1. Explain why international trade is not a zero-sum game
2. International trade does not necessarily make everyone better off?there are winners and losers. Who are "winners" from international trade?
3. International trade does not necessarily make everyone better off?there are winners and losers. How can the benefits of international trade extend beyond the buyers and sellers in trade transactions andbenefit a whole country?
4. International trade does not necessarily make everyone better off?there are winners and losers. Who are "losers" from international trade?
5. Why is it easier to identify the costs than the benefits of international trade?
6. Trade barriers are often suggested as a method of protecting workers from foreign competition. a) Why do economists generally advise against using trade barriers? b) What is one way the government helps those who are harmed by international trade?
   

PAGE ONE Economics Does International Trade Create Winners and Losers? Scott A. Wolla, Ph.D., Senior Economic Education Specialist Anna Esenther, Economic Education Intern GLOSSARY 'It is the maxim of every prudent master of a family, never to attempt to Domestic: Inside a particular country. make at home what it will cost him more to make than to buy. What is prudence in the conduct of every private family, can scarce be folly in Economies of scale: Factors that cause a producer's average cost per unit to fall as that of a great kingdom. If a foreign country can supply us with a com- output rises. modity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry." Exports: Goods or services that are produced domestically but sold abroad. -Adam Smith, The Wealth of Nations Imports: Goods or services that are produced abroad but sold domestically Productivity: The ratio of output per worker Is trade good for Americans? People seem largely divided on the issue. A per unit of time. 2017 poll found that only 52 percent of Americans feel that trade agree- Services: Actions that can satisfy people's ments between the United States and other countries are good for the wants. United States.' However, unlike the general population, economists are Standard of living: A measure of the goods overwhelmingly supportive of trade. A 2014 poll found that 93 percent and services available to each person in of economists agree that past major trade deals have benefited most a country; a measure of economic well- Americans.2 Given the consensus among economists, why is international being. Also known as per capita real GDP (gross domestic product). trade, and the free-trade agreements that make it possible, so controversial? Many people suspect that international trade operates as a zero-sum game. That is, they think it is like a sporting event-a competition with rules that ends with a winner and a loser. Specifically, people sometimes think that if our trading partners are gaining through international trade, the United States must be losing. In this view, exported goods represent a "win" for the economy and imported goods represent a "loss" for the economy. This idea is nothing new; it dominated economic and political thought from the sixteenth to eighteenth centuries. Known then as mercantilism, it led to government policies that encouraged exports and discouraged imports. One of Adam Smith's purposes in writing The Wealth of Nations (which helped establish economics as a distinct academic discipline) was to dispel the zero-sum game myth behind mercantilism. The Costs and Benefits of Trade In spite of people's apprehension about trade, both imports and exports are at all-time highs (see the figure). As such, it's important to understand why economists believe trade is good. Think back to the thriving trade in your elementary school cafeteria. Perhaps a friend across the table offered November 2017 Federal Reserve Bank of St. Louis | research.stlouisfed.org