What if Friday dismisses Crusoe's proposed deal on the grounds that it would "harm" his domestic bamboo-pole industry? If Friday cannot be dissuaded from this decision by rational argument, might Crusoe then benefit by refusing to engage in other exchanges with Friday? Clearly, such a retaliatory policy would be to Crusoe's detriment as well as that of Friday, for the efficiencies of association are realized even when only two goods are traded. Similarly, trade provides benefits to the citizens of two countries—e. g., the United States and Japan—even when one or both countries may persist in irrational protectionism for isolated industries. A free-trade policy, consequently, does not require "negotiation" between representatives of "opposing" governments, but only that a country repeal its own artificial barriers to trade. Historically, as we shall see later, the abolition of such impediments, inspired in part by Ricardo's discovery, led to enormous improvements in prosperity and living standards in Western European countries.

The benefits of association do not presume any prior economic "parity" between the trading partners. As we have seen, Crusoe and Friday both benefit from voluntary trade even when Crusoe can produce both bamboo poles and berries more efficiently than Friday (pp. 4.5:23-6). This principle again applies to whole countries. Contrary to a popular assumption, the citizens of an economically strong country, such as the United States, realize significant productivity gains even from trade with a weaker partner, such as Mexico.      Next page


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