Humans are inherently wired for connection and cooperation. Our mental, emotional, and even physical health depends on it. Prolonged isolation, whether personal or collective, challenges our capacity to thrive. When nations retreat into isolationist protectionism, they may gain short-term relief but risk long-term stagnation, weakened innovation, and social fragmentation.
Historically isolationist economic policies leads to stagnation, inefficiency, and missed opportunities. One of the best examples of a nation falling behind in naval, military, and industrial technology was the Chinese Ming and Qing dynasties of the 14th century. Fearing foreign influence and cultural impurity, the rulers severely restricted trade, costing China its competitive edge for centuries.
Industries become bloated and inefficient under protectionism
Post-independence, India adopted a protectionist, centrally planned economy. Foreign goods and investment were restricted, and most industries heavily regulated. The result: industries became bloated and inefficient. India nearly defaulted on its debt in 1991 and was forced to liberalize its economy.
Throughout history, we can find countless examples of nations thriving when they get together to form a common economic space, standardize rules and break down commercial barriers.
The success story of Hanseatic League of medieval merchant cities
The Hanseatic League (from the 13th to 17th century) was a confederation of merchant towns that collaborated for mutual benefit, and in many ways was a precursor to the European Union. Located along the North Sea and Baltic sea routes cities like Hamburg, Bremen, Lübeck, Danzig created an economic powerhouse based on shared interests, smart geopolitics, and commercial innovation.
The European Union stands as a remarkable testament to the power of unity, bringing together nations like France and Germany, once bitter enemies in centuries of war, into a partnership of peace and collaboration.
Countries once marked by poverty, such as Spain and Portugal, along with former Soviet Bloc nations like the Czech Republic, Poland, the Baltic states, and Romania, have found profound benefits in their EU membership—economically, politically, and socially. The EU has not only transformed these nations but has also reshaped the very idea of cooperation, showing how shared purpose can overcome history’s deepest divisions.
The notion that free trade is beneficial for all was first mooted by David Ricardo, a 19th-century British political economist. Ricardo introduced in 1817 the theory of comparative advantage in his book “On the Principles of Political Economy and Taxation.” His idea was that even if one country is more efficient at producing all goods than another country, both can still benefit from trade if they specialize in the goods they produce relatively more efficiently.
Factories in Bangladesh, Vietnam or China can for instance produce clothing much cheaper than in the United States, Canada or Europe. Consumers in these countries again can buy such imported clothing at a much cheaper price than if they were produced at home.
Key Points of Ricardo’s Concept:
- Comparative advantage (not absolute advantage) determines what a country should specialize in.
- By each country focusing on producing goods where they have the lowest opportunity cost, total global production increases.
- Then, through trade, all countries can consume more than they could in isolation.
Before Ricardo, Adam Smith had also praised free trade in his 1776 book “The Wealth of Nations,” arguing for absolute advantage—that countries should produce what they’re best at. But Ricardo’s theory was more powerful because it showed how even less efficient countries can benefit from trade.
Open markets push companies to innovate or die. Exposure to international competition fosters dynamic economies and technological advancement. Countries that trade together are less likely to go to war with trade interdependence promoting diplomatic ties and global stability. Free trade has lifted millions of people out of poverty especially in east Asia.
Most economists agree that tariffs or quotas should only be used selectively such as protecting key sectors during economic transitions. Free trade should also include safety nets such as retraining programs and unemployment benefits.
Brexit is one of the most compelling modern case studies on free trade vs. protectionism, and more broadly, economic integration vs. sovereignty. The United Kingdom (UK) was a member of the European Union from 1973 until 2020. It decided to leave the EU, known as “Brexit” following a referendum in 2016. The populist call for protectionism and sovereignty gained more traction than rational economic arguments. Economists and analysts at Cambridge Econometrics found that, by 2035, the UK will be 311 billion pounds worse off and is anticipated to have three million fewer jobs. Other estimates put the annual loss in GDP at four per cent annually.
In summary, at the micro level, individuals who come together in a community experience greater mental and physical well-being. Human connection fosters resilience, purpose, and meaning. At the macro level, nations that cultivate shared values, mutual cooperation, and strategic alliances lay the foundation for lasting prosperity and peace. Connection is based on trust and courage. Isolationism however is marked by fear, divisive tribalism, and conflict.
Reino Gevers – Author – Mentor –Speaker
If you enjoyed this article you might be interested in my latest book: Sages, Saints and Sinners to be launched globally on April 8th, 2025.
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