Healthy Trade

Are markets and economics a Western creation?

Photo: Leiah M Jansen. Source: Morguefile

Before John Keynes, or Alexander Hamilton, or even Adam Smith—the father of modern economics—markets flourished around the world. They did so because some folks were good at one thing, while other people specialized in other practices. In Europe, British iron ore was traded for Italian wine; in Africa, gold from Mali was traded for salt from Chad. And among Pacific islanders fish from the coast was traded for breadfruit and produce from the uplands.

For all of human history people have exchanged goods that they had in surplus for other items that they wanted or needed. And both sides were better off. Along the Pacific coast a diet consisting of mostly fish was incomplete—fish-based protein needed to be supplemented with starches, fruits, and greens. If the tribes didn’t trade, they’d get sick.

It’s like that with economies. The most open economies, the ones that encourage trade with other nations and other people, tend to be the healthiest. During the classical period all roads led to Rome. Rome was a center of commerce and culture. At its height the Roman economy achieved a standard of living that wasn’t equaled in more than a millennium. In Europe the British Empire was built upon trade. While their mercantilist system of royal monopolies was flawed and inefficient, it was better than the alternative: a closed system shut up in its own poverty. If you want to see what the lack of trade does to an economy, just look at North Korea.

Source: NASA

Trade has been a foundation for human flourishing. When trade increases, economic growth accelerates. For the past 25 years we have seen growth boom because of the fall of the Iron Curtain. As China and India reform their economies, the world will continue to benefit.

Trade isn’t limited to one culture or one time-frame. And as it expands, we all benefit.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2017-07-17T12:21:38+00:00 November 1st, 2016|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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