Why Globalization Works

"Wolf’s book makes, in the most effective way I have seen, the classical economic arguments for openness. At root, the argument for free trade is not anything fancy and analytical. It’s that you and I won’t engage in an exchange unless we’re both better off and if we’re both better off, why should anyone else object, unless our exchange is inflicting some harm on someone else? Our exchange can take the form of my buying something from you, an import, or you buying something from me, an export, or of my lending you money, a capital flow, or of you sharing an idea with me, a transfer of intellectual property. “I’ve said, for some years, that global integration won’t work if it means local disintegration.” What Wolf elucidates is all the benefits of exchange. Exchange promotes specialization and the division of labor, as Adam Smith pointed out. Exchange promotes comparative advantage, everyone gets to do what they do best. Exchange promotes competition, which is a huge spur to efficiency. There are multiple levels. As shown by Brexit and the rise of Trump , what happens far away is not the most pressing concern to people in industrial democracies , particularly when the economies of industrial democracies are struggling. But, ultimately, a world in which poor countries stay poor and in which rich countries are pursuing policies that are actively keeping them poor is very unlikely to be a stable or a successful world. That’s why the lessons of Wolf’s book are very powerful."