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Home / Carpe Diem / Venn Diagram of the day on the economic amnesia that afflicts many when goods cross certain imaginary lines… – Publications – AEI

Venn Diagram of the day on the economic amnesia that afflicts many when goods cross certain imaginary lines… – Publications – AEI

Summary:
AEI Venn Diagram of the day on the economic amnesia that afflicts many when goods cross certain imaginary lines… Economic Lesson: It’s a basic principle of economics that voluntary exchanges are Win-Win and benefit both the buyer and the seller. That Win-Win outcome from voluntary trade does not depend on whether the buyer and seller are on the same side of imaginary lines called national, state, country, city, neighborhood or household borders, or on different sides of those imaginary lines called national, state, country, city, neighborhood or household borders. Example A: A Michigan household can be made better off from a successful, relaxing family vacation regardless of whether they traveled inside the state of Michigan, traveled to another US state, or traveled to a foreign country

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Venn Diagram of the day on the economic amnesia that afflicts many when goods cross certain imaginary lines…

Venn Diagram of the day on the economic amnesia that afflicts many when goods cross certain imaginary lines… - Publications – AEI

Economic Lesson: It’s a basic principle of economics that voluntary exchanges are Win-Win and benefit both the buyer and the seller. That Win-Win outcome from voluntary trade does not depend on whether the buyer and seller are on the same side of imaginary lines called national, state, country, city, neighborhood or household borders, or on different sides of those imaginary lines called national, state, country, city, neighborhood or household borders.

Example A: A Michigan household can be made better off from a successful, relaxing family vacation regardless of whether they traveled inside the state of Michigan, traveled to another US state, or traveled to a foreign country like Canada, Mexico, China or Italy. That is, a vacation that creates fond lifelong memories for the family members does not depend on whether that family crossed or didn’t cross imaginary lines called state and national borders.

It never ceases to amaze me how so many people correctly understand the benefits of trade when goods and services are exchanged within the imaginary borders of the 50 US states. But as soon as those same goods and services cross imaginary lines called national borders…. well then economic amnesia seems to afflict otherwise sensible and rational individuals…. and they forget or deny the Win-Win outcome of those transactions.

Venn Diagram of the day on the economic amnesia that afflicts many when goods cross certain imaginary lines…
Mark Perry

Mark Perry
Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan’s Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

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