A Splendid Exchange: How Trade Shaped the World from Prehistory to Today by William J. Bernstein

A Splendid Exchange: How Trade Shaped the World from Prehistory to Todayby Anonymous

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June 30, 2008: William Bernstein convincingly shows that trade is inseparable from human nature and has played a pivotal role in the history of mankind (pp. 15, 18, 89). Any effort to stifle trade is doomed to failure in the long run, to do so would invite smuggling, retaliation, and eventually a real war (pp. 261-65, 356, 367, 376). Bernstein begins his history of trade around 3000 B.C.E. in Sumer in what is today Iraq and ends with the contemporary ambivalence about globalization. Climate, geography, natural resources, germs, openness to outside influences, technological advances, economically efficient institutions, political stability, and consumer preferences have all played a role in influencing trade (pp. 10-11, 34, 41-42, 53, 75-79, 86, 96-99, 103, 106-09, 129-51, 155-57, 167, 170-73, 187, 189-95, 199, 208, 215, 221-26, 232, 240, 243, 248, 254, 263, 270, 278, 286-87, 294, 307-12, 319-37, 356, 375-83). Bernstein notes that in the absence of any authority beyond the tribe, entrepreneurs will prefer to raid instead of either trading or protecting trade (p. 67). Few things excite the envy and belligerence of the ruling elites of a nation as much as wealth derived from commerce (pp. 43-53, 90, 103-06, 116-29, 174-97, 214, 238-40, 284, 314, 354, 376). Bernstein also shows with much conviction that the controversy about a positive trade balance has been around since the Antiquity (pp. 41-42, 258, 264, 279, 287, 290). Prominent Roman citizens such as Pliny the Elder and Seneca were complaining in the 1st century C.E. that Romans were wasting precious metal on fleeting luxuries such as silk and pepper imported from China and India. The perception that one nation?s gain comes only at the expense of another pleads for both a positive trade balance and mercantilism. Ideally, a nation should import raw materials and export finished manufactured products, which has a positive impact on employment. Bernstein correctly points out that nations grow wealthy mainly by improving their industrial and agricultural productivity. A nation?s true wealth is also defined by how much it consumes (p. 258). Like Erik Reinert, Bernstein emphasizes that most industrial countries first industrialize behind a protectionist wall and are then slowly and systematically integrated economically with nations at the same level of development. The United States followed the example of England to industrialize behind such a wall for about 150 years based on Adam Smith?s Wealth of Nations (pp. 319-20, 349-51, 372-75). Bernstein also reminds his audience that anti-globalization rallies are nothing new (pp. 199, 256-59, 270, 283, 302-05). Think for example about the dumping of tea into Boston harbor on December 16, 1773, under the pretext of ?no taxation without representation.? In reality, local smugglers and tea merchants feared the competition of the English East India Company that could import tea directly from Asia into America for the first time based on the Tea Act of May 1773. These local players couched their arguments in the predictable protectionist language of national interest. Protectionism benefits the economic agents who predominantly own a relatively scarce resource, say, labor, land, or capital, and harms those who own a relatively abundant one (p. 342). Unsurprisingly, the losers of the Boston Tea Party were the end consumers who ended up paying more for their tea in the absence of more robust competition (pp. 241-43)....