733. What Would The World Be Like Without Global Trade?

Hello everybody, welcome back to another episode of The Way the World Works. Today I want to talk about global trade and how trading with other nations and other countries has helped give us all the options, all the wonderful things we have in our home today. So to start off, I want you to pick something in your house. Maybe it is, I don't know, a piece of clothing. Maybe it is a spice from your cupboard. Maybe it's an electronic. Find some, maybe it's a pencil. We know, you know, we love pencils here. Whatever it is, I want you to think about it and think about all the things that we have access to because other countries supplied either maybe a material that made something like a pencil or the cloth or maybe the whole thing. And then I want you to think about everything we'd miss out on if we only had access to things that were made here in America. Now, there's a big push right now to have everything made in America or to support, you know, enterprises and support companies and support factories that are here in America. And I want to make sure and point out that there's nothing wrong with this. It's great to have American manufacturing, right? Manufacturing is when things are put together here. So it's the raw materials or they're assembled here, but when you have American-based products. Because a lot of things today are what they're made in India or they're made in China, they're made somewhere else. And so there was this big push or there is this big push to have things made in America and support American-based businesses.

And again, that's great. We should be able to do that. The problem is, is when the government comes in and says you can only buy from American-based businesses or we want to penalize you for not buying from American-based, you know, bank manufacturing or businesses, and that's what tariffs do. And I don't want to go too far into tariffs because that was a different episode. We did that episode, but that's what tariffs do. Tariffs essentially penalize us and penalize even American businesses. I'll get to that in a second for buying things that are made outside of the United States by placing like a tax on it. But that's really hard for a lot of American-based businesses. Because for example, I know a board game owner, which is pretty cool. He invented a board game, but the materials he needs to actually make the board game are way too expensive here in the United States. So he gets some of the supplies from abroad from somewhere else. And that's helped him be able to sell his board games and make a living off that. Now, the problem is if we want to support American-based businesses, they need to be able to get the supplies they need to make their businesses run so that they can still make money from their products. So that's just a quick debrief on how these kind of policies like tariffs hurt us. But now I want to focus on the miracle, the miraculous global trade industry and how that has impacted us. So we talked about items in your home today, but let's talk about things we maybe don't think about that are also in our homes or in our world around us.

First of all, let's make sure we clarify that trade predates nations. It predates the countries that we know today. Trade has always existed. Trade has existed so long as there were different communities or just different people on this earth that realize that you might have something that I want, and I have something that you might want. Let's trade. It is as innate and as human and as natural as anything. So trade existed long before we had countries with borders and governments who wanted to implement tariffs or certain policies. Trade is an organic natural thing. It's how people gained access to things like silk. It's how our food started tasting better through spices. I'll go into that more in a little bit. And it's also how we've gotten ideas, our ideas spread through trade. And so trade has done all these wonderful things. Let's talk about materials like silk first. So a lot of the materials that we wear today in our clothes did not, we're not invented or did not start here in the United States. Cotton started in India, actually. That is where that got big. And we got that through trade. Silk, that was associated with China. That's how we got silk back in the Silk Road.

That's where that name comes from. The big trading route. Things like wool, like the process for wool that came from Europe. And I mentioned this really briefly in another episode, but even the dies we got for clothing, that came from merchants who were traveling around and picking up things as they traveled. That's how we got colorful clothing. So these little things we take for granted, like the purple dress that you might love so much in your closet or the blue shirt that you wear so much, you might not have that shirt, especially if it's cotton or silk. You might not have it if it weren't for global trade, making it, bringing it to the rest of the world, making it accessible. Now, when I talk about ideas that actually takes two different forms when we talk about trade, because the actual paper that ideas are written on, that originated from China. And the book printer, that came from Europe. And so you have these different pieces, these different components, that came together, that then became the materials used to make books that gave people knowledge that changed the world. But it's more so than even just the books and the material that this information was written on. You have to remember that when people were trading with each other, they were picking up ideas that were more than just something physical like a book or something physical like the paper that needed to be turned into a book. When it comes to trade spreading ideas,

there are so many examples we can pull from. One of the main ones is it taught people about price information, about price signals. As we know, prices are about scarcity or the risk you have to take to get something. And when people were trading with other cultures all around, they were able to take this information and learning how to price things. And this is something obviously that we know has to exist in the market. You have to use prices as signals, but that was a big lesson from all this global trade. And then of course, you had religious tolerance. Now, that does not mean there were not still wars being fought over religion and disagreements that may have arisen from different codes of morality. But when you are trading with each other, when you are dealing with this hub of where you have sometimes Hindus and Muslims and Jewish people who were all trading in the days of the Silk Road or these port cities that were near waters where ships would come in, they had to be nice to each other. Because why would you be mean to someone you're trading with? You want that customer to come back. You want to be able to trade with them because they have something you want and you have something they want. So it keeps people very neighborly.

You know, they keep them friendly. I always return back to the Bostia quote that if goods don't cross borders, armies will. And you can kind of compare that to this where it makes people more cooperative because they are all working together to get something they need, to create value for others and to get value for themselves. And so it kind of makes the world go round. And I think one of the bigger lessons to be learned from trade in this day is that, you know, value can be created, not seized at the point of a gun or back then by swordpoint to maybe or through threat of force, that there was value in trading with other people. Because again, for a lot of times throughout history, even now when somebody sees something they want and they think they're more powerful, they'll try to just take it. But trade was this almost this way of seeing everybody as an equal. Because again, they were creating value for you and you were creating value for them. So it was just this this natural harmony, if you will. Just like we learned in the miraculous pencil, you know, that a one item, one thing like a pencil is actually dozens, maybe even hundreds of small things that come together from different entities to make this wonderful thing. Well, that's really what global trade has done for us. Because the miraculous pencil, we know that but we don't maybe think about that every item in our home or most items in our home are the manifestation of cooperation of many different people from many cultures.

People we couldn't even speak to because we don't know their language but they worked together and they got all these materials and they got access to things. Like things we don't even think about like the compass, which came from Asia. You know, these things that help people actually trade better because now they could navigate where they were going. But it was all these things that we got because we were working and trading together. And now my favorite part, let's go to the kitchen and talk about what changed there because of trade. The fact of the matter is food back in the day was probably very, very bland and that's no one's fault. They didn't have any spices. Salt was around, especially because salt was so important to preserving meats before there was refrigeration. Can you imagine living in a time before that? But food was pretty bland. It didn't have flavors. The way spices came to be, the way we were able to get access to all these unique and delicious flavors are through global trade. You know, a lot of the spices we know and love came from Asia and the Middle East. And so there's these flavors that we wouldn't have even been able to have. We're even cuisine in general. Yes, we can go to the store and we can buy these spices now. But imagine a world where the only food we had in America was like a cheeseburger, which you're probably fine with me because I love cheeseburgers.

Or, you know, like denny's, like eggs and pancakes. But now we have Indian food we can choose from or delicious Chinese food we can choose from. We have all these different cultures that brought their food here. And this happened because of trade. And this, this I think is the most important thing as far as I am concerned, potatoes came from Central America. And that's interesting because I think we always associate potatoes with like Ireland's, we think of Irish potato famine and things like that. We don't think of Central America, but that's where potatoes came from. Personally, I can't imagine living in a world where I cannot eat potatoes in every way imaginable on a regular basis. So we have global trade to thank for potatoes as well. But what happens if we don't have global trade? Well, I can tell you one thing is for sure, life gets harder, not simpler. Because all of a sudden these items we used to have access to we don't anymore. So we don't have as much choice in the marketplace. And when we don't have enough choice or we don't have enough items, innovation in general slows down.

And so our lives as we know it just aren't as enriched with choice. And with all these things that we have access to because of global trade. Now, I want to make sure I specify because I have talked so much to you guys about the importance of being self-sufficient and self-reliant. And so you might hear this and think, well, wait a second. Don't we want everything to be made here so that we can be self-sufficient and self-reliant? The point of being self-reliant in our communities is so that we don't have to rely on the government. Well, trade exists without the government. Remember, I said global trade is one of the most organic things that can happen when people work together. It doesn't require government, even though government tries to stick their nose in it a lot. And so it's a little bit different because when we talk about being self-sufficient in our families and our communities, that is about showing we don't need the government to be our babysitter and tell us what to do. But when we talk about being self-reliant or self-sufficient when it comes to not trading with other people, that's just isolation, right? That doesn't get us anywhere. People often call people who are non-interventionist, meaning we don't want to go to war with other countries. They often call people like that isolationist and it has this negative connotation because why would you want to be isolated and not be with other people? And that's true. That is isolation is not a good thing, even though, again, non-interventionists are

not isolationists, but pointing out here that isolation is a negative association with the word. And it's because in isolation, we aren't living as fruitful as we could if we're working with other people and we're getting access to all these amazing materials and products that we would not have any access to otherwise. So the takeaway from all this, trading with other nations and other countries is what allows us to be such a rich society full of pretty much anything we can think of. When we order things from Amazon, which I know I do a lot, sometimes those things are made here. Sometimes they're not or even better. Sometimes one product comes from five different countries and that's even better. That's so cool because it has a really cool origin story and you wonder like, oh, I imagine what these people do on their daily lives. I can't even speak to them because I don't speak their language, but they must have these different lives. And I'm getting a piece of them. I'm learning a piece of it just from this one item. Every item almost tells a story, a cultural story. So it's so cool to me. So I want us to be careful when we hear about, you know, by America or let's move manufacturing back to America. That is not inherently bad. It's great to support American businesses, but it's even better when you have the choice to do it. When it's not something that's coming as a mandate from government or something where like tariffs serve as a penalty saying basically, we're going to charge you more to get things from other countries. And like I said in the beginning with my friend who makes board games, it ends up hurting small businesses. So when we hear things like that, when we hear,

you know, oh, we should bring manufacturing back or only buy things that are made in America, I want you guys to remember this and I want you to take a look around your house and I want you to find that item you think is so cool and maybe do an origin story of that item. Find out where it was made. Find out where each of the supplies came from. And you'll see how wondrous global trade is. All right, I will wrap it up there. As always, don't forget to like and subscribe to the podcast. And until next time, I will talk to you later.