Unique Aspects of Trade

Trade is a distinct topic within ENL primarily because the separation of production and consumption results in the separation of cost and value.

When both production and consumption are local, or when geographical scope is global, cost and value are experienced by the same set of people and are therefore commensurable.

With trade, however, cost is experienced in one region, while value is experienced in another. This severs the connection between the two and destroys their commensurability, thus necessitating several modifications to the principles enunciated elsewhere within ENL.

ENL assumes that each region is trying to maximize its own health by entering into beneficial trade relationships with other regions, using the concepts outlined here.

The local region does not necessarily know about the remote region's gains from a trade relationship, and vice versa. Both regions are presumably trying to achieve sustainable well-being and are independently making rational trade decisions to this end.

If this compartmentalization of interests is repugnant to the analyst, global scope should be chosen instead.

The objection might be raised that, according to ENL's ethical stance, everyone on the globe should be treated equally, and that regional scope is therefore inappropriate for the framework despite the analyst's perceptions.

This objection has merit. Regional scope is an ethical compromise, although one that is probably unavoidable at present. ENL's principles constitute a huge leap for most economic analysts, and applying them on a regional basis is probably an essential first step towards applying them globally.

Supporting only global scope at this historical stage is akin to saying that the permissible level of CO2 emissions must be immediately shared among the world's nations. This is ethically correct, but in practice it is virtually impossible to achieve. A transitional approach is required, and this is what regional scope is intended to provide.


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