After giving each child a gift, I told the students they could each trade—if they chose—with the person seated to their left or right. Several made trades; some didn’t. Next I told them they were free to walk around the room and exchange their gifts. In a moment the room was filled with excited kids making trades.
When they had sat down, I asked them how many traded. Nearly all had. How many felt they were better off after their trade? I asked. They all did.
But trade is far more magical than this. In the fifth-grade class, all the things being traded were simply handed out, free. Nothing had to be produced. In the real world things must be produced, meaning people must spend time, effort, and other resources producing them.
This is where we find trade’s real magic: It directs people into areas of work and production where they can make the most at the lowest cost. That increases the total amount of wealth for everyone.