The Winning Case For Free Trade | Stock News & Stock Market Analysis

Free Trade: Both political parties these days give short shrift to the idea of free trade. It’s a pity, because, as a new report shows, it’s the key to a better life for all.

In its “2018 Index of Economic Freedom,” the Heritage Foundation reminds us that not only is the idea of free trade appealing, but the evidence for its importance in raising standards of living is overwhelming.

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“Countries with the most trade freedom have higher per capita incomes, more secure food supplies, and cleaner environments,” the report notes.

Or, put even more simply, “Citizens of countries that embrace free trade are better off than those in countries that do not.”

Exaggeration? They back it up with data. Applying standardized measures of free trade to 183 countries around the world, the report’s authors break it down in thirds: A bottom third, with the lowest degree of free-trade policies; a second third, right in the middle; and the highest third, with the most free trade.

XIt wasn’t close. On every measure, the free-trade nations scored highest on all conventional measures of economic well-being.

For instance, nations in the bottom third of free trade averaged $3,145 a year in per capita income. The middle third, $7,432. The top: $27,037. The free traders have nearly nine times the average income of the non-free traders, and almost four times the income of even the middle group.

But that’s not all. Food security, using the Economist Intelligence Unit’s Food Security Index as a measure, showed similar differences. The non-free-trading nations scored just 41.8 on a scale of 0 to 100 on food security; the middle third, 58.0; the top, 74.2.

Free traders are environmentally cleaner than others. Using Yale University’s 2016 Environmental Performance Index as their gauge, they found the non-free traders had the least healthy environments, at 56.7 out of 100; the middle tier of free traders were better at 66.9; but the free traders’ index was 79.8.

Finally, they also looked at political stability. Even there, free-trade nations reign supreme. Based on the World Bank’s Stability And Absence of Violence data, the bottom third of free traders score just 33.9 out of 100; the midlevel free traders a slightly better 42.0; but the freest traders hit 66.5.

We all know that free trade also has drawbacks. Nothing good is without cost. In the case of the U.S. industrial heartland, free trade has at times caused factories to close and the communities they’re in to suffer. Hardworking, well-trained people have lost jobs and livelihoods. These are facts that, in part, explain why not all politicians back free trade.

The fact remains that free trade has a huge positive impact on a country’s well-being far in excess of any costs it incurs. Rather than reimposing protectionist measures to revive defunct industries, we should help those who lose their jobs with transitional aid, training or education. But don’t give up on free trade. It’s a winner.


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Originally posted 2017-12-03 06:25:50.


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