Consider the following analysis of voluntary exchange…trade:

HOW TRADE CREATES WEALTH (out of thin air)!

Economists world over tend to support the notion of free trade. Why is this concept so widely supported by economists, the experts specializing in these issues? Their support rests on the concept of mutually advantageous gains from trade… that both partners in a voluntary exchange tend to be made better off.

Trade rearranges patterns of goods and services to a higher valued pattern.  Consider the following scenario: It is early morning and I want a cup of coffee. Fortunately for me the vender in the lobby is open for business and has fresh, hot coffee for sale. The vender is offering coffee at $1.00 per cup. The initial pattern and the revised, after trade, pattern are shown in the following table:

ME	COFFEE VENDER
$1.00	Cup of coffee
Cup of coffee	$1.00

I trade $1.00 for a cup of coffee. Since I voluntarily enter into an exchange I must expect to be better off after the trade. My participation provides evidence that I place a higher value on the cup of coffee than the one-dollar bill.  The vender, on the other hand, must place a higher value on the dollar than on the cup of coffee. Again, the trade provides evidence of his preferences. He must expect to be better off after the trade.  We both expect to benefit or gain from this action. (Remember that actions, not words, reveal preferences.)

This is an example of mutually advantageous gains from trade.

Again, we have evidence that the participants expect to be made better off after the trade - voluntary participation!

Comment: Given this clear example of the gains from voluntary trade, it is difficult to understand those who question the function of international institutions - such as the WTO, which have been created to facilitate trade.