[Applause]
thank you trade is good and in this ever
globalizing world it needs to be
embraced more than ever not vilified
this is something that is basically
agreed upon by nearly all economists and
how economists often quantify the
benefits of trade is to a model called
the productions possibilities frontier
it can get a little complicated so I’m
going to simplify this for you tonight
in this most bare basic form possible by
comparing avocados to Tigers and we’re
going to use people as opposed to
countries because there are far less
complex economic systems basically in
any given day we are limited by the
amount of skill resources and time to
the acquisition of goods we need in
order to survive and so therefore when
we choose to acquire one thing we have
to give up something else this is called
opportunity costs if we were to look at
this example person number one in any
given day on average could either
acquire 100 avocados or kill 50 Tigers
we need to ignore the logistical
realities of anyone being able to kill a
tiger with their bare hands let alone 50
or why they would want to but anyway 50
avocados or or I’m sorry hundred
avocados or 50 Tigers so therefore for
every one Tiger he choose to kill he has
to give up two avocados person number
two is significantly less productive
overall but much better at getting
avocados than killing Tigers I imagine
most of us would be more like person
number two in any given day they could
either have 80 avocados or just ten
Tigers so the equivalent here is for
every one Tiger if he chooses to kill he
will lose eight avocados this is where
trade comes in because if they choose to
work together they could both benefit
meet in the middle exchange one tiger
for four avocados therefore person
number one would double the amount of
avocados
he could get on his own and person
number two could double the amount of
tigers he could get for his eight
avocados fundamentally this is the root
of why trade is great
but that’s not it trade can even help
create jobs it’s true I know a lot of
you are sitting here thinking but wait I
thought that trade leads to job loss but
the reality is the overwhelming majority
of job loss in the past several decades
have been because of automation we’re
losing jobs to robots not foreigners and
let me explain how trade can actually
create jobs it’s through basically
incentivizing consumption it is
estimated that over 70% of America’s
gross domestic product is cause or is
directly related to consumption this is
what I mean let’s say I own a restaurant
that’s sold avocado and Tiger burgers
and I used to charge ten dollars for
this but thanks to trade I am able to
get my ingredients significantly cheaper
now right because I can double the
amount of kados I would have done have
been able to afford on my own so
theoretically I could lower the cost of
this I could pass these discounts off to
my customers let’s say now start
charging five dollars a burger but still
maintaining my profit margin because my
ingredients just got cheaper right so
because of this let’s say on average I
used to get 50 customers a day now I
have a hundred because my burgers are
cheap and delicious right so in order to
keep up with it the man I would have to
hire more staff I would need to have
another chef I would have to hire
another waitress or waiter I would have
to hire another person to manage the
register thus creating jobs because if I
don’t if I don’t keep up with this
demand then my restaurant will basically
be like Taco Bell drive-thru at 2:00 in
the morning which I’m sure for any of
you who’ve ever been you all had this
question why is the line so long all the
time
hire somebody please you know it’s true
trade in fact is so important to
economies that in the last century we
have not seen any country that did not
trade reach high levels of prosperity
let me give you some examples using
Canada as a benchmark here as you can
see Canada’s GDP per capita their
economy essentially experienced pretty
steady growth over the last half a
century because they’ve always been open
to trade now in contrast let’s take a
look at three other countries that
didn’t do this first we have Myanmar a
country located in Southeast Asia pretty
much since its independence it has been
governed by a military dictatorship that
isolated itself from the rest of the
world and it just has recently opened up
their country to trade to the outside
world coca-cola recently just came in it
was one of the last countries in the
world without coke until recently and as
you can see the exact moment in time
when this happened because their economy
skyrocketed once they opened up here’s
another greater example China under Mao
ska munis era there was literally no
growth at all and after his passing and
economic reforms were passed China shot
up like fireworks here where now it is
the world factory with the people having
the higher standard of living the
highest standard of living has ever had
in all of its history lastly let’s take
a look at Cuba Cuba after the Cuban
Revolution experienced modest growth
because it traded with the Soviet Union
but what you notice here is that in 1991
when the Soviet Union collapsed Cuba
also felt the pressure of it because
after the Soviet Union collapsed it was
no longer any investment in trading
between the two countries and as you can
clearly see here Cuba’s economy
absolutely fidel down
yeah I’d like that up and they were not
experienced oh I have more and they did
not it would not be able to get out of
this rut until they also opened
themselves up to trade and tourism to
the rest of the world see in fact you
might not know this but trade is so
important that you can even use it as a
geopolitical weapon where countries can
impose their will on other countries
simply by not trading with them and what
is known as trade sanctions so let’s
take a look at three examples on the
upper left here we have Iran as you can
see Iran was doing pretty well
economically and then the Iranian
Revolution happened and as a sign of our
disapproval the United States and much
of the United Nations imposed trade
sanctions on Iran and as you can see
their economy drop like nothing else
and it has never really recovered sense
if we look at Zimbabwe in the upper
right Zimbabwe was kind of teetering
along until of accusations that the
President Robert Mugabe committed voter
fraud and human rights abuses and so the
EU and the UN also imposed trade
sanctions on Zimbabwe and look what
happened to their economy the only
reason they rebounded just a little bit
sense is because they’ve established new
trade deals with China and lastly we
have Russia very recent data as you can
see from 2002 or msre 2012 to 2014 their
economy was doing pretty well primarily
from the export and trade of their
massive reserves of fossil fuel but what
happened was Russia basically decided to
illegally put in some soldiers on Crimea
and we didn’t like that either and so
the United States and the Ukraine yemm’s
are Unites States and the UN sanctioned
them and look at their economy in 2015
compared to 2014 absolutely devastated
so as I have shown you
trade is insanely important and it is
not a zero-sum game where only one
country wins and another country loses
often when taken in its whole trade
benefits everybody we need to encourage
good responsible trade deals with the
rest of the world not push for isolation
that would be a mistake
and besides without trade there would
not be enough guacamole to go around thank you very much