This article originally published in The Northern Daily Leader on 2 February 2013.
Do you remember the Seattle riots in 1999? The occasion was a gathering of government ministers for a World Trade Organisation Conference. While the meeting itself was unmemorable, images of violent protests acted as a rallying call to the anti-globalisation movement. While globalisation does have its faults, the rioters in Seattle were ironically protesting against the best feature of globalisation – free trade.
Two presenters on a recent Planet Money radio show, produced in the US by National Public Radio, showed the benefits of trade through a simple but clever experiment. They went to a primary school in New York and took a box of sweets and other snacks into a classroom of twelve year-olds. They then randomly handed out a sweet or snack to each child. Some of the children ended up with a chocolate bar or similar, while a few unlucky ones were given a small box of raisins or something equally less desirable. Once the goodies were handed out, each child was asked to score out of ten how happy they were with their gift. Some children were pleased with their chocolate or snack, though others would have preferred something else. And a few unfortunate ones rated their raisins or peanuts as worth only one or two on the happiness scale. Once all the ratings were added up, the total ‘happiness’ in the classroom from the gifts amounted to 67 points. Before they were allowed to eat their snacks however, the presenters asked the class if they had any ideas how the ‘happiness rating’ could be improved. Without prompting, one of the children suggested they could trade their snacks for somebody else’s which they might want more than their own. And so they spent a few minutes arranging a one-time-only trade with someone who they thought would be open to swapping.
At the end of the trading the children were again asked to score out of ten how happy they were with their new snack. As you would expect, the total ‘happiness score’ after they had had an opportunity to trade was now just under 100 points. By allowing the kids to swap an unwanted snack for another one, everyone was happier with what they ended up with. Kids who enjoyed raisins ended up with the raisins, and those who liked lollipops or chocolates ended up with those too. Just like countries are randomly given abundant resources of one type or another, by trading these resources for other goods everyone ends up happier. So the next time someone suggests that free trade is bad for Australia, ask them this: if a twelve year-old can understand the benefits, why can’t they?