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China Is Being Smart On Trade. Will We?
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| Parent(s) |
Issue
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| Contributor | Jason |
| Last Edited | Jason Aug 20, 2009 02:40am |
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| Category | Commentary |
| Author | Dave Johnson |
| News Date | Tuesday, August 18, 2009 08:00:00 AM UTC0:0 |
| Description | Trade is not complicated. Trade is just an exchange of goods. You trade something for something. I buy something from you, and in exchange you buy something from me. It is simple. It is a win-win bargain because we both end up with something we needed. The wealth of each of us is increased.
In modern times we use money as an intermediary instead of making a direct and immediate trade of one good for another. You have the money I used to buy from you, and you can use it to buy from me in the future. Of course, we both have to agree on what to use as money and its value for exchanges, but once we do our transactions proceed smoothly.
Trade between countries works the same way: we buy tings made in Factorystan and Factorystan gets richer, then the Factorystanis buy from us and we get richer. Both of us have things we didn’t have before.
Add in additional countries and the equations become more complicated. But it comes back to the same principle. Goods are exchanged. Each side benefits.
So obviously the more goods a country makes or grows, the stronger its position in this global system. |
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