Is trade an unvarnished good?
Before the financial crisis, we were frequently offered humorous pictures of anti-trade militants protesting a World Trade Organization meeting. They were reportedly concerned that global trade would wreak havoc with indigenous cultures and exploit vulnerable populations.
While some could see their point, it was usually undercut by the simple fact that none of these activists were looking to move in with the indigenous peoples they were so enamored of or avail themselves of indigenous health care.
The logic of trade seems simple: when everyone does what he or she does best, and we trade our goods and services to get what we need, we’re all better off. This is as true for countries as it is for individuals.
So when global trade began to contract in early 2008, that was troubling. When it fell off a cliff last fall, its decline was consistent with the rest of the economy. But now it’s stabilized—at about the same level it was in mid-2006. That’s not a great leap backwards; that’s a minor hiccup on the road to greater prosperity.
Some think we’re headed for a world of de-globalization where Luddite loonies call the policy shots and the benefits of trade are lost. But the data seem to show that global trade is coming back. One of the striking things about this recession has been the lack of any significant protectionism. The revival of trade growth is just one more sign that the global recession is over.
Douglas R. Tengdin, CFA
Chief Investment Officer
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