Does everyone always benefit from increased trade? No. In our simple model, workers within a country can easily switch between the shirt and computer sectors. In the real world, workers in the sector with increased demand (computers in the United States, shirts in Mexico) will see their wages rise while workers in the sector with decreased demand (shirts in the United States, computers in Mexico) will see their wages fall. Workers in sectors with falling wages will move to sectors with rising wages until wages in the sectors equalize, but the transition isn’t always easy or quick. We will take another look at the gains and losses from trade in Chapter 9. Overall, however, greater trade increases total wealth. That typically brings benefits to a great many people in all parts of the trading world. We can see this theme throughout history.

Decreases in transportation costs, integration of world markets, and increased speed of communication have made the world a smaller place. But globalization is not new; rather, it has been a theme in human history since at least the Roman Empire, which knit together different parts of the world in a common economic and political area. When these trade networks later fell apart, the subsequent era was named “The Dark Ages.”

Later, the European Renaissance arose from revitalized trade routes, the rebirth of commercially based cities, and the spread of science from China, India, and the Middle East. Periods of increased trade and the spread of ideas have been among the best for human progress. As economist Donald Boudreaux puts it: “Globalization is the advance of human cooperation across national boundaries.”3