Commerce is Better Than Education

I’ve recently read several essays on education by some of the American Founders.  These writings have in common a belief that good education will promote civility, manners, advances in agriculture, manufacturing, and morality.  It seems to me effect is confused with cause.

It’s not education – at least not formal education or schooling – that produces industriousness and social cooperation, but social cooperation and industriousness that increases knowledge and education.  Commerce is the great civilizing force in the world.  The greater and freer the extent of trade, the more scope individuals have to exercise and explore their abilities and the greater the incentive to obtain knowledge of value to them.

When people are free to reap the rewards or pay the costs of their endeavors, they have every incentive to improve.  This incentive leads to advances in industry, arts, and even culture and values.  Peaceful, mutually beneficial transactions bring the greatest returns, and these require knowledge and respect for other cultures, proficiency with products and processes, and constant adaptation and learning.

When commerce happens, the incentive exists to become educated.  No one need impose an educational plan on their neighbor, and no one has the ability to know what kinds of knowledge their neighbor needs.  We over-estimate the role that education plays in determining the kind of world we live in.  In reality, markets do most of the heavy lifting, and education follows and fills in the well-worn paths etched by exchange.  You could expend all the energy in the world trying to ensure more young people learn your favorite subject.  But if the market signals excellent returns in a different field, people will flock their despite what they’ve been trained in.

We needn’t fret so much about what kind of educational systems exist around us.  We do need to do everything we can to ensure free exchange is unhampered, and myriad educational opportunities will flower as a result.

You Can’t Have Free Markets without Free People

I’ve run a trading game at seminars and in classrooms where, by the end, all the students agree that free trade creates wealth and restrictions reduce it.  I give out trinkets, ask students to rank how much they value them, then allow them to trade for a few rounds, each with a larger segment of the room.  At the end of each round we tally up the value they place on the goods they have after trading.  As the movement of goods opens up, each person’s wealth in trinkets goes up.  Without producing a single new good, the total value of the goods in the room (measured subjectively by the owners) increases dramatically between the initial dispensation and the few rounds of trading.  Trade creates wealth.

This provides a nice segue into a short talk about the benefits of trade, comparative advantage, specialization, and why trade restrictions make us worse off.  I see several eureka moments as students understand from this simple exercise that freedom to move goods allows resources to go to their highest valued use.  Then I throw in a twist just before Q&A;

“Just as restricting the free movement of goods unnecessarily reduces wealth, so does restricting the free movement of labor; otherwise known as immigration restrictions.”

Hands shoot up.  Despite nearly an hour spent demonstrating and discussing free trade in goods, this single line at the end attracts 100% of the Q&A attention.  Inevitably, well over half the class has a reason why the laws of economics they just learned cannot possibly apply to human resources the way they do to goods and services.  Within the first few questions, every one of these objections withers.  What’s left are objections that have nothing to do with immigration per se, but are problems with the welfare state or the warfare state, and immigration is sought as a scapegoat.

The economic case for the free movement of people is incredibly clear and not hard to make.  Yet those opposed to freedom of movement tend still to cloak their arguments in economic rhetoric.  Even though it’s unsure footing, it is perhaps more comfortable than talking about the moral implications of barring people from interaction and exchange across arbitrary borders.  When you get down to it, it’s one of the most inhumane policies around.  Anyone who talks about helping the world’s poor should start by advocating open borders.

Here’s a great article to get started.

%d bloggers like this: