by Jurgen Brauer, June 2003
Copyright: J. Brauer. No reproduction without permission.

Medicines sans frontiers (Physicians without Borders) is an international organization that sends medical personnel into war zones to offer assistance to victims of violent conflict. The physicians perform noble deeds, fraught with danger to their own well-being. They do better than Hippocrates ("first, do no harm") himself. They do not wait for victims to be carted their way; instead, they seek them out. Because suffering respects no borders, neither do these physicians. Hats off to them.

Nature does not respect borders either, as the outbreak of the recent SARS epidemics shows. Borders are alien to nature; nature deals with zones, regions of gradual transition, not with sharply delineated borders. Borders are artifices of the human mind. Like the natural sciences, economic science has little need for borders. In fact, economics is a borderless science. Political borders exist in economics only as an impediment that interfere with underlying, fundamental economic processes of generating wealth and well-being.

One of the most fundamental of these processes is that of voluntary trade. If you wish to buy what I have to sell, and if both of us voluntary agree on the terms of sale, then both of us gain from the transaction. If that were not so, we would not trade. True, your share of the combined gain may be greater than my share. But it is still true that both of us gain. If I do not like your terms of offer, I will try to sell elsewhere. If you do not like my terms of offer, you will try to buy elsewhere.

Think about it. Why should it make any difference whether mutually beneficial, voluntary trade takes place between any two people in (a) Los Angeles, or (b) between two people in Los Angeles and San Francisco, or (c) between Los Angeles and Miami, or (d) between Los Angeles and London? Case (a) takes place within the political jurisdiction of the city; case (b) within the jurisdiction of the state of California; case (c) within the United States; and case (d) within that of the globe. In all cases, a buyer and a seller wish to voluntary trade with one another. So long as the dealing is done voluntarily, the political jurisdiction does not matter. Political borders are irrelevant. At heart, economics is a science without borders.

This is why economists advocate free trade. Because of shipping, insurance, and other costs, the more distant buyer and seller the more costly their trade. As in nature, zones exert their own influence. Borders are not needed.

How did borders enter the picture? There used to be a school of thought (not entirely dead) according to which Americans should buy from Americans – and Britons from Britons, Germans from Germans, and Chinese from Chinese. The money buyers spend, this school avers, should stay within the country rather than creating jobs for other people in other countries. If this were true, then money spend by folks living in Los Angeles on products from Miami, Florida, does not benefit California. Trade between Florida and California should be outlawed. And the good folks in Los Angeles should also be prevented from spending money in San Francisco because spending money there would be detrimental to the economy of Los Angeles. In fact, even within Los Angeles there should be no trade whatsoever because every time you spend a dollar it benefits someone somewhere else.

Ideally, therefore, you spend no money on anybody – and no one will spend money on you.

In reality, the very reason why you spend money, voluntarily, is because you get back something you value more than the money you spent. If I choose to spend in San Francisco, I do so because I think I will be better off than when I spend in Los Angeles. If I choose to spend in Miami, I do so because I will be better off. And if I choose to spend in London or Berlin or Beijing, I do so because I will be better off than spending anywhere else.

If a plumber from San Francisco can do the job I have for him equally well but more cheaply than a plumber from Los Angeles, what business of the city council politicians it is to tell me that I can hire only the Los Angeles plumber? Shouldn't the fellow earn his living, instead my being told to give it to him? And if the plumbers in San Francisco are told that henceforth there will be no more jobs for them in Los Angeles, will San Francisco not retaliate and tell the LA carpenters that henceforth there is no more business for them in San Francisco? Limiting trade is self-destructive.

Communities can set health and safety standards. Standards are information devices to help me decide whom to buy from. This helps to prevent people from taking advantage of each other. Good regulations foster trade, but borders limit it.

And besides, who in Los Angeles is going to hire a San Francisco plumber in the first place? Natural economic zones will delimit trade all on their own, without artificial borders.