trade deficits between states and localities.
Free trade within the several states and localities is one of the major reasons for why the United States has always been so much more prosperous than other countries. That’s because people raise their standards of living through the simple act of trade.
In every trade, both sides benefit. That’s because each of the traders is giving up something he values less for something he values more.
Suppose John has 10 apples and Mary has 10 oranges. They agree to a trade in which John gives up 1 apple in exchange for 7 of Mary’s oranges. Has John “won”? Has he taken advantage of Mary?
The answer is: Both sides have “won” and neither side has exploited the other. They have both voluntarily given up something they value less for something they value more. By trading, they have each improved their own economic well-being through their own subjective valuations.
Therefore, any government restriction, tax, tariff, or control that interferes with the ability of people to trade freely necessarily reduces people’s standard of living. That’s why trade wars are so harmful in and of themselves.
More important, free trade is consistent with the principles of liberty. Under principles of private property, which forms the foundation of a free society, people have the right to do whatever they want with their own money and property. If John wants to buy oranges from Maria in Mexico rather than from Mary in the United States, that is his right. His money belongs to him, not to government and not to “society.”
Moreover, trade nurtures natural harmony and dependencies among people, thereby reducing the potential for conflicts and wars. As someone once noted, “When goods don’t cross borders, soldiers will.” Conversely, when goods are crossing borders in both directions, the interdependencies and friendships makes it more politically difficult for government officials to initiate war against the other nation.
Among the best things America could ever do is extend its free trade zone to encompass the entire world. That would mean unilateral free trade. No negotiations. No trade agreements. Just drop all tariffs and trade restrictions and end all trade wars.
Would other nations follow? They might and might not. That’s irrelevant. What matters is that the American people would be liberated by their own government to trade anywhere in the world. Unilateral free trade would immediately head our nation, and by, example, the world, in the direction of liberty, peace, prosperity, and harmony.