For the first time in history, almost the entire world is now sharing the same economic system. Communism began to fall in the late 1980s, and since then, capitalism has spread to most corners of the world. The basis of a “pure” capitalist has spread to most corners of the world. The basis of a “pure” capitalist economy is free trade, also called “open trade.” There are benefits of open trade for both rich and poor countries. For developed countries such as Japan and England, free trade brings with it more competition, which in turn brings advantages such as lower prices and more choices of products for consumers. For developing countries, open trade means that people have access to essential goods such as food, clothing, and fuel (for transportation and heat). An open economic system can be a key to improving the lives of people in both poor and rich countries because it can reduce poverty and improve living conditions.
This is apparently very good news. Optimists often say that “the rising tide lifts all boats.” What do they mean by this? Imagine a harbour filled with boats – some small ones, some medium-sized, and some huge ships. As the ocean tide comes in every twelve hours, the water rises and literally lifts all boats – both large and small. In economics, this expression means that in good economic times, poor countries benefit as much as rich countries do. However, pessimists point out that many of the “small boats” seem to be “leaking”– they have holes in them – and so are going down instead of up. In other words, the gap between rich and poor – the economic difference between them – is wider than it was in the past. The contrast can be startling. A former U.S. president, Jimmy Carter, once put it this way: “Globalization, as defined by rich people,…is a very nice thing… You are talking about cell phones, you are talking about computers.” However, he went on to point out that this “nice...