• If trade is voluntary, everybody gains
• Deadweight loss is the amount of value lost due to absent trade
• The more trade, the better economics

Whenever we purchase anything, we contribute to the economy by being the first or last domino brick, depending on how you see it, in many trades affecting millions of people throughout the supply chain across the world. These trades are what bring economic value and human progression to this world.

In economics, we refer to the total value created by trades in societies as social welfare. Oftentimes, economists assess public policies based on whether they are projected to increase or decrease social welfare. For instance, suppose I am craving a banana and buy one at the supermarket for 50 cents. Since the supermarket is eager to sell the banana, they have perhaps bought it for 20 cents, making a profit of 30 cents per banana sold. The profits all producers make when selling their products are called producer surplus. When I am buying the banana, the price of 50 cents is unlikely the exact maximum price beyond which I would no longer want to buy the banana. For 50 cents it is obviously worth it, or else I would not have bought it. Perhaps I would rather keep my money had the price of the banana exceeded 75 cents. The difference between consumers’ valuation of the good and the price they are paying is called consumer surplus.

Producer and consumer surplus together become social welfare. The reason why voluntary trade always increases social welfare is that had it not done that, it would not have occurred in the first place. Had trade not been possible, the only way for people in Sweden to eat bananas would be to fly in an airplane to another climate to find a banana tree, which of course would require trade itself. The market for bananas gives rise to social welfare when the bananas are produced and gathered, when they are transported to their destination, and when they are sold in the store. Had the consumers no longer bought bananas, farmers and all other parts of the supply chain across the world would eventually be out of business. 

There are also costs attributed to producing and consuming goods. One of such costs economists and others obviously are concerned with is the cost of climate change. However, one should not be misled to believe that the way towards reducing our impact is through minimizing trade, but rather to use the resources created by trade to evolve into no longer harming the environment. Unless we would want to stop progressing away from poverty and starvation and go back to the standard of living of hundreds of years ago, evolving into climate neutrality costs resources. The more extensive and efficient our trade is, and the greater social welfare created, the more resources will be generated which may be used to invest in research and capital enabling us to reach climate neutrality. 

Many policies discourage trade in a variety of ways. Taxing production and consumption, regulating prices, or laws prohibiting businesses all induce deadweight loss, the economical term for a loss in social welfare. Since most of these policies undoubtedly decrease social welfare on the net, they cannot be justified by making the representative person in the society better off, but rely on the accomplishment of other legitimate goals such as stability and equality.