The case for free trade in The Wealth of Nations rests on a simple observation: countries are not equally good at everything, and everyone benefits when each produces what it does best and trades for the rest. Even when one country is better at everything in absolute terms, relative advantage is what matters. Two and […]

Adam Smith’s invisible hand is probably the most famous idea in economics and one of the most frequently misunderstood. What he meant was specific: in competitive markets, individuals pursuing private gain are often led to produce outcomes that benefit the public without intending to. The baker bakes good bread not out of benevolence but because […]