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We’re made to trade

November 20, 2012

Adam Smith wrote about it almost 250 years ago.

The propensity to truck, barter and exchange one thing for another is common to all men, and to be found in no other race of animals.  – The Wealth of Nations (1776)

Because value is subjective (and personal), I can value something of yours more highly than you do. When I willingly trade my used iPad for your cash it’s because I consider your offer to be worth more than the tablet I no longer want. You, on the other hand, must consider the tablet to be worth more than the cash or you wouldn’t make the offer.

This is how wealth is created. When we trade, we both end up with more… so we’re both now wealthier! Every voluntary exchange between consenting parties creates wealth.  Setting people free to trade with each other and setting prices free to move up or down as the supply and demand dictate unleashed the prosperity we enjoy today. If we want to alleviate poverty in the world we know how the government can help. Once again, in the words of the master…

Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice” – Adam Smith

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From → Economics, FAQ, Truth

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