Three emails

Wow, what a week in investments.  Aren't you glad that you don't have an investment advisor who indulges in short term market forecasts, or who takes the ups and downs of the stock market too seriously?  If you had, you would have sold shares at the bottom a few days ago and not yet purchased them back.

In fact, this email represents my third letter to you over the last few days.  The first two, both written while the market was way down, and which I mercifully and luckily did not send, attempted to explain tariffs and trade; topics so complex that I don't understand them myself, or, secondly, the history of stock market crashes.  I intended to tell you again that stock market crashes are always temporary, and that this time would be no different.  Now, I don't have to send those emails, not only because they were redundant to my usual message, such that even I found them boring, but because the market proved my point already.

Instead, let me say: we like trade.  We like international trade, but also interstate trade, trade among individuals and companies - almost all trade.  The value and the volume of our transactions define our GDP.  So long as they grow faster than our population grows, and also faster than inflation, we prosper.

We don't like all trade.  We prohibit trade in fentanyl, ivory, in human trafficking, and other odious types of trade which come at too high a cost and violate our morals.  But, short of these egregious exceptions, we embrace trade between all the people of the world, setting no upper limit to the volume and value of those transactions.  The more, the better.

In addition to promoting prosperity for everyone, trade gives one more great gift.  It encourages peace and friendship around the world, more strongly and effectively than any other force.  My father collected stamps.  Over the years, he sent me first day covers of one stamp or another which he liked.  After he died, I gave away his stamp collection, but I held on to one stamp.  It said "World Peace through World Trade".

Source: Bureau of Engraving

I agree.  When people trade, they establish a mutual interest in peace.  They develop tolerance for each other's strange practices, and sometimes great friendships, in spite of differences of language, culture, politics and faith.  We need much more of that.

Writing about the London Stock Exchange, Voltaire said: "Take a view of the Royal Exchange in London..., where the representatives of all nations meet for the benefit of mankind. There the Jew, the Mohamedan, and the Christian transact together, as though they all professed the same religion, and give the name of infidel to none but bankrupts. There the Presbyterian confides in the Anabaptist, and the Churchman depends on the Quaker's word.

"At the breaking up of this pacific and free assembly, some withdraw to the synagogue, and others to take a glass. This man goes and is baptized in a great tub, in the name of the Father, Son, and Holy Ghost: that man has his son’s foreskin cut off, whilst a set of Hebrew words (quite unintelligible to him) are mumbled over his child. Others retire to their churches, and there wait for the inspiration of heaven with their hats on, and all are satisfied.”

The introduction of electronic trading, conducted instantaneously across thousands of miles, in which no one speaks with anyone, somewhat compromises Voltaire's point.  But not entirely.  His larger point that traders "meet for the benefit of mankind" in a spirit of peaceful coexistence, and that  "all are satisfied", remains correct.

If you would like to end war and promote peace among nations, encourage more trade.  It will accomplish your goal far more effectively than appeals to peace, love and understanding, or multilateral institutions, such as the United Nations, or treaties and alliances and coalitions and other devices of government, which come and go, but do not endure, unless they are backed by trade.