This essay is part of a series which is outlined here.

Economists are largely of the opinion that free trade increases the wealth of all involved parties. In fact, in a structured analysis of global priorities, top economists chose trade liberalization at the #3 most effective way to improve human life. In his newest book, Cool It, statistician Bjorn Lomborg writes (emphasis mine):

We have to ask ourselves, What do we want to do first? This is a question I have been deeply involved in answering through a process called the Copenhagen Consensus. We asked some of the smartest economists in the world, Where do extra resources do the most good first? For each problem, we asked experts to put forward the very best solutions. With global warming, this might be CO2 taxes or Kyoto, whereas for malnutrition it might be agricultural research, and for malaria it could be mosquito nets. But each expert didn’t just state that the solutions do good– they showed just how much good they would do and how much they would cost.

In essence, the experts assessed the dollar value of different solutions, …

A panel of top-level economists, including four Nobel laureates, then made the first explicit global priority list ever, shown in table 1. It divided the world’s opportunities into “very good,” “good,” and “fair,” according to how much more good they would do for each dollar spent. “Bad” opportunities were those where each dollar would do less than a dollar’s worth of good…

Ending first-world agricultural subsidies and ensuring free trade would make almost everyone better off. Models suggest that benefits of up to $2.4 trillion annually would be achievable, with half of that benefit accruing to the third world.

Besides an extremely progressive business tax, the main tool the distributists want to use to encourage a widespread ownership of capital is tariffs on the importing of goods that are produced locally. The mantra seems to be “long distance trade when necessary, local goods whenever possible.”

Unfortunately this is one of the places where the desired reforms create “perverse incentives” rewarding unhelpful behavior. Obviously, nearly anything can be made locally if people are willing to pay the much higher costs. The fact is, under such a regime, any consumable being imported is a monopoly opportunity for a local business. Importing peanuts? Somebody will start a peanut farm, and suddenly its a local good. The local peanuts are a lot more expensive because the area isn’t ideal for peanut farming, but this won’t stop it from happening as long as the automatic tariff on imported peanuts does what it is designed to do: bring the price of imports up to whatever the locals are selling them for.

Tariffs of this kind may be intended to protect local producers, but in the long run they would wreck the entire economy by moving producers into more and more inefficient industries, lowering overall production and by extension the standard of living. If they persisted long enough, they would basically end all interstate trade. After all, if the tariff was low enough that anyone would buy the imported good, someone would try to produce it locally. If they couldn’t produce it locally at a price people were willing to pay for it, then the tariff to protect the local production would make the imported goods equally expensive, wouldn’t it?

The attempt to block only “unnecessary” trade on “locally produced” goods is doomed from the start. Instead, an open world economy should be allowed to prosper, in which each person, business, or region produces the goods they are particularly suited for, competing in a free global marketplace. This will allow each and every kind of good to be produced at the lowest possible cost, promoting economic growth and global prosperity.

To illustrate the results of free trade, let me direct you to this chart of global GDP per capita.

This kind of increase in productivity can’t help but benefit everyone on the planet, and the level of productivity we enjoy today isn’t a natural result of the year being numbered above 1900. A political climate that promotes economic freedom is the greatest way to fight poverty.